Export processing zones (EPZs) – also known as free zones (FZs) – are areas in which businesses are exempt from the normal regime applicable in Nigeria, particularly with regard to Customs duty and tax. In return, the government expects companies operating in the EPZs to boost national exports, create jobs and help in diversifying the Nigerian economy by bringing in new activities.

There are two types of FZ in Nigeria: specialised and general. Currently the only specialised EPZ is the Oil and Gas Export Free Zone (OGEFZ), at Onne Port in Port Harcourt, Rivers State.

For the effective management of the general and specialised EPZs, two bodies have been established by law: the Nigerian EPZ Authority (NEPZA) for the general purpose export FZs and the OGEFZ Authority (OGEFZA) for the OGEFZ.

With the incentives EPZs offer to corporations, they are one of various methods used to attract foreign direct investment, increase foreign exchange earnings, promote technology transfer and develop export-oriented industry in Nigeria. Since the establishment of the enabling laws relating to EPZs, 31 EPZs have been created. Of these, 14 are operational, with nine under construction and eight awaiting approval to begin approved activities. Over 300 licensed FZ enterprises are currently operating in Nigeria’s various EPZs.


Each FZ has its own regulation which determines how it is run, and the regulatory authority is NEPZA. The OGEFZ is the only FZ that has a different regulatory authority, the OGEFZA.

The laws regulating EPZs in Nigeria are: the Nigeria EPZ Act Cap N107 LFN 2004; the Investment Procedures, Regulations and Operational Guidelines for Free Zones in Nigeria, 2004, issued pursuant to Section 10 (4) of the Nigeria EPZ Act (the NEPZ Regulations); the Oil and Gas Export Free Zone Act, 1996; the Oil and Gas Export Free Zones Regulations, 2003; the Oil and Gas Export Free Zone (Special Import Provisions) Order 2003; and the Central Bank of Nigeria Guidelines for Banking Operations in the Free Zones in Nigeria, 2016, as well as the various regulations of the EPZs.

Nigeria Export Processing Zones Act

The Nigeria Export Processing Zones Act (the Act) was promulgated to provide for the establishment of Nigerian EPZs. It stipulates that the president of Nigeria, on the recommendation of NEPZA, may designate such areas as he deems fit to be EPZs.

NEPZA was created by the Act for purposes relating to the management of all EPZs in Nigeria. It is also responsible for promoting and facilitating local and international investments in Nigeria into licensed EPZs. Since its creation and pursuant to the provisions of the Act, NEPZA has promulgated investment procedures, regulations and operational guidelines for EPZs in Nigeria. The Act also envisages private and public sector involvement, or a combination of both, in the operation and development of EPZs, albeit under the supervision of, and with the approval of, NEPZA.

Under the Act there are seven activities permissible in EPZs, namely: manufacturing of goods for export; warehousing, freight forwarding and Customs clearance; handling of duty-free goods (trans-shipment, sorting, marketing, packaging, etc.); banking, stock exchange and other financial services, insurance and reinsurance; import of goods for special services, exhibitions and publicity; international commercial arbitration services; and activities relating to integrated zones.

Activities that are considered by NEPZA to be suitable include: oil and gas logistics; electrical and electronic products; textile products; garments; wood products and handicraft; leather products; petroleum products; rubber and plastic products; cosmetics; and other chemical products.

Private general EPZs that are already operating in the country include Snake Island Integrated FZ (SIIFZ), which is the first registered EPZ in Nigeria; LADOL Free Zone, which provides onshore and offshore logistics support for hydrocarbons production and exploration; and Lekki Free Trade Zone, which is home to over 95 enterprises.


Established in January 2005, SIIFZ is a major industrial development located opposite Tin Can Island Port. It is focused on maritime and hydrocarbons services and operations. Managed by SIMCO Free Zone Company, SIIFZ offers opportunities for international businesses to participate in Nigerian and West African deepwater projects. Its mission is to operate an efficient, secure centre for Nigeria’s deepwater oil and gas industry to:

  • Support integrated services, from a single site, in exploration, development and production;
  • Enable cost-effective supply chain solutions to the benefit of all industry stakeholders;
  • Sustain investment and employment via the attraction of a strong internal market from the site and the commercial efficiency of the FZ; and
  • Promote Nigeria’s interests in deepwater oil and gas through a competitive industrial base, unmatched in scale, capability and cost efficiency in the region.

SIIFZ was created to operate a fully functional support centre for Nigeria’s deepwater oil and gas industry, through the attraction of investment and creation of employment opportunities resulting from the development of a secure, commercially effective support infrastructure, and its continued cost-efficient operation.

