By Zika Bobby
Ashishi Kemka, chief financial officer and head of operations at the Lagos Free Zone, spoke about the uniqueness of the LFTZ project and how it holds great potential for the Nigerian economy.
Give us an overview of the Lagos Free Trade Zone and its uniqueness
Talking about the free zone, you know it is quite new in the country at present, though Nigeria was one of the first in the world to create the free zone movement and environment in Africa itself.
The history of Nigeria’s free zone goes as far back as 1992 when the Nigerian Export Processing Zones Authority (NEPZA) Act was passed. But over the last 30 years, the country has not been able to get the full benefit that comes out of the free trade zones.
Countries like Dubai and China have exploded out of it, and even smaller countries like Ethiopia. Neighbouring countries have been able to reap the benefits of free trade zones, but the reason Nigeria has been unable is due to poor coordination and understanding.
Also, not many people know about the free zones’ benefits. As we speak, there are almost 42 free zones in the country, not all are operational. Lagos free zone was the first private one that was established in 2002, and it has grown over the years as it started with 200 hectares of land but has grown to 850 hectares.
It is a unique free zone because it is the first private one and serves many purposes for the industries. This will be the first free zone in the country to be embedded within the deep-seaport. And as we speak, the port is almost 96 per cent gone and due to be completed by the end of September this year, and operations will commence by the end of this year or early next year. The port will resolve a lot of problems that we are facing in this country.
The Lagos free trade zone is privately developed and managed by Tolaram, which is a conglomerate that has been operating in Nigeria for 45 years.
As part of the free zone, we are developing various support infrastructure because we believe in the culture of “live, work and play” so that you can live here, work and enjoy your life.
We have divided the zone into three: industrial, logistics and the mixed use park. We have already invited multinational players like Salim Group from Indonesia and Kellogs from the US, Colgate of US, BASF biggest chemical company, Arla from Denmark and we have also developed facilities like warehouses and standard industrial facilities, as well as a fire station and a police station for security.
Aside from these features, what other things will the Lagos free zone have that are not in the over 40 other zones?
Other unique features are the private management and connectivity to the port, as I mentioned earlier. You get the trade facilitation, and the kind of infrastructure we are developing. Another advantage we have is our holistic approach and the technology being used to make this a smart free zone. By being a smart free trade zone, I mean our facility is fully automated. These things are what make us unique.
Talking about the smart free zone and automation, how does this work and how will that impact on trade?
It is multi-fold, a paperless transaction that moves faster, and the ease of operations and doing business comes into the picture because it is digitized. People can track the process easily. Once they know about this end-to-end process, it is easier to plan and make business processes faster.
Still on automation, are you doing this on your own or do you have links with companies that are versed in automation? Who is handling that for you?
We have an in-house team that works on it and helps the processes get implemented. Like yesterday, for example, we had a truck park operating inside the free zone, and it was successfully automated as the users of the truck park, an enterprise from the US, stay in the free zone.
They logged in the truck details, which are expected to come; it is in the system and as the truck comes inside the zone the information is entered into the system at the entry point, the truck park entry gate opens automatically for the truck to enter. As soon as it enters, the enterprise gets the information about the trucks, which are parked for the enterprises on a daily basis. Even if they want to call the truck back to their facility for offloading or onloading, they can do it from the system or app. And an announcement is made in the truck park.
So there is an app?
Yes, there is an app for the LFTZ for easy tracking. On the other front, we are getting a lot of support from government agencies, especially Customs and NEPZA.
NEPZA is our regulatory body that governs all the free zones in the country. We will soon start with a pilot project from the Customs, since the benefit of the free zone is that you can import and export goods duty-free.
If you are selling the goods manufactured in the free zone using imported raw materials, you need to pay the relevant custom duties on the imported raw materials used in the production when selling the goods in the Customs territory.
All those calculations and the systems were done manually, but with the help of the Nigeria Customs and its technological arm we have been able to develop a project and a system that will soon be run as a pilot project, where the imported raw materials will be captured automatically and, when the goods are sold, duty will be calculated on the imported raw material components.
It looks like a win-win for you, the workers, the government and other investors coming in. Could you tell us what it projects to achieve in the next 10 years?
As I said earlier, the Lagos free zone is 850-hectares large, and it is expected to be developed over time, because it doesn’t make sense to develop the entire zone at once. So, we are developing it in phases; in phase 1, we have roughly 360 hectares of land, which will be completed by the end of next year. As I speak, the zone has attracted more than $2.5bn of foreign direct investments (FDI) into the country and created more than 4,000 jobs inside the zone. So, the benefits of the zone is that in the next 10 years we expect to attract more than $5bn FDI and create more than 20,000 jobs in the country.
But the uniqueness of our free zone is that it is set up by the industrial port, which has neighbours like Lekki Free Zone, another free zone being developed by the Lagos State government and Chinese government. We also share our borders with the Dangote fertilizer and petrochemicals, as well as other free zones that are expected to emerge. We expect that the whole Lekki axis and its industrial corridor should contribute between 5 and 10 per cent of the national GDP in the coming 10 years.
How many companies have you brought in?
Till date, the LFTZ has more than 20 registered companies and with prospects for more growth.