NIGERIA: A STRATEGIC INVESTMENT DESTINATION THE PREFERRED LOCATION - - PowerPoint PPT Presentation

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Private and Confidential

YEWANDE SADIKU EXECUTIVE SECRETARY/CEO NIGERIAN INVESTMENT PROMOTION COMMISSION ABUJA | 05 NOVEMBER 2018

NIGERIA: A STRATEGIC INVESTMENT DESTINATION

THE PREFERRED LOCATION FOR CANADIAN INVESTMENTS IN AFRICA

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1 181 411 36 45

2015 2020 2025 2030 2035 2040 2045 2050

Nigeria Canada

0.006%

Nigeria – Canada

NIGERIA CANADA Capital Abuja Ottawa Official Language English English & French Land Area 910,770 km² 9,093,510 km² People (2017) Population (m) 191 36.7

• Pop. growth rate (%)

2.6 1.2 Median age 18.4 40.6 Economically active pop. (15-64) 98 24.6 Economy (2017) GDP nominal ($’ bn) 375.8 1,653 Agriculture (% GDP) 24.5 1.7 Industries (% GDP) 22 28.1 Services (% GDP) 53.6 70.2 GDP growth rate (%) 0.8 3.1 Inflation (%) 15.7 1.6 Labour (2017) Labour force (% of pop.) 59m (31) 20.1(55) Trade (2017) Import $’bn, (% of GDP) 30.7 (8.2) 548.3(33) Export $’bn, (% of GDP ) 44.5 (11.8) 510.7(31) Trade balance (% of GDP) 13.8(3.6)

• 37.6(<0)

Investment Climate (2017) EoDB 145 18 GCI 125 14

Comparative statistics Population (m) GDP ($’bn)

515 568 481 404 376 1,843 1,799 1,560 1,536 1,653 2013 2014 2015 2016 2017 Nigeria Canada

Sources: United Nations World Population Prospects; World Development Indicators, World Bank Doing Business (EoDB) Report 2017; Global Competitiveness Index (GCI) 2017-2018; www.countryeconomy.com

Age 15-64

61% 60%

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Nigeria in global context

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How the world will look in 2050

China India USA Indonesia Brazil Britain Italy France Bangladesh Russia Japan Germany China India USA Indonesia Brazil Pakistan Nigeria Bangladesh Russia Mexico Japan Ethiopia China India Nigeria USA Indonesia Pakistan Brazil Bangladesh Congo DR Ethiopia Mexico Egypt Most populous countries 1950 2017 2050 Forecast 7 3 190.9m 410.6m

Source: United Nations World Population Prospects: the 2017 Revision, medium variants

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How the world will look in 2050

Source: PWC Analysis, from “The long view: how will the global economic order change by 2050?”

2.3% 1.9% 4.2%

• 1%

0% 1% 2% 3% 4% 5%

Vietnam India Bangladesh Pakistan Philippines Nigeria Egypt Indonesia South Africa Malaysia Colombia Mexico Saudi Arabia China Iran Turkey Argentina Thailand Brazil Australia Poland Russia United Kingdom Canada South Korea United States Netherlands France Spain Germany Italy Japan

Projected average real GDP growth p.a., 2016-2050

Average pop growth p.a % Average real growth per capita p.a % Average GDP prowth p.a. (in domestic currency)

Nigeria could be the fastest growing African economy to 2050, and could move up the GDP rankings, to 14th by 2050, if it can diversify its economy away from oil and strengthen its institutions and infrastructure. 14

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The African growth story is real

1988 - 2000 2013 - 2030 2001 - 2012

GDP growth (CAGR)

Above 5% Between o% and 5% Less than 0% (negative)

Number of economies growing faster than 5% a year

11 11 7 1 6 3 2 1 1 3 6 4 8 21 24 Asia-Pacific CIS Central and Southeast Europe (CSE) Middle East SSA 1988 - 2000 2001 - 2012 2013 - 2030

