The Federal Government has begun strengthening the regulatory and legislative framework governing Nigeria’s Special Economic Zones, assuring investors that legitimate incentives will remain while loopholes allowing abuse of the Free Zones regime are closed.
Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, gave the assurance as the Special Economic Zones Legislative and Regulatory Reform Committee commenced a drafting retreat to translate previous consultations into revised legislation and regulations.
The exercise brings together officials from the Federal Ministry of Justice, Ministry of Industry, Trade and Investment, Nigeria Export Processing Zones Authority, Oil and Gas Free Zones Authority, Nigeria Customs Service and Nigeria Revenue Service. Pasted markdown
Incentives to Remain
Oduwole stressed that the reform was not intended to dismantle Nigeria’s Free Zones programme or withdraw incentives used to attract investment.
Existing legitimate incentives expected to remain central to the system include duty-free importation of capital goods, tax exemptions on qualifying export profits, 100 per cent foreign ownership and unrestricted repatriation.
These incentives have traditionally been used to attract investors interested in manufacturing, processing and exporting from designated economic zones.
The government, however, wants clearer boundaries between businesses legitimately operating within Free Zones and companies using the framework to gain advantages when selling into Nigeria’s domestic economy.
“A Free Zone cannot become an alternative route into the Nigerian domestic market on terms unavailable to manufacturers operating in the Customs Territory,” Oduwole said. Pasted markdown
FG Seeks Level Playing Field
The distinction is important for companies operating outside designated Free Zones.
Manufacturers in the regular Customs Territory face duties, taxes and other obligations that may not apply in the same way to qualifying Free Zone activities.
If businesses can exploit loopholes to enter the domestic market while retaining incentives intended primarily to support export-oriented activities, conventional manufacturers could face an uneven competitive environment.
The reform therefore seeks to preserve the investment benefits of Special Economic Zones while strengthening compliance and regulatory clarity.
For investors, predictability will be important.
Nigeria must balance the government’s desire to prevent abuse with the need to avoid creating uncertainty around incentives that companies may have relied upon when making long-term investment decisions.
The drafting process will consequently be closely watched by manufacturers, exporters, Free Zone operators and foreign investors.
