I. Overview

The Nigeria Lekki Free Trade Zone - China-Nigeria Economic and Trade Cooperation Zone is a major cooperative project that implements the important consensus the leaders of the two countries made at the 2006 Beijing Summit of the Forum on China-Africa Cooperation, and serves the construction of the Belt and Road Initiative. In November 2007, the Lekki Free Trade Zone was approved by the Ministry of Commerce of China as a "state-level overseas economic and trade cooperation zone." In April 2010, it obtained approval from the National Development and Reform Commission for overseas investment. In November 2010, it passed the confirmation assessment conducted by the Ministry of Commerce and the Ministry of Finance for overseas economic and trade cooperation zones. Currently, the Chinese side holds a 60% controlling stake, and the Chinese consortium is composed of the China Civil Engineering Construction Corporation, the China Africa Development Fund, and the Nanjing Jiangning Economic Development Zone. The Nigerian side is owned by the Lagos State Government with a 40% stake. The two sides jointly established a joint venture - the Lekki Free Trade Zone Development Company in 2006, with a franchise cooperation period of 50 years.

The Lekki Free Trade Zone is one of the earliest approved national-level overseas economic and trade cooperation zones established by the Chinese government, with the largest actual development area. It is located on the Lekki Peninsula in the southeast of Lagos, the economic capital of Nigeria. It is bordered by the Atlantic Ocean to the south and the Lekki lagoon to the north, 3 kilometers from the important West African port of Lekki Port and adjacent to the world's largest single-site refinery, the Dangote Refinery. It is 10 kilometers from the planned Lagos New International Airport. As an emerging seaport new town focused on the development of Lagos, the Lekki Free Trade Zone is also the fastest-growing region in Nigeria today.

Office building of the Lekki Free Zone

Planning Map of the Lekki Free Zone

II. Planning and Progress

The total planned area of the Lekki Free Trade Zone is 30 square kilometers. Currently, the zone has achieved its “six connections and one leveling”, which includes the installation of electricity, securing a water supply, gas supply, road access, and port access, as well as establishing communication and conducting site leveling. The infrastructure is well-established, with a road network of over 30 kilometers, 388 hectares of developed land, and a completed industrial carrier space of 70,000 square meters. This includes the office building, a 12-story integrated service center, seven 5,000 square meter standard workshops, a customs clearance center, an exhibition center, a 24-megawatt gas power plant, a 3,000-ton/day tap water plant, a natural gas pipeline and storage area, an investment reception center with 200 rooms and high-end apartments, an employee camp, a government police office building, and a zone clinic office building, among other supporting facilities.

After nearly 17 years of construction and development, as of July 2023, there are a total of 116 companies in the zone, covering various industries such as petroleum and natural gas product warehousing, furniture manufacturing, clothing production, trade logistics, engineering construction services, automobile assembly, and daily necessities. The actual investment has exceeded $3 billion, and the cumulative output value has surpassed $670 million. The zone has contributed nearly $110 million in taxes to Nigeria and stimulated domestic exports of over $575 million in China. Among them, there are 256 Chinese management personnel and 2,642 Nigerian workers employed within the zone, which greatly boosts local employment. It is worth mentioning that out of the 44 members of the management team of the Lekki Free Trade Zone Development Company, only 14 are Chinese and 30 are Nigerian, achieving a localization rate of 68%. Chinese and Nigerian employees receive equal pay for equal work, and both parties are making progress together, building a good platform for China-Nigeria economic, trade, and cultural integration. The development of the zone has played an important role in promoting bilateral economic and trade cooperation, implementing national strategies, and fulfilling corporate social responsibilities.

Central Industrial area of the Lekki Free Zone

III. Industry Positioning and Support

The Lekki Free Zone will vigorously promote the development of industries in the port area, focusing on key industries such as fine chemicals, manufacturing and processing, mechanical and electronics assembly, and port logistics, which are related to petroleum and chemical engineering. It will undoubtedly become the most important industrial and economic center on the Lekki Peninsula. In addition, a coastal city area primarily for residential purposes has been planned and designed to meet people's demands for high-quality living.

Companies within the free zone can enjoy a series of highly advantageous policies. For example, they can import raw materials and finished products into the zone, and after complying with the tax regulations set forth by the Nigerian government, they can sell their goods in the local market. Goods within the free zone do not require import and export licenses and are not subject to quotas when exported to the European Union or the United States. Customs codes and tax rates are determined based on the entry status into the zone. Furthermore, if a transaction takes place within the free zone or the exports are destined for countries outside of Nigeria, they are exempt from tariffs. Additionally, the zone provides various conveniences to companies within the zone, such as the re-exportation of finished products, an exemption of deductibles for foreign employees, and freedom in remitting foreign exchange. The policy specifics are summarized as follows:

Bonded function: Companies within the Lekki Free Zone can import raw materials and finished products into the zone. Since the zone possesses a bonded function, companies can sell their products in the Nigerian market after fulfilling the payment of relevant taxes as stipulated by the Nigerian government.

