FG Moves To Tighten Free Zones Rules, Protects Existing Investor Incentives

The federal government has moved to tighten the regulatory framework governing Nigeria’s Special Economic Zones (SEZs), assuring legitimate investors that existing incentives will be protected while loopholes capable of undermining the Free Zones scheme are being closed.

The Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, gave the assurance in Abuja as the Special Economic Zones Legislative and Regulatory Reform Committee began a drafting retreat to translate ongoing consultations into revised legislative and regulatory instruments.

The retreat brought together the Federal Ministry of Justice, Federal Ministry of Industry, Trade and Investment (FMITI), Nigeria Export Processing Zones Authority (NEPZA), Oil and Gas Free Zones Authority (OGFZA), Nigeria Customs Service and Nigeria Revenue Service (NRS).

Stakeholder presentations by the Nigeria Economic Zones Association (NEZA), National Single Window, Customs and NRS also featured at the retreat, with issues raised during the September 17 stakeholder engagement incorporated into the drafting process.

Oduwole said the reform was not aimed at dismantling the Free Zones regime or withdrawing incentives that had historically attracted investments into the country.

She said incentives such as duty-free importation of capital goods, tax exemption on qualifying export profits, 100 per cent foreign ownership and unrestricted repatriation would remain central to the framework.

“A Free Zone cannot become an alternative route into the Nigerian domestic market on terms unavailable to manufacturers operating in the Customs Territory,” the minister said.

She, however, said the government was determined to protect legitimate investors by making the rules clearer, institutional responsibilities more defined and customs and tax treatment more predictable.

The reform comes amid renewed scrutiny of the Free Zones scheme following recent enforcement actions by the Nigeria Customs Service over allegations that goods imported under Free Zone concessions were diverted into the domestic market.

Oduwole said the government would address such weaknesses without undermining investors and operators that had complied with existing regulations.

“The choice before Nigeria is not between preserving the Free Zones scheme and dismantling it. It is whether we can preserve what works, correct what does not and build a framework capable of serving the economy we are becoming,” she said.

The minister said the inclusion of Customs and NRS as core members of the drafting committee was deliberate because both institutions would implement key customs and tax provisions under the new framework.

Among the issues under review are the treatment of existing investments, transition arrangements for current licensees, the proposed 75:25 export-to-domestic-sales framework, customs coordination and joint inspections, simplified Customs exit procedures, foreign exchange and tax reporting, as well as services provided within Free Zones.

The reform also seeks to reduce multiple regulatory interfaces, with NEPZA and OGFZA retaining their coordinating responsibilities within their respective statutory mandates.

A key principle emerging from the consultations is “one authority, one visit, one record,” aimed at reducing regulatory bottlenecks for businesses operating in the zones.

The reform also proposes an expansion of the Free Zones framework to cover digital businesses.

For the first time, the draft regulations expressly recognise Digital Free Zones and Digital Free Zone Enterprises, with proposed licence categories including Innovator and Sandbox licences for businesses that may not require conventional physical locations.

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.

Oduwole said Nigeria’s export ambitions must go beyond physical goods, noting the growing importance of technology, financial and professional services, creative products, intellectual property and other digitally delivered services.

“Nigeria’s future exports will not only leave our ports in containers,” she said.

She added that a modern Special Economic Zones regime must be capable of attracting technology and service-based businesses as deliberately as it had historically attracted manufacturers.

The minister said the reform was 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.

Also speaking, NEPZA chairman, Hadi Mutallab, said the reform would strengthen the integrity of the scheme while protecting legitimate operators during the transition.

He said the objective was to ensure that incentives under the Free Zones regime delivered the investment, production, jobs and exports for which they were intended.

Similarly, the Executive Secretary of NEZA, Toyin Elegbede, welcomed the consultative process, saying operators wanted reforms that addressed genuine regulatory gaps without creating uncertainty for existing investments.

The Federal Ministry of Industry, Trade and Investment said consultations would continue until the legislative and regulatory framework is finalised.

The ministry also acknowledged the support of the National Assembly, including the House Committee on Commerce chaired by Hon Ahmed Munir.