Lagos Free Zone, a special economic zone integrated with the Lekki Port, is being positioned to be a major manufacturing hub in the world. In this interview, DINESH RATHI managing director/CEO of the Zone talks about the opportunities available for investors and the overall impact on Nigeria’s economy and West African sub-region. AMAKA ANAGOR-EWUZIE reports.
Tell us about the Lagos Free Zone and its current development status. How ready is the Free Zone to receive investments?
Lagos Free Zone (LFZ) is a special economic zone located 65km East of Victoria Island in Lagos. It is situated on 850 hectares of land and promoted by Tolaram, a Singapore headquartered conglomerate. We completed the land acquisition process in 2012 and have since invested 10 years into the development of critical industrial infrastructure, most importantly, the Lekki Port project. Currently, we are developing phase 1, which covers 300 hectares of land. Lekki Port, an integral part of LFZ, will come on stream by the end of 2022. Once that happens, the Zone will become the economic epicentre of Lagos and Nigeria. The vision of LFZ is to be the preferred industrial and logistics hub for blue-chip companies.
We have conceptualised and actualised the project to meet the requirements of international investors that want to bring Foreign Direct Investment (FDI) into Nigeria. We have been able to get some of the most reputable brands to the Zone. These include the likes of Kellogg’s, Colgate-Palmolive, BASF, and many others. We are now expecting additional tenants because we have put in the necessary infrastructure to support efficient industrial operations and value-added services at LFZ.
In simple terms, I would describe the Zone as a fully functional special economic zone with all the support infrastructure completed and functional.
Having taken the Zone to its current development level, what is your management doing to drive investments into the Free Zone?
We are making a 360-degree effort around our investment promotion, including driving key stakeholder engagement, active participation in coveted industry events, and continuous engagement with prospective tenants. Last year, we hosted high-profile visitors at the Zone to showcase what we have done and how we are ready to support business operations across sectors. These prospective investors are not limited to foreign companies but also the local ones in Nigeria. We also liaise with diplomatic missions and communities to guide the business investments coming from their countries into our Zone. So far, we have received delegations from various chambers of commerce and industry associations at the Zone to highlight its key value proposition.
These include the American Business Council, Indian Professional Forum, European Chamber of Commerce, and the Lagos Chamber of Commerce and Industry, among others. We have also appointed channel partners who work extensively with the industry on market entry and expansion strategy. We have also appointed an international marketing agency, which anchors to ensure that our marketing communication is top-notch and internationally relevant.
The effort to attract investment to the Zone runs simultaneously on two fronts: to encourage existing companies in Nigeria looking for expansion opportunities and to constructively engage with international markets, especially for investors looking at bringing FDI into Africa vis-a-vis Nigeria.
It is also worthy to mention that these efforts have been received very positively within the industry and have contributed to LFZ being recognised internationally by fDi Intelligence as a Highly Commended Free Zone in the Regional (Africa) category of the Global Free Zones of the Year 2021 awards.
Read also: Lagos Free Zone redefines ease of doing business in Nigeria
There are several Free Trade Zones in Nigeria, particularly in Lagos and Port Harcourt, and more are still coming up. Why will an investor choose to invest in Lagos Free Zone?
The biggest strategic differentiator LFZ has is the seamless access to Lekki Port which is the first modern, deep seaport in Nigeria that can service vessels of up to 18000 TEU capacity and is located inside our Zone. Furthermore, the breadth and quality of support infrastructure provided, such as Grade-A warehouses, prebuilt standard factories, central gas-based power stations, high-quality internal roads, and civil infrastructure set us apart. Facilities such as the central processing centre, residential units, fire station, police station, a truck park, and medical facility enhance the ease of operations and emergency preparedness at LFZ.
When you look at the proximity to the deep seaport with the infrastructural facilities and services in Lagos Free Zone, the result is an entirely unique ecosystem that delivers better value than other free zones.
Tolaram, as an organisation, has been in the country for many years and has gone through a sustained learning curve which has helped it understands the challenges and opportunities that are peculiar to this market. We are bringing all our learnings from growing in and with Nigeria for over 45 years to ensure that access to all the necessary industrial infrastructure to successfully operate and chart a growth path as an investor in Nigeria becomes as efficient as possible.
Are there companies operating in the Free Zone currently? If there are, who are they? And what is the worth of their investments?
