According to the World Bank, Free Trade Zones (FTZs) are duty-free areas, offering warehousing, storage, and distribution facilities for trade, trans-shipment, and re-export operations. FTZs have also been described as as a class of special economic zones, where goods may be landed, stored, handled, manufactured or reconfigured and re-exported under specific customs regulations and generally not subject to customs duty. We are more inclined to the latter definition because it expands the definition of a FTZ. We surmise that a FTZ is an economic model designed to improve the socio-economic development of the FTZ FTZ's host by the FTZ attracting local and foreign investors through vast tax and reduced-regulation incentives.
Historically, the first ever FTZ is traceable to the Greek Island of Delos in 166BCE. Today, over 50 countries in several continents are mining the benefits and advantages of FTZs. In Nigeria, there are 34 FTZs in 17 of Nigeria's 36 States and Federal Capital Territory. About 17 of the 34 FTZs are currently active. They include: Alaro City, Airline Services EPZ, Aluminium Smelter Company FTZ, Calabar FTZ, Dangote Industries Free Zone, Kano FTZ, LADOL Free Zone, Lagos FTZ, Lekki FTZ, Maigatari Border FTZ, Nigeria International Commerce city, Ogun-Guangdong FTZ, Onne Oil and Gas Free Trade Zone, Senbore Farms EPZ, Snake Island FTZ and FTZ and Tinapa Resort & Leisure FTZ.
FTZs in Nigeria are regulated by the Nigeria Export Processing Zones Authority (NEPZA). NEPZA oversees all the activities of FTZs by being the one-stop shop or coordinator of other government agencies in their relations with enterprises or businesses approved to operate in FTZs. These enterprises or businesses are known as Approved Enterprises. Government agencies that are typically interested in the activities in the FTZ 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, to mention a mention a few.
The sweeping attraction of Nigeria's FTZs is to be found in Sections 8 and 18(1) of NEPZA's establishing statute, the NEPZA Act, which exempts Approved Enterprises from all Federal, State and Local Government taxes, levies rates and foreign exchange regulations. Section 24 of the Act makes all other laws applicable, unless they have been specifically exempted by the NEPZA Act or the relevant law.
Lagos State Leads Again:
La Lagos State is ranked 2nd among the 36 States in Nigeria in the 2018 World Bank Ease of doing Business in Nigeria Report. At 3,577Km2, Lagos has less than 0.4% of Nigeria's 923,768km2 landmass. Lagos State however hosts 9 (nine) of the about 17 active FTZs in Nigeria. The 9 are, the: Airline Services EPZ, North West Quadrant Lekki Free Trade Zone (Alaro City), Dangote Industries Free Zone (DangoteFZ), Ladol Free Trade Zone, Lagos Free Trade Zone (LagosFTZ), Lekki Free Zone (LekkiFZ), Nigerian Aviation Handling Company (NAHCO), Nigeria International Commerce City (Eko Atlantic City) and Snake Island Integrated Integrated Free Zone. 4 (four) of these FTZs are located within the Lagos Lekki corridor, they are: Alaro City, DangoteFZ, LagosFTZ and LekkiFZ The Lekki corridor occupies 755km2 or 75,500hectares of Lagos' 357,700hectares. The Alaro City, DangoteFZ, LagosFTZ and LekkiFZ all share 16,500 hectares of land reserved by the Lagos State Government. The 4 FTZs make the Lagos Lekki corridor the largest host of FTZs in West Africa.
Appreciating the Lekki Four:
The Rendeavour Group is the developer of Alaro City. The concept of this FTZ seeks to harness the potentials of the ever-growing Lagos population, currently estimated at about 21million, about 10% of Nigeria's estimated 201 million population. Alaro City's concept is to accommodate this population by providing office, residential, educational, medical and industrial real estate opportunities within its 1,000 (potentially 2,000) hectarage. Alaro City is a joint venture development with the Lagos State Government (the State Government has a 40% non-controlling interest) and rides on the back of Rendeavour's status as Africa's la largest urban settlement developer, with footprint in the 4 other African countries of: Democratic Republic of Congo, Ghana, Kenya, and Zambia. The mixed used and multi-tenanted design of the Alaro City positively sets its apart from all other FTZs in Nigeria.
DangoteFZ houses a refinery and fertilizer plant that is projected to be the world's biggest single-train facility, upon completion. According to the promoters, the refinery, upon completion, will sustain the ever-demanding need for fuel in Nigeria and its proximate countries, thereby averting excessive avoidable importation costs.
The LagosFTZ, developed by the Tolaram Group, is acclaimed the first private owned FTZ in Nigeria. The FTZ was licenced in 2002 and sits on about 800 hectares.
The The LekkiFZ 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.
The FTZs in the Lekki corridor boast of the same benefits as other active FTZs in Nigeria. The Lagos State Government's avowed dedication to infrastructural development in the area gives the Lekki corridor greater advantages. Some of the promised developments include the Lekki Deep Sea Port which is under construction with an estimated time to complete set at 2022, the approved Lekki International Airport, the proposed coastal highway and the ongoing expansion of the Lekki-Epe expressway. Other transportation infrastructure needs of the area include the expansion of the Epe/Ijebu Ode (Poka) inter-States road and a possible single carriage mono-rail project on the Lekki/Epe expressway to ease mass transportation.
La Lagos State's pace-setting trend in internally-generated revenue (IGR) is not unconnected with the size and growth of its economy. At over US$130billion, it is the fifth largest economy in Africa. But then, it can still do more, for example, where it adequately concentrates on bridging the infrastructural deficit in the Lekki corridor and aid the Lekki 4 in maximising their potentials. At a little more than US$1billion in IGR in 2018, a focused Lagos could have easily done above US$2.5billion if its about 10million actively employed population with a GDP per capita of about US$5,500 is taken into full account. This is without without adding an additional 2million direct and indirect employment that the Lekki 4 can create when they operate at optimum (and not even maximum) capacity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.