•Industry, Trade and Investment minister, Jumoke Oduwole
The federal government has begun a major tightening of Nigeria’s Special Economic Zones (SEZs), warning operators against diverting goods into the domestic market, understating sales and exploiting tax incentives meant to promote exports.
Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, gave the warning today at a stakeholders’ meeting on the Special Economic Zones, declaring that the government would no longer tolerate practices that undermine the integrity of the scheme.
She specifically warned against goods diversion, mispricing of related-party transactions, understating domestic sales and disguising businesses operating in the Nigerian Customs Territory as free-zone enterprises, reports The Nation.
“These unsavoury practices are not victimless practices. They damage the reputation of the entire scheme and bring the entire scheme at risk, particularly under the new tax regime,” Oduwole said.
“Compliance is a condition precedent. The Ministry can only defend a clean scheme.”
The minister said the crackdown followed concerns that some enterprises were taking advantage of free-zone incentives to sell goods into the Nigerian market, creating what she described as an uneven competitive environment for manufacturers operating outside the zones.
According to her, manufacturers in the Customs Territory import similar inputs, employ Nigerians and pay full domestic taxes and duties, while competing with goods entering the same market from free zones on concessional terms.
She said the regulatory reforms were therefore designed to restore the original export orientation of the free-zone regime while ensuring that legitimate investors continue to enjoy lawful incentives.
Under the revised framework, Oduwole said the 75 per cent export and 25 per cent domestic-sales structure would be given clearer effect, while goods transferred from a free zone into the Nigerian Customs Territory would be treated in accordance with applicable customs laws.
The reforms, she added, would also establish clearer institutional responsibilities.
The Nigeria Export Processing Zones Authority (NEPZA) and Oil and Gas Free Zone Authority (OGFZA) will retain responsibility for licensing and operational oversight within their respective regimes, while the Nigeria Revenue Service will handle tax administration and the Nigeria Customs Service will retain responsibility for customs control, valuation, classification and enforcement.
Despite the tougher regulatory stance, Oduwole stressed that the government remained committed to protecting legitimate investments in the zones.
She said the free-zone scheme had attracted more than $200 billion in foreign investment and over ₦900 billion in domestic investment, generating more than 100,000 direct jobs and over 500,000 jobs when supply chains, logistics networks and host communities are included.
She said the government’s objective was not to weaken the zones but to make their regulatory environment clearer, more sustainable and attractive to investors.
“Lawful incentives that support the purpose of the Zones remain critically important,” she said.
“We are making the framework clearer, more coherent and more sustainable so investors can plan with greater certainty and the integrity of the Scheme can be protected.”
Oduwole cited the recent commencement of production by Health Textiles Nigeria FZE at the Lagos Free Zone as evidence of the type of investment the government wants to attract.
The company, a subsidiary of Vestergaard, has begun producing WHO-prequalified dual active-ingredient insecticide-treated mosquito nets and is expected to produce up to 10 million nets annually, with more than 600 Nigerians expected to be employed when the facility reaches scale.
The minister also cited the Dangote Industries Free Zone, which hosts the Dangote refinery and Africa’s largest granulated urea complex, as well as the Lagos Free Zone, where the International Finance Corporation took an equity position of up to $50 million.
The government is also expanding the free-zone framework to accommodate the digital economy.
Oduwole said revised NEPZA regulations would create Digital Free Zones and Digital Special Economic Zones for the first time in Nigeria.
She said the new framework would support technology-enabled and non-physical businesses and introduce licence categories, including an Innovator Licence for enterprises operating in areas where regulatory frameworks are still developing.
The minister said the reforms followed 19 months of consultations involving government agencies, lawmakers and private-sector stakeholders.
She urged operators to submit further recommendations to the Special Economic Zones Legislative and Regulatory Reform Committee.
Oduwole said the reforms were part of efforts to reposition the zones as engines of non-oil export growth and support President Bola Tinubu’s target of building a $1 trillion economy by 2030.
