The Lagos Free Zone offers top-tier infrastructure and strategic advantages for Nigerian market investors. By Tejaswi Avasarala
Nigeria, Africa’s largest country, is rapidly establishing itself as one of the most promising business locations globally. Nigeria’s promising economy boasts numerous sectors that are ripe for development and investment. In this article, we’ll delve into the burgeoning business opportunities in Nigeria and provide valuable insights on how to thrive in its dynamic business climate, whether you are an experienced trader, manufacturer, or investor looking to make a strategic entry. One interesting way new investors can access the best of the Nigerian market is through special economic zones, such as the Lagos Free Zone (LFZ). LFZ, which was established in 2012, is an 850-hectare state-of-the-art private free zone in Nigeria. Integrated with Nigeria’s deepest seaport, Lekki Port, LFZ is positioned as the premier investment destination in the region, attracting local and international investors with a deployed investment of USD 2.5 billion. Offering world-class infrastructure, facilities, and services, LFZ boasts a self-sustaining ecosystem for business operations, including grade-A warehouses, industrial factories, serviced apartments, and a comprehensive array of amenities. With its strategic location in the Lekki Industrial Corridor and a single-window clearance system, LFZ presents unparalleled ease of doing business, unlocking vast economic opportunities for foreign investors in Nigeria and West Africa.
The Board of Directors of Tolaram, one of Nigeria’s leading conglomerates, has appointed Adesuwa Ladoja as the Managing Director/Chief Executive Officer of the Lagos Free Zone (LFZ) Company, one of its subsidiaries.
In a statement issued by the Board of Directors to its stakeholders, the appointment is effective July 1, 2024.
Adesuwa Ladoja takes over from Dinesh Rathi, who has been moved to the position of Group Finance Director of Tolaram.
The Nigeria Export Process Zones of Authority (NEPZA) said that the Free Trade Zones only generated N11.1 billion between 2020 and 2023 as against the earlier N11.11 trillion erroneously captured in the Authority’s submission to the Senate Committee on Trade and Investment.
Dr Olufemi Ogunyemi, Managing Director of the Authority on Monday in Abuja described the initial quoted figure as a regrettable ` typographical mishap.’
Dr Ogunyemi, also the Chief Executive Officer of NEPZA, therefore, stated that the sum of N377.33 million was generated in 2020 while N3.11 billion accrued to the Federation Account in 2021 from the scheme.
According to him, the total remittances from the scheme in 2022 stood at N3.44 billion while an impressive N4.170 billion came through in 2023.
“The attention of the management has been brought to the news making around that the Authority remitted a whopping sum of N11.11 trillion to the Federation Account as at October 2023. This piece of information was a classical typograph error and it is regrettable.
“Let me emphatically state that the remittances from the Free Trade Zones from 2020 to 2023 stood at N11.1 billion only. We are however making good progress to take the scheme to that point where it can generate such huge revenue for the government.
“For instance, in 2023, the Nigeria Customs Service (NCS) generated ₦59.38 billion, and the Immigration Services received ₦828.7 million from the free trade zones while the Nigerian Ports Authority (NPA) garnered ₦8.738 billion from the sub-sector,’’ he said.
Dr Ogunyemi also explained that the Authority was gradually transforming the scheme to become the country’s sustainable economic gateways, adding that more efforts and support were needed to position the scheme for greater exploit.
“The Nigeria Export Processing Zones Authority (NEPZA) is the major driver of Government’s initiative to diversify the Nigerian economy. With attractive investment packages and a focus on economy-driven sectors, NEPZA provides investment opportunities in different sectors across the country.
“At the moment, the scheme focuses on three critical investment areas which included Manufacturing 45 per cent, Services 30 per cent, and Oil & Gas with 11 per cent active investment exploitation,’’ Dr Ogunyemi said.
The scheme currently has 53 Free Trade Zones habouring 580 enterprises with a cumulative USD30 billion.
The Authority collects 20 types of revenues ranging from 500,000 USD-Declaration fees, 60,000 USD Annually as Operation License (OPL) and 300 USD to 500 USD Registration fees in line with extant regulations on IGR.
There is also 100 USD to 300 USD Examination and Documentation fees per transaction, which occurs on a daily basis.
