With an abundance of resources and a growing trade economy, Africa needs ports, planes and infrastructure. Countries like Nigeria, the continent’s tiger-economy – leaping forward thanks to its manufacturing and oil and gas industries – are fighting hard to capitalise on their growth but are being hindered by a lack of basic logistical investment. Now, Nigeria’s leaders and foreign investors are changing all of that – one free trade zone at a time. The model, based on China’s success story, has seen the formation of free trade zones across the country, with the biggest and most crucial one located adjacently to the country’s commercial capital, Lagos.

The Lekki Free Zone is an ambitious project with the potential to transform Nigeria’s economy, but it is still very much in development. The key focus now is to make the zone viable for business and more importantly, to set up an unprecedented suite of infrastructure that will make any logistics veteran giddy. Potentially, Lekki’s deep-sea port will be one of the most advanced in the world, and the area’s sheer size will provide for warehouses storing millions and millions of trade wares. This is all in addition to a nearby refinery, which will ensure that the zone also becomes a hub for energy exports. All this is part of a national programme. The Nigerian Enterprises Promotional Agency has set out to create a slew of free trade zones all over the country, in the hopes that Nigeria can repeat China’s story, and become the leading economy of its region. The Chinese model – which first came into force in 1988 – saw the creation of several special economic zones that employed more flexible economic policies and government measures, in order to foster growth and foreign direct investment within those areas.

Nigeria statistics

Consumer price index

147.4
July 2013

158.6
July 2014

This later led to the expansive growth of economic hubs such as Shenzhen, Shanghai and Guangzhou, which have greatly contributed to China’s double-digit surges in GDP on an annual basis. With Nigeria’s GDP stumbling at five to six percent growth in recent years (see Fig. 1), its authorities are eager to move forward and light a fire under the country’s industries.

Incentives in West Africa
As such, Nigeria’s free trade zones are set to start industrial development, improve the local economy and generate employment and technological knowledge, through incentives such as a 100 percent tax holiday, custom duties and levies, foreign ownership of investments, no restrictions on the hire of foreign employees and a complete waiver on import and export licences. Lekki specifically will have four areas covering 16,500 hectares, with each phase dedicated to specific industries and types of business. Crucially, the overarching and all-encompassing focus and basis of the zone is facilitating logistics, says Chairman Olusegun Jawando of the Lekki Free Zone Development Company in an exclusive interview with World Finance.

“We are currently in the initial stages of development, with phase one’s roads and infrastructure already in place; the refinery in phase two up and running; and we’ve started construction on the deep sea port. The next step is to develop an infrastructure throughout Lekki. Electricity in Nigeria is very epileptic and we cannot allow that to happen in the zone, which is why we are developing an independent power supply. We’ll be working on ensuring the supply of water, telecommunications and increasing the road network in and around Lekki, because all industries coming here will require these things,” explains Jawando.

Lekki deep sea port

Facts and figures:

The port can handle the largest vessels in the world, including Majestic Maersk, which at 396 metres long is the world’s largest ship
The approach channel will be 16.5 metres deep, making it the deepest in West Africa
It will cover an area of 90 hectares with room for expansion in future
It will be capable of holding three container berths and one dry bulk berth
It can handle four million tonnes of cargo
It will create over 162,000 jobs in the area
The hope is that this will foster a strong trade, manufacturing and logistics sector, driven by the local light industries and energy exports. This is why the development company has established a massive land area for warehouses that can house the millions of goods set to come in and out of Lekki through its deep-sea port and the new international airport built within the zone.

In particular, Lekki’s deep-sea port has been dubbed the port of West Africa, being the deepest and one of the largest harbours on the continent. The project itself comes at a pricy $1.35bn, funded by the federal government, state government, and private investors (see Fig. 2). But in return, the port will create over 162,000 jobs and help to facilitate decongestion at Nigeria’s other ports, built initially to handle 60,000 tonnes, but which are now handling over 100,000 tonnes of cargo.

According to the Lekki Port LFTZ Enterprise, the port is designed to accommodate the largest vessels in the world and is expected to cover an area of 90 hectares with room for expansion, making it able to handle four million tonnes of cargo. Within 45 years, the government plans to see a $345bn payoff on the port, making it highly profitable. As part of the bargain, authorities have agreed to invest in significant road improvements to and from the zone. “We expect that about 25 percent of Lekki’s revenue stream will come from logistics,” says Jawando. “Nigeria is pivotal in West Africa and other countries are dependent on our industries and exports (see Fig. 3). Lekki will facilitate this and strengthen our links within the region”.

Creating new development
The hope is that Lekki will become a nerve centre for distribution for the Lagos area and nearby sub-regions. The current international airport in Lagos is extremely congested, and for many travellers, it’s common knowledge that the trip to and from the city can easily take three hours on muddy, chaotic roads. By establishing an airport in Lekki, the current hassle related to Lagos will be eliminated and by firstly focusing on the transport of cargo, Lekki will effectively become a major manufacturing and development zone.
For more inquiries call Korede on 09098947219 or 09057243390

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