Engr. Mustafa Bello, FNSE Executive Secretary/CEO NIGERIAN - - PowerPoint PPT Presentation

NIGERIA’S INVESTMENT CLIMATE AND OPPORTUNTIES

Presentation By

• Engr. Mustafa Bello, FNSE

Executive Secretary/CEO NIGERIAN INVESTMENT PROMOTION COMMISSION At the Nigeria Business Investment Forum November 20th 2009, Bern Switzerland.

Presentation Outline

Structure of the Nigerian Economy Drivers of the Nigerian Economy Economic Targets Nigeria’s Competitiveness The Nigeria Business Environment Basic Investment Legislation Investment Opportunities Conclusion

SITUATING NIGERIA IN AFRICA

4

NIGERIA – PROFILE: GOOD PEOPLE GREAT NATION

Official Name

• Federal Republic
• f Nigeria

Location

• West Africa, Africa

Government - Democratic since 1999 Land Area

• 923,768sqkm

Population

• 140million

(2006 Census)

Official Language - English Capital City

• Abuja

Currency – Naira (N) International Time Zone - +1GMT

5

STRUCTURE OF THE NIGERIAN ECONOMY

• Capital-intensive oil sector

– 95% of foreign exchange earnings, and – about 80% of budgetary revenues

• The Non-oil sector

– Major contributors of the non-oil activities are

• Services

– moderately driven by technology – Private sector-led – Telecommunications industry with growth rate between 26

– 29% per annum

• Agriculture sector

– employs 66% of workforce – highly subsistence farming system

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ECONOMIC INDICES

GDP Growth Rate

• 6.2% (2007) and estimated 6.8%

(2008) Sector Contribution Oil & Gas

• 23.7% (2007)

Agriculture

• 42.2% (2007)

Industry

• 19.4% (2007)

Services

• 16.1% (2007)

Utilities

• 3.5% (2007)

Transport

• 2.7% (2007)

Finance & Insurance

• 3.8% (2007)

Inflation Rate

• 15.1% (2007)

Purchasing Power Parity

• US$294billion (2008)

Foreign Reserve

• US$52.82billion (Dec, 2008)

US$48billion (March, 2009)

Source: CBN, Abuja

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REAL GDP GROWTH RATE (%) 2000 - 2008

0.00 2.00 4.00 6.00 8.00 10.00 12.00 Real GDP Growth 5.30 10.60 6.00 6.20 6.60 2000 2004 2006 2007 2008

2006 2007 2008

Source: CBN, Abuja

2000 2004

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DRIVERS OF THE NIGERIAN ECONOMY

• Rule of Law

– anchored on Good Governance, Transparency, Accountability, Zero-

Tolerance for Corruption

• Empowerment of the Private Sector

– Public Private Partnership (PPP) initiatives

• Commitment to creating Enabling Business Environment

– Port and Customs reform – Infrastructure concessioning and regulation – Land Use reform – Financial and Insurance sector reform – Business Entry procedures – The Civil Service reform – The sustenance of the Image Project – Amnesty Programme of Rehabilitation and Re-integration in the

Niger Delta Region

Low External Debt ― US$38billion (2006) ― US$3.5billion (Feb 2009)

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ECONOMIC TARGET

• The 7-Point Agenda targets the following

– Proactively maintain competitive macro economic

indices

• Single digit inflation rate
• Average GDP growth rate of 7% >10% >12%, 2009-2011-2015
• Ensure stable exchange rate against major currencies

(currently $1 = N150±)

– Building and expanding economic infrastructure

• Generate 6,000MW of electricity by Dec 2009
• Increase rural infrastructure by 40%

– Increase the GDP of agriculture sector by 15% to

remove parity with GDP and assure Food Security

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NIGERIA: 19TH RECIPIENT OF GLOBAL FDI INFLOW 2007-2008 (BILLIONS OF DOLLARS)

22 12 27 32 23 56 24 25 22 108 35 44 111 54 28 55 183 84 158 271 18 20 22 23 24 25 38 42 44 45 45 47 60 63 66 70 97 108 118 316 50 100 150 200 250 300 350 Tur key Niger ia Mexico S ingapor e Japan Ger m any S audi Ar abia India S weden Canada Br azil Ausr alia Belgium Hon Kong, China S pain Russian Feder ation United Kingdom China Fr ance United S tates 2008 2007

NIGERIA: TOP 10 RECIPIENTS OF FDI INFLOW IN AFRICA, 2007-2008 (BILLIONS OF DOLLARS) - UNCTAD

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12 10 12 6 5 2 2 2 2 3 20 16 9 9 4 3 3 3 3 2 5 10 15 20 25 N i g e r i a A n g

• l

a E g y p t S

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t h A f r i c a L i b y a n A r a b J a m a h r i y a T u n i s i a A l g e r i a C

