Lekki deep sea port promotes AFCFTA gains, but local communities seek environmental protection
Premium Times | 6th July 2023
By Irene David-Arinze
The Lekki Deep Sea Port seeks to position Nigeria for the big gains of the African Continental Free Trade Area (AFCFTA), competitive transhipment, and status upgrade as the maritime hub of West Africa, but neighbouring local communities also want a share of this prosperity and protection against adverse sustainability and human rights issues.
China provided 75 per cent financing for the project in addition to 20 per cent equity by the Lagos State Government, which came as the 90 hectares of land where the port sits today
The Lekki Port LFTZ Enterprise Limited was the Special Purpose Vehicle awarded the concession to develop the deep sea port in 2011, according to Dinesh Rathi, the MD of Lagos Free Trade Zone.
It took five years to get all required registration permits and documentation before the commencement of the 27 months of construction and completion of phase 1 of the Lekki Deep Sea Port, located 65km east of the Lagos Free Trade Zone.
The port currently covers 50 of the 90 hectares and has a phase 1 depth of 16.5m and a projected 19m phase 2 depth. It has been named the deepest port in West Africa, exceeding the 8m depth of the Apapa Quay and Tincan Island ports, located in Lagos, which are said to have reached their tipping points according to experts.
Prior to the operationalisation of the port, which recently acquired the status of a transhipment hub, the African continent lacked a regional trading hub aside from South Africa, which may be described as the trading hub for Southern Africa.
The emergence of the deep seaport in Nigeria positions it on the path to acquiring the status of West Africa’s trading hub.
According to Ogundele Adurayemi, Environmental Manager at the deep seaport, the speed of construction and completion would not have been possible without the Chinese loan.
“Once the Chinese came on board the deep seaport project, funding was available, and we completed everything you see here in 27 months. The total cost of construction was a little below the estimated $800m, and fixed assets cost $1.53bn. 75 per cent shareholding is owned by the Lekki Port Investment Holding split between China Harbour Engineering Co. (52.50%) and Tolaram (22.5%), The Lagos State government owns 20 per cent of the equity, which is the 90 hectares of land the port sits on, and 5 per cent of the shareholding is for the Nigerian Ports Authority.
“The port has a 45 years concessionary period with the build, own, operate, and transfer mode of operation, meaning the Chinese will fully hand over the operation and total ownership after 45 years.” LIDA Network was granted exclusive access within the port and its newly acquired 80-ton Bollard Pull tug boats, allowing for handling larger vessels and enhancing trade facilitation and transhipment operations in the country.
Before its operation, significant revenue had been lost due to bottlenecks in Nigeria’s maritime sector as neighbouring countries had become the preferred berthing and transhipment points. As a result, landlocked nations like Chad and the Republic of Niger, which previously used Nigeria’s ports as transit hubs for their shipments, switched to neighbouring Ghana, Togo, Benin Republic, Côte d’Ivoire, and Cameroon.
With an estimated return on investment of 230 times the cost of the project, the creation of about 170,000 jobs when in full operation, and revenue to federal and state agencies of $201 billion, the country will be more competitive under the AFCFTA, but neighbouring communities around the deep seaport do not want to be left out of these gains and protection against sustainability issues and human rights issues.
Neighbouring communities want shared prosperity
According to a report by AFDB, 21 per cent of community dwellers around the LDSP rely on fishing and farming for their livelihood.
A spokesperson for the Magbon Segun community claims that the 90-hectare land where the port stands were collected from them by the Lagos State Government in 2001 when the current President, Bola Ahmed Tinubu, served as governor of Lagos State.
“Six communities were displaced, and we were given 45 hectares of land and a Certificate of Occupancy for the substitute farmlands but in another community. Unfortunately, we have never farmed there because the residents of the community say that the government did not also compensate them for their land before giving it to those of us affected. It has been tough for us farmers in this community.”
Visually impaired Conflict Resolution PhD candidate, Kesah Prinsly, says the government should take responsibility for setting up a dialogue and compensation structure for the communities whose lands were offered as substitutes.
“Land is a very important resource, especially for Africans. Intercultural communication is very important in this case. The government should hold a dialogue, grant some concessions, and see an end to two communities seeing themselves as enemies instead of people who could collectively work for the development of Nigeria,” he said.
Mama Ireti (not real name), who smokes fish in the Oke Segun community, said she has seen a decline in revenue due to the reduction in fishermen’s catch.
“Before now, we used to smoke up to 2-3 batches of fish, but now it has been reduced to 1 batch. The fish have gone far into the ocean,” she said.
Speaking to Baba Atobajeun, President Fishing Cooperative Federation of Nigeria in the Magbon Community, he said during the port construction, their nets got spoilt a lot when the youths went fishing as there were things laid for construction inside the water which spoils their fishing net.
“Now that the port is completed, we have to go deeper into the sea to find a sizeable number of fish, as you can rarely see fish close by, but at this rate, to be profitable, we need a 40 horse-power outboard engine to enable us to go far into the ocean, and we need at least one fishing trawler. We will appreciate it if we can get it with support from the government. We can negotiate with the deep seaport to berth the trawler there since we do not have a place to secure it. ”
In response, Ogundele Adurayemi, Environmental Manager at LDSP, said they have five core corporate social responsibility projects.
“These projects include education, where we host competitions for neighbouring community schools and provide furniture, youth empowerment through vocational skills, urgent needs requests from communities; and while we may not be able to support all the fishermen in all the communities, we provide fishing gear for them,” he said.
China as Nigeria’s largest economic partner but at what cost?
Data shows China has committed to more infrastructure projects within the African corridor.
Over the years, China has been Africa’s largest bilateral trading partner, with $254 billion in 2021, and has remained its largest provider of foreign direct investment. While this may be argued to promote Africa’s infrastructure and industrialisation portfolio, the critical question remains at what cost to the continent, especially Nigeria?
McKinsey evaluated Africa’s economic partnerships with the rest of the world across five dimensions: trade, investment stock, investment growth, infrastructure financing, and aid, and found that China is among the top four partners for Africa across all these dimensions, with Nigeria being one of the top eight preferred investment destinations.
According to former Vice President Yemi Osinbajo, China shows up where and when the West will not or is reluctant, as Africa needs the loans and the infrastructure, and China offers them.
Referencing a professor, Deborah Brautigam’s thought, he says, “All Chinese lending to Africa is only 5 per cent of all outstanding public and publicly guaranteed debt in low and middle-income countries, compared to 23 per cent held by the World Bank and other multilaterals.”
In the same breath, Chinese companies have also taken the lead in exploiting minerals and taken on contracts with little to no detail of contractual agreements.
There is a general point that all of China’s activities in Nigeria should align with plans that Nigeria has already put in place for its development.
Speaking with Teniola Tayo, an investment, trade, and development policy expert and Principal Advisor at Aloinett Advisors, she is optimistic about China’s involvement in Nigeria and the operationalisation of the port, provided negotiators put the country’s interests first.
“When it comes to trade facilitation and business enabling infrastructure, there is usually an added interest in job creation, the need for knowledge transfer, and the nature of the financing agreements, especially considering that they make sense to Nigeria and Nigerians in the medium to long term. It is important that Nigeria knows exactly what it wants from these projects and then negotiates from a strong position with China and other external partners,” she said.