Published on 18 Apr 2023

Tolaram’s Lagos Free Zone issues US$38m bond for further expansion

The 20-year corporate bond shows that domestic institutional investors have the ability to finance critical infrastructure in Nigeria

Singapore-based conglomerate Tolaram has issued a NGN17.5bn (US$38m) bond to advance the development of a massive industrial zone in Nigeria that it manages.

The bond issued to local institutional investors in March 2023, has a tenure of 20 years and offers local investors a fixed annual return of 15.25%. Investors include ten Nigerian pension funds and an insurance company. "The Lagos Free Zone plays a vital role in Nigeria's industrialisation. Infrastructure is an area in which the country is lacking. The level of investment required for infrastructure is immense, thus private players like us need to step in," said Ashish Khemka, the Chief Financial Officer (CFO) of the Lagos Free Zone. Few corporate bonds recently issued in Nigeria have terms exceeding 10 years. This is the third bond issued by the Lagos Free Zone, which has collectively raised approximately US$100m. Khemka told the NTU-SBF Centre for African Studies that bond highlights the capacity of Nigeria's debt markets to finance strategic infrastructure projects.

The 300-hectare Lagos Free Zone is located next to the Lekki Deep Seaport, which can accommodate vessels four times larger than those able to dock at Lagos' other maritime facilities. The integrated industrial zone offers investors high quality plug-and-play manufacturing infrastructure that includes warehouses, 24x7 power, modern offices, residential complex, and a variety of shared services that can allow them to operate in Nigeria hassle-free. LFZ also offers single-window clearance for business registrations and customs clearance. These incentives encompass tax-free remittance of profits and dividends, exemptions from government taxes, levies, and rates, as well as the ability to export out of Nigeria. Currently, the Lagos Free Zone has over 30 registered enterprises, including Kellogg's, Colgate-Palmolive, Arla Dairy and BASF.  The developers have allocated 70% of the zone to industrial concerns, 20% to logistics and support services, and the remaining 10% to real estate projects.

Launched in 2008, the Lagos Free Zone is now in its first development phase, covering 300ha of land. Khemka projects phase one to wrap up by 2024's end, and the entire zone is expected to be completed within a 15 to 20-year timeframe.

Tolaram has been operating in Nigeria for over 45 years, with business interests across consumer goods, infrastructure and fintech.



Nigeria opens 'game-changer' billion dollar deep seaport’, Reuters, 23 January 2023

Nigeria: Buhari commissions ‘West Africa’s deepest sea port’ in Lagos’, The Africa Report, 24 January 2023

History as Buhari inaugurates $1.5bn Lekki Deep Sea Port, witnesses first cargo ship offloading’, ThisDay, 24 January 2023

Incentives’, Lagos Free Zone, Accessed 17 April 2023

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