Source: EY’s 2015 Africa Attractiveness Survey

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But a wide perception gap exists: present optimists, absent doubters

Source: EY’s 2015 Africa Attractiveness Survey (total respondents:501)

#1

Africa is the most attractive investment destination in the world

66%

believe attractiveness has improved over the past year

81%

believe attractiveness will improve over the next three years Respondents who are not established in Africa Africa is the second least attractive investment destination in the world Believe attractiveness improved over the past year Believe attractiveness will improve over the next three years Respondents who are already established in Africa

50% 30%

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Nigeria in context

Sources: National Bureau of Statistics (2018 estimates), http://www.data.worldbank.org

Top 5 Top 5 Smallest Smallest

Population (m) Total: 192,449,083

Botswana 2.3 Rwanda 12 .2 Israel 8.7 Sierra Leone 7.5 Belgium 11.4

Land size (km2) Total: 910,710

Panama 74, 340 Luxembourg 2,590 Croatia 55,960 Dominican Republic 48,310 Ireland 68,890

Bayelsa 2.3 Kano 13.0 Oyo 7.7 Katsina 7.7 Kaduna 8.2 Lagos 12.4 Lagos 3,671 Borno 72,609 Niger 68,925 Bauchi 49,119 Taraba 56,282 Yobe 46,609

Most populated region North-West 48.7m Largest region North-East: 280,419 km2 Smallest region South-South: 76,852 km2 Least populated region South-South: 20.6m

Denmark 42, 262 Spain 46.6m Italy 294,140 km2 Sri Lanka 21.44m Czech 77,210 km2

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Improving Nigeria’s business environment

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9 Note: Size of bubble reflects relative GDP

• f each country

Southern Africa East Africa West Africa

Increasingly friendly business environment Increasing population

South Africa Nigeria Angola Senegal Kenya Ethiopia Côte d'Ivoire Cameroon Tanzania Equatorial Guinea Ghana Uganda Togo Zambia Botswana 20 40 60 80 100 120 140 160 180 200 20 40 60 80 100 120 140 160 180 200 Population (millions)

Ease of doing business (ranking)

Nigeria: a strategic market, undergoing dynamic changes and transformation

Target

Source: World Bank Doing Business Report 2017

Nigeria is the emerging economic locomotive of the African continent ▪ Largest population on the continent and 7th in the world ▪ Largest GDP in Africa ▪ Largest gas reserves and second largest oil reserves in Africa

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Africa’s investment attractiveness

Source: EY’s 2015 Africa Attractiveness Survey

Biggest draws: natural resources, high growth rates and large domestic markets…

…yet concerns about business environment persist

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Africa’s perceived barriers to investment…

Source: EY’s 2015 Africa Attractiveness Survey

Business environment is most important barrier… … incentives are least important barrier

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12 Sources: Council on Foreign Relations, www.timeanddate.com/worldclock/distances.html Above represents incidents motivated by political, economic or social grievances

Security concerns should not discourage investments

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Deaths Per Month 12-month Moving Average

Security incidents have reduced… …and are far from commercial hub

Comparative flying distances Ontario – Ottawa to North Carolina – Fayetteville 1,182 km Quebec – Montreal to Wisconsin, USA 1,192 km

Sambisa Forest

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Business case for improving business operating conditions

Strong correlation between economic prosperity and ease of doing business

R² = 0.4918 100 1,000 10,000 100,000 20 40 60 80 100 120 140 160 180 200

Income Per Capita (log scale) USD per person per year

# of Objs = 185 Nigeria Brazil South Africa USA Singapore Norway

Doing Business Rank (2018)

Source: World Bank Doing Business Report 2018

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Response: highest level commitment to ease of doing business reforms

Launch No of announced reforms No of initiatives Participating agencies Success rate

February 2017 8 22 12 72% October 2017 11 22 29 52% February 2018 9 28 26 68%

Presidential Enabling Business Environment Council (PEBEC) inaugurated in July 2016