(right): H.E. Abdel Fattah al-Sissi – President of the Arab Republic of Egypt and Chairperson of the African Union and (left): Dr. Benedict Okey Oramah – Chairperson of Afreximbank launching the operational phase of the African Continental Free Trade Area at the African Union 2019 July Summit.
The 12th Extraordinary summit of the African Union which was held in Niamey on the 7th of July 2019 was a momentous occasion for Africa, as it saw the successful launching of the operational phase of the African Continental Free Trade Area (AfCFTA). The AfCFTA agreement was adopted and opened for signature on 21 March 2018 in Kigali and entered into force on 30 May 2019.
The launch ceremony included “a roll call of honour” during which the 27 countries that had ratified the instruments of the AfCFTA as at 7th July 2019 were announced, and the 28 countries which had signed but not yet ratified were also announced with only one member state, Eritrea, yet to sign. A commemorative plaque was unveiled to mark the occasion and the announcement of the selection of Ghana to host the AfCFTA secretariat was also made.
The launch of the operational phase was characterised by the adoption of five key instruments
The Rules of Origin: A regime governing the conditions under which a product or service can be traded duty free across the region
The Tariff concessions: It has been agreed that there should be 90% tariff liberalisation and the deadline is 1st July 2020. Over a 10 year period with a 5 year transition, there will be an additional 7 % for “sensitive products” that must be liberalised
The online mechanism on monitoring, reporting and elimination of non-tariff barriers, NTBs: NTBs are a great hindrance to intra African trade whether physical, like poor infrastructure, or administrative like the behaviour of customs officials. These are to be monitored with a view to ensuring they are eliminated.
The Pan-African payment and settlement system: To facilitate payments on time and in full, by ensuring that payments are made in local currency and at the end of the year there’ll be net settlements in foreign exchange. With the certainty of payments, there will be confidence in the system.
The African Trade Observatory: A trade information portal to address hindrances to trade in Africa due to lack of information about opportunities, trade statistics as well as information about exporters and importers in countries. The trade observatory will have all this information and other relevant data which will be provided by AU member states
The significance of the African Continental Free Trade Area The AfCFTA will be the largest free trade area since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050. Some of its expected benefits include:
Increasing trade among African countries which currently ranges between 15-18%.
Stimulate production through the development of regional value chains, to ensure that manufacturing, agro processing and other activities across the continent are stimulated to supply the market.
Strengthen the capacities of African companies to access and supply world markets.
Strengthen African’s economic and commercial diplomacy.
[1/4]Prime Minister of Singapore Lee Hsien Loong and Prime Minister of Malaysia Anwar Ibrahim shake hands during a ceremony to commemorate the completion of the connecting span for the construction of the Johor Bahru – Singapore Rapid Transit System (RTS) link project which connects the marine viaduct… Purchase Licensing Rights
KUALA LUMPUR, Jan 11 (Reuters) – Malaysia and Singapore agreed on Thursday to jointly develop a special economic zone (SEZ) in the southern Malaysian state of Johor, aiming to attract investments and free up movement of goods and people.
The Southeast Asian neighbours will work towards a full-fledged pact, aiming to co-operate on renewable energy and smoothing procedures from business approvals to border clearance, they said in a joint statement.
“The zone presents an unprecedented opportunity,” said Malaysia’s Economy Minister Rafizi Ramli, adding that it would boost the cross-border flow of goods and people, strengthening business, and benefit the economies of both.
Rafizi and Singapore’s trade and industry minister signed the deal at a ceremony in Johor, in the presence of the leaders of both countries.
Singapore was Johor’s second-largest foreign investor from January to June 2022, and contributed about 70% of Johor’s total foreign direct investment in manufacturing, according to the statement.
According to employment reports recorded at the end of 1402 (Iranian solar year) in the National Employment Monitoring System, the executive body of the Sirjan Special Economic Zone was able to increase its employment by 100%. employment commitment, which is determined annually. by the province’s Jobs and Investment Task Force.
In line with the commitment of 350 people to attract labor and register in the national employment monitoring system by the provincial employment task force, the Sirjan Special Economic Zone managed to register 370 people in the national employment monitoring system, which played an important role in the total employment of the city of Sirjan.
It is worth mentioning that the Sirjan Special Economic Zone is the first special economic zone created by the private sector in the country, which was established in 1992 with the permission of the Cabinet of Ministers and, despite all the difficulties in the development path, it has managed to accommodate more than fifty active industrial units. May it lead to the creation of 3,000 direct jobs in total.
