Powerful future for investment firm

Zheng Jun, managing director of CALI, says plans for the Lekki Free Trade Zone are consistent with Africa's development trends and China's industrial transfer policies in the continent.

Zheng Jun, Managing director of CALI

"As a country rich in labor and natural resources, Nigeria's economy has been developing rapidly since the elected government put political fragmentation to an end in 1999, with a focus on improving infrastructure and people's livelihoods," Zheng says. "The country also attracts the highest foreign investment in Africa and displays robust purchasing power.

"For the Chinese business community, it means investment is likely to yield higher returns."

The Lagos State Government envisages the Lekki Peninsula as having a free trade zone, an international airport and a new port - a "blue-green" environment satellite city of the crowded international metropolis of Lagos.

A blue environment means economically sustainable with little or no waste, and a green one is environmentally sustainable.

Nigeria's government has offered multiple preferential policies such as duty-free trade, creation of in-zone businesses and a tax holiday. The country has also pledged tax rebates to enterprises in "pioneer industries" such as steel, pharmaceuticals and cement.

Most pioneer industries Nigeria has identified are those with excess capacity in China, Zheng says. "Also because of the rising costs of labor and land, these Chinese enterprises are eager to transfer their production overseas, but they lack a thorough understanding of the African market."

"The ultimate purpose of the Lekki Free Trade Zone is to tackle two problems that Chinese enterprises encounter in Africa: where to relocate and how to develop," Zheng says. "As an answer to these two questions, the zone helps them minimize costs and risk."

CALI, headquartered in Beijing, pitches the zone at Chinese business groups. It also has offices in Europe and other African countries to promote the Lekki project. During the first half of this year, the zone received more than 150 business delegations from all over the world.

Chinese enterprises' misconceptions about Africa and inadequate preparation are major challenges in touting the zone's attractive investment climate, Zheng says. Determination and vision are vital for Chinese companies that want to invest in the rising continent, he says.

"Some enterprises still associate Africa with poverty, disease and danger, and flinch because of concerns over geographic distances and cultural differences, while some just flock there without studying the local market and the regulations, or even having a good support team."

CALI is also helping to make the zone welcome by designating 0.5 percent of its total investment to support development of surrounding communities through drilling water wells and donating to hospitals.

"Chinese investors should interact more with native Africans," Zheng says. "They will have better growth prospects by employing local people and strictly controlling pollution."

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