The benefits of using a foreign trade zone inbound logistics. Trading in the ecowas free trade area ecowas trade liberalization scheme rules for traders. Calabar free trade zone cftz, kano free trade zone kftz, ladol free zone, alscon expert processing zone, onne oil and gas free zone. From large manufacturers to individuals, any size importer or exporter can take advantage of a foreign trade zone ftz. Following the unveiling of the african continental free trade agreement in kigali, rwanda, in march 2018, africa is about to become the worlds largest free trade area. Pdf effect of international trade on nigerian economic. Positive economic impact of a free trade zone in the dominican. The use of free trade zones ftz in the title refers to export oriented zones which broadly refers to an. New port projects in nigeria have been affected by the severe downturn in the national economy and the fall in trade volumes but new container handling capacity will be needed in. Pdf free trade zones between theory and practice in nigeria.
That is why trade wars can be such a devastating problem too. A free trade zone is normally established in a single country, although there are a few exceptions where a free zone may cross a national border, such as the syrianjordanian free trade zone. Any free trade zone can receive a shipment of goods without paying the import duties. Freetrade zones are usually located around major seaports or international airports and the nigerian government through the nigeria export processing zones authority the authority has so far licensed about 33 free trade zones located in different parts of the country. An overview of six economic zones in nigeria world bank. The free zone law is delaying the business community who are dynamic beings. About 9 are said to be under construction, and others are in various states of preconstruction and license suspension. Chinese investment in african free trade zones africa portal. The notion of the epz may have originated from free trade zones established in major ports such as hong kong, gibraltar, and singapore during the nineteenth century. Ghana free zones authority looking beyond the horizon. The report says that the country would benefit from policies to promote diversification and longterm inclusive growth, and focuses on leveraging regional connections and coordination to enhance nigeria s competitiveness. Chapter two legal framework of free trade zones in nigeria free trade zone.
Free trade zones and the nigeria tax regime idogun. Meetings were held with relative stakeholders government officials, zone developers, and zone management in. Chinas investment in african special economic zones. Strengthening economic diversification in nigeria through. Ogfza was established by section 2 of the oil and gas export free zone act no. 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. A free trade zone is a class of special economic zone.
It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured and reexported under specific customs regulation and generally such goods are not subject to customs duty. The overall advantages and disadvantages of free trade show that when multiple countries can work together to create mutual benefits, then the global economy can gain strength. Free trade means that countries can import and export goods without any tariff barriers or other nontariff barriers to trade. Arshiya international ltd, indias first free trade and warehousing zone the largest multiproduct free trade and warehousing infrastructure in india. A free trade zone ftz is a spatially defined area in a wider political unit, often next to a port where. Free trade zone and port hinterland development united nations. Incentives freetrade zone nigeria lekki free trade zone. Effect of international trade on nigerian economic growth. These repatriation, import and operational incentives make the lagos free trade zone a 100% hassle free business proposition for all. Investors and businesses are guaranteed a host of preferential policies and 100% incentives by the government of nigeria. African countries, which can be broken down into free trade zones. The ghana free zones authority gfza was established on 31st august, 1995 by an act of parliament1995 act 504, to enable the establishment of free zones for the promotion of economic development. Nigeria export processing zones authority established under this act, designate such area as he thinks fit to be an export processing zone in this act referred to as a zone.
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. We establish, license, regulate and operate highly efficient free zones by providing a highly competitive incentive scheme, excellent support facilities and service for the purpose of creating an enabling environment for export manufacturing and other commercial activities. In 2001, nigeria moved in this direction by abrogating the rule that the epzs must export. Get access to the guidelines that govern all partnerships and investments in the lagos free trade zone. With a large population and growing middle class, there are 65 million economic active people in nigeria. Free zone regulations pdf nigeria export processing zones. Free trade zones should be distinguished from free trade areas. Free trade zones in nigeria are designated geographical locations which are granted special tax concessions from all taxes attributable to trading activities.
