Federal Government of Nigeria temporarily suspends granting of Free Zone Licenses

Federal Government of Nigeria temporarily suspends granting of Free Zone Licenses

The Federal Government of Nigeria (FGN), through the Federal Ministry of Industry Trade and Investment, has suspended the processing of Free Trade Zone (FTZ) licenses and inaugurated a Panel to evaluate the performance of FTZs in Nigeria.

An FTZ or Export Processing Zone (EPZ) is an area designated by an order of the President, upon recommendation by the Nigeria Export Processing Zones Authority (NEPZA), pursuant to the provisions of NEPZ Act. The NEPZ Act confers approved enterprises with certain incentives strategically designed by the Federal Government of Nigeria to bolster economic growth. Some of these incentives include:

  • Exemption from all Federal, State and Local Government taxes, levies and rates
  • Exemption from foreign exchange control rules, which enables unrestricted repatriation of capital investment and profit
  • Exemption from obtaining import and export licenses

According to the FGN, there are 33 licensed FTZ operators, but due to poor implementation, only 12 are “operational”. The Panel, based on a thorough evaluation of the current operations of FTZs, will provide recommendations to inform the FGN’s strategy on FTZs.

This will not be the first time that the FGN is reviewing the activities of its agencies. It will be recalled that the FGN carried out a review of the Export Expansion Grant as well as the Pioneer Status Incentive in order to position them for improved efficiency and curb excesses in their application. We expect that this review will position the operations of the FTZ to be more efficient and to meet the demands of both the FGN and operators in the Zone.

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