A bird's-eye view of Lekki Free Trade Zone (CHEN JIAN)
Forty-six-year-old Zhang Yongjun is very satisfied about the decision he made eight months ago. In April, he decided to move his Sunshine Houseware Co. from China to Nigeria to further expand his market to more African countries.
Before moving to Nigeria, Zhang's company produced plastic brooms and other plastic articles for home use in Ningbo, east China's Zhejiang Province, for more than 10 years, and his products were mainly exported to the Nigerian market. In April this year, he visited the Lekki Free Trade Zone in Lekki Peninsula in Lagos, the most populous city on the African continent. After some research on the ground he decided to move his company here.
"As my products are targeting Nigeria, producing locally can greatly reduce my production costs by up to 20 percent because of the low labor costs and no international transportation fees," Zhang told ChinAfrica, adding that the materials are also sourced locally.
After moving to Nigeria, Zhang expanded his production by increasing his injection molding machines from two to six, increasing his annual output value to over 10 million yuan ($1.45 million).
"What's more, producing in the free trade zone can help me explore surrounding markets in Africa," said Zhang. "I can also enjoy a lot of preferential policies here."
Zhang's company is only one of the Chinese enterprises operating in the Lekki Free Trade Zone. To date, 63 companies have signed investment agreements with the zone, of which, 25 are operational or under construction, mainly engaging in logistics, industrial manufacturing and auto assembly.
Starting construction in 2007, the Lekki Free Trade Zone is an important part of the eight measures to strengthen China-Africa cooperation announced by the Chinese Government at the First Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) in 2006, which was also listed in the FOCAC Beijing Action Plan (2007-09).
After more than 10 years' construction, the zone is now in a fast-developing stage in terms of both construction and operation, according to Lai Siqing, Deputy General Manager of China-Africa Lekki Investment Ltd., which controls 60 percent of the free trade zone. The remaining 40 percent is held by the government of Lagos State.
"It has a long construction process as we hope to plan it using China's successful experience in developing its special economic zones," Lai told ChinAfrica. "It is not simply an industrial development zone or hi-tech development area, but a zone with various functions and infrastructure like a city."
The Lekki Free Trade Zone covers an area of 30 square km and has been divided into different functional areas that include a manufacturing district, logistics district, business district and real estate development district. In addition, the zone has its own power plant and water supply plant. "Since the power supply in Lagos is not stable, it is important to have our own power plant, which can ensure stable electricity supply for people's daily livelihood and production in the zone," Huang Xigong, Managing Director of Lekki Free Zone Development Co., told ChinAfrica.
According to him, the zone will house 120,000 people and will provide nearly 60,000 jobs.
"Our goal is to build the zone into a new satellite city that includes a new airport and a deep sea port," said Huang.
The Lekki Deep Sea Port, a multi-purpose port at the heart of the free trade zone, began construction by China Harbour Engineering Co. Ltd. in March. After completion, it will be one of the most modern ports in West Africa, offering enormous support to the development of the export-oriented free trade zone. In addition, a new international airport has been planned 10 km from the zone.
"The new airport and the deep sea port will increase the development potential of this area," said Huang.
Like the special economic zones China established soon after it adopted the policy of reform and opening up in late 1978 to attract foreign capital, advanced technologies and management expertise, the Lekki Free Trade Zone also has a series of measures to facilitate investment and to attract technologies.
"To establish a company like Zhang's Sunshine Houseware Co., you can go through all the government procedures and get licenses without leaving the zone," said Huang.
Government agencies such as customs, immigration, Nigeria Export Processing Zones Authority (NEPZA) and police have set up offices in the zone to facilitate investment. In addition, the zone has hotels and hospitals.
"We are a government department for licensing and monitoring operations of free trade zones by providing a highly competitive incentive scheme, excellent support facilities and service for the purpose of creating an enabling environment for export manufacturing and other commercial activities," Nasiru A. Musa, a NEPZA official at the Lekki Free Trade Zone told ChinAfrica. "We also ensure that necessary incentives are given to the zones and enterprises."
According to Musa, who has been working in the zone since 2007, the government encourages the development of free trade zones like the one in Lekki. "The role of the zone is enormous in terms of promoting local development," said Musa, adding that he personally experienced the huge changes that have taken place in the past decade, from almost barren ground to modern facilities in the zone.
To encourage investment to the free trade zone, the Nigerian Government also granted preferential taxation policies. Enterprises in the zone are exempted from tax categories such as corporate tax, enterprise income tax, value-added tax and educational tax. In addition, the zone has a bonded function, meaning that companies do not need to pay tariffs while importing parts and only need to pay the tariff on parts after the assembled products are sold.
According to Huang, the development of the free trade zone can not only diversify the country's economy by changing the Nigerian economy's heavy reliance on the oil industry, but also ease the country's heavy unemployment burden. Nigeria's unemployment rate reached 16.5 percent of its total labor force in 2017 according to Opendataforafrica.org.
A Nigerian works in a Chinese enterprise in Lekki Free Trade Zone (CHEN JIAN)
"Our goal is to hire 60,000 local people in the zone," said Huang. He noted that the zone does not encourage companies only engaging in international trade, but welcomes manufacturers. "Trading companies hire fewer people than enterprises in the manufacturing industry," he said. "We hope to provide local people with more jobs."
Currently, the companies in the zone are providing 2,500 jobs for local people. Its developer, Lekki Free Zone Development Co., employs 16 Chinese and more than 100 local people. Elvis Njoku, Human Resources Officer of the company, has been working here since 2014, and is in charge of recruiting new staff and designing people-related policies for the zone. He noted that the zone provides stable employment.
"Thanks to the zone, many people in nearby communities like me have the opportunity to work here and gain experience," he told ChinAfrica. "When they work here, they can learn from the Chinese and Nigerian employees. This is the biggest advantage of working here."
Njoku visited the China (Tianjin) Pilot Free Trade Zone in 2014. "I have learned a lot from the zone [in Tianjin] and I can see the zone is playing a very important role in promoting economic development of the municipality," he said. "I think our zone will be as good as the Tianjin zone. Through China-Nigeria cooperation, I am sure we can achieve that."
"In China, special economic zones and free trade zones are playing important roles in economic development and have proven to be successful. In Nigeria, this free trade zone is just in the primary stage, and will surely help promote local industrialization in the future," said Huang.
(Reporting from Nigeria)
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