• n

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• c

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• 2007

2008

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Nigeria’s Output Growth versus Peer Countries Average 2000 – 2008 (%)

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THE REAL GDP GROWTH RATE CONSISTENCY OF NIGERIA WITH SELECTED COUNTRIES (2006-2009)

• 2

2 4 6 8 10 12 14 Nigeria South Africa Ghana Cote dÍvoire Tunisia Ethiopia Cameroon 2006 2007 2008 2009'

Sources: CBN, SA Reserve Bank, World Economic Report (2008)

2009’ Data projection

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THE NIGERIAN BUSINESS ENVIRONMENT

Macroeconomic and political stability; Public fiscal management, and creditworthiness Growth in Non‐Oil Exports: $1.8b and $1.9b in 2007 and 2008; $900m realized in the first 9 months of 2009 Governance; Rule of Law; Legal and regulatory frameworks Commitment to Reforms; Pro‐Private sector, investor‐ friendly policies Capacity to Deliver Prowess of local financial institutions and development of markets Achievements

THE NIGERIAN BUSINESS ENVIRONMENT

Challenges:

Widening Income Gaps and Wealth Distribution,

aggravated by: Dependence on Oil Exports, which finance Overdependence on Imports

High cost of Infrastructure = retards competitiveness of

business, promotes poverty

Completion of sector regulatory agenda (several bills to

be passed)

Rapid scaling‐up of Capacity, esp in PPP management Increase long‐term funding for infrastructure

investments

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BASIC INVESTMENT LEGISLATIONS

• The Nigerian Investment Promotion Commission Act 16
• f 1995;

– Investment Protection Guarantees

– Non-expropriation of Investment: The NIPC Act No. 16 of

1995 guarantee that ‘no enterprise shall be nationalized or expropriated by any government of the federation

– 100% ownership of investment in any sector (except ones listed

in the ‘negative list’) irrespective of nationality

Guarantee of unconditional transferability/repatriation of funds

through an authorized dealer, in freely convertible currency

• The Foreign Exchange (Monitoring & Miscellaneous

Provisions) Act 17 of 1995

–

Repatriation of Profit

– Under the Act 17 of 1995, investors are free to repatriate their

profits and dividends net of taxes through any authorized dealer in freely convertible currency.

• There are other sector specific regulatory legislations.

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INVESTMENT OPPORTUNITIES

Investment Opportunities exist in all sectors of

the economy, especially:

Power/Energy Oil & Gas (extractive and non-extractive) Agriculture & Agro Allied Waste Management etc Maritime, Shipping and Ports Solid Minerals Banking & Financial services Tourism / Hospitality Manufacturing Pharmaceuticals and Health services Information & Communication Technology (ICT) Industrial Parks and Clusters as landing platform

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INVESTMENT OPPORTUNITIES: POWER

Privatization/Concessioning of Generation &

Distribution companies

Expansion of the transmission grid by increasing

wheeling capacity to 16,000mw

Expansion of Gas Transmission Infrastructure Rehabilitation of existing plants (Thermal, Hydro

etc)

Completion of NIPP Projects: Transmission,

Generation, Distribution & Gas Pipelines estimated at $3billion

For more information (CLICK)

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INVESTMENT OPPORTUNITIES: TRANSPORTATION

ROAD:

Construction of Major Bridges on BOT PPP of Major Highways on Design, Build,

Maintain, Operate and Transfer (DBMOT) of Major economical viable routes

Total Asset Management of Some Core

Network

Quarries and Asphalt Plants

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INVESTMENT OPPORTUNITIES: TRANSPORTATION

Aviation:

Airport Terminal Concessions and Terminal

Development on BOT

Runway Construction and Rehabilitation Aircraft Maintenance Facilities Aviation Security and Safety Infrastructure Aviation Security and Safety Training Integrated Airport Transportation System In-Flight Catering Services and Infrastructure

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INVESTMENT OPPORTUNITIES: TRANSPORTATION

Railway:

Right of Way Concession Passenger Coaches Station building and operations Branded Cargo lines (e.g. for oil companies, flour

mills steel companies, cement companies etc

New Track Construction from Narrow Gauge to

Standard on BOT Basis

Inter-modal facilities (Road/Rail/Sea Port)

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INVESTMENT OPPORTUNITIES: TRANSPORTATION

Maritime and Ports:

Greenfield Port Development (Lagos, Port Harcourt

and Warri)

Water Front Development/Inter-modal Jetties

(Lagos and Calabar)

Port Infrastructure Expansion and Renewal Dredging and Channel Maintenance Inland Container Depots on BOOT Development of River Ports for Inland Water

Transportation

Greenfield Dockyard. For more information (CLICK)

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INVESTMENT OPPORTUNITIES: MANUFACTURING

Automobiles industry:

• pportunities for establishing

local plants abound with:

establishment and provision of

automobile service centres

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INVESTMENT OPPORTUNITIES: AGRICULTURE

Contributes 40% to the GDP Investment in dams and irrigation infrastructure

development

Large scale factory driven agriculture in identified areas

• f crops, livestock and fisheries

Investment opportunities exist in research & extension,

mechanisation, input provision, agro-processing, storage & market development, bio-fuel

Large scale commercial Agriculture - production &

processing with a view to adding value to Rice, Sugar, Wheat, Cassava, Oil Palm etc

For more information CLICK

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INVESTMENT OPPORTUNITIES: WASTE MANAGEMENT etc.