SIIFZ has its own port facilities, and is adjacent to the Lagos ports of Tin Can and Apapa. It also has easy access to the sea and Lagos International Airport, and its jetty offers access to the Lagos road infrastructure and its links to the rest of Nigeria.

LADOL Free Zone

Lagos Deep Offshore Logistics Base (LADOL) is a custom-built, fully integrated, secure and independent engineering and logistics base in LADOL Free Zone, set up for the provision of logistical, engineering and other support services for deepwater offshore oil and gas exploration. LADOL is strategically positioned at the entrance to Lagos harbour and provides a one-stop shop for multinational industrial and oil and gas companies operating in West Africa.

The zone is managed by Global Resource Management Free Zone Company, and accommodates a range of local and foreign enterprises.

Lekki Free Trade Zone (LFTZ) 

LFTZ is located on Lekki Peninsula in Lagos and covers 16,500 ha. It offers easy access to the existing international airport and sea port of Lagos. In May 2006 a Chinese consortium – China Civil Engineering Construction Corporation-Beyond International Investment & Development Company – entered into a joint venture with the Lagos state government and Nigerian partner Lekki Worldwide Investment to establish the Lekki Free Zone Development Company, the sole entity authorised to develop, operate and manage the LFTZ project.

LFTZ is in the south-eastern part of Lagos State, facing the Atlantic Ocean to the south and Lekki Lagoon to the north. It is bordered by 5 km of coastline and stretches 50 km from Lagos city centre. It is 70 km from Murtala Mohammed International Airport and 10 km from the proposed site of Lekki International Airport. The zone is also 50 km from Apapa Port, West Africa’s largest port.

License For Operating In An EPZ 

Any enterprise proposing to undertake an activity within an EPZ in Nigeria must first apply in writing to NEPZA for permission. NEPZA may grant a licence for any approved activity in an EPZ to an individual or business, whether or not the business is incorporated in Nigeria. The granting of a licence by NEPZA shall constitute registration for the purposes of company registration within an EPZ.

A licensed enterprise does not need to comply with the rules of local incorporation in Nigeria, which are governed by the provisions of the Companies and Allied Matters Act 1990 (which provides for the incorporation of companies and incidental matters). This is because the granting of a licence by NEPZA is evidence of a company’s registration in an EPZ in Nigeria.

In view of the above, if a foreign investor chooses to register as an FZ enterprise in an EPZ in Nigeria, the licences issued by NEPZA are only valid within the EPZs and, as a result, holders of such licences that wish to carry on business outside the EPZs are required to comply with the applicable laws outside the EPZs. Alternatively, a company may opt to register a company outside the FZ and subsequently apply for a licence to operate a registered FZ company within the FZ, as an FZ enterprise. The types of licences issued by NEPZA are:

  • Free Zone Developers Licence: granted to either a public or private entity or a combination of the two for the establishment, operation and management of an FZ in Nigeria under the supervision, monitoring and regulation of NEPZA;
  • Free Zone Enterprise Licence: granted for an enterprise to undertake an approved activity within an FZ. These activities could be manufacturing, trading or service provision; and
  • Export Processing Factory/Export Processing Farm Licence: granted to an export-oriented manufacturing enterprise or farm located in Nigeria which has the capacity to export over 75% of its production.

The NEPZ Regulations provide that any approved FZ enterprise’s investment in an approved activity within an EPZ must be of a value of at least $500,000, and the operation of the activity must not cause damage to human life and property, damage the environment, or constitute a threat to public peace and order or national security.

Customs Regulations In EPZs 

The Act legitimises the receipt in foreign currency by an approved entity of payment for goods and services supplied to customers within Nigeria. Thus foreign investors can charge for services in their own currency, and are not bound by the restrictive provisions of the Central Bank of Nigeria Act 2007 and recent regulations mandating the payment for goods and services in naira. However, for the purposes of such payment, the rules and regulations regarding the importation of goods and services into Nigeria and the repatriation of proceeds of sales or services will be applicable.

Approved entities are also entitled to import into any EPZ, free of Customs duty, any capital goods, consumer goods, raw materials, components or articles intended to be used for the purposes of and in connection with an approved activity, including any article for the construction, alteration, reconstruction, extension or repair of premises in an EPZ or for equipping such premises.

However, notwithstanding the removal of Customs duties, the Act prescribes for the provisions of the Customs and Excise Management Act and any regulation made thereunder to be applicable where goods that are dutiable on entry into Nigeria are sent from an EPZ into Nigeria. NEPZA’s consent must be obtained, and the Customs authorities must be satisfied that all relevant import restrictions have been complied with and all duties payable in connection with the importation into Nigeria have been paid, particularly where goods are intended to be disposed of in Nigeria.


