Investing in Nigeria is a great opportunity for both budding entrepreneurs and established people in business alike. Considered as one of the “Next Eleven” (countries that have been acknowledged as the having the potential to be the world’s largest economy) by Goldman Sachs, the population of Nigeria is growing at a steady rate of 3% per annum. Looking at the tremendous growth potential, the government of Nigeria has announced various incentives for foreign investors. One such step taken by the government is the establishment of the free trade zone in Nigeria.
What is a Free Trade Zone?
Free Zones (FZs) is also known as export processing zones (EPZs). These are specific areas which have a different set of rules than the rest of the country. There is a give and take relationship between the government and the business that has been set up in these zones in Nigeria. If a business commences in any of the free trade zones, they are exempt from the normal laws and rules of the government which are applicable all over the country of Nigeria, especially in the field of taxes and customs duties. In return, the government anticipates that the companies mentioned aboves will help the economic growth of the country and boost the national exports.
List of Free Trade Zones in Nigeria
An entrepreneur can choose the free trade zone in Nigeria in which he wishes to incorporate his company according to the services provided in the free zone. Some of the free zones are more suitable to a particular kind of industry whereas others are more general. A businessperson can choose from 17 free zones in Nigeria, which are:
- Aluminium Smelter Company Free Trade Zone
- Onne Oil and Gas Free Trade Zone
- Enugu Industrial Park (Free Zone Status)
- Ibom Science & Technology Park Free Zone
- Maigatari Border Free Trade Zone
- Nigeria International Commerce city
- Ogun-Guangdong Free Trade Zone
- Illela International Border Market
- Snake Island Free Trade Zone
- Tinapa Resort & Leisure Free Trade Zone
To manage both the general and specialized Export Processing Zones in Nigeria, the government has formed two bodies which would oversee the workings of the various companies in these free zones. These are namely:
- Nigerian EPZ Authority (NEPZA) for all the general purpose export Free Zones
- OGEFZ Authority dedicated to the Oil and Gas Free Trade Zone (OGEFZ)
A business can avail many benefits offered by the EPZs, and this makes the EPZs one of the most important method to attract FDI into the country and promote technology transfer. Since the creation of free zones in Nigeria, there are more than 350 enterprises which are licensed to free-zones and are operating under the various EPZs of Nigeria.
Benefits of Free Trade Zones in Nigeria
There are several benefits which can be utilized by an enterprise when it is set up in an EPZ in Nigeria. These benefits are:
- Any legislative provision related to taxes, levies, duties and any foreign exchange regulations which are applicable in the country will not apply to the companies’ set up in EPZs.
- At any time, it is possible to send back all the foreign capital investment with capital appreciation of the investment.
- If any profits and dividends earned by foreign investors, they can be remitted back to the home country.
- If a company is set up in any of the FTZs, they do not require any import or export license.
- 25% of the total production of a business in the free zone may be sold in Nigeria by obtaining a valid permit and by payment of the required duties.
- At the construction phase, the business in construction does not need to pay any rent. When the company commences its operations, the rent will be determined by NEPZA.
- Foreign ownership of a business up to 100% is permitted depending upon the nature of business and the rulings of the concerned authority.
- A company established in the free zones can employ foreign managers and qualified personnel.
- The NEPZ has implemented liberal Regulations and has eased the investment and approval process in EPZs.
- EPZs in Nigeria are at proximity to seaports and have extensive road linkages and are also linked to various airports.
- Nigeria has a huge consumer market, and this market reach is still growing. It also has many trade agreements with many global economic organizations.
- One of the biggest benefits of incorporating a company in EPZ is that the Nigeria Export Processing Zone Act prevents an employee from conducting a work strike or any lock-outs within ten years of the inauguration of a business.
- The regulations of the NEPZ state that all the companies which are licensed companies established in EPZ will be exempt to the expatriate quota. The expatriate quota states that in case any qualified Nigerians are present which can potentially occupy a position in a business, then the business cannot hire an expatriate for the job.
How to Set Up a Company in the Free Trade Zones in Nigeria
To set up a company in the free trade zone, a businessman needs to take specific steps which are standard for all the free zones of the country. These steps are given below:
- Fill up the application form, which can be downloaded online, collect from the free zone administration office or the headquarters of Nigeria Export Processing Zone Authority (NEPZA) in Abuja.
- Submit the completed application form in the Zone Administration office or NEPZA Office in with the required Project Plan/Feasibility Study. The application will be reviewed within five working days, and at the end of this process, the application may be accepted by the administration or may be rejected.
- If the application is approved, an Operating License (OPL) will be issued to you by the Administration of the Free Zone. After acquiring the OPL, the Free Zone Administration will discuss your site location and assign/reserve a space for you.
- Receive a Certificate of Importation through one of the various banks located in the zone.
- You can start building your office or warehouse in the space allotted to you. Those investors who are constructing their buildings must submit four copies of full architectural drawings for approval by Zone Management. They should also take care that the built-up spaces should not exceed 70% of the leased land, and construction should start within three months after the execution of the agreement.
- Move in and operate. It is possible that several companies may require to obtain permissions for their foreign nationals and employees. This can be done at the immigration desk offices in the free zones.
The benefits mentioned above offered by the various free zones make setting up a business in EPZ in Nigeria a very lucrative option for both domestic and foreign entrepreneurs. To make setting up a company a hassle-free process, you should take avail the business advisory services of an expert advisor.
If you are looking for such advisers, you should take the help of “Business Setup Worldwide”. At BSW, we can help you to set up a company at the free zone of your choice and will also provide with various other services which would help you plant a firm foot in the business environment. For more details on how to set up your company in a free zone, do contact us – we’d be happy to help.