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In Nigeria, the establishment of Free Trade Zones is a Federal Government initiative designed to stimulate economic growth by attracting foreign direct investment, promoting exports, and creating employment opportunities. This publication addresses frequent and important questions from current and prospective investors, providing clarity on operational guidelines and compliance requirements for approved free zone entities.
Introduction
In Nigeria, the establishment of Free Trade Zones is a Federal Government initiative designed to stimulate economic growth by attracting foreign direct investment, promoting exports, and creating employment opportunities. This publication addresses frequent and important questions from current and prospective investors, providing clarity on operational guidelines and compliance requirements for approved free zone entities.
WHAT IS THE CONCEPT OF FTZ
A Free Trade Zone (FTZ) is a designated geographical area where goods can be imported, manufactured, stored, handled, re-exported, or reconfigured under special customs regulations. Typically, such goods are not subject to customs duties while within the zone. FTZs offer various benefits for both manufacturers and consumers as the regulations around these Zones provide a viable way of cushioning the effect of foreign exchange (FX) risk by reducing the financial burden associated with import duties and simplifying complex regulatory procedures. Consumers, on the other hand, benefit from greater access to more affordable foreign goods, as customs duties or tariffs are reduced or eliminated. Moreover, free trade zones promote broader economic development by attracting investment, fostering industrial growth, and creating jobs. These zones can be managed by either public or private sector operators.
WHERE ARE THE APPROVED LOCATIONS IN NIGERIA
There are currently 42 private and 2 public free zones in Nigeria, hosting over 500 registered enterprises operating in various sectors and industries including logistics, manufacturing, aviation, shipping, tourism, industrial parks, amongst others. Examples of functioning free trade zones in Nigeria include the Lekki Free Zone, Ladol Free Zone, Dangote Industries Free Zone, Ogun Guangdong Free Trade Zone, Abuja Tech Village Free Zone, Snake Island Integrated Free Zone, Lagos Free Trade Zone, etc.
WHAT ARE THE LAWS & REGULATIONS GUIDING THE OPERATION OF FTZs IN NIGERIA
The primary legislation governing Free Trade Zones (FTZs) in Nigeria is the Nigeria Export Processing Zones Authority (NEPZA) Act. This Act establishes NEPZA and empowers it to make regulations to fulfil its mandate of promoting export-oriented investment within designated zones.
In addition to the NEPZA Act, several secondary regulations guide FTZ operations, including:
Investment Procedures, Regulations, and Operational Guidelines for Free Zones in Nigeria (2004)
Lagos Free Trade Zone Regulation 2016 (Note: Other approved free zones may have their own specific regulations)
Furthermore, the Oil and Gas Free Zones Act (OGFZ Act) provides for the establishment of the Oil and Gas Free Zone Authority (OGFZA), which specifically regulates free zones within the oil and gas sector.
DO ENTITIES NEED LICENSE/PERMIT TO OPERATE IN A FTZ
Businesses intending to operate within a Free Trade Zone in Nigeria must first obtain a license from the Nigeria Export Processing Zones Authority (NEPZA). The licensing process involves the submission of required documentation in compliance with the NEPZA Act and NEPZA Regulations, along with the payment of a prescribed registration fee. Once NEPZA approves the application
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Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Jackson, Etti, & Edu (JEE) or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: October 1, 2024.
