26th July, 2018
The Nigeria Industrial Council and Competitiveness Advisory Council is reviewing fiscal arrangements and incentives applicable to the country’s free trade zones to improve their operations.
The Minister of Industry, Trade and Investment, Mr Okechukwu Enelamah said this in a statement signed by his Strategy and Communications Adviser, Mr Bisi Daniels in Abuja on Wednesday.
Enelamah, who is also the council’s Vice Chairman said the council had been working to review the fiscal arrangements and incentives available to operators in the zones vis-a-viz the customs territory.
He said that the review was to ensure competitiveness of goods produced in the zone in the local and export markets.
”There are many free trade zones at different stages of development in the country and 14 are operational, 12 are under construction, while the development of 11 others is yet to commence.
”Also, the ongoing Special Economic Zones project is developing six special economic zones across the geopolitical zones,” he said.
Enelamah said that approved enterprises within Federal Government owned zones were entitled to incentives such as exemption from legislative provisions pertaining to taxes, levies, duties and foreign exchange regulations.
According to him, other incentives are full repatriation of foreign capital investment with capital appreciation of the investment at any time; up to 100 per cent of foreign ownership allowable; and no import or export licences required for operations.
He said that over the years, since the promulgation of the Nigeria Export Processing Zones Authority (NEPZA ), Act of 1992, changes had been made to the operational guidelines of the zones.
According to him, a study by the council has identified some areas that need redress for example, manufacturers outside the zones have complained about unfair competition as the tax concessions available to zones.
“They also complained that operators do not take into cognisance the fact that up to 100 per cent of goods produced in the free zones can be sold into the Nigeria customs territory.
“Others are inadequate definition of value addition and certification; and cash flow advantage to free zone operators who pay duties on constituent raw materials equivalent of finished goods after production and processing,’’ he said.
The minister added that manufacturers outside the zones pay duties and other relevant levies upfront.
”However, in the study, free zone operators raised concerns over their inability to effectively compete in the export market, high administrative charges on turnover and exclusion from export incentives.
”To address these issues and others affecting the efficiency of the free zones, a technical committee comprising representatives of NEPZA, Nigeria Export Promotion Council (NEPC) and Nigeria Investment Promotion Commission (NIPC) was set up.
”Others in the committee are the Federal Ministry of Finance (FMF), the Federal Ministry of Interior (FMI), the Central Bank of Nigeria (CBN), the Nigeria Customs Service (NCS), the Standards Organisation of Nigeria (SON).
”This include selected operators set up to review and recommend appropriate fiscal and operational changes to the free zones to ensure that goods produced in the zones are competitive in the export market.
”Also concerns around unfair competition in the Nigeria and Customs Territory from goods produced in the free trade zones are addressed,’’ he said.
Enelamah said that future licensing of zones would be closely linked to priority sectors for industrialisation and export growth.
According to him, NEPZA is to implement comprehensive measurement and certification guidelines and monitoring mechanisms for determining value addition for each prohibited item.
He said that the council was inaugurated in 2017 to spearhead the industrial agenda that would boost the contribution of manufacturing to the country’s Gross Domestic Product (GDP) by 250 per cent over a five-year period.
According to him, the agenda will make Nigeria a manufacturing hub for West Africa and diversify the economy from its over-dependence on oil.