Remove criticalbottlenecks and bureaucratic constraints to doing business in Nigeria

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Up by 24 places in WorldBank’s 2018 Ease of Doing Business ranking

NAP 1.0 NAP 3.0 NAP 2.0 EO 1 May 2017 Transparency and improving the business environment

President Muhammadu Buhari, GCFR Vice President Yemi Osinbajo SAN, GCON

Source: Enabling Business Environment Secretariat Reports

NAP: National Action Plan, EO: Executive Order

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Global competitiveness index: Nigeria (115/140)

Source: World Economic Forum: The Global Competitiveness Report 2018

Performance overview 2018

Previous edition Lower income group average Sub-Saharan Africa average

2018 2017 115/ 140 125/ 137

Positive national competitiveness ranking…

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Starting a business Dealing with construction permits Getting electricity Registering property Getting credit Paying taxes Enforcing contracts Protecting minority investors Trading across borders Resolving insolvency

120/ 190 149/ 190 171/ 190 184/ 190 12/ 190 38/ 190 157/ 190 182/ 190 92/ 190 149/ 190 +10 +2 +1

• 5
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+14 +1

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2018 2017 2016 2015 145/ 190 169/ 190 170/ 189 170/ 189 +24 +1

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Rank Difference 2019 DB Ranking Rank Difference DB Year

Source: World Bank, Doing Business 2019

Nigeria’s ease of doing business score improved by 1.37 points 2019 146/ 190

• 1

*DTF 52.89 51.52 44.63 43.56 44.69

* The distance to frontier (DTF) score measures the distance of each economy to the “frontier”, which represents the best performance observed on each of the indicators across all economies

Difference +1.37 +6.89

• 0.06

+1.14

• 3.06

2019 Ease of Doing Business ranking: Nigeria (146/190)

… positive national doing business score …

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Subnational: Doing Business in Nigeria 2018

… positive subnational doing business scores

Lagos Bayelsa Rivers Imo Abia Akwa Ibom Adamawa Bauchi Gombe Kaduna FCT Nassarawa Plateau Taraba Benue Cross River Enugu Ebonyi

Anambra

Delta Edo Kogi Oyo Ogun Osun Ekiti Ondo Kwara Niger Sokoto Kebbi Zamfara Katsina Kano Yobe Jigawa Borno

Source: World Bank, Doing Business in Nigeria 2018

In the past 4 years, 29 Nigerian states implemented 43 reforms across the four areas benchmarked. Kaduna, Enugu, Abia, Lagos and Anambra showed the largest advance toward the global good practice frontier

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Nigeria’s economy

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Recovery has been driven by non-oil sectors

25% 23% 2% 0.5% 0.3% 22% 9% 4% 4% 2% 1% 53% 17% 11% 7% 4%

3%

68 Agriculture Crop… Livestock Fishing Forestry Industries Crude Oil & Gas FBT Construction TAF Cement Services Trade ICT Real Estate PSTS

• Fin. & Insurance

Total

2017 (N trillion) Contribution to GDP (%)

2017 Sector 2016

Industries Agriculture 24.45 25.08 21.96 22.26

Growth Rate (%)

Services Industries Agriculture (0.82) (0.91) 4.11 3.45 (8.85) 2.19 Total

• 1.58

0.83

FBT – Food, Beverages & Tobacco; TAF – Textile, Apparel & Footwear; ICT – Information Communication & Technology; PSTS – Professional, Scientific and Technical Services; Fin & .. – Financial and Insurance

5.82 8.37 8.02 7.0

Source: National Bureau of Statistics

2017 Sector 2020E

91 9 Non Oil Oil

Services 53.59 52.66

2020E

27.7 21.8 50.6

2016

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Modest GDP growth… FX reserves risen by 20% over last 12 months

