According to the World Bank, Free Trade Zones (FTZs) are duty-free areas, offering warehousing, storage, and distribution facilities for trade, trans-shipment, and re-export operations. FTZs have also been described as as a class of special economic zones, where goods may be landed, stored, handled, manufactured or reconfigured and re-exported under specific customs regulations and generally not subject to customs duty. We are more inclined to the latter definition because it expands the definition of a FTZ. We surmise that a FTZ is an economic model designed to improve the socio-economic development of the FTZ’s host by the FTZ attracting local and foreign investors through vast tax and reduced-regulation incentives.
Historically, the first ever FTZ is traceable to the Greek Island of Delos in 166BCE. Today, over 50 countries in several continents are mining the benefits and advantages of FTZs. In Nigeria, there are 34 FTZs in 17 of Nigeria’s 36 States and Federal Capital Territory. About 17 of the 34 FTZs are currently active. They include: Alaro City, Airline Services EPZ, Aluminium Smelter Company FTZ, Calabar FTZ, Dangote Industries Free Zone, Kano FTZ, LADOL Free Zone, Lagos FTZ, Lekki FTZ, Maigatari Border FTZ, Nigeria International Commerce city, Ogun-Guangdong FTZ, Onne Oil and Gas Free Trade Zone, Senbore Farms EPZ, Snake Island FTZ and Tinapa Resort & Leisure FTZ.
FTZs in Nigeria are regulated by the Nigeria Export Processing Zones Authority (NEPZA). NEPZA oversees all the activities of FTZs by being the one-stop shop or coordinator of other government agencies in their relations with enterprises or businesses approved to operate in FTZs. These enterprises or businesses are known as Approved Enterprises. Government agencies that are typically interested in the activities in the FTZ include, the: Nigeria Customs Service, Nigeria Port Authority, Central Bank Of Nigeria, Federal and States’ Revenue Services, Nigeria Police Force, Nigeria Immigration Service, State Governments, to mention a few.
The sweeping attraction of Nigeria’s FTZs is to be found in Sections 8 and 18(1) of NEPZA’s establishing statute, the NEPZA Act, which exempts Approved Enterprises from all Federal, State and Local Government taxes, levies rates and foreign exchange regulations. Section 24 of the Act makes all other laws applicable, unless they have been specifically exempted by the NEPZA Act or the relevant law.
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