$200 Billion Into Nigeria’s Free Zones; Now Abuja Wants to Rewrite the Rules

FTZ News: Nigeria’s industry minister says the country’s free zones have taken in more than $200 billion in foreign investment, and more than 900 billion naira from investors at home.

Jumoke Oduwole read the figures to zone operators on a video call in September. Punch carried them on Thursday. The ministry has not published a zone-by-zone list, or said how much of the foreign money has actually been spent. NEPZA, which licenses most of the zones under a 1992 law, lists several dozen zones and several hundred enterprises on its site. That is a registry, not an investment ledger.

“Across the scheme, the authorities record over $200 billion of foreign investment and over 900 billion naira of domestic investment, more than 100,000 direct jobs, and over 500,000 when the supply chains, the logistics networks and the host communities are counted,” Dr. Oduwole said. She told the call they were “valuable investors and contributors to the Nigerian economy. This has not and will not change.

” The same call was about a rewrite. A committee inaugurated in February — her ministry, NEPZA, and the Oil and Gas Free Zones Authority — has draft rules for NEPZA, for oil and gas zones, and for domestic sales, tax and customs. Oil and gas zones sit under a 1996 law and were first run at Onne in 2001.

She said the current text does not fit firms that do not run a plant. The draft would add digital free zones and digital special economic zones, on a platform rather than inside a fence, with no physical site required. An “innovator” license would cover lines of business where the rules are still being written.

“The Revised NEPZA Regulations and Operational Guidelines create, for the first time in Nigeria, Digital Free Zones and Digital Special Economic Zones — zones that operate on a platform rather than a perimeter, with no requirement of physical presence,” she said.

The fight is over goods that stay in Nigeria

Officials say goods made in a zone are being sold into the Nigerian customs territory while the maker keeps export incentives.

Dr. Oduwole said that undercuts factories outside the fences, which import similar inputs, hire Nigerians and pay domestic tax and duty.

She said the draft would restore the old split: 75% exported and 25% sold at home, with domestic sales taxed under ordinary law. Licensing would stay with NEPZA and the Oil and Gas Free Zones Authority. Tax would sit with the Nigeria Revenue Service. Customs control, valuation, classification and enforcement would sit with the Nigeria Customs Service. Dr. Oduwole said the changes are meant to keep investment coming while giving tax authorities clearer rules to enforce. She tied them to non-oil exports and to President Bola Tinubu’s aim of a $1 trillion economy by 2030.

The example she used was Health Textiles Nigeria FZE, a unit of Swiss-based Vestergaard, which started production at the Lagos Free Zone in September. The plant makes PermaNet Dual, a WHO-prequalified mosquito net, the first such line in Nigeria.

The ministry says about 80 Nigerians are already in training, and that full scale is 10 million nets a year and more than 600 workers. She also cited the Dangote refinery and urea complex, and the Lagos Free Zone port, where the International Finance Corporation has taken an equity stake of up to $50 million. Operators want protection for investments made under the old rules Toyin Elegbede, NEPZA’s executive secretary, said members want a look at the draft before it is locked.

The problem is the company that built its model on the rules in force when the money went in. “Our priority is to ensure that the reforms address genuine gaps without creating new uncertainty for operators who have invested and modelled their investment on the strength of the existing regime at the time of investment,” Mr. Elegbede said.

Hadi Mutallab, the NEPZA chairman, said the incentives still have to produce the investment, production, jobs and exports they were supposed to produce. The changeover, he said, cannot put money already in the zones at risk. “We must protect legitimate operators who have invested in our Zones and ensure that the transition to the new framework is clear, predictable and does not undermine existing investments,” Mr. Mutallab said.