Corruption in Nigeria’s Free Trade Zones as bad as Oil Theft


Nigeria, often characterized as a cesspool of corruption, has faced numerous challenges on its path to progress. Crude Oil theft escalated corruption from a criminal enterprise to an existential danger to its 200 million citizens. For six decades, Nigeria’s oil sector has been plagued by rampant corruption, with rogue politicians, military chiefs, government officials, and private sector actors looting the nation’s oil resources. While oil theft remains a grave concern, a new menace has emerged in recent times. It is called the Free Trade Zone (FTZ).

 FTZ is a policy scheme established to encourage foreign investment, economic diversification, and job creation. At the last count, Nigeria has 51 Free Trade Zones, some of them in questionable locations. The benefits for operators include zero tax from federal, state and local tax authorities; zero levies and rates (no corporate tax, withholding tax, value-added tax, and capital gain tax) and 100 percent foreign ownership.

Contrary to the success stories of FTZs in countries like China and the United Arab Emirates, Nigeria’s FTZs have become the breeding grounds for a wide range of illicit activities, threatening the nation’s economic stability. These zones have given rise to corruption, trade malpractices, illicit financial flows, organized crime activities, drug trafficking, document cloning, import duty evasion, license racketeering, counterfeiting, smuggling, and a plethora of criminal contraptions that undermine Nigeria’s potential for growth.

A peek into BUSINESS LEAKS’ upcoming investigative series shows that corruption in Nigeria’s FTZs is costing the country billions of dollars each year. The Onne Port Free Trade Zone is one of the largest FTZs in Nigeria. It is located in Rivers State and is home to over 200 businesses.

BUSINESS LEAKS, in many months of investigations so far in Lagos, Rivers and Kano States, uncovered a massive import duty evasion scam at the Onne Port Free Trade Zone amounting to over N600 billion in lost revenue. The fraud mostly involves regular business entities migrating to the FTZs to evade customs duties. This is often preceded by license racketeering, a scheme that sells to the highest bidders, operational licenses and permits to entities who have no business in the FTZ in the first place.

Some businesses in the FTZs are engaged in the smuggling and repackaging of contraband and counterfeit products. Goods are smuggled into and out of FTZs without paying the appropriate taxes and duties.

FTZs are designated areas where businesses can operate with minimal government interference and enjoy tax and customs breaks. They are often used to attract foreign investment and promote economic growth. FTZ operators in Nigeria enjoy eye-popping incentives never seen anywhere else in the world. However, for most of the privileged operators, the FTZ licence and permits are licences to impunities and illicit activities.

In 2021, the Nigerian Customs Service intercepted a container of drugs at the Onne Free Trade Zone. The drugs were estimated to be worth over $100 million. Investigations revealed that the drugs were being smuggled into Nigeria by a syndicate of corrupt Customs officials and businessmen. The syndicate was using the Onne Free Trade Zone as a transit point for the drugs. The same is true for the FTZs in Lagos and in Calabar.

The corruption taking place in Nigeria’s FTZs is having a devastating impact on the country’s economy. It is discouraging foreign investment in Nigeria’s FTZs; it is leading to the loss of government revenue just as it is harming legitimate businesses that are operating in Nigeria’s FTZs. Corruption is also creating an environment where organized crime and illicit activities can flourish.


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