No import and export licenses required: Goods within the free zone do not require import and export licenses. Products from the zone can be freely sold to the European Union and the United States without quota restrictions.

Tariff exemption: Customs codes and tax rates are determined based on entry status into the zone. Transactions within the free zone or exports to countries outside of Nigeria are exempt from tariffs.

Re-exportation benefits: Companies within the free zone can directly import fixed assets investments, factory equipment and machinery, as well as construction materials without the need to pay tariffs.

Products manufactured, processed, or assembled within the zone, as long as they meet the 35% value-added requirement, only need to be taxed based on the import rate of raw materials and can be freely sold in the local Nigerian market.

Products manufactured, processed, or assembled within the zone can be sold to any company within the LFZ, any company within the LFZ in Nigeria, or any overseas country without incurring Nigerian tariffs.

Foreign employee quota exemption: Companies within the free zone can employ foreign personnel without being restricted by relevant quotas.

Prohibition of labor unions: The establishment of labor unions is not permitted within the free zone. Furthermore, employees working for companies within the zone are prohibited from going on strike or engaging in work stoppages within the first 10 years of the company's operation.

Freedom in remitting foreign exchange: Products and services provided within the Lekki Free Zone can be invoiced in foreign currencies. Foreign exchange capital and dividends of companies within the zone can be freely remitted.

Infrastructure of the Lekki Free Zone

IV. Comprehensive Benefits

As of now, 116 companies from different countries including China, Nigeria, India, and France have signed investment agreements with the zone, with 73 being Chinese companies and 43 being foreign companies. Among them, there are 11 petroleum storage companies, 11 engineering contracting companies, 5 service companies, 79 manufacturing and processing companies, 8 trade and warehousing companies, and 2 real estate companies. At the same time, the Lekki Free Zone actively fulfills its social responsibilities, promotes the deepening and solidification of the Belt and Road Initiative, and establishes assistance mechanisms with various surrounding communities. This includes employing and training industrial workers, donating relief supplies during floods, offering animals for local festivals, and providing medical assistance and medication during the pandemic. These efforts have not only established a positive image for Chinese companies but have also solidified the Chinese-African friendship, promoting people-to-people exchanges and friendly cooperation.

In-zone enterprises in the Lekki Free Zone

V. Development Mode and Experience Summary of the Zone

Currently, the completion and operation of Lekki port provides new opportunities for the introduction of high value-added and high-tech enterprises to the Lekki Free Zone. However, factors such as the level of Nigeria's economic development, government management efficiency, and infrastructure conditions have hindered the implementation of preferential policies. In order to create new economic forms in the port area and maximize the comprehensive advantages, we propose the following four points for reference: 1. Establish an effective mechanism to monitor and predict changes in political factors; 2. Promote the FTA agreement and accelerate the progress of bilateral free trade agreements; 3. Seize the opportunity of port area economic development and prioritize Nigeria as a key country along the "Belt and Road" initiative. Under the promotion of government departments, accelerate in-depth cooperation between domestic enterprises, financial institutions and the Nigerian side; 4. Drive the landing of the industrial chain and supply chain through leading enterprises, with a focus on key areas related to national development, people's livelihoods, and strategic security. Provide policy support for the development of overseas economic special zones, as well as designing and planning, investment and financing support, technology, and promoting the concept of green and sustainable development to ensure an orderly transfer to overseas markets.

VI. The Plan of the Zone Participating in the Belt and Road Initiative

The Lekki Free Zone will consistently implement the national Belt and Road Initiative and the international capacity cooperation strategy, continuously exert the advantages and role of the platform, scientifically plan, meticulously organize and fully leverage the driving role of various bilateral and multilateral cooperation mechanisms, enhance its close connections with the Ministry of Foreign Affairs, Ministry of Commerce, Ministry of Natural Resources and Environment Protection, as well as policy financial institutions such as the Belt and Road Fund and the China-Africa Development Fund, extensively promote the Lekki Free Zone, support the implementation of a series of policies and strive to create a safer and more reliable overseas platform for Chinese companies to "go global" and utilize external resources, thus participating in international competition.

VII. Contact Information

China (Beijing)                       

China-Africa Lekki Investment Ltd            

Tel: 0086-10-52727027                        

E-mail: zhaoshang@calekki.com               

Web: www.calekki.com

Nigeria (Lagos)

Lekki Free Zone Development Company

Tel: 00234-8160691001

E-mail: investinlekki@lfzdc.org

Web: www.lfzdc.org