Companies receive many the benefits of firms in epzs. A free trade zone is developed for attracting foreign direct investment into a country. There can also be regulatory problems that occur as global businesses attempt to get a piece of the pie. Africa and free trade zones initiative for policy dialogue. Africa set for a massive free trade area africa renewal. Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods. Nigerian free zones offers a multitude of incentives for. The law giving legal backing to nepz as a statutory body is the nigeria export processing zones act, cap 107 as amended nepz law. The taxes exempted exclude paye of the employees as the exemption relates to trade and not to employees. The developers of the new port of badagry in nigeria have been awarded a license to develop a free trade zone ftz, named maritime africa economic city, on the site. By howard stein professor center for afroamerican and. Arshiyas first 165acre ftwz is operational in panvel, mumbai, and is to be followed by one in khurja near delhi. Investors willing to start a nigeria free trade zone companies can do so in one of the following nigeria export processing zones.
Schedule a procedures for importing goods into the free zone. An entrepreneur can choose the free trade zone in nigeria in which he wishes to incorporate his company according to the services provided in the free zone. A brief history of free zone legislation in nigeria. Nigerias free trade zone ftz legislation has been in place for 17 years, but progress in. The oil and gas free zones authority ogfza is the national regulatory agency superintending over the operation of the oil and gas free trade zones in the country.
Healy consultants assists our international clients with nigeria free trade zone company incorporation. Overview of foreign trade zone program benefits the ftz corporation specializes in making ftz benefits available to its clients and maximizing savings. Zhangjiagang free trade zone are involved in several african zones. Progress, emerging challenges, and future directions.
Free trade zones eliminate many of the barriers to trade that increase prices for consumers and businesses. Nigeria export processing zones authority setting up. African leaders launched a continental free trade zone on sunday that if successful would unite 1. The licensing, monitoring, and regulation of all free zones in nigeria is vested in the authority. Our partners and investors can obtain a hardcopy of the official rules and regulations from our corporate office. Free trade zone benefits include the elimination of importexport duties, the deferral of customs duties, lower quotabased tariffs and lower duty payments, all of which save businesses money. However, many companies are unaware of the sizeable cost savings and other benefits they can achieve by taking advantage of an ftz program.
Some of the free zones are more suitable to a particular kind of industry whereas others are more general. Nigeria, pakistan, philippines, senegal, sri lanka and zimbabwe are exempted from. In terms of real development, the lekki free zone and the ogun. Enterprises from export processing zones or free zones and any other special economic schemes or customs territory may not benefit from the etls. Chinese and nigerian governments, lekki free zone lfz, a. Some of the wellknown functional ftz in nigeria include the calabar free trade zone cftz, kano free.
Free trade zones ftz have become widespread with the liberalisation of. Goods of any description, except those specifically prohibited by law, may be brought into a free trade zone, be removed from the free trade zone, destroyed, or sent into customs territory or into another free trade zone in the original package or otherwise and, unless otherwise directed by the authority, be stored. In addition to providing the benefits of a ftz, these zones offer other. The nigeria export processing zones authority nepza lists 32 ftzs. A free zone is a specially designated region, clearly demarcated and administratively considered to be outside the customs territory of the host country, having special regulatory and fiscal incentive regimes to enhance its competitiveness. This paper will draw on the experience with zones both in africa and. Free trade zone in nigeria benefits of free trade zones. Impact of free trade zone on nigeria s property sector. This paper compacts with the notion of free trade zones between theory and practice in nigeria, issues and challenges why free trade zone in theory does not reflect same theoretical models in nigeria.
The regulatory body for all export processing zones, free trade zones, etc in nigeria is the nigeria export processing zones authority nepz. Nigeria s quest for a way out of the current economic recession could easily be found if the federal government pays closer attention to the development of the countrys free trade zones, says. The main focus of this paper is to analyze the history, concept, benefits, operational disadvantage to the investor and the host of free trade zones. Free trade zone is considered as an enclave in the country. Introduction1 this note is based on the insights gained from field visits by world bank staff2 to six zone project sites in nigeria in december 2011. It also presents the insights of three leading nations in managing sez which include. Free trade zones between theory and practice in nigeria. Some of the first free trade zones allowed imports and exports free from custom formalities so that goods could be reexported quickly.