An enabling environment in NigeriaSeptember 24, 2021
Amy Jadesimi, CEO of LADOL, talks to The Energy Year about how the company is supporting the drive for sustainability and moves to diversify away from crude oil, as well as the coming benefits of the African Continental Free Trade Area (AfCFTA). LADOL owns and operates a free zone and logistics hub located at the point of entry into Lagos harbour.
What measures has LADOL adopted to ensure safety and resilience in these challenging times?
LADOL is an enclosed ecosystem. It was designed to be able to operate in very challenging circumstances. When Covid-19 hit, not only did we continue operations, but we actually ramped these up by working 24/7. We created a sterile area within the free zone where there was zero access unless you had been tested. Our key staff live and work in the zone full time. We also set up an isolation centre where everyone – including clients – has to go through a rigorous screening process if they want to stay in the zone.
In this sense, we have always been ahead of the curve, and we made sure to increase our stringent terms of access control by putting Covid-19 protocols in place. We also had the advantage of already having the facilities’ ISO compliant policies and procedures in place, which enabled us to quickly adapt and remain safe and resilient.
How can free-trade zones (FTZs) attract private investment to boost their economic footprint and performance?
One of the key aspects of free-trade zones is the universally applicable benefits that they get via the regulatory environment. This includes duty-free imports, 100% repatriation of profits and zero corporate tax. These are key tenets of all free-trade zones. However, in Nigeria, we need to tackle the issue of low efficiency, which is hampering the performance of FTZs.
A smooth partnership with government agencies is needed, and this is what makes us an effective ecosystem. The Nigerian industrial sector needs much more local private investment; in fact, this is an economic and social imperative. What we can do through free-zone schemes is attract this private investment into setting up a range of industrial businesses. LADOL has attracted hundreds of millions of dollars, and other private zones can do the same, provided that we have a consistent and enabling regulatory environment.
What benefits can the AfCFTA bring to Nigeria and how can the private sector be a key driver of intercontinental trade and growth?
The AfCFTA represents a huge opportunity. What we now need to see throughout the African continent is technology made in Nigeria. This may range from green energy tech such as mini solar grids to agricultural products and manufactured finished consumer goods. The local engineering, design and manufacturing of these tech products is where the private sector has a key role to play. Local private-sector growth is key to ensuring that the AfCFTA does not become a missed opportunity. When it comes to the provision of finished goods, we need to quadruple the size of the private sector so that Nigeria can start playing a serious role in pan-African trade. It is the private sector, mostly SMEs, that is going to produce these goods.
One of the advantages Nigeria has, with respect to AfCFTA participation and growth, is our huge local market. The Nigerian market is large enough to attract private-sector activity on its own. So new entrants should see Nigeria as a platform from which they can grow to service the continent. Nigeria also has an energetic, young, highly trainable population. Despite its importance and the certainty that its growth will drive double-digit GDP growth in Nigeria, the local private sector still struggles with free access to the market. There are still too many barriers for the private sector that are making it too much of a challenge for local entrepreneurs to access and survive in the current marketplace. Steps have been taken to improve this situation, but much more needs to be done.
In short, for the AfCFTA to be considered a success we have to make sure that the new pan-African market is dominated by African products (for example, “made in Nigeria” or “made in Ghana”), just as the EU market thrived through “made in EU” products creation and trade. If the industrialisation of Africa fails and the AfCFTA fails, i.e., Africa becomes a dump site for products coming into the continent, it will lead to market failures across the world – as the growing African markets would be left without the capacity to purchase from wealthier nations. I believe there are enough people, institutions, governments and companies in the world who understand that an industrialised Africa and a successful AfCFTA will drive global wealth and peace, and, as such, we are already on a path to ensuring this future unfolds.
How important is sustainability for LADOL’s business model?
In LADOL, we have sustainability built into our DNA. It runs through all our policies and procedures, as we are ISO 9001, 14001 and 45001 certified. LADOL is now a platform upon which a range of companies, from small to large, can develop their businesses in an efficient safe haven.
In our special economic zone, we have managed to build a sustainable ecosystem where we provide services, infrastructure, facilities and utilities in a sustainable manner. The idea is for clients to come in and run their businesses without having to worry about capex or finding their own power or water solutions. They can move in and plug in. This has been specially thought out for SMEs, while larger companies can actually take an area and develop their own facilities.
