Elsewhere in the world, Free Trade Zones (FTZs) are designed to drive economic development and facilitate international trade and investment. In Nigeria, FTZs have become freebies that come in the form of 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. There is a legion of other sweetheart incentives, in addition to lax oversights and regulations.
Like bees to honey, the lax regulations have led to a proliferation of FTZs. At the last count, there are 51 FTZs, straddling the general-purpose zone (Nigerian Export Processing Zone Authority, NEPZA) and the oil and gas zone (Oil and Gas Export Free Trade Zone Authority, OGEFTZA). Only a few of the FTZ operators are there to advance economic development.
A peek into BUSINESS LEAKS’ upcoming investigative series shows why the Nigerian currency, Naira, is plummeting daily in value; and why the nation’s economy is inextricably going belly up.
Infiltrated by organized criminal groups who purchased operational licenses at any cost, FTZs in Nigeria are fast becoming a haven for drug trafficking, Illicit tobacco, money laundering, terrorism financing, counterfeit products trafficking, firearms trafficking, wildlife and forest crime, and manufacturing of and trafficking of dodgy medical products and counterfeit food and beverages. BUSINESS LEAKS’ findings equally show that the FTZs have become new routes to smuggle in exotic automobiles, jewelry, wines, mobile phones, and other luxury goods.
In 2021, the National Drug Law Enforcement Agency (NDLEA) intercepted a shipment of 10 kilograms of cocaine concealed in a container of tiles imported through the Onne Port in Port Harcourt. The shipment was destined for a company registered in the Onne Free Trade Zone.
In 2022, a Nigerian arms dealer was arrested at an FTZ in Port Harcourt. The arms dealer was found to be storing a large cache of weapons in a warehouse at the FTZ. The weapons included AK-47 assault rifles, rocket launchers, and grenades. The arms dealer was planning to sell the weapons to militant groups in the Niger Delta region.
In 2022, a Nigerian tobacco smuggling ring was busted after it was discovered that the ring was using an FTZ in Port Harcourt to store and distribute illicit tobacco products. The ring was importing counterfeit cigarettes from China and then smuggling them into other African countries. The ring was also using the FTZ to launder the proceeds of its criminal activities.
The tobacco was valued at over ₦1 billion.
In 2021, the National Agency for Food and Drug Administration and Control (NAFDAC) seized a container of counterfeit drugs imported through the Tin Can Port in Lagos, Nigeria. The shipment was destined for a company registered in the Snake Island Integrated Free Trade Zone. The drugs were valued at over ₦500 million.
In 2023, the Nigerian Economic and Financial Crimes Commission (EFCC) arrested two Nigerian businessmen for laundering money through an FTZ. The businessmen are alleged to have laundered over $100 million through the FTZ. The businessmen used the FTZ to open shell companies and bank accounts. They then used these companies and accounts to launder money from their illegal activities, such as corruption and drug trafficking.
In 2022, Nigerian customs officials seized a container of counterfeit goods worth over $500,000 at an FTZ in Kano. The goods included counterfeit handbags, shoes, and watches. The counterfeit goods had been imported from China and were destined to be sold on the Nigerian market. The counterfeit goods were of poor quality and could pose a health and safety risk to consumers.
In 2022, Nigerian customs officials seized a container laden with ivory tusks and other wildlife products worth over $1 million at an FTZ in Calabar. The wildlife products had been imported from Cameroon and were destined to be sold on the Asian market. The wildlife products were from endangered species and their trade is illegal and a major threat to biodiversity and conservation efforts.
In 2022, Nigerian customs officials seized a container containing exotic automobiles, jewelry, wines, mobile phones, and other luxury goods worth over $10 million at an FTZ in Onne. The goods had been imported from Europe and were destined to be sold to wealthy Nigerians. The luxury goods had been smuggled into the FTZ to avoid paying import duties.
As BUSINESS LEAKS’ upcoming investigative series would show, for any arrest or intercept made by officials, possibly as a public relations stunt, about 300 more illicit activities have been allowed to sail through by corrupt officials suspected to be members of foreign organized crime groups.