The Federal Government has expressed concern over the worrisome trend of diversion of goods produced within Free Zones by some business owners into the Nigerian Customs Territory despite enjoying fiscal incentives designed primarily for export-oriented activities in the EFZs.
The Minister for Industry, Trade and Investment, Dr. Jumoke Oduwole, who spoke about the government’s concerns about the abuses in the EFZs in the country, noted that the ugly development had created an uneven competitive environment for manufacturers operating within the Customs Territory who remained subject to the full domestic tax regime.
Speaking at the Special Economic Zones (SEZS) stakeholders’ meeting in Abuja, said the reforms were the product of a whole-of-ministry process being implemented through a whole-of-government approach involving the relevant agencies and stakeholders.
The minister disclosed that based on the negative impact of the abuses on the nation’s economy, the Federal Government had commenced a major regulatory overhaul of Nigeria’s Special Economic Zones (SEZs) with a view to restoring their original export-oriented purpose, provide greater certainty for investors and address concerns over the treatment of goods entering the domestic market.
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Oduwole recalled that during the Third Special Economic Zones Annual Meeting in February of 2025 she promised that the ministry would work to align fiscal, monetary and trade policy so that our zones remain globally competitive.
The minister clarified. “At assumption of office in November 2024, we identified the ongoing tax reform process as a critical policy development with significant implications for Nigeria’s Special Economic Zones (SEZ) ecosystem. I also stated the policy direction of the Tinubu Administration with regard to Free Zones. This stakeholder engagement forms a part of that delivery process which has been ongoing since then.
According to her, after the February 2025 engagement and recognising the need to preserve Nigeria’s competitiveness as an investment destination while strengthening fiscal accountability, the Ministry commenced extensive engagements with the Legislative and Executive arms of government, and private sector stakeholders throughout the development of the tax reform process to ensure that the impact of the tax legislations on the special economic zones scheme are aligned with President Bola Ahmed Tinubu’s Renewed Hope Agenda on the diversification of the economy through the increase of non-oil exports.
Oduwole said that the process began in February 2026 with the inauguration of the Special Economic Zones Legislative and Regulatory Reform Committee, comprising officials from the ministry’s Legal Services and Commodities and Export Departments, the managing directors of the Nigeria Export Processing Zones Authority (NEPZA) and the Oil and Gas Free Zones Authority (OGFZA), as well as their respective teams.
She identified three key regulatory instruments at the centre of the reform, namely the Nigeria Export Processing Zones Authority Regulations and Operational Guidelines for Free Zones in Nigeria, 2025; the Nigeria Export Processing Zones (Domestic Sales, Fiscal Alignment and Customs Treatment) Regulations, 2026; and the Oil and Gas Export Free Zones (Domestic Sales, Fiscal Alignment and Customs Treatment) Regulations, 2026.
The minister said the reforms were designed to bring greater clarity to the legal and fiscal framework governing free zones without undermining the incentives that make the zones attractive to investors.
Noting that public discussion around free zones has increasingly centred on taxation, the minister argued that such a focus did not fully reflect the contribution of enterprises operating within the zones to Nigeria’s economy in terms of increasing production, exports, investment and employment across the scheme as evidence of the broader economic role of the zones.
Oduwole also explained that among recent investments was Health Textiles Nigeria FZE, a wholly owned subsidiary of Vestergaard and recognised by the World Health Organization (WHO), which began production of dual active-ingredient insecticide-treated mosquito nets, at the Lagos Free Zone in August 2026.
She projected that at full scale, the facility would be producing about 10 million nets annually and employ more than 600 Nigerians.
Oduwole also spoke about the Dangote Industries Free Zone at Lekki, which hosts the Dangote refinery and Africa’s largest granulated urea complex. The refinery, according to the minister, was debottlenecked in February to between 650,000 and 700,000 barrels per day.
The minister explained: “The refinery also recorded a significant increase in aviation fuel exports, reaching a reported 158,000 barrels per day in April 2026.The Lagos Free Zone has similarly attracted institutional capital, with the International Finance Corporation taking an equity position of up to $50 million in Nigeria’s first deep-sea-port-based private special economic zone.
“Across the wider free-zone scheme, the authorities record more than $200 billion in foreign investment and over N900 billion in domestic investment, alongside more than 100,000 direct jobs and an estimated 500,000 jobs when supply chains, logistics networks and host communities are included”, she added.
While acknowledging criticism from domestic manufacturers, who import similar inputs, employ Nigerian workers and pay applicable duties and taxes while competing with goods entering the Nigerian market under concessional arrangements associated with the free-zone, Oduwole assured that the planned reforms would address these problems while preserving the investment incentives and export benefits for which the zones were established.
She maintained that one major objective of the reforms would help to reinforce the export orientation of the scheme through a clearer 75 per cent export and 25 per cent domestic-sales framework, and by so doing ensuring that domestic sales receive tax treatment consistent with applicable Nigerian law.
Oduwole explained that the reforms would also establish a clearer hierarchy between primary legislation and administrative directives, stressing that administrative circulars cannot amend Acts of Parliament and that historical concessions or practices inconsistent with primary legislations could no longer form the basis for investment or regulatory decisions by the government.
