INSIGHT NIGERIA/FRANCE /
FREE-TRADE ZONES
Set them free Nigerian special economic zones and free zones are taking off, providing investors with the infrastructure and facilities they need to target local and international markets By NICHOLAS NORBROOK in Lagos
Several are now at advanced stages of construction and operation. Tolaram, a Singaporean agri-processor, is running the Lekki Free Zone east of Lagos. “The master-planning of the zone is by Surbana Jurong, one of Singapore’s topmost town planners,” says Lekki 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
Special economic zones (SEZs) and free-trade zones were the spearhead of Asian industrialisation – allowing countries with major deficits in power, logistics and bureaucracy to pull in investors. 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? It has 33 such zones. But only 15 are active, and the government has not fully backed them. For instance, during Sanusi’s term as central bank governor, it did not allow repatriation of profits.
Sabre rattling
Lekki: port of the future
DR
“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.
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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 Lekki 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.
