• Thursday, December 07, 2023
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Lekki Port: Innovating Nigeria’s approach to trade for modern future

Lekki Port: Innovating Nigeria’s approach to trade for modern future

Lekki Port is the first deep-sea port in Africa’s biggest economy and one of the largest deep-water ports in West Africa. Built on a 90-hectare land area, the port is Nigeria’s first fully automated port equipped with world-class machines that are better imagined in movies.

Dipo Oladehinde joined officials of the company on a tour of the facility and found that the facility can promote a blue economy diversified from reliance on oil and gas as the main sources of revenue.

Since the concept of developing deep sea ports has gained traction across the globe for decades now, records have shown that the development as an economic infrastructure has tremendously influence positively on the growth of countries that took the initiative.

Read also: Lekki Port in slow start as economic hardship worsens

The United Nations Conference on Trade and Development (UNCTAD) estimates showed more than 80 percent of global merchandise trade by volume is transported by sea, and ports play a vital role in ensuring the efficient and cost-effective movement of goods.

A cursory look at the economic history of Britain, Netherlands, and Singapore, reputedly referred to as the maritime powers in the world, undoubtedly proves the important role such ports have played in the development of their economies.

These ports are the lifelines of global trade, serving as hubs that connect producers, suppliers, and consumers across continents.

The UN trade group believes ports provide a platform for the efficient exchange of goods, fostering economic growth and development worldwide.

It added, “By providing berthing facilities, cargo handling equipment, and logistical services, ports facilitate the movement of commodities, manufactured goods, and raw materials, enhancing global trade networks, especially in African countries”.

While the ability to export products or import inputs efficiently will be key to helping African countries engage more comprehensively with global trade, a new World Bank report finds that even many African countries with major sea ports can still take longer delays than the average European or North American country.

As African countries heavily rely on international trade to boost their economic fortunes, they need to improve customs operations and transport infrastructure. This would have a huge impact on logistics in sub-Saharan African countries, according to a World Bank report.

Read also: Lekki port struggles to gain traction amidst economic headwinds

To change the narrative, some private investors have embarked on one of the region’s most ambitious infrastructure projects, the Lekki Deep Sea Port.

Located approximately 40 miles to the east of Lagos the port covers over 90 hectares, it represents the first expansion of the country’s ports in 25 years and is part of an ambitious plan of development for Africa’s biggest economy.

The development of the seaport located in the Lagos Free Trade Zone initiated by the Tolaram Group was conceptualised on the basis of a significant gap in projected demand and capacity.

Market studies indicated that the demand for containers in the region is expected to grow at a steady Compound Annual Growth Rate (CAGR) of 12.9 percent in 2025.

Given the expansion constraints on the existing infrastructure, the capacity in Lagos was incapable of meeting the growing demand.

“The strategic location, flexible and optimised layout, and modern facilities give Lekki Port a competitive edge over any other port facility in the West African region,” Adesuwa Ladoja, the executive director of Lekki Deep Sea Port said during the tour.

Prior to the operationalisation of the port, which recently acquired the status of a trans-shipment hub, the African continent lacked a regional trading hub aside from South Africa, which may be described as the trading hub for Southern Africa.

The emergence of the deep seaport in Nigeria positions it on the path to acquiring the status of West Africa’s trading hub.

“The speed of construction and completion would not have been possible without deep pockets of foreign investments,”

BusinessDay’s findings showed the total cost of construction of the Lekki seaport was estimated at $800m while fixed assets cost stood at $1.53bn.

The project is unique in Africa as the continent’s coastline has relatively few natural harbors large enough to accommodate today’s modern ships. In addition to being the first of its kind for Nigeria, it is also one of the largest ports in sub-Saharan Africa.

The first phase, which has been completed, developed the overall layout including a five-mile-long navigation channel, a nearly 2,000-foot turning basin, a 62-foot depth throughout the port, as well as the breakwater and berths.

The container terminal consists of three berths at a nearly 4,000-foot quay and a container storage yard with over 15,000 slots. It is the first Nigerian port with ship-to-shore super-post-Panamax cranes. The container port can handle an annual throughput of 2.7 million TEU.

Read also: Lagos in aggressive push ahead traffic from Dangote Refinery, Lekki Port

When fully completed the port will also have a liquid bulk terminal with three additional berths with a capacity to handle vessels up to 160,000 dwt. There will also be a tank farm connected by pipelines running to the breakwater. The dry cargo terminal will have the capacity to handle up to four million metric tons of dry bulk per year.

“This is the gateway to the maritime and beyond. I have not seen any investment like this anywhere other than in Dubai. This port can generate hundreds of millions of dollars in revenue for Nigeria and hundreds of thousands of jobs,” Lawerence Smith, the chief operating officer at Lekki Port said.

The new Lekki Deep Sea Port is 75% owned by the China Harbour Engineering Company and Tolaram group, with the balance shared between the Lagos state government and the Nigerian Ports Authority.

The Lagos State government owns 20 percent of the equity, the 90 hectares of land the port sits on, and 5 percent of the shareholding is for the Nigerian Ports Authority.

