Many of those zones were designed by Singaporean planners, who learned from Japan, the famous ‘flying geese’ development model through which capital and know-how cascades from country to country.
Will geese land in Nigeria? The country has 33 such zones. But only 15 are active, and the government has not fully backed them in the past. For instance, during Sanusi’s term as central bank governor, it did not allow repatriation of profits.
“Challenges such as low investor confidence due to frequent arbitrary changes in government policies and some political and social developments, including insecurity in different parts of the country, have negatively affected investor confidence,” says lawyer Afolabi Caxton-Martins of Dentons ACAS-Law. In addition, “in certain cases, the states where some of the free-trade zones are located are simply not viable and were bound to struggle to succeed from inception,” he says.
This has changed. The Nigeria Export Processing Zone Authority (NEPZA) is more stable under its current management – sabre rattling by the Onne zone notwithstanding. Several are now at advanced stages of construction and operation. Tolaram, a Singaporean agri-processor, is running the Lagos Free Zone, east of Nigeria’s commercial capital.
“The master-planning of the zone is by Surbana Jurong, one of Singapore’s topmost town planners,” says Lagos Free Zone CEO Dinesh Rathi. “Our group [Tolaram] has been in the manufacturing business for 50 years now, operating around the world. In Nigeria, we run 19 factories.”
The project integrates a deepwater port and has several anchor clients, including the second factory Kellogg’s has built in Africa and a Dano Milk factory from Arla. The sectors that Tolaram expect to be attracted to the zone are: food and beverages, pharmaceutical, chemicals, non-metallics and logistics.
“Given that the port is integrated into the zone, that will allow us to incubate the entire logistics vertical,” says Rathi. Along with the warehouses that have been built to lease, to allow investors to “focus on their core business”, Rathi argues the integration of a port into the project makes it a “silver bullet” for those who want to use Nigeria as a hub for manufacturing in West Africa.
Help with red tape
The Lagos Free Zone backers hope to achieve similar levels of ease of customs clearance as Singapore, he says, “something that is helped by the SEZ status. The government agencies [involved in clearing freight] are all housed under the same roof, and we are putting automation processes in place.”
This helping hand with red tape is a key draw for investors, says David Frame, managing director of South Energyx, the developers of Eko Atlantic City, another free zone. The project management is in discussion with the central bank, mediated by NEPZA, over the possible offshore status of banks that set up in Eko Atlantic.
Government backing is critical for connecting infrastructure. The Lagos State government is upgrading the road connecting to the city. Along the Lekki-Epe Expressway, north of the Lagos Free Zone, lies Alaro City, another free zone, set on 1,000ha carved out of the bush. It too has an anchor client up and running, Ariel Foods. Around 40 companies now have purchased land here, with a handful already building their factories.
Lekki will change Nigeria’s import-export story
For Babatunde Olaifa of Rendeavour, the company running the zone in partnership with the state government, the ability to bring goods out of Apapa port without going through the lengthy customs procedures is a major draw to investors. “Instead, they are inspected here at Alaro,” he says. It is attracting both local and international investors.
The Lekki port
Laurent Martens, Vice President Ports and Terminals, CMA CGM, speaks to The Africa Report about the Lekki Free Trade Zone.
Why invest in the Lekki port?
Investing in Nigeria, the country with the greatest population on the continent, is a good choice. The existing port facilities lack modern equipment, with lots of inland congestion.
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We also need some transhipment capability – not that Lekki will be a transhipment hub, but it could act as one in case of need for West Africa. The draft is 16.5m, the phase one capacity is 1.2m twenty-foot equivalent units (TEUs). With our seven ship-to-shore cranes and with the draft allowing bigger boats, we will be able to do 100 moves per hour – which is not incredible by global standards, but light years ahead of what we have at Apapa and Tin Can Island. It will make Lekki a port of the 21st century. It will change the import-ex-port story for Nigeria.
Who is the primary market?
Our goal is to be a gateway, mainly for the Lagos market, plus the wider Nigerian market. Year after year, CMA CGM is putting bigger ships into service for West Africa. We have plans to introduce more ships bigger than 10,000 TEU capacity – there are not so many ports in our network that are able to accept this kind of call. Our colleagues from the shipping side at head office are waiting for us to open the Lekki Terminal as soon as possible.
This article was first published in The Africa Report’s print magazine.
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