Construction of the Lekki FTZ is underway and more than 30 investors have already shown
substantial interest to set up shop in the zone. Picture: Caterina Bortolussi
The Lagos State government has grand plans for the Lekki Free Trade Zone. Caterina Bortolussi spoke to Mrs Olusola Oworu, Special Advisor to the Lagos State Governor on Commerce.
Could you give us an overview of the Lekki Free Trade Zone (FTZ) and the progress that has been made?
Construction of the Lekki FTZ is in progress. It is not just a FTZ but a new model city. Apart from the industrial component, we will have urban development, which include residential accommodation, business centres, a financial hub and tourism activities. Initially we will be looking at light industries such as textiles, electronics, household equipment, and foods and beverages, but around the ports we will accommodate heavy industries like petro-chemicals and oil refineries. We have five kilometers of coastline and we intend to make the best of it by having a deep seaport to accommodate huge vessels coming in from all over the world. The idea is to make the port the shipping hub of West Africa. We are also proposing to have an international airport not too far from the zone as 70% of the people that use the Murtala Mohammed International Airport come from Ikoyi and Victoria Island. The airport will also service the logistical needs of corporate businesses.
Who is responsible for the development of the Lekki FTZ?
The first 3 000 hectares will be developed with the Chinese. They are assisting us with certain infrastructure such as a power plant, sewage systems, a water treatment plant, as well as the construction of roads. They will help us with the first phase, and then the rest of the zone will be opened to other developers. The idea is to fast track the development of the zone; we cannot leave it to one developer because of the amount of funding that is required. The Chinese are the first set of developers we have in the zone to jump start things and we already have a 350 hectares launch area to be commissioned by the end of May 2008.
What incentives and policies do you have in mind to attract investors to the zone?
The idea is that anything coming into the zone is duty free and that investors do not have to pay taxes. Companies can be 100% foreign owned, foreign exchange controls will not apply and investors will be able to easily move their capital and profits overseas. Furthermore, in terms of meeting the requirements and policies for setting up business in the zone, there is going to be a one-stop-shop within the zone to fast track any necessary procedures.
What are the main advantages of the Lekki FTZ when compared to other free zones like Onne, Calabar, Kano and others?
The key advantages are the accessibility, location and the market. Lagos State remains the commercial hub of Nigeria with about 65% of the commercial activities. The state has the largest population in Nigeria with about 18 million people; so there is a ready market. Apart from the market we have in Nigeria itself, we also have good access to the whole of West Africa reaching the largest consumer market in Africa with over 500 million potential consumers.
To make the Lekki FTZ more accessible the Lagos State Government, in conjunction with the federal government, is looking at expanding the Badagry expressway that leads to the Seme, the main border crossing between Benin and Nigeria. We are also looking at other road networks to improve accessibility.
What do you have in mind in terms of tourism?
There are going to be hotels constructed in the zone and resorts will take advantage of the natural features such as the lagoon. We are also thinking about having restaurants and other facilities where various events can be hosted. We have a lovely beach and have to make the most of it. We really need to look inwards and appreciate what nature has given us.
How did the Chinese get involved with the free zone?
As you know, when the Chinese opened up their economy in the late seventies and early eighties, they established a number of free zones or economic zones to improve economic activity in their country. These zones helped to encourage investments into the country and improve the level of employment. My predecessors went round and talked to various people, looked at what was available and they were happy with what they saw in China. Four Chinese firms then came together to form a consortium and here they are now.
Lagos State Government is providing the land and this forms our equity. The Chinese consortiums are bringing in funds for the basic infrastructure for the first phase which will cover power, water, sewage and some roads and then the land will be leased to prospective investors. Proceeds from the land will be used for further development of the zone. Also, some money will be raised from local investors in due course.
The agreement we have with the Chinese is that there has to be some form of skill transfer to local Nigerians. For every Chinese, there should be four Nigerians working with him to acquire the necessary skills. Whatever jobs can be given to the local community will be given to them. One of the benefits of this project is employment creation and we will start with the local communities to garner their support for the FTZ.
Are you planning on developing communities in the FTZ?
As I said before, apart from the commercial activities, we are planning to build a self sustained model city, people can move out of the congested central Lagos. There is so much land on the Lekki axis that has not been developed and people do not realize how big Lagos State is. Once there are self sustaining cities in different parts of the state, people will move to those areas and decongest central Lagos.
What have you learned from other FTZs in Nigeria and internationally?
I have visited a couple of other zones like Tinapa, Calabar FTZ and the Snake Island Zone, but they are smaller zones compared to what we plan to do here. The key problems I found in all the Nigerian zones are with power supply and the handling of imports/custom procedures. Customs is a federal government agency and there has to be better collaboration between the state and the federal government on certain issues. We say that whatever is produced in the zone and then exported is tax free, but not all goods produced will be for export. A certain amount of duty will have to be paid on goods intended for the domestic market.
The processing of imported raw materials, even when they are custom duty exempt, should be streamlined between the state, the Nigeria Export Processing Zones Authority (NEPZA) and the federal agencies in charge of customs and immigration because investors would want to have access to their raw materials within 48 hours. I want to assure you that before full activity picks up in the zone, all these little grey areas will be ironed out so that investors don’t have any constraints.
Internationally, I have been to Jebel Ali Free Trade Zone and was impressed with the zone. It is well and nicely laid out and you can see the transformation that has happened in Dubai over the last twenty years. We are trying to replicate that and do things according to international standards and hope to make Lagos the Dubai of West Africa. To achieve this requires good leadership and focus, but luckily we have a governor who is very energetic and passionate about Lagos State. He is focused, hardworking and backed by an excellent team.
I hope to visit China and other free zones around the world soon and the idea is to encourage our partners and prospective investors to come and see what we have here in terms of our natural and human resources. There is a lot of propaganda out there that does not paint the correct picture of what is happening on ground. We want to tell the world that we are ready to put Lekki on the world map.
Have you received any interest from investors?
We have a lot of people visiting us all the time. We have thirty potential investors waiting and ready to invest in the zone and that is why we caved out that launch area to kick start the zone because the infrastructural requirement is large and will be developed in phases. We have a lot of interested parties involved in oil and gas, real estate and manufacturing. Investors are also looking at tourism potentials in terms of building hotels and recreational facilities.
Nigeria's erratic power supply presents a major issue for manufacturing industries. How do you plan on coping with electricity problems in the FTZ?
We are looking at putting our own independent power plant in the zone. We have had a few proposals that we are considering, one or two from the Chinese and a couple from other investors. For the first 350 hectares launch area we are putting in a temporary arrangement which will be 10 000 KVA generators, but we are going to have our own independent power plant. If you look at the Onne FTZ, despite all these years they are still using generators.
What message do you have for investors in Nigeria, Africa and internationally with respect to the Lekki FTZ?
I am very passionate about the Lekki FTZ and want to let the investors know that this is the place to be. This is a developing country and the opportunities are limitless. We have identified our needs, especially in the area of infrastructure, and are ready for business; we are not looking for handouts from any person. The returns are also very attractive. Investors are welcome to come the Lekki FTZ.
To address the issue of security, the Lagos State government, in conjunction with banks and other companies, have set-up the Security Trust Fund that provide police in the state with an additional allowance besides what they get from the federal government. Vehicles, communication gadgets, and bullet proof vests have also been procured for the police in order to motivate them and to make them more efficient.