“The Lekki Deep Sea Port is a project of pride not only for the promoters but for the government and the people of Nigeria,” Ladoja said during the tour.

The seaport is expected to generate direct and induced business revenue estimated at $158 billion, a qualitative impact on the manufacturing, commercial, and services sectors, and a multiplier effect over 230 times the cost of construction.

Its modernity and efficiency are projected to make Nigeria a regional hub and boost the country’s GDP. It is envisaged to have an estimated aggregate macroeconomic impact of $361 billion over 45 years.

“Lekki Port remains a game-changer that would redefine maritime activities in Nigeria and the entire West African sub-region,” Ladoja said on the sidelines.

Promoters of the Lekki Deep Sea Port, Lekki Port LFTZ Enterprise said the Lekki Port will revolutionise maritime activities in Nigeria, noting that, the port would facilitate trade volume growth and increase the Gross Domestic Product (GDP) of the country.

Smith highlighted other benefits including; improvement of external trade competitiveness through improved port efficiency, cost-effective port operations & services, and improved turnaround time for cargo handling and clearance, a reduction in delays in the supply of raw materials and equipment, as well as reduced costs of importations and charges such as demurrage, among others.

“With Lekki Port, Nigeria will witness a growth in maritime traffic and global trade and strengthen connectivity and capability to provide efficient and reliable services.
Lekki Port,” Smith said.

Before its operation, significant revenue had been lost due to bottlenecks in Nigeria’s maritime sector as neighbouring countries had become the preferred berthing and transhipment points. As a result, landlocked nations like Chad and the Republic of Niger, which previously used Nigeria’s ports as transit hubs for their shipments, switched to neighbouring Ghana, Togo, Benin Republic, Côte d’Ivoire, and Cameroon.

“No doubt will be a critical engine that will drive the Nigerian economy upon commencement of operations. I am equally confident that it would help to reinforce Nigeria’s status as a regional maritime hub and enable many related industries to flourish,” Smith added.

Read also: Lekki Port is now processing transhipment cargo for neighbouring countries NPA

Lagos Free Zone

Further findings showed that Lekki Deep Seaport is part of the Lagos Free Zone, an initiative promoted by the Singapore-headquartered Tolaram Group.

Lagos Free Zone in Nigeria, on the West coast of Africa, is been promoted by Tolaram, an industrial conglomerate with more than four decades of experience in the country.

Global brands including Colgate-Palmolive, Kellogg’s, BASF, Indofoods, Arla, Insignia Print Technologies and Stanbic IBTC, among others, have taken advantage of the facilities and infrastructure provided within the Zone.

When fully developed, the Lagos Free Zone will be home to over 150 companies in seven to eight high-profile industrial clusters.

The Lagos Free Zone is divided into three major areas including industrial (70%), logistics (20%), and real estate (10%).

The industrial clusters that the Zone is targeting include food and beverages, pharmaceuticals, chemicals and downstream oils, agro-processing, engineering and logistics.

Manufacturing within the Lagos Free Zone comes with lower energy costs compared to manufacturing costs outside the Free Zone. The primary source of power is a rugged 7MW gas-fed power plant currently running on compressed natural gas, which provides cheap and reliable power to all enterprises. CNG is more cost-efficient than diesel generators, which is the primary power source for the manufacturing sector outside the Zone.

The Zone signed a Gas Infrastructure Development Agreement with a consortium of top energy companies to deliver piped natural gas to all our tenants by 2024. Switching from CNG to PNG will further reduce energy costs within the Zone.

Lagos Free Zone is connected to the hinterland by road. Lekki Port, which has a draught of 16.5 metres, is scheduled to be operational by December 2022, and will provide cost-efficient access to regional and international markets. It will result in Lagos strengthening its position as a regional logistics hub.

Lagos Free Zone occupies 850 hectares, and its development has been broken down into three phases. Phase 1, which is currently under development, and is expected to be completed by 2024, covers 300ha. Most of the companies in this phase are expected to see movement in their business revenues when Lekki Port, the deepest seaport in Nigeria, is commissioned in the fourth quarter of 2022.

Read also: Lekki Port commissions new scanning facility to enhance cargo examination

The total amount of tenanted space in Lagos Free Zone has gone up from 12.27 million sqft in 2018 to 14 million sqft in 2022; the number of big clients has gone up from four to nine; and the total number of direct jobs in the Zone has gone up from 820 in 2018 to 1,200 in 2022.

Who are the promoters of Lagos Free Zone?

Tolaram is a Singapore-headquartered enterprise focused on building businesses that propel growth and elevate communities. Since 1948, Tolaram has transformed from a single retail shop to a business that reaches over one billion customers across Asia, Africa, Europe, and South America. It is Africa’s largest consumer goods company with brands in packaged food and personal and household care.

Read also: Lekki Port receives first transship vessel with Cotonou-bound containers

Tolaram has fintech interests in Indonesia, Estonia, and Brazil and continues to seek strategic opportunities to drive financial inclusion for communities across emerging economies. In addition, Tolaram owns the only sack kraft paper producer in the Baltics making packaging products that are renewable, reusable, recyclable, and biodegradable.