In Nigeria, free zones serve as significant and profitable locations that draw in foreign companies and give locals job opportunities.
Nigeria is excellent for both aspiring business owners and seasoned industry professionals. Nigeria's population is expanding at a pace of 3% annually, making it one of the "Next Eleven" nations identified by Goldman Sachs as having the potential to have the largest economy in the world. The Nigerian government has proposed several incentives for international investors. The free trade zone in Nigeria is one such action made by the government.
Free Trade Zone
Free Zones (FZs) is also known as export processing zones (EPZs). These areas have different rules than the rest of the country. There is a give-and-take relationship between the government and the business in these zones in Nigeria. Suppose a company commences in any of the free trade zones. In that case, they are exempt from the customary laws and rules of the government applicable all over Nigeria, especially in the field of taxes and customs duties.
In return, the government anticipates that the abovementioned companies would help the country's economic growth and boost national exports.
The List of Free Trade Zones in Nigeria
According to the services offered in the free zone, an entrepreneur can decide which free trade zone in Nigeria he wants to incorporate his business into. While some free zones are more suited to a specific industry, others are more all-purpose. learn more about the 6 steps guide on registering a company in Nigeria with the CAC. In Nigeria, there are 17 free zones from which to choose.
To manage the general and specialized Export Processing Zones in Nigeria, the government has formed two bodies to oversee the workings of the various companies in these free zones. These are
- Nigerian EPZ Authority (NEPZA) for all the general-purpose export Free Zones
- OGEFZ Authority is dedicated to the Oil and Gas Free Trade Zone (OGEFZ)
A business can avail of many benefits offered by the EPZs, making the EPZs one of the most important methods to attract FDI into the country and promote technology transfer. Since the creation of free zones in Nigeria, more than 350 enterprises have been licensed to free zones and to operate under Nigeria's various EPZs.
Benefits of Nigerian Free Trade Zones
One can get many advantages by establishing a business in EPZ of Nigeria. These are as follows:
- The enterprises established in EPZs are exempt from any legal provisions relating to taxes, levies, tariffs, and applicable foreign exchange laws.
- All foreign capital investments, along with their capital gains, may be sent back at any time.
- Foreign investors may send any profits and dividends they get back to their home country.
- A company does not need an import or export license if established in one of the FTZs.
- A business operating in the free zone can sell 25% of its overall output into Nigeria by acquiring legitimate permission and paying the necessary charges.
- The company under construction is not required to pay any rent throughout the construction phase. Instead, the rent will be decided by NEPZA once the company starts operating.
- Depending on the type of business and the decisions of the relevant government, foreign ownership of a company up to 100% is allowed.
- A business founded in a free zone is permitted to hire competent employees and managers from abroad.
- The NEPZ has liberalized regulations and simplified the approval and investment processes in EPZs.
- In Nigeria, EPZs are close to seaports, have good road connections, and are connected to several airports.
- Nigeria has a sizable consumer market, and it is still expanding. Additionally, it has numerous trade agreements with multiple international economic organizations.
- One of the main advantages of forming a business in an EPZ is that the Nigeria Export Processing Zone Act forbids employees from organizing any lockouts or strikes during the 10 years of the official opening of a company.
- All approved businesses created in EPZ are exempt from the expatriate quota, according to NEPZ legislation. However, according to the expatriate quota, a company can only engage an expatriate if competent Nigerians can fill the post.
How to Set Up A Free Trade Zone Company in Nigeria
To set up a company in the free trade zone, a businessman needs to take specific steps that are standard for all the country's free zones. These steps are given below:
Fill out The Application Form
Fill up the application form, which can be downloaded online, and collect it from the free zone administration office or the Nigeria Export Processing Zone Authority (NEPZA) headquarters in Abuja.
Review of the Application
Submit the completed application form to the Zone Administration or NEPZA Office 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 rejected.
Issue the License
If the application is approved, the Administration of the Free Zone will issue an Operating License (OPL). After acquiring the OPL, the Free Zone Administration will discuss your site location and assign/reserve a space for you.
Obtain the Importation Certificate
Receive a Certificate of Importation through one of the various banks in the zone. Learn more about the guide to opening a business bank account in Nigeria.
Start Working on the Warehouse
You can start building your office or warehouse in the space allotted. The investors 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 be at most 70% of the leased land, and construction should start within three months after the execution of the agreement.
Get Permission if Required
Move in and operate. Several companies may require to obtain permission for their foreign nationals and employees. This can be done at the immigration desk offices in the free zones.
Setting up a business in an EPZ in Nigeria is a very profitable alternative for both local and international business owners because of the advantages of the numerous free zones previously stated. You should use a professional advisor's business consulting services to make starting a business hassle-free.
If you're looking for such consultants, Business Setup Worldwide can assist. At BSW, we can help you form a business in your free zone and offer several other services that will enable you to establish a solid foundation in the commercial world. Please contact us for more information on setting your business in a free zone.
How many free zones are there in Logos?
9 free zones.
How many licenses are there in Nigerian free trade zones?
Free Zone Developers License
Free Zone Enterprise License
Export Processing Factory/Export Processing Farm License
How long is a free trade zone license active in Nigeria?
For a single year.