The African Development Bank (AfFB) Group says it has approved an $80 million loan to finance the Ekiti Knowledge Zone project in Nigeria.
The bank made the announcement in a statement on Monday.
According to AfDB, the zone seeks to promote digital innovation and entrepreneurship, generate 26,000 jobs, and contribute some $14 million annually in net economic benefits.
Free trade zones are areas in which businesses are exempted from the normal regime applicable in Nigeria.
Earlier this year, former President Muhammadu Buhari granted a free trade zone (FTZ) status to the Ekiti Knowledge Zone.
In October 2023, Wale Edun, the minister of finance and coordinating minister of the economy, said the federal executive council (FEC) approved a $1.58 billion loan request.
From the total amount, Edun said $1.5 billion will be from the World Bank and $80 million from the African Development Bank (AfDB).
The minister added that the $80 million loan from AfDB will be used to finance the Ekiti Knowledge Zone (EKZ) project.
Speaking on the loan, AfDB said the board of directors have approved the federal government’s request.
The bank said the project will go a long way to 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,” AfDB said.
“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.
“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.
“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.
In the statement, Lamin Barrow, AfDB director-general of the Nigeria country department, said the project design “responds to the requirements of technology firms and prospective investors as indicated during the preparation phase”.
He added that there were 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,” Barrow said.
“The fund is expected to mobilize investments into more than 50 seed and early growth startups.”
AfDB’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.