Lekki Port: A Union of Economic Giants
Since China started to implement the BRI (Belt and Road Initiative) back in 2013, it has gained considerable access to strategic infrastructure in developing nations. To date, BRI is the largest development program any country has ever undertaken. Africa has emerged as the largest beneficiary of the BRI, and the platform has come in handy for China in redefining its trade partnership with the continent.
Although China is now slowing BRI financing in many African nations due to debt sustainability concerns, some of the projects that have been in the pipeline are starting to mature with visible economic benefits.
One such project is Lekki Port in Nigeria, which is the country’s first deep-sea port. Located 60 kilometers east of Lagos, the world’s 15th largest city and Africa’s largest metropolis, Lekki Port is set to turn around shipping in Nigeria, putting it on the global map.
Despite Nigeria being Africa’s most populous nation and hosting a growing number of middle-class income earners, it relies on two old ports, Tin Can Island and Apapa. These facilities are perennially congested, and their shallow harbors restrict the type of vessels that can comfortably dock. It has also made Nigeria lose maritime business to the neighboring countries of Togo, Cote d’Ivoire and Ghana.
Essentially, Lekki Port is designed to address some of these problems as well as catalyze investors’ interest in the Nigeria’s massive shipping potential.
Lekki Port begun construction in 2017 with financing from China Development Bank. It is being built by Lekki Port LFTZ (Lagos Free Trade Zone) Enterprise. This is a special purpose vehicle owned by a group of investors - led by state-owned China Harbor Engineering and Tolaram, a Singapore-based conglomerate - and includes local and federal Nigerian government agencies.
With 16.5 meters of water depth and capacity to handle over 2.7 million TEU a year, Lekki port is one of the most valuable assets under the Chinese BRI in West Africa (and by extension the African continent).
Unlike some of China’s more economically isolated port investments in, for example, Sri Lanka and Pakistan, Lekki Port appears to follow an East Asian development tradition, noted Prof. Lauren Johnston, a senior Researcher at South African Institute of International Affairs (SAIIA), in a recent commentary.
Lekki Port is embedded into the Lekki Free Trade Zone, offering tax incentives and reliable, modern infrastructure to prospective investors.
Africa’s richest man, Aliko Dangote, has stationed two grand investments at the Lekki Free Trade Zone, giving Lekki Port a head start once it starts operations in October.
The 650,000 barrel per day Dangote Refinery is expected to start processing oil in the fourth quarter of this year. Besides meeting Nigeria’s local oil demand, the petrochemical complex will produce a surplus for export, a significant benefit for Lekki Port’s liquid bulk terminal.
In addition, Dangote Fertilizer Plant, commissioned in April by President Mohammadu Buhari, is also good news for Lekki Port business prospects.
The plant is now the largest fertilizer manufacturer in Africa with an annual production capacity of three million metric tons of urea fertilizer.
“We are lucky to have this plant. It is coming at the right time with the Ukraine-Russia conflict as both Ukraine and Russia control substantial amounts of agricultural inputs,” Aliko Dangote told CNN.
With China’s strategic role at Lekki Port, this might be the point where the interests of the economic and demographic giants of Asia and Africa intersect. Such a union will be interesting to watch unfold.