A Free trade zone (FTZ) is a distinct economic zone in the country that confers special privileges in relation to trade and business policy for companies carrying on business within that zone, especially in the area of taxes.  It can also be defined as a special area within a country where foreign and local companies can import materials, manufacture goods, export products, and perform services without being subject to the usual customs, tax, labor, and other bureaucratic regulations.

There is a mutually-benefitting relationship between the free trade zones and the government of Nigeria in that as they are exempt from customary law, especially in the area of taxes and customs duties, the government anticipates that the abovementioned companies would boost the overall economic growth and national exports.[i] There are over 42 licensed free trade zones in Nigeria with over 500 businesses (companies) doing business with them.  

Some examples of functioning Free Trade Zones in Nigeria include the following: Lekki Free Zone, Ladol Free Zone, Dangote Industries Free Zone, Ogun Guangdong Free Trade Zone, Abuja Tech Village Free Zone, Snake Island Integrated Free Zone, Lagos Free Trade Zone, etc.[ii]


The primary laws regulating the FTZs in Nigeria are the Nigerian Export Processing Zone Act 1992 (NEPZ Act) and the Oil and Gas Free Zone Act (OGFZ Act)

The NEPZ Act established the Nigerian Export Processing Authority (NEPZA) to license, manage and supervise FTZs in Nigeria. NEPZA has the power to make regulations binding FTZs in Nigeria. NEPZA has also made specific regulations over the operation of specific FTZs like the Lekki Free Trade Regulations 2016. NEPZA has passed a regulation over the operation of FTZs in Nigeria known as the Regulations and Operational Guidelines for Free Zones in Nigeria 2004.

 The OGFZ Act established the Oil and Gas Free Zone Authority (OGFZA), with the power to license oil and gas free trade zones and manage and supervise the Onne Oil and Gas Free Trade Zone.[iii] OGFZA also has guidelines as contained in the Oil and Gas Export Free Zones Regulation 2003.


There are many benefits available for an enterprise when it is set up in a Free Trade Zone in Nigeria:[iv]

  1. Exemption from taxes, levies, and customs duties: By virtue of Section 8 of the Act, “approved enterprises operating within a Zone shall be exempted from all Federal, Government and State taxes, rates and levies”.
  2. Repatriation of foreign capital investment with capital appreciation of the investment.
  3. Companies established in the free zones are able to employ competent personnel and foreign managers. This is because they are exempted from the expatriate quota requirement as they are not required to obtain expatriate quotas before they are to bring the expatriate to work in the free trade zones [v]
  4. Free remittances of profits and dividends earned in the Free Trade Zones
  5. A company does not need an import or export license if established in one of the FTZs.
  6. A business operating in the free zone can sell 25% of its overall output into Nigeria by acquiring legitimate permission and paying the necessary charges
  7.  Also, all disputes arising within the Zone between the government and an enterprise are resolved by the Authority in an expeditious and equitable manner.
  1. To encourage industrial technology, companies and other organizations that engage in Research and Development activities for commercialization enjoy a 20% investment tax credit on their qualifying expenditure.
  2. Preferential tariffs for made-in-Nigeria goods by some economic blocks like the European Union (EU). 
  3. Legal Guarantees and protection of foreign investments, both in the Free Trade Zones and within Nigeria, from nationalization, expropriation, and mandatory buying by the Nigerian government as confirmed in the Nigeria Investment Promotion Act.
  4. Enterprises in the Zone can sell up to 100% of their manufactured item, with up to 35% value addition, in the domestic economy, regardless of whether the item is banned or prohibited. 
  5. One-Stop approvals for all permits, operating licenses, and incorporation papers
  6. The free trade relationship between the investors and their personnel as no strike or lockout is permitted for a period of ten years following the commencement of operations in the Free Trade Zones. [vi]
  7. Licensing of approved enterprises without complying with local incorporation under section 54 CAMA. This constitutes registration in the zones.


To set up a company in the free trade zone, the investor must take certain steps that are standard for all of the free zones of the nation. These steps are as follows:

  • Obtain and complete the application form.
  • Submit the completed application form to the Zone Administration office or perhaps NEPZA Office with the required Project Plan/Feasibility Study.
  • The application will be reviewed for either approval or refusal by the administration
  • When the application is actually approved, an Operating License (OPL) will be issued by the Administration of the Free Zone.
  • Remit the investment capital through banks located in the zones which will in turn issue a Certificate of Capital Importation[vii]


Free zones in Nigeria provide rewarding opportunities that not only attract foreign investors but also provide employment opportunities to local citizens. Thus, businesses should take advantage of these incentives to maximize industrial growth and economic development by taking steps to set up their businesses in a  free trade zone in Nigeria.

[i] Business Setup, <https://www.businesssetup.com/ng/free-trade-zone-in-nigeria>, accessed on April 25, 2023

[ii] Ibid

[iii] Afolabi Elebiju, <Free Trade Zones & Nigeria Tax Regime”,<https://www.templars-law.com/app/uploads/2015/05/citn_presentation.pdf > , accessed on April 25th, 2023

[iv] Taxaide, Free Trade Zones: Taking advantage of the Incentives, <https://taxaide.com.ng/2021/04/15/free-trade-zones-taking-advantage-of-the-incentives/>, accessed on April 25th, 2023

[v] Section 20/para 3(4)(b) & OGEFZ Regulations.

[vi] Oxford Business Group, “Nigerian free zones offer a multitude of incentives for investors”, https://oxfordbusinessgroup.com/reports/nigeria/2016-report/economy/laws-of-attraction-free-zones-offer-a-multitude-of-incentives-for-investors > accessed on April 25th, 2023

[vii] NEPZA, “Enterprise Setup”, <https://nepza.gov.ng/enterprises/new-enterprise/enterprise-setup/>, accessed on 26th April 2023

Written bDeborah Dada for The Trusted Advisors

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