Chinese company believes trade zones will spur investment in Nigeria

"Africa is kind of my place. It's a marvelous place. It's a place you can love deeply but can be frustrating, too."

Zheng Jun, who has worked in Africa for more than eight years, is sitting in a meeting room on the eighth floor of Plaza of the China Railway Construction Corp in Beijing. His enthusiasm for the continent comes through particularly when he talks of Nigeria and the Lekki Free Zone his company is building there.

On those 30 square kilometers of land the foundations are being laid not only for a more prosperous country but for great opportunities for investors, he says.

Zheng is the managing director of China-Africa Lekki Investment Ltd, for which he has worked since 2010.

China-Africa Lekki Investment started to build the zone in May 2006. It is in Lekki Peninsula, a satellite city of Lagos, the country's economic heart, with a population of more than 18 million.

Terrain for the free-trade zone has been made hospitable thanks mainly to the political stability that Nigeria finally achieved at the end of the 1990s. That now promises foreign investors huge potential as Africa's most populous country develops its fledgling industries.

In the more than 30 years of China's reform and opening up, one of its instruments of choice in pursuing its goals has been the economic development and trade zone, which has been highly successful in attracting foreign capital and technology.

So perhaps it is little surprise that Chinese investors see development and trade zones as a promising method of increasing their chances of success when they enter Africa. Among six overseas economic and trade cooperation zones they have been building in Africa, the Lekki Free Zone in Nigeria is the largest.

Lekki is now building a new international airport and a deepwater port that will shorten the distance between the free-trade zone and transport hubs to 10 kilometers and 3 kilometers from 70 kilometers and 60 kilometers respectively.

"What really sets our free-trade zone apart is that the blueprints call for a completely new city instead of simply a manufacturing base," Zheng says.

"In all our years in China we have found that development zones need more than technology and capital. Because such developments promote economic growth in surrounding areas, they eventually lose their advantages. We reckon building a development zone as a complete city is the way to make it sustainable."

The zone will consist of six parts: the center, where banks, shopping malls and hospitals will be located; an industrial park; a creative cultural industry park; a trade and logistics area; an area for warehousing and petrochemical processing; and another for housing, tourist resorts and recreational services.

So far $86 million has been spent on building infrastructure, including 24 km of roads, 13,000-sq m of factory buildings, 2,000 sq m of office buildings, 6,000 sq m of dormitories and more than 100,000 sq m of green landscaping.

"We are trying to complete the building of infrastructure to attract more investors," Zheng says. "But we're not building everything. We hope investors will build their own plants or other structures based on their needs."

By the end of last year, 28 companies from China, Nigeria and Britain had signed investment deals with China-Africa Lekki Investment, with the value surpassing $76 million. The companies include Sinotruk, Puma Energy and Loving Home, which are investing in industries such as truck service, petroleum and natural gas storage and furniture production.

"We want to attract companies from different countries so the place takes on the shape of a miniature United Nations," Zheng says.

The zone employs more than 1,200 local workers and says that eventually it expects to create 100,000 jobs and have annual turnover of $20 billion (15.5 billion euros).

"Personally, I'm not satisfied with the progress," Zheng says. "There are a lot of reasons for that."

Inside the zone the company can do whatever it needs to, building roads or factories, but the larger environment has hampered progress, he says. Because of the political instability in North Africa over the past several years few companies have dared to invest in West Africa.

Transport from Lagos to Lekki is poor. There is only one road, which is still being built, and is still about 10 kilometers short of reaching the zone.

"At the moment we are like an island. We can do our own job inside the zone, all the construction, and try to attract investors, but without a larger, amenable environment, things cannot work," says Zheng.

The World Bank said in April last year that Nigerian ports have the highest cargo clearance waiting times in Sub-Saharan Africa, an average of 14.11 days.

Most port users blame outdated and inadequate cargo handling equipment for clearance delays, but the report blamed the customs service, importers, agents, banks and others who stand to make money while goods are stuck on the docks.

"We hope the Chinese government and the Nigerian government can do some strategic deals to protect our and investors' interests in the zone so goods at ports can be dealt with quickly," Zheng says.

Despite the difficulties, Zheng says Nigeria presents great market potential for investors.

Nigeria has the largest population of any African country, 167 million, and is the continent's second-largest economy. Analysts forecast annual growth of above 6 percent in the coming five years and that it will eventually overtake South Africa as the largest economy on the continent.

The business consulting firm Frost & Sullivan said in October that in the coming 10 years investment opportunities worth $650 billion in infrastructure will be available in Nigeria in construction, energy, power and transport.

Trade between China and Nigeria is also growing rapidly. Last year bilateral trade was worth $10.57 billion, 34.5 percent of that between China and the Community of West African States. About 70 percent of China's exports to Nigeria are mechanical and electrical products.

It is estimated that as much as 90 percent of Nigeria's industrial products are imported. Last year, the more than $9 billion of Chinese exports to Nigeria included machinery, transport equipment, clothing, textiles and furniture, Zheng says.

"Chinese products are highly popular in Nigeria. Now Nigeria is trying to develop its industries and China is transforming and upgrading its manufacturing, so this is a great chance for both Chinese producers and Nigerian industries.

"With the huge amount of construction and West Africa's largest port, there is a lot of demand for machinery and transport equipment."

Zheng says he pays close attention to Nigeria and reads news about it every day.

"I think Nigerians are very smart people, good at doing business. I'm really confident about the market prospects," he says.

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