Nigeria’s Special Economic Zones Fall Short Despite High Numbers
4 min read
Nigeria’s Special Economic Zones (SEZs), despite being among the most numerous in Africa, are underperforming compared to global standards, the Federal Government has admitted. Trade and Investment Minister, Dr. Jumoke Oduwole, expressed concern over their lacklustre contribution to economic growth, attributing the stagnation to regulatory bottlenecks and uncompetitive policies.
Speaking at the third annual SEZs meeting in Lagos, organised by the Nigerian Export Economic Zones Association, the Nigerian Export Processing Zones Authority (NEPZA), and the Oil and Gas Free Zones Authority, Oduwole highlighted that Nigeria operates over 200 SEZs but struggles to achieve the impact seen in other countries, notably Morocco.
“With over 70 new SEZ projects announced for completion across Africa, Nigeria and Morocco lead in numbers. Yet, Morocco’s 12 Free Trade Zones have transformed its automotive and aerospace industries, powered by a favourable investment climate. In contrast, Nigeria’s SEZs are yet to fully realise their potential,” Oduwole noted.
Regulatory Overhaul and Policy Alignment
To address these challenges, the Ministry of Industry, Trade, and Investment is driving regulatory and fiscal reforms aimed at enhancing the competitiveness of Nigeria’s SEZs. This involves close collaboration with the Federal Inland Revenue Service, the Central Bank of Nigeria, and NEPZA to streamline fiscal, monetary, and trade policies.
Oduwole acknowledged that while SEZs have attracted over $300bn in investments and generated over N650bn in government revenue, their role in boosting exports and diversifying the economy remains underwhelming. “Nigeria’s SEZs must do more than just attract investments. They need to significantly enhance exports and drive economic diversification,” she asserted.
Obsolete Laws and Competitive Pressures
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, stressed the urgency for modernising Nigeria’s Free Zone legislation, which dates back to 1992. He argued that success should be measured by export impact, not the sheer number of zones, citing Nigeria’s non-oil exports at under $5bn annually compared to Morocco’s $40bn.
“Our Free Zone law is outdated and no longer aligns with modern economic realities. We need strategic updates to compete globally,” Oyedele said.
Revised Tax Policy and Investor Confidence
Responding to industry concerns, Oyedele disclosed that initial proposals to tax Free Zone businesses exporting up to 25 per cent of their goods to Nigeria’s Customs Territory have been revised. The new policy exempts 100 per cent of exporters from taxation, with taxes only applicable to domestic sales.
He also highlighted global tax compliance obligations, stating that multinational companies operating in Nigeria must pay a minimum of 15 per cent corporate tax either locally or in their home countries. To prevent revenue losses, the government is considering a “top-up tax” to ensure Nigeria receives its fair share.
Strategic Reforms to Boost SEZ Competitiveness
Lagos State Governor, Babajide Sanwo-Olu, represented by Commerce Commissioner Folashade Ambrose-Medebem, emphasised the need for strategic reforms to fully harness the potential of SEZs. He identified infrastructure development, access to financing, regulatory harmonisation, and globally competitive policies as critical enablers.
Citing the Lekki Deep Sea Port and the Lekki Free Trade Zone, Sanwo-Olu highlighted their potential to enhance exports, reduce import dependency, and improve supply chain efficiency.
Policy Consistency and Regional Competition
However, Nabil Saleh, Chairman of the Nigerian Export Economic Zones Association (NEZA), warned that inconsistent policies and overlapping regulatory mandates are major obstacles to SEZ growth. He cautioned that Nigeria risks losing investments to neighbouring countries offering better incentives.
“Countries across Africa are aggressively updating their SEZ policies to attract global investors. If Nigeria doesn’t remain competitive, investors will take their funds elsewhere while still leveraging the African Continental Free Trade Area (AfCFTA) to reach Nigerian consumers,” Saleh cautioned.
Path to Industrialisation and Future Growth
Dr. Femi Ogunyemi, Managing Director of NEPZA and Council Member of the World Free Zone Organisation, reiterated that SEZs are central to Nigeria’s industrialisation strategy. However, he revealed that SEZ exports are growing at a sluggish rate of 0.79 per cent annually, compared to non-oil domestic exports growing at 3.26 per cent.
Ogunyemi called for policies that bolster investor confidence and streamline business processes, especially under the AfCFTA framework, which recognises SEZ-produced goods for intra-African trade.
Meanwhile, Bamanga Jada, Managing Director of the Oil and Gas Free Zones Authority (OGFZA), highlighted emerging investment opportunities, including a Compressed Natural Gas conversion centre in Onne/Ikpokiri aimed at reducing logistics costs by up to 70 per cent while promoting cleaner energy.
Jada also revealed plans to establish Liquefied Petroleum Gas processing plants in the Onne and Liberty Free Zones, projecting that these facilities will provide clean cooking gas for over 200,000 households.
The Road Ahead
As Nigeria seeks to revitalise its SEZs amid regional competition and global economic shifts, the government’s reform agenda will be pivotal. However, translating policy promises into actionable growth will require consistent implementation and strategic collaboration with industry stakeholders.
The SEZs’ success could play a transformative role in Nigeria’s quest for economic diversification and industrialisation. But to achieve this, the country must first tackle regulatory bottlenecks, enhance policy consistency, and create a more investor-friendly climate.
About The Author
