The Lekki Free Trade Zone has indeed attracted global attention and foreign direct investments in recent times. Already, the zone is a home to a number of multinationals. Could this be as a result of the tax-free zone or the fact that investors can wholly-own their investments and repatriate profits? The Lekki Free Trade Zone is touted to be the biggest in Africa with a land size of 16,500 hectares; and will have its own international airport, deep sea port and a home to the largest oil refinery in Africa – Dangote Refinery – and a fertilizer plant, petrochemical plant and sub-sea gas pipeline valued at $17 billion and owned by Africa’s richest man, Aliko Dangote.
Free Trade Zones are special economic areas within a country where foreign companies can import materials, manufacture goods, assemble goods and export products without being limited by the usual rules and taxes. In other words, FTZ is an area set aside for special economic activities which may vary from goods landing, handling, manufacturing or re-configuring, storing, and re-exporting without intervention as regard to customs duties. This means the FTZ is a place where trade activities can be carried out without delays from customs authorities.
The Free Trade Zones are usually built around strategic locations like major international airports, seaports or areas with geographical trade advantage. The goal is to eradicate the hindrances to trade caused by complex regulations and high tariffs from the seaport, airport or other borders.
LEKKI FREE TRADE ZONE
Lekki Free Trade Zone (LFTZ) is located in the Ibeju-Lekki axis of Lagos. This part of Lagos is under the Ibeju Lekki Local Government Area, which is at the South-East of the Lagos map. The Lekki Free Trade Zone is considered to be twenty times the size of Victoria Island – a busy district serving as the headquarters of most major Nigerian banks and international corporations in Lagos.
The Lekki Free Trade Zone is set to cover about 155 square kilometers which is one of the numerous projects that progressively changes the face of Lagos. It is considered a Jaw dropper as it will make Lagos the destination place for commerce. What the Lekki Free Trade Zone will offer is a diverse market for both investors and businesses. The importance of the Free-trade will no doubt make it a landmark in the future of Lagos and Nigeria as a whole.
Lekki Free Trade Zone when complete is expected to accommodate a total of 120,000 people for residential purposes. The Lekki Free Trade Zone map is a guide to what to expect when the project is finally completed which is envisaged to be one of the major business hubs in Lagos, for which to move through, you definitely want a map.
This map indicates glaringly that the LFTZ is divided into two – south and north. The north is mainly for residential purposes and the south is for commercial purposes.
However, from the master plan of the LFTZ, it is characterized by two centres, two axes, three districts, multiple nodes, and axial penetration.
Lekki Free Trade Zone is definitely one project that expects to accommodate lots of investors. The free trade zone area is South of the Atlantic Ocean and North to the Lekki Lagoon. It’s easy to access factor makes it an ideal place for business. With over 200 million people from the West African market and about 600 million from both US and European market, investors definitely abound. The strategic location of the LFTZ is what makes it the perfect destination. It is positioned in such a way that it is open to all forms of transportation – land, air, and water. For investors who intend not only do business in Nigeria, it opens them to all of Africa and the world.
Despite still being under construction, it is fast attracting both local and foreign investors. The Lekki Free Trade Zone is soon home to the largest oil refinery in Africa, which is being constructed by Dangote Industries Limited. The refinery is set to be the largest single line refinery in the world with a processing capacity of 650,000 barrels of oil per day. While the gas pipeline project is set to supply over 3 cubic feet of gas daily with uninterrupted power supply.
WHY YOU MUST INVEST IN NIGERIA
Nigeria as the giant trade hub in Africa presents great opportunity for both prospective entrepreneurs and established business personalities and entities. The country is considered one of the “new business hub” that have been acknowledged as having the potential to become Africa’s largest economy. The population of Nigeria is growing at a steady rate of 3% per annum by an affluence and increasing middle class. Looking at the tremendous growth potential, the government of Nigeria has announced various incentives for foreign investors. One of such steps taken by the government is the establishment of free trade zones in Nigeria.
