The Nigeria Export Processing Zones Authority (NEPZA), has said that the country’s Free Trade Zones are business anchorages that have for decades, been used to generate revenues for the Federal Government.

Managing Director, NEPZA, Dr. Olufemi Ogunyemi, made this remark yesterday in Abuja. According to him, the widely held notion that the scheme was a ‘free meal ticket’ for investors, thereby denying government revenues, is incorrect.

He said this clarification has become necessary to correct the misunderstanding by individuals and entities, on the nature of the scheme, adding that they are prepared to enhance public knowledge on the principal reason for the country’s adoption of the scheme by the NEPZA Act 63 of 1992.

He further explained that a policy shift on the operations of the scheme might hurt the economy, adding that the law backs the incentives and waivers enjoyed by investors.

“The Free Trade Zones are not hot spots for revenue generation, rather they exist to support the social-economic development which includes but are not limited to industrialisation; infrastructure development; employment generation; skills acquisition; foreign exchange earnings as well as inflows of Foreign Direct Investments. The NEPZA Act provides an exemption from all federal, state, and local governments taxes, rates, levies, and charges for FZE, of which duties and VATs are part.”

“However, goods and services exported into Nigeria attract duty, which includes VAT and other charges. In addition, NEPZA collects over 20 types of revenues ranging from $500,000 declaration fees, $60,000 Operation License (OPL) renewal fees between three and five years. There is also the 100-300 USD examination and documentation fees per transaction which occurs daily. There are other periodic revenues derived from Vehicle Registration, Visa among others. The operations within the free trade zones are not free in the context of the word.’’

He reiterated that the global business space has contracted significantly; adding that to win a sizable space would require the ingenuity of the government to either expand or maintain the promised incentives. “These incentives, coupled with NEPZA’s streamlined approval processes and investor-friendly policies, will encourage more multinationals and local investors to leverage on the scheme which has a cumulative investment valued at $30 billion.

The scheme has indeed caused an influx of FDIs; it has also brought in advanced technologies, managerial expertise, and access to global markets. For instance, the 52 FTZs with 612 enterprises have, and will continue to facilitate the creation of numerous direct and indirect jobs, currently estimated to be within the region of 170,000,’’ he said.

According to him, the scheme should be seen as a tool for economic and social security as skilled, semi-skilled, and unskilled citizens are continually lifted above poverty, through its employment channels and infrastructure development across sectors.

Furthermore, he noted that it might be time to consider dropping ‘free’ from the title, saying an adjustment in the title and introduction of current global business practices would advance the scheme with an ever-increasing forward and backward linkages with a greater market offered by the Africa Continental Free Trade Agreement (AfCFTA). “We have commenced negotiations across the board to ensure the NEPZA Act is amended to give room for the adjustment of the scheme’s title from ‘Free’ Trade Zones to Special Economic Zones. This will open up the system for the benefit of all,” he said.