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By Merit Ibe
Local manufacturers have raised fresh concerns over worrisome abuse of the Free Trade Zones (FTZs) operational framework, saying that current practices are tilting the playing field against indigenous producers and will ultimately drown them if not addressed.
They argue that while FTZs were originally designed to boost investment, enhance export competitiveness and spur industrialisation, loopholes in oversight and implementation have created distortions that undermine in-country producers struggling with high operating costs, foreign exchange constraints and energy challenges.
Industry leaders insist that without decisive intervention, the imbalance could trigger job losses, reduce domestic capacity and weaken Nigeria’s wider industrial base.
They are calling on regulators to enforce stricter compliance rules, eliminate regulatory arbitrage and restore the FTZ framework to its original purpose, which is stimulating production, not stifling it.
Manufacturers insist that if indigenous production must survive, government policies must not only be well crafted but also properly enforced. They stressed the need for an industrial environment with single-digit lending rates, prompt disbursement of Bank of Industry (BOI) funds, elimination of multiple taxation and stronger local content enforcement.
FTZs should not compete with local industry
Project Implementation Team Lead for the Calabar and Gulf of Guinea Municipal and Trade Centre Limited by Guarantee, David Etim, explained that FTZs should not compete with local industry, adding that products manufactured in these zones are meant strictly for export. He criticised the lack of logistics connectivity such as shipping links that force FTZ operators to sell locally.
According to him, FTZs should function like foreign territories within Nigeria, benefiting from tax incentives only to help them compete internationally. “When FTZ operators sell into the Nigerian market, an equalising tax should be applied to bring their prices to the same level as those of local manufacturers,” Etim said.
He warned that tax holidays and duty-free privileges enjoyed by FTZs are now being weaponised against domestic producers. However, he noted an exception for the Dangote Refinery, which is situated in a FTZ but allowed to supply petrol locally due to national security and economic considerations.
“Public interest can justify certain exemptions,” he said.
He stressed that poor government planning, lack of logistics were harming FTZ performance. Etim said FTZs are failing partly because the government established them without integrating the necessary logistics infrastructure.
He cited China as an example of a country that aligned shipping capacity with FTZ development.
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“For a FTZ to work, a dedicated port or logistics corridor is essential. Without it, the entire export-based purpose collapses,” he said.
Dr. Mallinson Afam Ukatu, Chairman of Mallinson Group and Fellow of the Manufacturers Association of Nigeria (MAN), called for policies that level the field for indigenous businesses.
He lamented that local manufacturers face impossible competition like expensive financing, unstable energy, and harsh regulatory conditions, while foreign firms operating in FTZs enjoy duty waivers, tax holidays, and faster processes.
He also noted that funds from the BOI often get trapped within commercial banks, delaying manufacturers who end up paying interest on funds they never fully access.
Afam cited China’s strategy of supporting its manufacturers with zero-interest loans for exporting machinery, contrasting this with Nigeria’s costly financing structure.
He said foreign companies, particularly Chinese and Indian firms, enjoy incentives both in their home countries and in Nigeria’s FTZs, enabling them to dominate markets, operate warehouses, and trade directly, while indigenous firms collapse under unfair competition.
Afam also emphasized that high energy costs, especially reliance on diesel and petrol, have crippled Nigerian manufacturers. He urged the government to accelerate adoption of natural gas and CNG to reduce production costs and boost competitiveness.
To him, Nigerian manufacturers are not demanding special treatment,only a fair playing field that allows them to innovate and grow.
Mrs. Bosun Solarin, founder of Dosun Integrated Farms and member of the Lagos Chamber of Commerce and Industry (LCCI), noted that FTZ facilities are largely allocated to foreign firms that eventually repatriate profits abroad.
According to her, local investors with the potential to generate employment and foreign exchange are often neglected due to limited access to capital. She called for SME hubs within FTZs and PPP-driven funding to support indigenous producers.
Recently, Chairman of the Basic Metals, Iron and Steel Manufacturers Sectoral Group of MAN, Lekan Adewoye, urged the Federal Government to establish a Special Task Force to recover lost revenue arising from abuses within FTZs.
He highlighted cases of under-invoicing and misclassification of finished goods as raw materials, allowing operators to evade taxes and smuggle products into the domestic market without adding any value.
Adewoye revealed that one Ogun State steel manufacturer has been forced to scrap nearly 80% of its installed capacity due to unfair competition from FTZ operators. “If this persists, more steel manufacturers will collapse, leading to job losses and wasted investments.”
