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HOME > INVESTMENT OPPORTUNITIES (Introduction) > Export Processing Zones |
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Nigeria's Export Processing Free Zone Scheme (EPFZS) (Reviewed, 8th Dec 2001) Tell your friends about this page! Email it to them.
Since the inception of the new democratic administration led by President Olusegun Obasanjo in May 29 1999, a number of efforts have been made to attract both local and foreign investors to the country to boost Nigeria's economy. To point the country towards the path to industrialisation will involve discipline, focus and hard work from all sectors to the economy. In this light, the
diversification of the economy has led to de-em All these efforts toward economic development led in November 1991 to the establishment of the Export Processing Free Zone Scheme (EPFZS). This scheme allows for interested persons to set up industries and businesses within demarcated zones known as Export Processing Zones, (EPZs) principally with the objective of exporting the goods and services manufactured or produced within the zones. But this novel scheme was slowed down by the political shenanigans in power then. It thus took another decade before it saw the light of the day with the inauguration by President Obasanjo of the multi-billion naira Calabar Export Processing Zone (CEPZ) very recently. In a nutshell, the scheme is targeted to promote the diversification of the export base of the nation through the acceleration of export business with attendant loaded incentives, this it is perceived will include industrial production, offshore banking, insurance and re-insurance, international stock, commodities and mercantile exchanges, commercial industrial research, agriculture and agro-allied industry, mineral processing, as well as international tourist resort development and operations. The Calabar zone has been designated as the primary EPZ territory and a total of 80 serviced plots have been reserved for prospective investors for self-built factories. Tax and Other Incentives The incentives that come to investors in the designated EPZ territories include:
There are also a number of grants available for exporters Pioneer Status Companies The provision of the Industrial Development (Income Tax relief) Act with respect to Pioneer Status qualify for a tax holiday of 3-5 years to any manufacturing exporter who exports at least 50% of his annual production. Additional concessions are also available in the local raw material development, local value-added, labor-intensive or export-oriented activities that involve significant training. Tax Relief on Interest Income Interest accruing from loans granted by banks in aid of export activities enjoys favorable tax treatment Capital Assets Depreciation Allowance The law in Nigeria provides an additional annual depreciation allowance of 5% on plants and machinery to manufacturing exporters who export at least 50% of their annual turnover provided that the product has at least 40% local raw material content or 35% value added. Investment Protection Protection of property is provided by Section 31 of 1999 Nigeria's constitution. The section states: "No property or other rights will be taken over or compulsorily acquired except under a law which provides for adequate compensation and for a right of access for any claimant to the High Court of the relevant part of Nigeria for the determination of interest in the property and compensation amount." Expropriation The Nigeria Investment Protection Commission Decree guarantees against nationalisation, expropriation and compulsory purchase. Disputes Settlement Disputes between an investor and any government of the Nigerian Federation in this regard which cannot be amicably settled, may be submitted by an aggrieved party to arbitration in accordance with Nigeria's Arbitration and Conciliation Decree 1988 or within the framework of any bilateral or multilateral agreement on investment protection to which the Federal government and the investor's country are parties or in accordance with any other national or international machinery for the settlement of investment disputes as agreed to by the parties. Nigeria's general legal environment, which is based on English common law, further upholds the sanctity of contracts and the rule of law. The scheme operates in a fashion that cuts off the bureaucratic delays that is synonymous with government agencies by allowing the Nigerian Export Processing Zones Authority (NEPZA) to administer, manage, control and coordinate the quick approvals for participating foreign investors while its supporting agencies handle almost all phases of operations in the zone independent of government. These include issuing application forms and approval, company registration and construction licensing among others. To facilitate the operation of the Calabar EPZ, the Calabar seaport has been declared as a free port to complement the status of the free trade zone. Among the numerous facilities sited at the 152 hectare Calabar EPZ site, is a new port less than two kilometers away with a fully buoyed river channel and an estimated capacity of about 1.5 metric tons of cargo excluding crude oil. Many investors are already eager to set base in Calabar and the Government has assured of the existence of several pre-built standard factories. Presently, only three companies are operating in the Calabar zone so there is plenty of room for new companies. It has been promised that all the necessary infrastructure will be in place - the plots, roads, street lighting, perimeter fencing, electricity and water facilities and factory facilities - all that remains is for investors to come in, establish operations and begin exporting. With a vast population that is rich in human potentials and abundant mineral resources, the success of the EPZs is almost certain from day one, though the elimination of the "Nigerian factor" must be a priority concern for the eventual growth of the scheme. Also, the establishment of other zones around the country is being considered in order for wider coverage and developmental impact. Kano and Lagos are veritable locations for such a project with the former catering for Trans-Sahara trade and the latter focusing on export of manufacturing products. The prioritisation of quality should not be sacrificed on the altar of quantity and strict monitoring regulations must be formulated to guide participating firms. Note: We will shortly be providing contact details for the Nigerian Export Processing Zones Authority. © NigeriaBusinessInfo.com |
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phasising the role of oil production and exports within the country's economy. Much needed focus has thus been devoted to other sectors like solid minerals, tourism, telecommunication, commerce and industry.