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Nigeria Industrial Council moves to improve operation of free trade zones

The Nigeria Industrial Council and Competiveness Advisory Council has moved to review fiscal arrangements and incentives applicable to the country’s free trade zones (FTZs).
Speaking on last week’s meeting of the council, its Vice Chairman, who is also the Minister of Industry, Trade and Investment, Okey Enelamah, said the council has been working to review the fiscal arrangements and incentives available to operators in the zones vis-a-viz the custom territory with the view to ensuring competitiveness of goods produced in the FTZs in the local and export markets.
There are many free trade zones at different stages of development in the country. Fourteen are operational, 12 under construction, while the development of 11 others is yet to commence. Also, the ongoing Special Economic Zones project is developing six special economic zones across the geopolitical zones.
Approved enterprises within FG-owned FTZs are entitled to the following incentives: Exemption from legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations; full repatriation of foreign capital investment with capital appreciation of the investment at any time; up to 100 per cent of foreign ownership allowable; and no import or export licences required for operations; among others.
Over the years, since the promulgation of the NEPZA Act of 1992, changes have been made to the operational guidelines of the zones.
According to Mr Enelamah, a study by the council has identified some areas that need redress. For example, manufacturers outside the zones have complained about unfair competition as the tax concessions available to FTZ operators do not take into cognizance the fact that up to 100% of goods produced in the free zones can be sold into the Nigeria customs territory; inadequate definition of value addition and certification; and cash flow advantage to free zone operators who pay duties on constituent raw materials equivalent of finished goods after production and processing, while manufacturers outside the zones pay duties and other relevant levies upfront.
However, in the study, free zone operators raised concerns over their inability to effectively compete in the export market, high administrative charges on turnover and exclusion from export incentives.
To address these issues and others affecting the efficiency of the free zones, a technical committee comprising representatives of the Nigeria Export Processing Zones Authority (NEPZA), Nigeria Export Promotion Council (NEPC), Nigeria Investment Promotion Commission (NIPC), the Federal Ministry of Finance (FMF), the Federal Ministry of Interior (FMI), the Central Bank of Nigeria (CBN), the Nigeria Customs Service (NCS), the Standards Organisation of Nigeria (SON) as well as selected operators will be set up to review and recommend appropriate fiscal and operational changes to the free zones to ensure that goods produced in the free trade zones are competitive in the export market and that concerns around unfair competition in the Nigeria Customs Territory from goods produced in the free trade zones are addressed.
Also, future licensing of free trade zones should be closely linked to priority sectors for industrialisationand export growth; while NEPZA is to implement comprehensive measurement and certification guidelines and monitoring mechanisms for determining value addition for each prohibited item.
The council, which meets monthly under the chairmanship of Vice President Yemi Osinbajo, was inaugurated last year to spearhead the industrial agenda that will boost the contribution of manufacturing to the country’s Gross Domestic Product (GDP) by 250 per cent over a five-year period. The agenda will make Nigeria a manufacturing hub for West Africa and diversify the economy from its over-dependence on oil.
The council, made up of leaders in the private and public sectors is chaired by Vice President Osinbajo, while the Minister of Industry, Trade and Investment, Okechukwu Enelamah, and President of Dangote Group, Aliko Dangote, are vice-chairmen, representing the public and private sectors, respectively.

The alternate vice-chairmen of the council are the Minister of State for Industry, Trade and Investment, Aisha Abubakar. and Chairman of ANAP Business Jets Limited, Atedo Peterside.