By Prevail Inegbenose
The Federal Government has commenced the drafting of a new legislative and regulatory framework for Nigeria’s Special Economic Zones (SEZs), with provisions expected to accommodate digital businesses that may not require conventional physical operations.
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The development followed the transition of the SEZ reform process from stakeholder consultations to a dedicated drafting retreat involving the Federal Ministry of Industry, Trade and Investment (FMITI), Nigeria Export Processing Zones Authority (NEPZA), Oil and Gas Free Zones Authority (OGFZA) and the Federal Ministry of Justice.
The reform process also brought the Nigeria Economic Zones Association (NEZA), National Single Window, Nigeria Customs Service and Nigeria Revenue Service (NRS) into the drafting exercise.
Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, said the proposed framework would preserve legitimate incentives available to investors while strengthening the integrity and regulation of the Free Zones regime.
She said the government was not seeking to dismantle the scheme or withdraw lawful incentives that have attracted investment into the zones.
“A Free Zone cannot become an alternative route into the Nigerian domestic market on terms unavailable to manufacturers operating in the Customs Territory,” Oduwole said.
“But this is not an argument against Free Zones. It is an argument for protecting them. Legitimate investors who have committed capital to Nigeria deserve certainty. The rules must be clear. Institutional responsibilities must be clear. Customs and tax treatment must be predictable. And lawful incentives must remain defensible.”
The reform is coming amid renewed scrutiny of the Free Zones system following recent enforcement actions by the Nigeria Customs Service over alleged diversion of goods admitted under Free Zone concessions into the domestic market.
Oduwole said the review would seek to address identified weaknesses while ensuring that legitimate businesses are not disadvantaged.
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She said existing incentives, including duty-free importation of capital goods, tax exemption on qualifying export profits, 100 per cent foreign ownership and unrestricted repatriation of capital and profits, subject to applicable laws and regulations, would remain relevant under the reform.
The minister said the exercise also provides an opportunity to reposition the SEZ framework to reflect changes in the Nigerian and global economies.
“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.
A major feature of the proposed framework is the formal recognition of Digital Free Zones and Digital Free Zone Enterprises, with proposed licence categories including Innovator and Sandbox licences for businesses that may not need conventional physical locations.
According to Oduwole, the expansion is necessary as Nigeria’s export economy increasingly includes 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.
Chairman of NEPZA, Hadi Mutallab, said the reform should strengthen the integrity of the Free Zones while ensuring that incentives translate into increased investment, production, employment and exports.
He also called for adequate protection of existing operators and a clear transition arrangement as the new framework takes effect.
NEZA Executive Secretary, Toyin Elegbede, welcomed the consultative approach, saying operators supported a strong and transparent regulatory system that would protect legitimate businesses and attract further investment.
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Spark News reports that issues being considered in the drafting process include the treatment of existing investments, transition arrangements for current licensees, the proposed 75/25 export-to-domestic-sales framework, customs coordination, joint inspections, simplified customs exit procedures, foreign exchange and tax reporting.
The treatment of services provided within the zones and the reduction of multiple regulatory interfaces are also under consideration.