London, May 19, 2024 – In an exceptional celebration of excellence and recognition at the iconic House of Lords, SOHAR Port and Freezone has received the RoSPA’s Best New International Entry Award, and the RoSPA’s Gold Sector Award for Health and Safety performance for the period of January 2023 to December 2023 by Lord Bill Jordan, Life President of the Royal Society for the Prevention of Accidents (RoSPA).
RoSPA is a not-for-profit organization patroned by His Majesty King Charles III, King of the United Kingdom that has worked for more than 100 years to exchange life-enhancing skills and knowledge to reduce serious accidental injuries. The esteemed RoSPA Awards program is celebrating its 68th year as the UK’s largest and most impactful health and safety program. With almost 2,000 entries annually from over 50 countries, impacting over seven million employees, they offer a platform to spotlight an unwavering commitment to continuous improvement and excellence in health and safety.
Commenting on this achievement, Omar bin Mahmood Al Mahrizi, CEO of SOHAR Freezone and DCEO of SOHAR Port, said, “We are honored to receive the Gold Award for Health and Safety 2023 and the Best New International Entrant Award from RoSPA. This recognition reflects our team’s and tenants’ dedication and efforts to ensure a safe and healthy work environment. It strengthens our commitment to improving standards, enhancing safety culture, and developing best practices for all stakeholders. We are proud to be part of the international awards community, setting a standard for safety and occupational health excellence.”
Rebecca Hickman, CEO of the Royal Society for the Prevention of Accidents (RoSPA), expressed her delight in welcoming Sohar Port and Freezone to society. Hickman commended SOHAR Port and Freezone’s exceptional commitment to safety excellence and their efforts to promote a safety culture among the companies within the port and freezone.
In line with this achievement, SOHAR Port and Freezone has signed an MOU agreement with RoSPA to collaborate on occupational safety training and the exchange of expertise. This partnership aims to enhance safety standards and boost operational efficiency, establishing SOHAR Port and Freezone as a benchmark in this field.-Ends-
About SOHAR Port and FreezoneAs one of the world’s most rapidly growing integrated industrial and logistics projects, SOHAR Port and Freezone capitalizes on its strategic location to cement its status as a crucial logistics hub in the region and globally. A unique collaboration between the Port of Rotterdam and ASYAD Group marks it as a key mega-project in Oman, offering a range of services including logistics, petrochemicals, metals, and the region’s first dedicated agro-terminal. With 20 over years of operation, SOHAR is the main gateway for Oman’s import and export, contributing 2.1% to the nation’s GDP and creating almost 26,000 jobs. Committed to sustainable development and advanced technology, SOHAR is modernizing logistics infrastructure in line with the economic diversification goals of Oman’s 2040 Vision. For more information on SOHAR Port and Freezone, visit soharportandfreezone.com
From Dr. Akinwumi Adesina CON; President of the African Development Bank Group, to Ngozi Okonjo-Iweala GCON; Director General of the World Trade Organisation, to Hon. Dr. Doris UzokaAnite MD, CFA; Nigerian Minister of Industry, Trade, and Investment, to Sergio Pimenta; Regional Vice President for Africa at the International Finance Corporation, the message is clear: an industrial revolution is crucial for Nigeria’s overall transformation.
Our national focus on economic development has become imperative, and industrialisation is emerging as a compelling strategy for sustainable growth and inclusive fiscal prosperity.
This is reinforced by our country’s abundant endowment of a labour surplus, scarce raw materials, growing consumer markets, and an economy in dire need of diversification.
With industrialisation as the desired outcome, prominent among effective approaches is the establishment of Free Zones.
A Free Zone (FZ), also referred to as a Special Economic Zone (SEZ), Foreign or Free Trade Zone (FTZ), Enterprise Zone (EZ), Industrial Development Zone (IDZ), or Export Processing Zone (EPZ), is a geographically defined area offering differentiated legal and regulatory framework compared to the rest of the nation, specifically designed to enhance investment attractiveness. By addressing weaknesses in the broader business environment, FZs aim to compensate for potential risks and create a more conducive climate for foreign direct investment (FDI).
