Repositioning Nigeria’s Economy: The Alaro City Example

Charles Ilechukwu

As a developing economy, Nigeria needs the component of Foreign Direct Investments (FDIs) to complement local efforts, in order to achieve the desired objective of economic stability for improvement of the standard of living of the people. Despite concerted efforts that have been made by successive administrations to encourage local production of goods and items that are consumed in the country, there still remains a yawning gap that needs to be filled by FDIs, if the country is to achieve its objective of a developed economy.

The issue of FDIs and their catalytic role in a country’s economic growth came up for discussion at a one-day Trade Summit organised recently by Alaro City Free Zone, in Lagos. The event brought together key stakeholders including policymakers and private sector operators, to discuss ways in which Nigeria could be repositioned to become a production economy, rather than a consumption-based one, which has so far defined our very existence as a nation.

My takeaway from the one-day event was that now, more than ever, Nigeria must focus on production for export, in addition to meeting the needs of its growing population. This shift is particularly crucial as the world moves away from fossil fuels – the cornerstone of the country’s economy. Free trade zones would play a critical role in driving the production level required to enable Nigeria to make an impact not just in Africa, but on the world stage. This is even more important as the African Continental Free Trade Area (AfCFTA) – potentially the largest market on the planet with an estimated 1.3 billion people – comes into existence.

As conversations centre around repositioning the Nigerian economy to be production-driven with an eye on export, Alaro City is arguably the country’s best and most attractive investment location today. Rendevour, Africa’s largest private city builder, appear to have realised the crucial role of free zones in Nigeria’s quest to become a production economy. This is evident by the fact that Alaro City claims to be the most business-friendly Free Trade Zone in the country.

The city is planned to be built on 2,000 hectares of land within the Northwest Quadrant of the Lekki Free Zone and equipped with critical infrastructure like good access roads, 24-hour electricity from a privately-owned 100 megawatts-capacity power plant, water capacity of one million litres per day, Information and Communication Technology (ICT), a central sewage and drainage system, and gas and dark fibre infrastructure. It has all the trappings of a modern free zone.

Alaro City’s readiness to lead Nigeria’s transition from an import-dependent economy to an export-driven one, is evident in its rapid growth; in just five years, it has become home to over 70 private sector organisations of different sizes and capacities. These include globally renowned brands, including Mantrac (Caterpillar) and HMD, along with one of Nigeria’s leading indigenous conglomerates, the BUA Group. This speaks volumes about investors’ faith in the city.

The decision by Ariel Foods, a major therapeutic food supplier for UNICEF, to set up shop in Alaro City is a testament to the integrity and credibility of Rendeavour, which has expanded outside Nigeria with presence in four other African countries: Ghana, Tanzania, Democratic Republic of the Congo, and Kenya.

Managing Director of Ariel Foods, Dhiren Chandaria, spoke of how he took a gamble and ignored advice against coming to Nigeria, based on negative perceptions of the country. Instead, he decided visit the country, and Alaro City in particular, after being convinced by Managing Director of Rendeavour, Yomi Ademola.

It is a gamble that has paid off, handsomely. Ariel Foods is not only reaping the benefits of operating in Alaro City; from its 28,000 square-meter plant, it has turned Nigeria from a net importer to a net exporter of therapeutic foods, exporting to 26 countries around the world.

Chandaria’s testimony could not offer a better endorsement of Nigeria, and Alaro City in particular, as an investment destination. With more business leader like Chandaria being convinced of the conduciveness of the Nigerian environment, by the day, the achievement of an economic paradigm shift is more likely than ever before.

 One of the advantages Alaro City enjoys as an early bird is that it sits within vicinity of landmark projects that will change the business landscape of Nigeria’s economic nerve centre – the new Lekki International Airport, the Fourth Mainland Bridge, the Lekki Deep Sea Port, and the Dangote Refinery and Petrochemical plants.

As AfCFTA comes into operation, Alaro City offers opportunities for Nigerian manufacturers wishing to be part of the effort to reposition the country’s economy and place it on the pedestal of production. For example, companies operating in this area enjoy zero per cent corporate income tax, exemption from the value-added tax, and withholding tax on dividends. With the tax exemptions, there is a guarantee of up to a 43 per cent annual increase in profitability. The opportunities also include duty-free importation of raw materials, machinery, and equipment. Additionally, working with a construction company registered in the free zone saves a production company up to 25 per cent in production costs.

For organisations operating in Alaro City, logistics issues are greatly minimised, if not eliminated entirely. The Lekki Deep Sea Port and proposed international airport provide gateways to the world, while the expansive road network associated with those two projects allows organisations to enjoy the benefits of easy access to local and international markets.

For Nigeria, the journey to becoming a production economy may have just begun.

Ilechukwu, a public affairs analyst, lives in Lagos.