Over $300bn investment attracted to free zones in January 2024

Nigeria Economic Zones Association has stated that as at January, 2024, over $300 billion investment had been attracted to the free zones in the country.

In a communique issued after the emergency stakeholder meeting of Free Zone Operators said over N650 billion have been generated into Government coffers through various government agencies of Nigeria Custom Service, Nigeria Ports Authority, Nigeria Immigration Service, Free Zone Regulatory Authorities P.A.Y.E etc. in the last 5 years.

According to NEZA in the communique, over 100,000 direct and more than 500,000 indirect jobs have been created through free zone activities.

NEZA stated that stakeholders deliberated on the effect of the Nigeria Tax Bill, 2024 on Nigeria’s free zones, noting that while the Federal Government’s intention to consolidate and modernize the tax framework in Nigeria via the Bill is salutary, some of the sections are a significant departure from the existing tax framework for the operation of the country’s free zones saying that it will have a grave impact on the survival of the free zone scheme.

“This is particularly evident in Sections 57, 60,198(2), and 198 (3) of the Bill and the Second Schedule to the Bill; Noted that if these provisions are passed into law, they will alter/rescind decades-long tax exemptions and incentives that have historically been central to the operations of free zone enterprises and which, indeed, constitute the “offer” that was made by the FGN to international investors, and which they have accepted over the decades and have based their long-term investment decisions and models on.

“Noted that by removing exemptions from taxes contained in the existing law, as well as protections against levies, duties and foreign exchange restrictions, the amendments will destroy the attractiveness of free zones, result in massive capital flight and job losses, and stall the realization of Nigeria’s industrialization and export expansion ambitions and the other above-mentioned objectives of free zone scheme in Nigeria.

“Noted that Nigeria is in the process of economic reform, but also noted that pulling the rug off the feet of free zone entities through this bill will amount to self-sabotage on the part of FGN and it will stand out as a classic example of policy somersaults in Nigeria, significantly damage the country’s image within the global investment community, erode investors’ confidence, impair Nigeria’s credibility to keep investment promises and attract foreign direct investment (which is currently very low), and send a strong negative signal to potential investors that Nigeria is not ready for business.”