A union of economic giants

Courtesy of Lekki Port

Posted on August 28, 2022 at 9:35 p.m. by

Brian Gicheru Kinyua

Since China began implementing the BRI (Belt and Road Initiative) in 2013, it has gained considerable access to strategic infrastructure in developing countries. To date, the BRI is the largest development program ever undertaken by a country. Africa has become the biggest beneficiary of the BRI, and the platform has proven useful to China in redefining its business partnership with the continent.

Although China is currently slowing down BRI financing in many African countries due to debt sustainability concerns, some of the ongoing projects are beginning 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 15th largest city in the world and Africa’s largest metropolis, Lekki Port is poised to transform shipping in Nigeria, putting it on the global map.

Although Nigeria is Africa’s most populous country and home to a growing number of middle-class earners, it relies on two ancient ports, Tin Can Island and Apapa. These facilities are constantly congested and their shallow ports limit the type of ships that can comfortably dock. It has also caused Nigeria to lose maritime activities to the benefit of neighboring countries such as Togo, Côte d’Ivoire and Ghana.

Essentially, Lekki Port is designed to address some of these issues and catalyze investor interest in Nigeria’s massive maritime potential.

Construction of Lekki Port began in 2017 with funding from China Development Bank. It is built by Lekki Port LFTZ (Lagos Free Trade Zone) Enterprise. It 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 a handling capacity of over 2.7 million TEUs per year, Lekki Port is one of China’s BRI’s most valuable assets in East Africa. West (and by extension on the African continent).

Unlike some of China’s more economically isolated port investments, for example in Sri Lanka and Pakistan, the Port of Lekki appears to follow a tradition of East Asian development, noted Professor Lauren Johnston, senior research fellow at the South African Institute of International Affairs (SAIIA), in a recent commentary.

Lekki Port is integrated into the Lekki Free Trade Zone, providing tax incentives and reliable, modern infrastructure to potential investors.

Africa’s richest man, Aliko Dangote, has placed two large investments in the Lekki Free Trade Zone, giving Lekki Port a head start once it becomes operational in October.

The Dangote refinery, with a capacity of 650,000 barrels per day, is expected to start processing oil in the fourth quarter of this year. In addition to meeting Nigeria’s local oil demand, the petrochemical complex will produce a surplus for export, a significant benefit to the Port of Lekki Liquid Bulk Terminal.

In addition, the Dangote fertilizer plant, commissioned in April by President Mohammadu Buhari, is also good news for the business prospects of Lekki Port.

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 factory. It comes at the right time with the conflict between Ukraine and Russia, because Ukraine and Russia control substantial amounts of agricultural inputs,” Aliko Dangote told CNN.

With China’s strategic role at the port of Lekki, this could be the point where the interests of economic and demographic giants from Asia and Africa intersect. Such a union will be interesting to follow.

About Mitchel McMillan

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