As opposed to the highly liquid Arabian Gulf states and China, where governments have the hard cash to finance construction, many emerging economies have settled on concession-based and PPP models to fund infrastructural expansion. Before 2005, Nigeria had almost no concession-based or PPP projects. Two megaprojects in Lagos State are testing the waters in resplendent fashion through exclusive deals with the state government.
Eko Atlantic and the Lekki Free Zone (FTZ) are both joint ventures between private companies or state actors and the Lagos State government. In both cases, land has been given in long-term agreements in order to stimulate massive investment. Together they may change the face of Lagos.Eko Atlantic has been widely reported for the audacity of its vision and scale. It is being developed primarily by Ronald Chagoury, a longtime Nigerian-Lebanese businessman with close ties to successive governments in Nigeria. The vast new landscape created by the hundreds of thousands of tons of sand that have been deposited in what was only a few years ago part of the Lagos shipping channel is impressive, but perhaps equally so are the terms of the legal arrangement under which Eko Atlantic will exist. Eko Atlantic is classified as its own municipality, and will run on its own bureaucracy which, while overseen by that of Lagos State, will operate independently with an eye towards easing investor access. Eko Atlantic will also be an offshore banking zone (pending approval by the CBN) and allow free movement of capital by investors. Most significantly, the agreement between Lagos State and the Eko Development Company is essentially a concession, granting what was formerly water to the company in exchange for billions in investment.
Eko Atlantic’s legal provisions certainly make exposure to Nigerian markets safer for multinationals, and could reform public opinion about Nigeria all over the world. It will also boast its own power, water, and security, ensuring that, at least for major companies who can afford to be located there, business can continue as usual and not be dependent on an ultimate solution of the nation’s infrastructural problems. Although striking, Eko Atlantic will do little to promote industry in Nigeria as it is conceived as a residential area.
There is another project just over an hour outside Lagos, the Lekki Free Trade Zone that may, among other things, give Nigeria its first working steel mills. The zone offers similar protections to Eko Atlantic including tariff-free importation of materials for use within the zone, tax-free operation within an offshore banking zone (pending CBN approval), and on-site power, water, and security. The Lekki Free Trade Zone is a joint venture comprised of the Lagos State Government (20%), China Africa Lekki Investment Ltd (60%), and Lekki Worldwide Investment Ltd. (20%). The zone has been in process since the early 2000s, but the first phase of the zone’s generating plant opened in mid-2015, attracting tens of millions of dollars in Chinese investments including a steel mill and other industrial projects. The zone’s infrastructure, including its power plant, housing for tens of thousands of workers, roads, and much more is all financed by the Chinese government. The zone is part of the China’s policy of creating conditions favorable to Chinese companies abroad, although in Nigeria there are still pieces of the agreement that have not been finalized. Officials in the CCECC suggest that once the terms are complete, there will be a major influx of investors. However, the LFTZ has already advanced the concession model in Nigeria.
Near the LFTZ there is the $1.65 billion Lekki Deepwater Port, where construction began in May of 2015. It will be the only post-panamax port in sub-Saharan Africa and its being developed by the Singapore-based Toloram Group, which has various interests in Nigeria. There is also the proposed Lekki-Epe International Airport, which will be constructed on a PPP basis. The airport has seen sincere interest from foreign and international investors interviewed for this publication, but at the time of press a binding agreement has yet to be signed.