CHINESE TAKING OVER THE NIGERIAN BUSINESSES IN THE FREE TRADE ZONE : CHALLENGES AND WHO TO BLAME <\/p>\n
By HARUNA OMOLAJOMO<\/p>\n
Recently, maritime stakeholders are of the opinion that the Chinese and other foreigners had fully taken over Nigerian businesses in the Free Trade Zone by bringing in all goods and paying less duty or nothing at all. Is this the full picture?
\nTo my mind, that’s not the full picture. What I observed is the real shift that is causing tension especially in Lagos. It should be recalled that on 15th September, 2026, traders at the Trade Fair complex Lagos , protested . Their protest was on “Chinese must go” and “they should go from our market environment” These traders grouse was that the Chinese,as manufacturers and wholesalers , who supposed to supply Nigerians middle men are now opening direct retail outlets inside the market there by selling directly to the consumers . This is a case of door to door services in the maritime business chain . To be honest, this model is surely threatening the Nigerian traders who provide financing , warehousing and distribution, yet the state and local governments will expect them to pay taxes and other related dues .
\nIt is a known fact that the Chinese, Lebanese,Indian and other foreign investors have long been in manufacturing, plastics ,Steel, Ceramics ,tiles and superstores but recently the Chinese had overshadowed others . Chinese trade with Nigeria now is not less than $26bn.
\nIt is a known fact that there could be documented cases of duty evasion and concealment. Some foreigners here must have contravened import laws and underpaid duty, to the tune of a billion naira. It is not true however to claim that they pay nothing.
\nNote that all goods into Apapa, Tincan and Lekki ports go through Nigeria Customs Service valuation.The issue at stake is different advantages the foreigners enjoyed as against the local Nigerian traders . For instance,the Chinese enjoy low interest rates from their home country. It therefore has the comparative advantage over the Nigerian traders .
\nIt should be noted that whether we like it or not the Chinese no doubt must have contravened import laws and underpaid duty to the tune of billions since they started operations there . It is not therefore correct to state that they paid nothing for duty as a rule .
\nThe real issues could be having direct access to low interest credit; ability to import more volume of goods ; ability to sell cheaper; reduction of certain goods like brake pads etc from 25% to 10% since 2024. These factors above are making the Chinese have comparative advantage over the Nigerian traders as well as making their imports to be cheaper too.
\nIt is also a known fact that Nigeria businesses still rely on Chinese imports because it is cheaper than manufacturing it here . This is not unconnected with credit cost, business climate and power issues in Nigeria.
\n We must equivocally state that in the Free Trade Zone, paying little or no duty is legal. This does not mean that the foreigners have taken over businesses. Lekki Free Trade Zone is a PPP consortium of Chinese Companies represented by China-Africa Lekki Investment Limited with 60% stake . Lagos on the other hand through Lekki Worldwide Investment has the remaining 40% . As we speak ,there are over 120 investors there comprising the Chinese and other foreigners.
\nIn the Lekki Free Trade Zone,duty free,, tax free, import of raw materials and components for goods destined for re-export are obtainable therein. Others are capital goods, machinery and equipment and these are duty free. Customs also made it possible for the companies there not to source for Form M . No PAAR is also required. In this way, goods are brought in without paying anything provided it stays inside the FTZ. This is an incentive from the NEPZA act to attract factories. This is why the local traders outside feel cheated . A factory in Lekki Free Trade Zone can only pay duty if,for instance, it is Chinese Steel Coil or plastic pellets,not the finished door product or pipe. So the duty at the end is lower .
\nIt is interesting to note that the federal government is aware of abuse in this arrangement and therefore put in place “New Nigeria Tax Act 2025 ” . The act simply states that FTZ firms can only sell 25% of output into Nigeria without losing tax expectations . That if they exceed 25% , profits on domestic sales are taxed . FIRS claim that this is to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market.
\nWe must lay emphasis on the fact that the Chinese and other foreigners have not taken businesses in this zone illegally. They are doing legal business there . It is the federal government who invited them and gave them those privileges they are enjoying there . These are in the areas of 60% of LFTZ , legal duty free import for manufacturing exports. The only problem or issue is that the Chinese are contravening the good intentions of the federal government by selling 100% of their finished products instead of 25% allowing them into the Nigerian market or exporting the remaining 75%. They are using LFTZ as a cheaper route than Apapa .
\nIn order to further close this loophole, the federal government needs to enforce the act stated above. Secondly , a level playing ground needed to be created for these foreign investors and Nigerian manufacturers. The local content,by now, should be protected or totally encouraged. If the federal government can genuinely fix power, give favourable credit facilities to the local manufacturers and enforce the FZ export rule , it would go a long way for the masses to enjoy cheap goods . One thing is certain , if what is produced outside the FZ was cheaper , Nigerians would not need to import goods from China again.
\nThe question that will readily come to mind is who is to blame ?
\nAgain, the above can be traced to fiscal framework challenges 100% . It is not just a Chinese trade problem. It is because our federal government failed to provide a fiscal model for 20 or more years by providing steady power, cheap credit facilities and good roads . Instead of doing this, they are given wavers of 0% company tax , 0% duty free on machine, equipment, rent free land and no expatriate quota inside the FTZ. The result is that we are losing revenue upfront hoping to gain jobs and exports later . But where there is no monitoring , what you get is “tax expenditure without performance”
\nMy final take here is that the Federal Government, NEPZA and Customs among other relevant government agencies have to live up to expectations . Since they set up the rules, they must strictly enforce it . Any time the Chinese or any other nationalities go beyond their boundaries and establish retail outlets , they need to be sanctioned . Local content of the Nigerian traders must be protected. It is a known fact that for Chinese takeover retailing in the market ,the Chinese private firms and the shylock landlords who rented shops and Warehouses to them because they paid a higher rate are culpable. They must be sanctioned accordingly.
\nNigeria must rise again. <\/p>\n
HARUNA OMOLAJOMO is the
\nM.D\/CEO HARSECOM LOGISTICS LTD<\/p>\n","protected":false},"excerpt":{"rendered":"
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