African Development Bank Approves $80M For Investment In Ekiti

The Board of Directors of the African Development Bank Group has approved an $80 million loan to finance the Ekiti Knowledge Zone project in Nigeria.

The Zone seeks to promote digital innovation and entrepreneurship, generate 26,000 jobs, and contribute some $14 million annually in net economic benefits.

The Ekiti Knowledge Zone is a federal government-backed and state-led Special Economic Zone with fiscal incentives to attract private sector investment in the digital technology and knowledge economy value chains.

The project will attract technology firms and investors, including anchor investors from the private sector, to form part of a Special Purpose Vehicle that allows multiple investors to pool financing. This structure will enable investors to manage the operations of the Zone.

The project also aims to attract businesses, including tech start-ups, business process outsourcing firms, fabrication and production companies, research institutes and corporate back-office operations, to locate in the Zone.

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The Ekiti Knowledge Zone’s incubator programme will support promising start-ups with pre-seed and seed funding. It will also offer skills-enhancement training in information and communication technology targeting the youth in Ekiti and neighbouring states.

The Ekiti Knowledge Zone was conferred “a free zone” status by the Federal Government under the Nigeria Export Processing Zones Authority Act in April 2023. It will thus offer various incentives for private investors, including: free repatriation of capital, profits and dividends by foreign investors, rent-free land during the construction phase, tax holidays, waivers on import and export duties, and expatriate quotas for companies operating in the Zone.

The total project cost is estimated at $94.8 million; the Ekiti State government is providing $14.8 million in counterpart funding. The Bank’s financing will leverage other development partners’ programmes in the state.

Lamin Barrow, Bank Group Director General of the Nigeria Country Department, said: “The Ekiti Knowledge Zone Project design responds to the requirements of technology firms and prospective investors as indicated during the preparation phase, lessons learnt from similar Bank-financed projects such as the Cabo Verde and Senegal technology parks, and drew insights from good practices of similar initiatives in the continent and globally.”

The Bank’s financing will support the development of world-class infrastructure, including a 20-hectare green technology park and such services infrastructure as roads, electricity, water supply and wastewater treatment facilities. The project will provide information and communication technology training to youth, nurture innovation and enhance entrepreneurial skills.

The project also advances government-enabling policies and establishment of the Ekiti State Innovation Fund to provide pre-seed and early growth stage funding to promote entrepreneurship, innovation, and investment. The Fund is expected to mobilize investments into more than 50 seed and early growth start-ups.

The Ekiti Knowledge Zone targets more than 19,000 youth and seeks to attract investment commitments from at least fifteen firms with the potential to generate revenues of about $10.8 million.

The African Development Bank’s active portfolio in Nigeria comprises 48 operations valued at $4.4 billion. These include 24 public sector projects amounting to $2.5 billion and 24 private sector operations valued at $1.9 billion.