The United Nations’ Sustainable Development Goals [SDGs] set for 2030 will potentially unblock USD 12 trillion of new opportunities for the private sector worldwide. Most of that will be in high-growth, low-income countries like Nigeria. We have a vastly under-served market that is growing every year and the private sector should capitalise on this. If you are sustainable, you will be more profitable, so it is a win-win.
What plan is LADOL pursuing for diversifying away from crude oil?
LADOL has embarked on phase two of its development, the hallmark of which is the realisation of our Just Transition. That is leveraging our work with the petroleum sector to build a special economic zone where the majority of the clients are non-petroleum sector companies. Our masterplan, finalised with the help of SAVO Developers and Niras, turns the zone into a circular economy. The engineering team identified sectors that can work together in the zone, maximising the benefits of circularity. We are currently in discussions with companies in those sectors.
One of the identified sectors is the manufacturing and assembly of green technology solutions, e.g., companies involved in mini solar grids. We offer them a compelling value proposition whereby they can set up in the zone, benefit from our hassle-free safe space and run their main or back-end operations in a more cost- effective and reliable way. We are also in discussions with agricultural companies, the healthcare sector, general manufacturing and logistics support companies.
By diversifying away from hydrocarbons, we are not denying the importance to Nigeria of this commodity, which still accounts for 90% of the country’s foreign currency. The fact is that it is impossible to be bankable at a significant level if you ignore that industry. However, one now has to look at how to transition away from that and diversify in order to achieve the sustainability goals set for 2030. That is where a lot of investments should be going now. Some petroleum companies, such as Shell, are already taking sustainability more seriously. While other multinationals have embarked on a path away from paying lip service to sustainability and towards implementing solid plans for achieving it across their supply chains.
What added value does LADOL’s recent partnership with Mammoet bring?
Mammoet is the largest heavy-lift solutions provider in the world. They have a range of heavy-lift equipment, from cranes to low loaders and other more specialised equipment. Through this partnership, we have made LADOL the epicentre for heavy-lift operations in the region for any sector. You see, it is very difficult to have everything you need in place to support a 10,000-tonne heavy lift. For this reason, you tend to have regional hubs where people go when they need to do these specialised operations.
In addition, Mammoet supplies us with its heavy-lift terminal crane MTC 15, which enables loads of up to 600 tonnes to be lifted to and from the quay from non-geared cargo vessels. This lifting capacity is ideal for loading and unloading heavy items such as columns, vessels, engines and other cargo.
What are LADOL’s keys to success and how is it creating in-country value?
The first key is having a long-term business model and patient capital. Over the past 20 years, we have developed infrastructure and facilities along with compliant and complex operational support, run by a highly skilled workforce. Secondly, local content is key as we have made sure that local people are delivering the services. We are looking beyond the normal in terms of recruiting methods, trying to get the best people for the job. Having an empowered and intelligent workforce is critical.
Thirdly, we are operating in a market with significant untapped opportunities that can only be addressed by the expertise and specialised facilities we have in LADOL. Nigeria is a place where market opportunities abound. The petroleum sector is potentially doubling in size and thus you need to provide competitive deep offshore support. At the same time, your competition not only entails Nigerians but the rest of the world, which is trying to attract the billions of dollars that it takes to develop deep offshore fields. Now more than ever Nigeria needs to be globally competitive, LADOL is highly strategic because we have halved the cost of deep offshore support in Nigeria. Fourth, we are implementing our Just Transition from petroleum sector support to running the world’s first sustainable industrial special economic zone that primarily services non-petroleum sector companies.
This brings us full circle in terms of free zones because that is the true essence of what a free zone does. A free zone should be a catalyst that enables industrial activity to rapidly ramp up in a country by providing a location in which key high-value activities can take place, which trigger a multiplier effect on job creation outside the zone. For every one job created in LADOL, there are 5-15 jobs created outside the company, which means that we are creating value.
What is the company’s main focus for 2021?
The key is to continue to focus on the implementation of phase two of our Just Transition master plan. We are busy working with green energy solution providers and agricultural companies, while expanding and increasing the sustainability of what we are doing for our petroleum sector clients. That will naturally lead to more cost savings for all the companies in the zone. Our resilience throughout Covid has made us one of the local market leaders, we will continue to build on and reinforce that fact as well.
Covid was a warning, and based on what scientists are saying, it may have been a relatively mild warning of the things to come if we do not all participate in a just transition from a world dependent on burning carbon to a world that develops energy, manufacturing, social and healthcare solutions that are sustainable. We see our role in helping to achieve the United Nations’ 17 SDGs as even more important now than ever, it is uplifting to see the number of companies and institutions and governments that agree.