Blacks’ Law dictionary defines a free-trade zone as ‘a duty-free area within a country to promote commerce, especially transshipment and processing, without entering into the Country’s market’. Blacks’ Law dictionary also defines duty in relation to a free-trade zone as – A tax imposed on a commodity or transaction, particularly on imports. The duty (tax) in this sense is imposed on things and not on persons.
In other words, a free trade zone, also known as an Export Processing Zone, is a class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and re-exported under specific customs regulation and generally such goods are not subject to customs duty. Free trade zones (FTZs) are usually organized around major seaports, international airports, and national frontiers – areas with many geographic advantages for trade.
The body in charge of overseeing the activities of the free trade zones in Nigeria is called the Nigeria Export Processing Zones Authority (NEPZA), and it is established under the Nigeria Export Processing Zone Act Cap N107 Laws of the Federation of Nigeria 2004.
NEPZA oversees all the activities of the Free Trade Zones (FTZ) by being the co-ordinator of other government agencies in their relations with enterprises approved to operate in Free Trade Zones. These enterprises are known as Approved Enterprises. Governments and agencies whose approvals or permits are required for the proper conduct of activities within the Free Trade Zone include the Nigeria Customs Service, Nigeria Port Authority, Central Bank Of Nigeria, Federal and States’ Revenue Services, Nigeria Police Force, Nigeria Immigration Service, State Governments etc.
Free Trade Zones in Lagos State
Lagos State is ranked 2nd among the 36 States in Nigeria in the 2018 World Bank Ease of doing Business in Nigeria Report. At 3,577Km, Lagos State hosts 9 (nine) FTZs in Nigeria. The 9 are:
- Airline Services EPZ,
- North West Quadrant Lekki Free Trade Zone (Alaro City),
- Dangote Industries Free Zone (Dangote FZ),
- Ladol Free Trade Zone,
- Lagos Free Trade Zone (Lagos FTZ),
- Lekki Free Zone (Lekki FZ),
- Nigerian Aviation Handling Company (NAHCO),
- Nigeria International Commerce City (Eko Atlantic City)
- Snake Island Integrated Free Zone.
Most of the Free trade zones outlined above are not fully active as they are yet to fully develop requisite infrastructure. However, a couple of the free trade zones in Lagos state are operational and fully active. They are, Lagos Free Trade Zone and Lekki Free Trade Zone.
Lagos Free Zone (LFZ), a private owned zone, is an 850-hectare industrial development, a fully functional special economic zone located 65km East of Lagos in the Ibeju-Lekki axis, the commercial hub of Africa’s largest economy.
There are 23 business entities operating within LFZ, including international brands such as Kellogg’s and Colgate.
It is also worthy of note that there is an ongoing construction of the Lekki Deep Sea Port, a multi-purpose, deep sea port at the heart of the Lagos Free Trade Zone, projected to be one of the most modern ports in West Africa, offering enormous support to the burgeoning commercial operation across Nigeria and the entire West African region. The Lekki Deep Sea Port is scheduled to be operational by the fourth quarter of 2022 and has been projected to attract further investments into the Zone. The Lekki Deep Sea Port and the Lagos Free Zone’s combination offers a unique commerce ecosystem to traders and manufacturers in Nigeria.
Another Free trade zone in Lagos State is the Lekki Free Trade Zone, which is managed by the Lekki Free Zone Development Company (LFZDC). It was established in 2006 as a joint venture among the China-Africa Lekki Investment Ltd, Lagos State Government and Lekki Worldwide Investments Limited.
Procedure for Investing in Lekki Free Trade Zone (LFTZ)
To invest in the LFTZ, you must take the following steps:
- Initial requirements:
- The applicant must submit the written application to Lekki Free Zone Development Company.
- After the submission of the application, the applicant will receive the Memorandum of Understanding which itmust execute.
- Registration of the companies:
- All the applicants and investors need to complete and submit application forms along with the other supporting documents.
- Applicant must pay a non-refundable registration fee whose amount will be decided according to the investor’s investment industry
- The LFTZ will issue a Provisional Approval Letter and later the Operating License to the applicant.
- Execution of the Investment Agreement and issuance of land sub–lease certificate:
- Investment Agreement and other necessary documents are to be notarized by the applicant before submitting.
- Land Sub-Lease Certificate is issued to the investor by LFZDC upon payment of the land lease fee.
- The documents received, such as the Land Sub-Lease Certificate and other necessary documents are to be notarized.
- Development and Construction of the Investment Project:
- The investor will have to submit the construction plan and design scheme of the investment project in the Zone within six months from the date of issuance mentioned in the Land Sub-Lease Certificate.
- LFZDC provides a Letter of Approval for the construction plan and design scheme after performing a review.
- Construction of the investment project is initiated within 12 months from the date of issuance of the Letter of Approval.
- The onsite inspection is made before the installation of all the equipment. If all is found suitable, the approval is given.
- Lastly, the investor must apply for a permit to commence production.
Benefits of operating in the Free Trade Zones in Lagos State.
The benefits that accrue to approved entities of FTZ in Lagos are:
- Complete holiday from all Federal, State and Local Government Taxes, Rates, and Levies.
- Duty free importation of capital goods, machinery/components, spare parts, raw materials and consumable items in the zones.
- 100% foreign ownership of investments and 100% repatriation of capital, profits and dividends.
- Waiver of all imports and export licenses and waiver on all expatriate quotas.
- One-stop approvals for permits, operating license and incorporation papers.
- Permission to sell 100% of goods in the domestic market; save raw material – (customs shall apply).
- The FTZ offers rent-free lands during the first six (6) months of construction (for government owned zones) and delays in the movement of goods and services are minimized.
The operational free trade zones in Lagos State are amongst the most active free trade zones in the country. With procedures highlighted above for ease of doing business amongst other incentives, Lagos state prides itself as the highest investment stop for foreigners and others who are interested in doing business, and as such should be the first choice for investors looking to do business in any of the free trade zones in Nigeria.