The Federal Government has moved to tighten the regulatory framework governing Nigeria’s Special Economic Zones (SEZs), with measures aimed at curbing the diversion of goods benefiting from Free Zone concessions into the domestic market.

Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, disclosed this as the Special Economic Zones Legislative and Regulatory Reform Committee commenced a dedicated drafting retreat to translate ongoing stakeholder consultations into revised legislative and regulatory instruments.

The retreat brings together the Federal Ministry of Justice, Federal Ministry of Industry, Trade and Investment, Nigeria Export Processing Zones Authority (NEPZA), Oil and Gas Free Zones Authority (OGFZA), Nigeria Customs Service and Nigeria Revenue Service (NRS).

Stakeholder presentations by the Nigeria Economic Zones Association (NEZA), National Single Window, Customs and NRS opened the retreat, with issues raised during the September 17 stakeholder engagement now being considered in the drafting process.

Oduwole said the reform was not intended to dismantle the Free Zones regime or withdraw incentives that have historically attracted investment into the country.

She said legitimate incentives, including duty-free importation of capital goods, tax exemption on qualifying export profits, 100 per cent foreign ownership and unrestricted repatriation, would remain central to the framework.

“A Free Zone cannot become an alternative route into the Nigerian domestic market on terms unavailable to manufacturers operating in the Customs Territory,” the minister said.

“But this is not an argument against Free Zones. It is an argument for protecting them. Legitimate investors who have committed capital to Nigeria deserve certainty. The rules must be clear. Institutional responsibilities must be clear. Customs and tax treatment must be predictable. And lawful incentives must remain defensible.”

The reform follows renewed scrutiny of the integrity of the Free Zones scheme after recent enforcement actions by the Nigeria Customs Service involving allegations that goods brought in under Free Zone concessions were subsequently diverted into the domestic market.

The minister said the government’s objective was to address such weaknesses without undermining investors and operators that had complied with existing rules.

“The choice before Nigeria is not between preserving the Free Zones scheme and dismantling it. It is whether we can preserve what works, correct what does not and build a framework capable of serving the economy we are becoming,” she said.

Oduwole said the participation of Customs and the NRS as core members of the drafting committee was deliberate, given their roles in implementing customs and tax provisions under the new framework.

Among the issues being examined are the treatment of existing investments and transition arrangements for current licensees, the proposed 75/25 export and domestic-sales framework and its possible phased implementation, customs coordination and joint inspections, simplified Customs exit procedures, foreign exchange and tax reporting, as well as the treatment of services provided within Free Zones.

The reform is also seeking to reduce multiple regulatory interfaces, with NEPZA and OGFZA retaining their coordinating responsibilities within their respective statutory mandates.

A key principle emerging from stakeholder discussions is the call for “one authority, one visit, one record” to reduce regulatory friction for businesses operating in the zones.

Oduwole described the principle as a useful test for the final implementation framework.

The reform also seeks to expand the Free Zones framework to digital businesses.

For the first time, the draft regulations expressly recognise Digital Free Zones and Digital Free Zone Enterprises, with proposed licence categories including Innovator and Sandbox licences for businesses that may not require conventional physical presence.

The development follows President Bola Ahmed Tinubu’s directive to move the Digital Free Zones initiative into implementation, with a roadmap for full launch within 180 days.

NEPZA has licensed Itana as Nigeria’s first Digital Free Zone, while the Africa Finance Corporation is backing the $500 million Itana Innovation project at Alaro City.

Oduwole said Nigeria’s export ambitions must extend beyond physical goods, noting the growing importance of technology, financial and professional services, creative products, intellectual property and other digitally delivered services.

She added: “Nigeria’s future exports will not only leave our ports in containers. Nigerian companies increasingly export technology, financial and professional services, creative products, intellectual property and other digitally delivered services.

“A modern Special Economic Zones regime must be able to attract those businesses as deliberately as it has historically sought to attract manufacturers.”

The minister said the reform was aligned with the Renewed Hope Agenda and the Federal Government’s efforts to expand Nigeria’s productive base, increase non-oil exports and create jobs.

Speaking, NEPZA Chairman, Hadi Mutallab, said the reform would strengthen the integrity of the scheme while ensuring that legitimate operators were protected during the transition.

Executive Secretary of the Nigeria Economic Zones Association, Toyin Elegbede, welcomed the consultative process, saying operators wanted reforms that addressed genuine regulatory gaps without creating uncertainty for existing investments.