GOVERNMENT POLICIES ON FREE TRADE ZONE
Nigeria’s history of free trade zone dates back to the year 1992, when it first emerged with the enactment of Nigeria Export Processing Zones Act 63. In 1989, the government introduced a Structural Adjustment Program (SAP) as part of her economic and political reforms. SAP as an economic policy, has one of its objectives, the establishment of Export Processing Zones (EPZ) as a way to attract FDI (Foreign Direct Investment). Accordingly, in 1992, a Nigerian Export Processing Zone Authority act No. 63 was enacted as a continuation of the economic liberalization policy of that administration. NEPZA was given the obligation to inaugurate, control, license and monitor EPZs which saw the creation of the Calabar EPZ in 1992 followed by the Onne Oil and gas Free Zone in 2007. Today, Nigeria has over a dozen functional free trade zones in more than 7 states which have been established from 2009 till date.
Over time, there have been several regulatory and governing practices incorporated into the FTZ project which has created several improvements and seen many major investors troop into Nigeria to further their investment ambitions.
GOVERNMENT INCENTIVES & BENEFITS
In Nigeria a business can avail many benefits offered by the EPZs, and this makes the EPZs one of the most important method to attract FDI into the country and promote technology transfer. Since the creation of free zones in Nigeria, there are more than 500 enterprises which are licensed to free-zones and are operating under the various EPZs of Nigeria.
There are several benefits which can be utilized by an enterprise when it is set up in an EPZ in Nigeria.
- This new governing practices have incorporated new incentives that guarantee zero percent (0%) tax holiday including all government agencies (federal, state and local government) for any form of taxes, rates and levies. Any legislative provision related to taxes, levies, duties and any foreign exchange regulation which are applicable in the country will not apply to the companies set up in EPZs. If a company is set up in any of the FTZs, they do not require any import or export license.
- Foreign ownership of a business up to 100% is permitted depending upon the nature of business and the rulings of the concerned authority.
- One hundred percent (100%) repatriation of capital and profit. At any time, it is possible to send back all the foreign capital investment with capital appreciation of the investment. If any profits and dividends earned by foreign investors, they can be remitted back to the home country
- Permission to sell hundred percent (100%) of goods into the domestic market. It is also worthy of note that applicable customs duty on imported raw material shall apply, when selling into the customs territory (host market).
- The zones also assured of reduction of delays in the movement of goods, services and rental of unrestricted land during the first six months of construction for government owned zones.
- 25% of the total production of a business in the free zone may be sold in Nigeria by obtaining a valid permit and by payment of the required duties.
- At the construction phase, the business in construction does not need to pay any rent. When the company commences its operations, the rent will be determined by Nigeria Export Processing Zones Authority (NEPZA).
- A company established in the free zones can employ foreign managers and qualified personnel.
- (NEPZA has implemented liberal Regulations and has eased the investment and approval process in EPZs.
- EPZs in Nigeria are at proximity to seaports and have extensive road linkages and are also linked to various airports.
- Nigeria has a huge consumer market, and this market reach is still growing. It also has many trade agreements with many global economic organizations.
- One of the biggest benefits of incorporating a company in EPZ is that the Nigeria Export Processing Zone Act prevents an employee from conducting a work strike or any lock-outs within ten years of the inauguration of a business.
- The regulations of the NEPZA states that all the companies which are licensed companies established in EPZ will be exempt to the expatriate quota which quotes “The expatriate quota states that in case any qualified Nigerians are present which can potentially occupy a position in a business, then the business cannot hire an expatriate for the job”
Paul Olaniyi, Project Engagement Manager at CompanyFormation.ng
Click here to Download LFTZ information booklet. For more information on free Trade Zone in Nigeria, please contact Citizens & Expats Agency Limited via email: firstname.lastname@example.org or call +234 805 5598 1421