The Act has made numerous provisions and incentives for individuals and companies wishing to operate in EPZs in Nigeria.

The incentives for approved entities within the EPZs are as follows: legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations shall not apply; repatriation of foreign capital investment at any time with capital appreciation of the investment; remittance of profits and dividends earned by foreign investors; no import or export licences shall be required; up to 25% of production may be sold in Nigeria against a valid permit and on payment of appropriate duties; rent-free land at construction stage, thereafter rent shall be as determined by NEPZA; up to 100% foreign ownership of business is permitted; and foreign managers and qualified personnel may be employed by companies in the EPZs.

The NEPZ Regulations have also liberalised the investment procedures and approval process in EPZs, thereby eradicating the bureaucratic bottlenecks that can accompany regulatory procedures and approvals in Nigeria.

For instance, an application to undertake activity must be considered within five working days of its acknowledgment and the applicant must be notified of approval or otherwise.

Within 24 hours of receipt of an application to commence operations NEPZA shall complete inspection of the factory site to ensure compliance with relevant laws, and will issue the permit to begin operations within 24 hours.

Another advantage is the huge consumer market in Nigeria – which has a population of over 184m – and ECOWAS, which has a total population of over 250m. There is also the availability of abundant natural resources such as rubber, palm oil, gum arabic, sesame seeds, cocoa, wood, food crops and more, which can be accessed in the general Nigerian territory for the purpose of manufacturing in or carrying out business from EPZs. Furthermore, the advantage of the proximity of the EPZs to sea ports, airports and an extensive road network, likewise, cannot be overemphasised.

Nigeria has various trade arrangements with many global economic organisations, including the World Trade Organisation, ECOWAS (through the ECOWAS Trade Liberalisation Scheme), the Commonwealth of Nations and the D-8 Organisation for Economic Cooperation. These agreements can have a positive impact on enterprises in the EPZs.

Other incentives for operating within EPZs relate to labour and employment. Due to the potential adverse effects strikes could have on business activities in terms of output, the Act specifically prohibits employees from embarking on strike actions or lock-outs for a period of 10 years following the commencement of operations within an EPZ, therefore any trade dispute arising within an EPZ shall be resolved by NEPZA.

Furthermore, while the expatriate quota scheme in Nigeria is designed by the government to prevent the indiscriminate employment of expatriates where there are qualified Nigerians to occupy chosen positions, there is a liberalised regime for employment of expatriates in EPZs. This is because the NEPZ Regulations stipulate that all approved enterprises shall be exempt from being subject to expatriate quotas. The NEPZ Regulations also prescribe that all employers in an EPZ are at liberty to draw their labour force from any part of the world. Effectively licensed business enterprises in EPZs are not restricted by laws which may potentially reduce productivity and output.

Prohibited Activities In EPZs

Notwithstanding the liberalisation of free trade facilitated by the Act within EPZs in Nigeria, certain activities are prohibited. For example, no retail trade shall be concluded within an EPZ without the prior approval of NEPZA, and it may be subject to such terms and conditions as may be imposed from time to time by NEPZA. The Act goes further to provide for the revocation of a licence of any approved enterprise that contravenes the prohibition. Likewise, there are specific items which are prohibited from being imported into EPZs in Nigeria and any person or approved enterprise that imports the specific goods prohibited would be guilty of an offence. The prohibited items include:

  • Firearms and ammunition, other than by members of Nigeria’s police force or armed forces, or by security agencies employed to work in an EPZ in the course of their duties or by such other persons as may be authorised by NEPZA.
  • Dangerous explosives, without prior approval from NEPZA.
  • Petrol, inflammable materials, hazardous cargoes or oil fuels, other than in such quantities and on such terms and conditions as may be prescribed by NEPZA.
  • Goods on which NEPZA has imposed specific or absolute prohibition of importation into an EPZ.


The enabling law for the OGEFZ in Nigeria is the OGEFZ Act, which designated the Onne/ Ikpokiri area of Rivers State as the sole oil and gas FZ in Nigeria. This initiative is a major success story for Nigeria, as it not only supports numerous jobs in the region, but has also helped drive infrastructural development in Rivers State.

The OGEFZ was opened by the government in early 1997 in a bid to draw fresh investment into the country, and promote local and regional economic growth. Efforts are presently being made to designate or create other oil and gas FZs in Nigeria by amending the OGEFZ Act.

One example is a proposed bill which would amend the OGEFZ Act and also designate the Ogu Creek Area of Rivers State and Delta Port as part of the OGEFZ. The bill also provides that the president of Nigeria, on the recommendation of NEPZA, may designate any area as an oil and gas free zone or a special investment area.

