Lekki port can help Nigeria be a manufacturing hub for Africa

By David Whitehouse
Posted on Thursday, 6 January 2022 11:23

A new factory built in the Lagos Free Zone
A new factory built in the Lagos Free Zone (photo: LFZ)

Completion of Nigeria’s first deep water port at Lekki will mean the country can take advantage of African free trade to become a manufacturing hub for the continent, Lagos Free Zone Company CFO Ashish Khemka tells The Africa Report. Lagos Free Zone raised 10.5bn naira ($26m) in an oversubscribed bond sale in September.

Lagos Free Zone involves the development of about 740 hectares of land over the next 15 years, including the development of Lekki. The port is 79.5% built as of early January and the first phase is scheduled for completion in September, Khemka says.

Nigerian ports have been ranked among the worst in the world due to slowness, red tape and congestion both internally and on the external road network. That hampers the country’s attempts to diversify the economy away from oil. The handling capacity of ports in Nigeria is estimated at 60m tonnes, while demand is about 100m tonnes. That demand is likely to increase in future as urbanisation and population growth continue.  Ships currently have to wait between 25 and 30 days just to get a berth at ports such as Tin Can and Apapa. Those delays will be slashed when Lekki is finished, Khemka says.

The National Council of Managing Directors of Licensed Customs Agents (NCMDLCA) has described Nigeria’s ports as being river ports rather than seaports. Ghana, Côte d’Ivoire, Cameroon, Benin Republic and Togo have benefited from being able to offer deeper ports. Lekki will allow 18,000 TEU (Twenty-foot Equivalent Unit) capacity vessels, four times bigger than the ships that Nigeria can currently berth.

  • All industries in Nigeria will benefit, led by manufacturing, Khemka says. “This will be a game changer for the country.”
  • The multiplier effect of the investment in the port, which totals about $1.2bn, is estimated at about 230 times over the 45-year concession period, Khemka says.
  • The port will create about 170,000 jobs.

Construction is being carried out by China Harbour Engineering Company (CHEC). The first phase of the project includes two container terminals. Lack of port infrastructure has been the main constraint on Nigeria’s ability to handle containerised shipments, Khemka says. He estimates the country handles between 1mn and 1.2mn containers a year, only slightly ahead of much smaller Ghana on 600,000 to 700,000.

  • Lekki will enable Nigeria to punch its weight relative to other ports in the region, he says. “Nigeria will become a shipment hub for West Africa.”

Bond Sale Plans

The Lekki project is part of Nigeria’s strategy to improve port efficiency. The Nigerian Maritime Administration and Safety Agency (NIMASA) is starting a digital system for vessels calling at the country’s ports. Physical transactions involving sailing certificates and cargo processing are being phased out and replaced by a “total digital manifest” on the NIMASA portal.

  • The scheme aims at faster turnaround times, less human intervention and lower revenue leakage. Lekki will be ready for “all forms of digitization which will improve efficiency,” Khemka says.

Lagos Free Zone raised 10.5bn naira ($26m) in an oversubscribed bond sale in September.  The company is planning a further bond sale to support the project. The amount sought will be between 20bn and 25bn naira, Khemka says. He is currently seeking the regulator’s approval for the sale, and aims to go ahead in the second week of February.

Logistics in Nigeria are further complicated by a poor road network. The country has the lowest road-to-population ratio in Africa. Khemka is confident that Lekki will have the supporting infrastructure it needs. Given the economic importance of the project, Khemka says that federal and state governments will meet their road-building commitments. Much remains to be done, and roads are a “prime focus” as the port nears completion. “We don’t see that there will be a bottleneck,” he says.

  • The government is currently working on six roads for the port. Khemka says there may be a delay of six months from port completion to when the roads are all finished.

Bottom Line

Lekki won’t meet its full potential until it is supported by a fully developed road network.

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