Opportunities:

Conversion of waste to wealth Establishment of waste transfer loading stations Operation of waste management enterprises

Public Private Partnership – For more

information CLICK

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INVESTMENT OPPORTUNITIES: TOURISM

Nigeria’s Home Movie industry the 3rd largest in the world Audience growing all over the world

Opportunities:

Establishment of hotels and resorts near waterfalls, springs

etc

Beach Tourism Heritage/Cultural Tourism Resources Development Wildlife Tourism Resources Development Building of tourist lodges – Nigeria will host Football World

Youth Championship in 2009

Marketing/Distribution of Nigerian Films

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INVESTMENT OPPORTUNITIES: SOLID MINERALS

Mining now a Government priority (Nigerian

Minerals and Mining Act, 2007)

New investor friendly minerals policy Mining Cadastre Office established Sector opened to private sector from monopoly Opportunities:

⇒ Development of Bitumen, Tarsand in Nigeria ⇒ Exploration and Mechanized Coal/Lignite Production

Reserve estimated at 15 billion barrels Coverage 73 square kilometre

⇒ Exploration and Development of Barytes and Bentonite for the

Oil Industry and Gypsum for the Cement Industry

⇒ Exploration and Development of Phosphate Resources for the

Fertilizer Industry

⇒ Processing of Iron Ore For more information CLICK

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INVESTMENT OPPORTUNITIES: TELECOMMUNICATIONS

Fastest growing sector: 26 – 29% per annum Sales, installation, repair and maintenance of

telecommunications terminal, facilities and equipment;

Major Networks in Nigeria – Active Subscribers

MTN – 23million Zain – 17million Globacom – 16million

Provision and operation of telecommunications services

Cellular mobile telephony, paging and trunked radio; Value Added Network/Data Services (Internet, Voice

Mail, Electronic Mail services)

Local Manufacture of Equipment

The local manufacture of switching and transmission

equipment

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INVESTMENT INCENTIVES IN NIGERIA

General Incentives:

Vast arable land – over 60% of Nigerian land area is suitable for agriculture and remains under utilized Trainable, resourceful and cost effective workforce with 60% youth Strategic location – hub of the West and Central African Markets Relative absence of natural disasters / calamities; i.e. no earthquakes, hurricanes or major floods etc.

Highest Return on Investment (RoI) in Africa

― 35% - 45% generally (70 – 100% in some sectors)

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Statutory Incentives

Up to 5 years Corporate Tax Holiday

* Capital Allowances:

Research & Development – use of local inputs

– 140%

Investment in infrastructure 20% of costs Minimum local raw materials utilization –

20% for 5 years

Very low VAT regime of 5%

…INVESTMENT INCENTIVES IN

NIGERIA

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The NIPC is the Government agency charged with responsibility for promoting and co-ordinating both foreign and domestic investments Mission: To Proactively Position and Promote Nigeria as the Preferred Investment Haven Vision: To be the Pre-eminent Investment Promotion Agency in the Emerging Markets

WHO ARE WE?

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OUR SERVICES

• Investment Promotion and Generation

– Organise out and in-bound missions (Business and

Investment Forum)

– Match-make investors

• Private/private sector
• Public/private sector
• Investors Relation

– Pre and Post investment services – Grant Business Permit and register foreign investments

• Investment Facilitation

– Business authorisations/licenses

• e.g. Telecommunications license and Expatriate Quota
• Policy Advocacy

– Advises government to enhance the business climate – Champion reforms to create an enabling environment

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THE ONE-STOP INVESTMENT CENTRE (OSIC)

An investment facilitation mechanism Accommodating 16 relevant government

agencies (Additional 22 agencies to join by the end of 2010)

Coordinated and streamlined to provide

prompt, efficient and transparent services

guidelines for issuance of business approvals,

permits and licenses

fast track business entry requirements to reduce

the cost of doing business in Nigeria

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CONCLUSION

• Government has taken bold steps to do the right thing

;fix power, develop infrastructure, tackle security, fight financial and economic crimes, improve justice system and reform electoral process to be electorate-friendly

• The economic reforms have succeeded in reshaping the

investment climate with tremendous inflow of FDI especially in telecoms, banking, manufacturing and agricultural sectors

• Given the investment friendly disposition of Nigeria,

there is no better time than now to invest in Africa’s most profitable economy