Nigeria Content Online

Governor,
Babatunde Fashola’ s well attended commissioning of the Lekki Free
Trade Zone administrative complex was designed to send the message that
Lagos is determined to turn the 16,500-hectare plot into an investor’s
paradise or the Dubai of Africa, as it is being touted.

Envisioned as an
industrial and leisure park to host manufacturing, real estate,
tourism, oil, gas and other concerns, the zone is expected to boost
commercial activity in the state, while improving the lives of
residents, especially by providing employment. The project is designed
to be developed in four phases, with the first being handled by a joint
venture company under a partnership between the state government and a
Chinese consortium.

Free trade zones
are designed to attract investors local and international, to a
particular business environment where transactions and production take
place with minimum government intervention or restrictions in the form
of nationality requirement, taxes, duties and other trade barriers.
Other benefits of the Lekki project, as spelt out by Mr. Fashola, and
in line with Nigeria’s free trade zone framework, include “repatriation
of capital, profit and dividends, 100 per cent free imports of raw
materials and components for goods destined for re-exports, 100 per
cent waivers on all import and export licenses, 100 per cent
restriction-free hiring of foreign employees, 100 per cent waiver on
all expatriate quotas for companies operating in the zone.”

Since the
promulgation of Decree 34 of 1991, permitting the establishment of
Export Processing Zones within designated locations, several free trade
zones have been licensed for operation all over the country, but most
of them exist in name only today. The major ones include the Kano Free
Trade Zone, Onne Oil and Gas Free Zone in Rivers State, Calabar Free
Trade Zone, Cross River State, all of which are owned by the federal
government; and the Tinapa Free Zone and Tourism, also in Cross River
State. Construction is on-going in some others such as the Olokola Free
Zone owned by Ondo and Ogun States, and the Lekki FTZ.

Among the existing
ones, however, none can be said to be operating optimally. This raises
the question: how viable are these free trade zones?

A major
requirement for the takeoff and success of any free trade zone is the
provision of adequate infrastructure. While private companies drive
activities in free trade zones, government has the responsibility of
providing infrastructure such as land, water, ports, transportation and
other amenities. In Nigeria, this is where everything falls apart.

Among the critical requirements in the Lekki zone is electric power and roads.

Although the Lekki
arrangement would see the Chinese partners providing most of the
infrastructure such as a power plant, sewage system, water, and some
roads, so far, only few local companies are operating there. This
situation, unfortunately, is what also obtains in other free trade
zones in the country.

Attractive as the
incentives for the Lagos project appear, such as easy access to large
domestic and regional markets, developing the four phases of the
project will take some years, and its continuity depends on whether
succeeding administrations in Lagos will uphold the vision. This factor
of lack of continuity in government policy has also largely accounted
for the failure of most of the free trade zones earlier approved in
different parts of the country.

To ensure the success of the Lagos free trade zone, it is also
imperative that the state government and the federal agencies that
would be involved iron out the customs procedures to avoid the
situation that impacted negatively on the smooth take off of the Tinapa
Free Zone and Tourism project. All things considered, it will take the
state government more than wishes to turn the Lekki Free Trade Zone
into the Dubai of Africa.