We have got Lekki Port which is our keystone project within the Zone. We also have the likes of Kellogg’s, BASF, Colgate-Palmolive, Arla, Power Oil, Lekki Freeport Terminal (a subsidiary of CMA Terminals), SANA Building Systems, and CNC Logistics, among others. All these companies operate within the Zone.
The total deployed investments to date within LFZ including investments made by respective tenants stands at about N600 billion (USD1.2billion). By the end of the year, our aim is to reach N1 trillion (USD2billion).
We have conceptualised and actualised the project to meet the requirements of international investors that want to bring Foreign Direct Investment (FDI) into Nigeria
How has the Lagos Free Zone’s existence impacted the Lagos economy and Nigeria in general? Are there other economic implications that the Free Zone holds for Nigeria?
Due to the presence of Lekki Port, the Zone would have a substantial catalytic impact on the Nigerian economy. On account of the Port alone, the Zone will be adding a handling capacity of 1.2million containers (TEU) annually, which will make us well equipped to handle a high volume of international trade. The second contribution is that economic activities would get a massive boost because historically, ports have unlocked a multiplier effect on the GDP of host countries. Take for example last year, we contributed a substantial amount to the overall collection of Customs.
Thirdly, we generate substantial employment opportunities with close to 4,000 people working in the Zone, and almost 30 percent of them are from the local communities. Once the port becomes operational, the employment numbers would experience a growth trajectory of about 30,000 people working in the Zone within the next 4 or 5 years.
Beyond the employment opportunities, LFZ has contributed to the economy by significant revenue generation through payment of Customs duties, PAYE, and other levies. At LFZ, we are providing all the factors for industrial production at a very competitive rate so that investors can enjoy the benefits of operating within the Zone as efficiently as possible. LFZ has equally created a competitive landscape that allows investors to cater to the market’s needs within Nigeria more efficiently. LFZ will enable them to utilise interconnectivity with other parts of West Africa through the Lekki Port to improve export in a competitive manner.
In a nutshell, LFZ would position Nigeria as a formidable manufacturing hub in the coming years.
What is your relationship with government agencies, particularly NEPZA and NIPC? How are you collaborating with both agencies to drive investments into the Free Zone?
Our relationship with the Federal Government through the Ministry of Trade and Investment has been very cordial. All the government agencies, including Nigeria Export Processing Zone (NEPZA), the key regulator, have been highly supportive. Agencies such as the Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), Department of State Security (DSS), Nigeria Police Force (NPF) have been supportive of our efforts at LFZ.
The current Managing Director, NEPZA, happens to be a former Customs Officer and a former member of the NIPC board, who can bring an investment promotion mindset to his office.
We have a cordial relationship with the Nigerian Investment Promotion Commission (NIPC). We recently met with and requested their current Managing Director to visit the Zone to guide foreign direct investment into Nigeria.
Lagos Free Zone houses the Lekki Deep Seaport, an iconic project. How will you leverage the port’s closeness to the Zone to grow business in the Zone?
Once the Nigerian government formally implements the rules and procedures for the African Continental Free Trade Agreement (AfCFTA), the port integration with the Zone will become a critical factor in making Nigeria a manufacturing and distribution hub for Africa. As an operator within the Zone, you can use the Lekki Port to bring your imports and export your finished products to the rest of Africa. Logistics has been one of the biggest challenges preventing Nigeria from becoming an export hub. We believe that the Lekki Port and LFZ combination can be a silver bullet to that problem. There are a lot of inefficiencies that apply to the container business in Nigeria today. The presence of Lekki Port will significantly bring down the cost of logistics for those who import and export in Nigeria.
Can you share some of the incentives available for investors in the Zone?
Through the Nigeria Export Processing Zones, the Federal Government of Nigeria established NEPZA Act in 1992. This Act provides for specific incentives that lead to efficiencies for those companies operating within the Free Zone and provides a compelling framework for international investors looking at Nigeria.
What have been your challenges?
First was the slowdown of the economy that has impacted the way we have done many things, leading to inflationary pressures, especially in terms of our input costs for development and growth. In simple terms, there is a challenge occasioned in the short term by the macro-economic situation in the country.
The second is the road network. I must express our sincere appreciation to the Lagos State Government, which has significantly improved infrastructure in the Ibeju-Lekki axis. Given the kind of economic development happening on that axis, we would need more support and the fastest execution of the infrastructure for the benefit of Nigerians.
