Free Trade Zones (FTZs) are no longer optional policy tools; they have become critical development levers, especially at this time Nigeria is working assiduously towards diversifying its economy, creating jobs, and tapping into the African Continental Free Trade Area (AfCFTA) opportunity. The country’s manufacturing sector which was once the pride of West Africa but now contributes less than 10% to the GDP makes this argument all the more convincing. While FTZs are often associated with manufacturing and logistics, they are equally powerful in service sectors like media, finance, healthcare and pharmaceuticals.
The UAE offers a global benchmark in this direction. The CNN, BBC, and Reuters operate out of Dubai Media City, a media-focused FTZ that has transformed the country into a regional broadcasting and content hub. More broadly, the UAE boasts over 45 Free Trade Zones, each tailored to specific sector; from finance (DIFC) and logistics (JAFZA) to biotech (Dubai Science Park) and healthcare (Dubai Healthcare City). These zones are connected by a network of modern ports like Jebel Ali and Khalifa, enabling seamless trade.
If Nigeria was to replicate such success, she must look beyond physical factories and invest in future-focused FTZs that align with global trends and regional strengths. While Lagos and Ogun states have taken the lead, Nigeria’s South-East; a region rich in human capital, entrepreneurial energy, and trade history, remains largely on the sidelines. It’s time for the eastern states: Imo, Abia, Ebonyi, Enugu, and Anambra, to rethink their economic geography and align with the evolving FTZ ecosystem.
What Is A Free Trade Zone?
A Free Trade Zone is a specially designated area primed to promote import-export trade with developed storage facilities capable of scaling local manufacturing and distribution. Here, businesses operate under more liberal trade terms, zero customs duties, etc. The objective is to eliminate trade barriers through tax exemptions on imported equipment and raw materials,100% profit repatriation and foreign ownership, zero VAT or withholding tax within the zone, simplified FX application, and and duty-free treatment of goods, unless sold into local customs territory. In effect, FTZs are treated as semi-autonomous production centres allowing businesses to operate with greater flexibility at lower costs, especially for exports and capital-intensive services.
Benefits of Free Trade Zones to Nigeria
FTZs deliver transformational benefits to a developing economy like Nigeria such as job creation across the manufacturing spectrum, services, logistics, and digital sectors. It attracts FDI via legal clarity and reduced investment friction, export diversification and reduction of oil dependency. It enables local value addition by enabling raw-to-finished goods conversion and plugging Nigeria into international value chains. It also enhances domestic production of critical drugs and health solution, and improve local Infrastructure such as roads, rail, and port terminals. FTZs has propensity to lead to long-term fiscal gains through indirect tax expansion and industrial spillover.
Unlocking Southeast Productive Potential Through FTZs
Measuring about twenty-nine thousand square kilometers, Nigeria’s Southeast region plays host to rich mangrove forests, navigable lakes and temperate weather. The region is considered a commercial dynamo as a result of heightened trade activities. From Aba’s leather and textile markets to Nnewi’s auto-parts industry, and the agrarian belts of Ebonyi and Imo. While the region pulses with increased productivity, it however lacks policy framework to industrialize at scale. Building need-based geographically specific FTZs that aim to take advantage of the opportunity its location and resources confer is critical. For instance, launching agro-processing FTZs for cassava, palm oil and kernel, rubber etc, build light industrial clusters focused on AfCFTA regional supply, set up dry ports and road linkages to other FTZs in the country.
Bridging the Infrastructure and Policy Gap
South Eastern States should integrate with Lagos–Calabar sea corridor via rails and road, push for upgrade of Onne, Calabar, and Warri ports to reduce congestion at Lagos seaport; and open new export routes that align FTZs with state development plans and ensure harmonization with federal authorities (NEPZA, Customs, CBN). The idea of trucking containers from Lagos to the East by road is not a sustainable export diversification strategy and besides the impact of carbon emissions, it adds significantly to cost of goods and worsens the cost-of-living index for the region.
According to Aliko Dangote, domestic investors are the ones to attract foreign investors. Therefore, an inclusive design that engenders local participation should be encouraged.
Putting Cautionary Measures In Place
The recent Ogun State–Zhongfu FTZ arbitration, which led to the seizure of Nigerian presidential jets and foreign properties over a $70 million award debacle should teach us some hard lessons. FTZs must be backed by clear contracts, actionable policies, and investor protection frameworks. Economic zones must not only be built well, they must be governed well.
Creating a Future-Ready FTZ Model For Southeast
Moving forward, Nigeria ought to expand its FTZ framework to include modern economic sectors rooted in regional strength and global demand. Just as Lagos may have a ‘Lagos Fintech Free Zone’ that supports mobile banking, e-payment platforms as well as a media & creative FTZ for nollywood, music, gaming and animation exports, the Southeast region could also come up with other innovative ideas.
Abia State could have an Aba fashion and creative FTZ for textiles, footwear, branding, etc as well as a pharmaceutical FTZ supporting local drug formulation, manufacturing and testing. Similarly, Imo State could come up with Owerri digital content park for storytellers, YouTubers, game designers, food and tourism. With Imo’s serene environment, its educated populace, it could position itself as West Africa’s medical innovation hub, producing not only care products but medical equipment, diagnostics software, and health data platforms under a well-governed FTZ regime. On its part, Enugu State could develop a knowledge-driven FTZ such as the the ‘Enugu Knowledge City’ aimed at boosting talent hub for ed-tech, e-learning, and AI startups.
In the same vein, Anambra State may choose to focus on automobile and auto spare parts by considering an ‘Anambra Automotive City & Smart Logistics Hub’ that could be fashioned after the ‘Tanger & Atlantic Free Zone of Morocco’ which offers dedicated automotive cluster and auto-component manufacturing, logistics, warehousing, freight terminals, and packaging center. Conversely, Ebonyi is richly endowed with lead, zinc, limestone, salt, granite, marble, and kaolin. Establishing a Free Trade Zone focused on mineral beneficiation, enabling value addition rather than the raw export of materials, would significantly advance Ebonyi’s development strategy. And as one of Nigeria’s top ranking states in rice production as well as cassava, yam, maize, and palm oil, the creation of an ‘Ebonyi Industrial Minerals & Agro-Processing Free Zone’ would strategically position Ebonyi State for the future, boosting trade within the region and across borders.
On its own, a Free Trade Zone is not a magic wand but rather a powerful tool, especially when anchored on sustainable infrastructure, good governance and regional inclusivity. The South-East is uniquely placed to drive Nigeria’s next wave of export-led, service-driven, inclusive industrial growth if put to proper use. The future of Nigeria’s trade story won’t be written solely in Lagos but also in Aba, Owerri, Enugu, and Nnewi, if only we are bold enough to build it. This should be the focus of the newly approved South East Development Commission by the Tinubu-led federal government.
Leonard Ohakpugwu, MBA, CSCP, ACA, is a South African trained procurement and supply chain professional with over a decade experience working for FMCG and manufacturing industries. He is currently pursuing a PhD in Trade and Development Finance and is passionate about the impact of regulatory systems on African markets, trade, governance & sustainability. Email:Kpugwu@gmail.com, +2348124029826
