LAGOS — Principal Consultant, International Trade Advisory Services Ltd, Okey Ibeke, has backed the Nigeria Customs Service’s suspension of further transire processing for bonded terminals, warehouses and Free Trade Zones with unresolved transactions, saying the action has exposed a bigger question about the actual economic value being delivered by Nigeria’s Free Zone regime.
Ibeke, who spoke to maritime journalists in Lagos on Friday, said while bonded facilities and Free Zones were created to facilitate trade, manufacturing and exports, Nigerians were entitled to know what the country was getting in return for the extensive government’s fiscal and Customs incentives granted to operators.
The Customs directive requires affected facilities with outstanding transire transactions to reconcile their positions before they can process, initiate or obtain approval for fresh transire applications.
The directive also reportedly rules out waivers, local clearances or exceptional approvals for affected facilities until the reconciliation exercise is completed.
Ibeke described the measure as “a necessary enforcement intervention,” but said the issue should go beyond the immediate Customs action.
“We need to ask a very simple question: what exactly are many of these Free Trade Zones producing, and where are the exports?” he said.
“If the principal justification for the incentives is export-oriented manufacturing, then the public should be able to see the products being manufactured, the volume and value of exports, the markets they are going to and the number of genuine jobs being created.
Ibeke said Nigeria’s Free Zone policy was established to attract investment, promote export-oriented manufacturing, create employment, increase foreign exchange earnings and encourage technology and skills transfer.
NEPZA currently lists more than 40 Free Zones and over 500 licensed enterprises, with permissible activities ranging from agro-processing, textiles and garments to pharmaceuticals, chemicals, electronics, machinery, food processing and oil and gas-related manufacturing.
“But having a licence to operate in a Free Zone is not the same thing as demonstrating that the zone is achieving the economic objectives for which it was established,” Ibeke said.
He questioned whether Nigeria had a sufficiently transparent system for measuring actual production and exports by individual zones and enterprises.
“How many are actually manufacturing? How many are primarily warehousing or trading? What products have they manufactured in the last three years? What quantity was exported? What was the foreign exchange value? How many Nigerians are genuinely employed there?”
He said these figures should not be treated as confidential information when the operators are beneficiaries of substantial government incentives.
NEPZA’s published figures show the scale of the scheme. Its current website lists more than 40 Free Zones, over 580 enterprises, more than $30 billion in foreign investment and more than 25,000 jobs created.
But Ibeke said the stated foreign direct investments figures should not be a measure for what is on ground.
“Government should be able to disaggregate those figures. We should know which enterprises are operational, which are manufacturing, which are exporting and which are merely registered,” he said.
NEPZA’s own performance data previously showed a significant gap between registered enterprises and those actually operating. Its published figures listed 584 enterprises, of which 244 were operational, 30 were under construction and 307 had yet to commence operations.
Ibeke said such figures make greater transparency even more important.
“If hundreds of enterprises are licensed but a substantial number are not operational, then Nigerians deserve to know why. The Free Zone scheme cannot become a cover for warehousing and distribution of illegally imported goods and prohibited items”.
He stressed that Free Zone status does not mean that goods can simply enter Nigeria’s domestic market without Customs controls.
“The Free Zone concept is about production, processing, investment and exports. It was never designed to provide a back door into the Nigerian market for finished goods without the appropriate Customs treatment,” he said.
Ibeke said the same principle applied to bonded terminals.
A transire facilitates the movement of cargo from one Customs control point to another. It does not constitute an unrestricted release from Customs control.
Where a facility has outstanding cargo transactions, he said, Customs was justified in demanding reconciliation before allowing additional duty-suspended cargo to move under its authority.
According to Ibeke, the vulnerability arises when the movement of cargo becomes difficult to reconcile. He identified possible areas of abuse as cargo diversion, false declarations, under-valuation or under-declaration, manipulation of quantities and unauthorised release of duty-suspended goods into the domestic market.
Weak controls could also create opportunities for prohibited or restricted goods to exploit the transit and warehousing chain.
He stressed, however, that such vulnerabilities should not be interpreted as evidence that every bonded terminal or Free Zone operator is involved in illegal activity.
“The point is that the system must be strong enough to prevent abuse and detect it when it occurs,” he said.
Ibeke commended Comptroller-General of Customs, Adewale Adeniyi, and the Customs Service for insisting on reconciliation before affected facilities receive further transire privileges.
He said the decision to prevent local waivers or exceptional approvals while outstanding transactions remain unresolved would also strengthen enforcement.
However, he urged Customs to ensure that the reconciliation process was transparent, evidence-based and concluded within a reasonable period.
“Legitimate operators should not be held down indefinitely. Once a facility has satisfactorily reconciled its transactions, its operations should be restored,” he said.
He also called for stronger digital tracking of containers, regular reconciliation of transire movements and better integration of Customs records with bonded terminals and Free Zone inventory systems.
Ibeke said the Customs action should now trigger a broader review of the Free Zone regime.
He called on the relevant authorities to publish an updated performance scorecard showing the number of operational enterprises, their actual production, exports, domestic sales, Customs obligations and direct employment.
“The Nigerian public should not have to rely on broad claims about investment and jobs,” he said.
“We should see the factories, the products, the export destinations, the value of exports and the jobs. If an enterprise enjoys duty-free or other special treatment, Nigerians should be able to measure the economic return.”
He said the issue was ultimately about ensuring that trade facilitation and investment incentives served their original purpose.
“Facilitation should support production and exports, not simply the movement of imported cargo,” Ibeke said.
“And Customs must continue to protect the system against revenue leakage, cargo diversion and smuggling.”
He added that the current suspension provided an opportunity not only to reconcile outstanding transire transactions but also to examine whether Nigeria’s Free Zone system was delivering the manufacturing, export and employment outcomes promised when the incentives were granted.
