Nigeria has begun drafting a new regulatory framework for its Special Economic Zones (SEZs) as the Federal Government seeks to protect legitimate investors while closing loopholes that have allowed some operators to take advantage of free-zone incentives.
The Special Economic Zones Legislative and Regulatory Reform Committee began a dedicated drafting retreat in Abuja, bringing together officials from the Federal Ministry of Industry, Trade and Investment, Ministry of Justice, Nigeria Export Processing Zones Authority (NEPZA), Oil and Gas Free Zones Authority (OGFZA), Nigeria Customs Service and Nigeria Revenue Service.
The latest step follows months of consultations with government agencies and private-sector operators. The government has said the reform is not intended to remove the incentives that have attracted investment into the zones, but to make the rules clearer and prevent the scheme from being used as an alternative route into the domestic market on terms unavailable to businesses operating outside the zones.
Among the incentives expected to remain central to the framework are duty-free importation of qualifying capital goods, tax exemptions on qualifying export profits, 100 per cent foreign ownership and unrestricted repatriation of capital. The government is also examining how existing investments and current licence holders will transition into the revised regime.
A major issue under review is the proposed 75:25 export-to-domestic-sales framework, under which businesses in the zones would maintain an export-oriented model while sales into Nigeria’s customs territory would be subject to the applicable rules. The proposal follows concerns that goods produced or imported under free-zone concessions have sometimes been diverted into the domestic market while retaining advantages intended to support export-oriented investment.
The reform is also expected to clarify the responsibilities of the different regulators. NEPZA and OGFZA would retain their respective licensing and operational roles, while the Nigeria Revenue Service and Nigeria Customs Service would have clearer responsibilities for tax administration, customs control, valuation, classification and enforcement. The committee is also examining joint inspections and simplified customs exit procedures.
For businesses operating in the zones, another proposed change is a reduction in the number of regulatory interfaces. Stakeholder discussions have produced a proposed “one authority, one visit, one record” approach intended to reduce regulatory friction and make compliance easier for legitimate operators.
The overhaul is also expanding the concept of free zones beyond conventional manufacturing and physical industrial sites. Draft regulations are expected to recognise Digital Free Zones and Digital Free Zone Enterprises, with proposed licence categories including Innovator and Sandbox licences for businesses that may not require a traditional physical presence.
The changes come as Nigeria seeks to use its economic zones to attract investment, increase non-oil exports and expand productive capacity. The Federal Government has previously reported more than $200 billion in foreign investment and over ₦900 billion in domestic investment associated with the free-zone scheme, alongside more than 100,000 direct jobs.
For investors, the key issue now is how the proposed framework treats existing businesses and incentives during the transition. The regulations are still being developed, with consultations expected to continue before the legislative and regulatory framework is finalised.