Since the OGEFZ officially opened in March 1997, over 112 reputable local and international oil and gas companies – including all the major oil exploration, producing and service multinational companies – have registered as FZ users or enterprises. OGEFZ combines the effectiveness of the private sector and the commitment and support of the government, with DMS International providing management for the zone and the OGEFZA providing licensing and monitoring.

The OGEFZ is located in the oil-rich Gulf of Guinea, with strong logistics support and an efficient oil service centre. Companies like Agip, Elf, Shell, Texaco and ExxonMobil take advantage of the strategic location and the FZ incentives at Onne to move equipment and spares between the OGEFZ and their production locations not just within Nigeria, but also in Cameroon, Equatorial Guinea, Gabon, Congo Brazzaville, Congo Kinshasa, Angola and Côte d’Ivoire.


The main objectives of the OGEFZ Act are summarised under three headings. The first objective is to provide the support infrastructure and enabling environment for operations, and to provide cost effective solutions in procurement logistics and supply chain management.

The second objective is to develop the OGEFZ as a distribution centre for West and Central Africa by supporting global procurement policies and logistics coordination beyond national boundaries; and enhancing socio-economic and political integration in the region, such as the Nigeria-São Tomé and Príncipe Joint Development Zone.

The third objective is to expand the zone’s facilities by allowing manufacture via: importation/ transfer of technology; attracting foreign direct investment; generating employment opportunities; and increasing exports and improving economic growth with increased foreign exchange.

License For Operating In The OGEFZ 

Three types of licences can be granted to prospective enterprises in the OGEFZ – a general licence, a special licence or a free zone enterprise licence.

It is possible for an enterprise to be granted more than one of the above licences, and application for a licence(s) can only be made to and granted by the OGEFZA.

For purposes of obtaining a general licence, an entity shall hold a valid certificate of incorporation, issued by the Registrar of Companies in Nigeria; and have a permit from the Department of Petroleum Resources to operate as an oil and gas service company in Nigeria. In order to obtain a special licence, an offshore entity shall produce evidence of a notarised certificate of incorporation in the country of origin, together with its memorandum and articles of association.

Incentives In The OGEFZ 

The OGEFZ is set to play a major role in the development of the West African oil and gas industry with its package of incentives and strategic advantages.

Many of the incentives available to investors in the OGEFZ are comparable to other successful zones around the world. The facilities at the OGEFZ also provide an excellent base for international companies to conduct their business operations in West Africa’s dynamic oil and gas industry. Some of these incentives are listed below.

Customs Incentives 

Customs duties are not paid on equipment and machinery stored and consumed in the OGEFZ. No duties or levies are expected to be paid on FZ goods exported to other countries or on goods transferred into the OGEFZ from any port of entry in Nigeria under the authority of a document issued by the OGEFZA to the Nigeria Customs Service for the same purpose. A 75% duty rebate is allowed on raw materials processed in the OGEFZ, but goods manufactured, assembled or pre-packaged in the OGEFZ and sold in Nigeria are subject to the tariffs and other charges prescribed by the appropriate authorities.


The Oil and Gas Export Free Zones Regulations 2003 (the OGEFZ Regulations) stipulate that there will be no quota restrictions for expatriate employees in the OGEFZ.

Tax & Capital Incentives

The OGEFZ Act provides that approved enterprises operating in the OGEFZ shall be exempt from all legislative provisions pertaining to taxes, levies and duties, and that foreign exchange regulations shall not apply within the OGEFZ. Those operating in the FZ shall be entitled to up to 100% foreign ownership of any business in the FZ and up to 100% foreign management of any business in the FZ.

Dispute Resolution

The OGEFZ Regulations empower the OGEFZA to protect the rights and privileges of licencees in the zone and settle any dispute between licencees as a result of breach of same (such rights and privileges).

The OGEFZ Regulations also provide for the referral of any dispute between any government agency and any licencee in the OGEFZ, and the OGEFZA is compelled to represent the licencee in all negotiations, arbitration, settlement and reconciliation of the dispute. The OGEFZ Regulations provide for the application of the Nigerian Arbitration and Conciliation Act in the case of disputes between licencees, disputes between licencees and employees, and disputes between licencees and government agencies in the OGEFZ.

In addition to the aforementioned provisions regarding the settlement of disputes in the OGEFZ, the OGEFZ Regulations provide that a licencee shall take out litigation or defend any suit through the OGEFZA and the OGEFZA shall take appropriate measures to protect the rights of the licencee in the suit. These provisions were made in order to fulfill the objectives of the establishment of the OGEFZ, to create a conducive, business atmosphere and environment, free from distractions that may arise from legal disputes within the zone.

OBG would like to thank Ajumogobia & Okeke for their contribution to THE REPORT Nigeria 2016