The Nigerian Federal Government has introduced new measures to regulate the country's Special Economic Zones (SEZs), aiming to prevent the diversion of goods benefiting from Free Zone concessions into the domestic market. This move was announced by Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, as the Special Economic Zones Legislative and Regulatory Reform Committee began a drafting retreat. The retreat brings together various government agencies, including the Federal Ministry of Justice, Nigeria Export Processing Zones Authority (NEPZA), and Nigeria Customs Service.
The reform is not intended to dismantle the Free Zones regime or withdraw incentives that have attracted investment into the country. Legitimate incentives, such as duty-free importation of capital goods, tax exemption on qualifying export profits, and 100 per cent foreign ownership, will remain central to the framework. According to Dr. Oduwole, the goal is to protect legitimate investors and ensure that the rules are clear, institutional responsibilities are defined, and customs and tax treatment are predictable.
The reform follows recent enforcement actions by the Nigeria Customs Service, which alleged that goods brought in under Free Zone concessions were subsequently diverted into the domestic market. Dr. Oduwole stated that the government's objective is to address these weaknesses without undermining investors and operators that have complied with existing rules. The reform seeks to balance preserving the Free Zones scheme and correcting its shortcomings.
The Special Economic Zones Legislative and Regulatory Reform Committee is examining various issues, including the treatment of existing investments, transition arrangements for current licensees, and the proposed 75/25 export and domestic-sales framework. The committee is also considering customs coordination, joint inspections, simplified Customs exit procedures, foreign exchange and tax reporting, and the treatment of services provided within Free Zones.
A key principle emerging from stakeholder discussions is the call for "one authority, one visit, one record" to reduce regulatory friction for businesses operating in the zones. This principle is seen as a useful test for the final implementation framework. The reform also seeks to expand the Free Zones framework to digital businesses, with proposed licence categories, including Innovator and Sandbox licences.
The development follows President Bola Ahmed Tinubu's directive to move the Digital Free Zones initiative into implementation, with a roadmap for full launch within 180 days. NEPZA has licensed Itana as Nigeria's first Digital Free Zone, while the Africa Finance Corporation is backing the $500 million Itana Innovation project at Alaro City. Dr. Oduwole emphasized that Nigeria's export ambitions must extend beyond physical goods to include technology, financial and professional services, and digitally delivered services.
The reform is aligned with the Renewed Hope Agenda and the Federal Government's efforts to expand Nigeria's productive base, increase non-oil exports, and create jobs. Stakeholders, including NEPZA Chairman, Hadi Mutallab, and Executive Secretary of the Nigeria Economic Zones Association, Toyin Elegbede, have welcomed the consultative process, saying it will strengthen the integrity of the scheme while protecting legitimate operators during the transition.
Key points
- The Nigerian government aims to prevent diversion of goods from Free Zones into the domestic market.
- The reform seeks to expand the Free Zones framework to digital businesses.
- The new measures will ensure that legitimate investors have certainty and that the rules are clear and predictable.
