Fhe Nigerian free trade zones (FTZs) have successfully attracted over $300 billion in investments and contributed more than N650 billion to government revenue since their inception, according to Dr. Jumoke Oduwole, Minister of Trade and Investment.
Dr. Oduwole made these remarks at the third Special Economic Zones (SEZ) annual meeting, organized by the Nigerian Economic Processing Zones Authority (NEPZA) and the Oil and Gas Free Zones Authority (OGFZA), held in Lagos.
The event, themed “Fostering Strategic Synergies for Enhanced Special Economic Zones Operations and Sustainable Economic Growth,” brought together key stakeholders from various sectors.
.Highlighting the achievements of Nigeria’s SEZs, Dr. Oduwole noted that the country is home to over 200 operational SEZs and has announced more than 70 projects set for completion across Africa.
Notably, Morocco and Nigeria lead the continent in the number of SEZs. While Morocco’s 12 FTZs have thrived by attracting substantial foreign direct investment (FDI) and becoming hubs for automotive and aerospace industries, Nigeria is still in the process of realizing its full potential.
Although FTZs in Nigeria have attracted over $300 billion in investments and contributed over N650 billion to government revenue, the country has a long way to go in creating substantial employment opportunities,” Dr. Oduwole stated. The Minister emphasized the ministry’s commitment to enhancing regulatory synergy with the Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN), and NEPZA to ensure that fiscal, monetary, and trade policies remain competitive for SEZs.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, also addressed the forum, pointing out that many of Nigeria’s tax regimes, including the Free Zone law of 1992, need updates to align with current economic realities.
He emphasized that while the number of Free Zone entities is commendable, the true measure of success lies in their economic impact, particularly on exports.
Currently, Nigeria’s non-oil exports stand at less than $5 billion annually, a stark contrast to Morocco’s $40 billion.Under the initial tax reform proposal, Oyedele explained, businesses in Free Zones that exported up to 25 percent of their goods to the customs territory would be taxed only on those sales, while those exceeding the threshold would incur taxes on all sales.
After stakeholder engagements, the proposal was revised to allow Free Zone entities exporting 100 percent of their products to remain fully tax-exempt, while those selling into the Customs Territory would pay taxes proportionally.
Oyedele also discussed global tax compliance, noting the international requirement for multinational companies operating in Nigeria to pay a minimum 15 percent tax either in Nigeria or their home country.
He warned that if Free Zone companies could sell within Nigeria without paying taxes, it could disadvantage businesses outside these zones, leading to potential revenue losses for the government.
Lagos State Governor Babajide Sanwo-Olu, represented by Mrs. Folashade Ambrose-Medebem, the Commissioner for Commerce, Cooperatives, Trade, and Investment, echoed the need to address critical issues hindering SEZ growth. These include improving infrastructure, facilitating access to financing, and ensuring competitive regulatory policies.
Governor Sanwo-Olu highlighted the operationalization of the Lekki Deep Sea Port and its role alongside the Lekki Free Trade Zone and other industrial hubs in enhancing exports, reducing import dependency, and improving supply chain efficiency.
Nabil Saleh, Chairman of NEPZA, identified several challenges facing the SEZ scheme, including inconsistent policies and overlapping regulatory mandates that create inefficiencies.
He warned that neighboring countries are aggressively enhancing their investment climates, and Nigeria must maintain competitiveness to avoid losing investors.
Saleh cautioned against misconceptions about SEZs impacting manufacturers in the customs territory, which could lead to reduced stakeholder engagement.
He noted that recent developments like the Tax Reform Bill present both challenges and opportunities.
Dr. Femi Ogunyemi, Managing Director of NEPZA and Council Member of the World Free Zone Organisation (WFZO), emphasized the importance of SEZs in Nigeria’s strategy to attract investment, create jobs, and develop globally competitive industries.
He reported that SEZ exports have grown at an average annual rate of 0.79 percent, while domestic exports have increased by 3.26 percent.Bamanga Jada, Managing Director of OGFZA, highlighted a World Bank projection that economic growth will rise from 3.3 percent in 2024 to 3.6 percent in 2025, indicating significant investment opportunities in SEZs.
He announced a partnership to establish a Compressed Natural Gas (CNG) conversion center aimed at reducing logistics costs by up to 70 percent while promoting cleaner fuel alternatives.
Jada also revealed ongoing efforts to establish Liquefied Petroleum Gas (LPG) processing plants in both the Onne and Liberty Free Zones, with a combined storage capacity of 70,000 metric tons, underscoring the potential of SEZs in driving Nigeria’s economic growth.