Free-trade zones (FTZs) are designated areas within a country that foster economic development by offering duty-free privileges. In Nigeria, there are 46 FTZs, with 44 privately owned and two government-owned. While some of these zones face challenges such as inadequate infrastructure, legal disputes, and security issues, several functioning FTZs have significantly contributed to the country’s economy. One shining example is the Lekki Free Trade Zone (LFZ), a rapidly growing project located near Lagos. This article explores the transformative potential of the LFZ and the overall optimism surrounding its impact on Nigeria’s economic growth.
In 2005, the Lagos State Government identified the Lekki area, situated 60 kilometres east of central Lagos, for the development of a free trade zone. The LFZ spans an impressive 16,500 hectares and was officially launched in 2006 through a Tripartite Agreement between China-Africa Lekki Investment Ltd., Lagos State Government, and Lekki Worldwide Investments Ltd. Recognizing its potential, the Chinese Ministry of Commerce approved LFZ as one of the “Overseas Economic & Trade Cooperation Zones” in November 2007.
The joint venture between the Lagos State Government and a Chinese consortium resulted in the establishment of the Lekki Free Zone Development Company (LFZDC). The LFZDC oversees various projects within the Free Trade Zone, including the construction of the Lekki deep seaport, managed by the Lekki Deep Sea Port Enterprise Ltd (LPLEL). To finance the port project, LPLEL secured a loan of USD 629 million from the China Development Bank (CDB).
The LFZ aims to become a manufacturing, logistics, and energy hub, offering a wide range of opportunities for businesses and investors. With its strategic location and comprehensive infrastructure, it has the potential to transform Nigeria’s economy. The zone features a deep-sea port, warehouses, and a refinery attracting significant investment.
However, the establishment of the LFZ has not been without challenges. Previous landowners have raised concerns about the acquisition of their land by the state government between 2005 and 2006. Some feel that they were inadequately compensated for their properties. Reports of compensation provided by the Lagos State Government exist, but a 2018 survey highlighted instances of cash payments and proxy involvement, which opened avenues for diversion, theft, embezzlement, manipulation, and fraud. This situation raises the possibility of potential opposition or rebellion from former landowners against the success of the LFZ.
To gauge the potential threats to the LFZ’s growth, a research survey was conducted by VIISAUS, targeting residents in the communities surrounding the zone, especially those whose land was expropriated by the state government. Surprisingly, the results revealed a widespread sense of optimism and strong confidence in the establishment of the zone due to its anticipated positive impact on community growth. Around 75% of residents expressed belief in these positive outcomes. Furthermore, the survey indicated that 65% of community members held a remarkably positive perception of the free trade zone, indicating a low level of opposition, despite the land expropriation and seemingly dissatisfactory compensation process.