Policy goals of FZs include export promotion by providing a duty-free platform for calculated importation of raw materials and machinery, as well as tax breaks for the export of finished products. They also target import substitution by increasing domestic production to reduce attendant reliance, and job creation, through attraction of businesses that generate employment opportunities within the zone. In addition, FZs facilitate foreign direct investment to leverage capital and technology transfer.
The Nigerian Export Processing Zone Authority (NEPZA) lists permissible activities in FZs as construction and light manufacturing; solid minerals & metals; oil & gas; and agribusiness & agro-allied, covering various industries: from electronics to textile, to plastics, to cosmetics, pharmaceutical products, food processing, and more.
Building and maintaining the highest quality infrastructure within Free Zones demands substantial investment in logistics networks, operations and maintenance utilities, warehousing and distribution facilities, as well as communication technology. Businesses need a clear and predictable regulatory environment, accordingly, streamlined bureaucratic processes and consistent implementation of regulations are crucial. Perhaps the most pressing challenge lies in equipping its workforce with skillsets needed to thrive in these dynamic zones. Investing in technical and vocational education programs will be essential to ensure a talent pool that can meet the required demands.
The Nigeria Export Processing Zones Authority (NEPZA) has stated it will offer startups and foreign businesses operating in free trade zones tax breaks, customs duties waiver and other incentives as part of measures to stem the growing tide of foreign business exit in the country.
The Managing Director of NEPZA, Olufemi Ogunyemi told the News Agency of Nigeria (NAN) that it was supporting businesses within its free trade zones and enclaves.He said, “This initiative aims to reduce production costs and incentivise companies to maintain operations in Nigeria. We offer a range of incentives designed to attract and retain foreign direct investment.
“These incentives include customs duty waivers, tax breaks, and deferred payments to the government at the start-up phase of businesses,’’
Offer of innovative power solutionsHe further decried the exit of multinationals and closure of businesses across the country and stated that part of Authorities’ plan includes addressing concerns raised by these companies such as increased power cost by offering innovative solutions tailored to business needs.
He noted that in exchange for these business reliefs, companies would be mandated to train Nigerians sometimes to professional level through CSR activities which he described as ‘Community Social Regeneration’.
In his words, “We are witnessing an unfortunate trend where companies are relocating due to issues like foreign exchange access and power supply. To mitigate these challenges, NEPZA is actively involved in providing power generation solutions tailored to the needs of businesses operating within its zones.”
“Now, on the flip side, like I said, it’s a handshake, so we give, and then we take. Therefore, NEPZA requests from these foreign direct investors that they employ Nigerians. They train Nigerians on skilled, semi-skilled, even sometimes up to professional level. These are statutory requirements that are part of this handshake.”
By Chris Whales, Publisher at the Journal of African Business
Atlantis SEZ north of Cape Town is targeting industries in the green economy. GRI Wind Steel South Africa is making wind towers in the blue building. Credit: ASEZ
December 2022 saw the celebration of 30 years of Special Economic Zones in Nigeria. A joint event was hosted by the African Union (AU) and the Africa Economic Zones Organization (AEZO) under the theme, “African Special Economic Zones: Engine for Resilience and Accelerator for Sustainable Industrial Value Chains Development.”
The meeting doubled as the 5th African Union Symposium on Special Economic Zones and the 7th edition of the AEZO Annual Meeting and was held in the Nigerian capital, Abuja.
An indication of the importance of the event is seen in the other partner organisations: United Nations Conference on Trade and Development (UNCTAD), the United Nations Industrial Development Organization (UNIDO), the African Development Bank (AfDB) and the German Agency for International Cooperation (GIZ).
The first African Special Economic Zone (SEZ) was launched in 1970 by Mauritius and by the end of the decade both Ghana and Senegal had followed suit. According to African Economic Zones Outlook (2021), more than 200 SEZs are currently operational in 47 African countries while a further 73 projects.
Nearly 150 000 hectares is devoted to SEZs on the continent while over $2.6-billion in investments has been made into a wide variety of sectors such as agro-processing, manufacturing and services.
Carnegie Mellon University Africa has relocated to a site within Kigali Innovation City, a zone which aims to promote digital innovation and entrepreneurial activity in Rwanda. Credit: CMU-Africa
Carnegie Mellon University Africa has relocated to a site within Kigali Innovation City, a zone which aims to promote digital innovation and entrepreneurial activity in Rwanda. Credit: CMU-Africa
Nigeria has moved on rapidly from that first foray into SEZs. Today there are six zones established and run by the federal government that serve as export-processing zones: Calabar Free Trade Zone (CFTZ), Kano Free Trade Zone (KFTZ), LADOL Free Zone, ALSCON Expert Processing Zone, Onne Oil And Gas Free Zone and the Maigatari Border Free Zone.
Altogether, licences for 52 free trade zones have been granted by the Nigeria Export Processing Zones Authority (NEPZA) but not all of them are active. Lagos has secured 18 of the licences and the Lagos Free Zone, administered by Singapore-based Tolaram, and the Eko Atlantic Free Zone are among the best known of these.
Kenya is another country with a strong focus on SEZs. A Special Economic Zones Authority (SEZA) oversees 14 SEZs in eight regions. The recently launched Konza Technopolis outside Nairobi caters to the information, communications and technology (ICT) sector.
Although the term Special Economic Zone is widely used, a number of different types of economic zones are in operation across the continent. These include SEZs, Industrial Parks (IPs), Free Trade Zones (FTZs), Export Processing Zones (EPZs) and other zones. This is why the continental body is called the Africa Economic Zones Organization.
The goals of SEZs vary from place to place, but three main motivations can be identified: to promote industrialisation or beneficiation of local resources; to boost a particular sector that has additional potential or which is not performing to expectations; to bolster and grow local economies and small, medium and micro-enterprises (SMMEs).
Textile manufacturing centre, Benjamin William Mkapa SEZ at Dar es Salaam.
Textile manufacturing centre, Benjamin William Mkapa SEZ at Dar es Salaam. The BWM SEZ was the first government-owned industrial park. Credit: Export Processing Zones Authority (Tanzania).
Industrialisation
By locating SEZs strategically in particular economic corridors and near agricultural or mineral resources, planners aim to promote agro-processing or mineral beneficiation.
Some zones are targeting energy, and more specifically renewable energy. In Egypt, the Suez Canal Economic Zone (SCZONE) in 2022 signed a preliminary agreement with Indian company ReNEW Power for 220 000 tons of green hydrogen production, with an investment value of approximately $8-billion.
This was the eighth such agreement that SCZONE has so far signed with the aim of localising and manufacturing green fuels. Some of the other partners include Maersk, Scatec and EDF Renewables.
Sector enhancement
It is to boost a particular sector that the South African province KwaZulu-Natal has announced plans to create a third economic zone. The Dube TradePort SEZ is located at the main regional airport and naturally deals in logistics and the import and export of agricultural products but also has manufacturing elements, while the port-based Richards Bay Industrial Development Zone plays to its strengths as a deepsea port and is intended to become an energy hub.
The new SEZ will have a specific focus on the clothing and textile sector and be located in towns like Newcastle and Ladysmith where enterprises in those sectors already exist.
A focus on the automotive sector defines Morocco’s Tangier Automotive City and the Tshwane Automotive SEZ in South Africa.
Supporting SMMEs
In Mozambique a mining company, Kenmare Moma Mining, has helped establish the MozParks Topuito Agro-Industrial Park in Nampula Province as an innovation centre to support startups in getting access to the value chain. MozParks, the other partner in the venture, is the developer and operator of agro-industrial parks.
As a recent AEZO newsletter noted: “In emerging markets, where they account for 90% of all firms and 50% of all jobs created, SMEs constitute the backbone of the global economy. The impact is greater in Africa, where SMEs employ almost 80% of the labour force on the continent. Although SMEs are a substantial economic force, there is still a lot of room for expansion.”
Africa and the world
The AEZO is a continental association which was founded in 2015 and now has 82 members representing 42 African countries. In 2022, the process of economic zones and their representative bodies working together went global. In May 2022, UNCTAD met with seven global, regional and national associations representing over 7 000 SEZs to launch a global alliance.
The Global Alliance of Special Economic Zones (GASEZ) aims to drive the modernisation of these zones across the world and maximise their contribution to the UN Sustainable Development Goals (SDGs). UNCTAD Secretary-General Rebeca Grynspan said, “The United Nations 2030 Agenda for Sustainable Development provides an opportunity for Special Economic Zones to attract investment by putting SDGs at the forefront of their value proposition.” source