305.31 305.83 494.70 359.00

• Jan. 13
• Jan. 14
• Jan. 15
• Jan. 16
• Jan. 17
• Jan. 18
• Sept. 18

Inter-Bank Parallel/IEFX

• Feb. 2017

Exchange rates kept relatively stable… Inflation is 40% lower than the highs of 2017

62% 17%

Premium Price Naira/USD Annual growth rate, %

%

US$bn

Sources: Central Bank of Nigeria, National Bureau of Statistics

Cautious economic recovery

9.00 8.00 8.20 9.62 18.72 11.28

• Jan. 13
• Jan. 14
• Jan. 15
• Jan. 16
• Jan. 17
• Sept. 18

45.82 40.67 34.24 28.28 28.59 34.95 42.00

• Jan. 13
• Jan. 14
• Jan. 15
• Jan. 16
• Jan. 17

Jan.18

• Oct. 18

1.5

2013 2014 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

Recession Period

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Economic Recovery and Growth Plan (ERGP) 2017 - 2020

Restoring Growth

• Macroeconomic stability
• Economic diversification

Investing in Our People

• Social Inclusion
• Improved human capital
• Job creation and youth empowerment

Building a Globally Competitive Economy

• Investing in infrastructure
• Improving the business environment
• Promoting digital-led growth

Broad Policy Objectives

• Double manufacturing’s share of GDP
• Maintain a competitive exchange rate
• Reduce inflation from 18.6% to 9.9%
• Increase tax/GDP ratio from 6% to 15%
• Improve budget preparation and execution process
• FDI target of $10bn
• Create 15m new jobs
• Grow GDP at average of 4.62%
• Top 100 ease of doing business ranking by 2020
• Rebalance domestic/foreign debt from 84:16 to 60:40

Source: ERGP document

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Services Manufacturing Agriculture Real Estate Oil and Gas Solid Minerals

• Increase internet

penetration from 47.4% to 75%

• Encourage local

production of ICT hardware and software

• Channel funding

to entrepreneurs though accelerators and incubators

• Strengthen

enforcement of IP rights

• Increase tourism

by 10% a year from 2017

• Focus on agro-

processing and industrial hubs

• Create forward

and backward linkages among industrial sub- sectors

• Increase local

content in raw materials and machinery

• Increase export

potential of manufactured goods

• Increase R&D,

technology and innovation

• Ensure self-

sufficiency in tomato paste, rice, and wheat

• Become net

exporter of key agricultural products

• Fast-track the

development and execution of irrigation projects

• Extend the Anchor

Borrowers Programme to all States and major crops

• Recapitalize

Federal Mortgage Bank from N2.5b to N500b

• Mobilize private

capital through Government seed- funding in roads, housing, and agriculture

• Deliver 2m

housing units via Family Homes Fund

• Invest in technical

& vocational training needed by the industry

• Increase oil

production to 2.5 mbpd

• Accelerate

building of critical pipeline infrastructure

• Promote domestic

use of LPG and CNG

• Increase local

refining capacity

• Develop domestic

gas infrastructure for power and domestic consumption

• Facilitate

development of coal to fire power plants

• Integrate artisanal

miners into formal sector

• Integrate mining

transport and power needs in national implementation plans

• Produce geological

maps of the entire country

$67.5b $35.7b $25.5b $21.8b $15b $3.9b

ERGP: Priority sector objectives and private sector investment requirements

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ERGP Focus Labs

Focus labs

◼ Can unlock US$ 22.5 bn of private investments by

2020 across various sectors of the economy:

– Agriculture: US$ 1.2 bn

Transportation: US$ 3.5 bn

– Manufacturing: US$ 5.9 bn

Solid Minerals: US$ 3.3 bn

– Gas: US$ 2.0 bn

Power: US$ 6.5 bn ◼ Target creation of 514k jobs by 2020 ◼ ‘Most ready’ to go: US$ 10.9 bn of the investments

◼ Identify projects to drive growth, increase

private investments and create new jobs

◼ Mobilize private capital to finance projects ◼ Harness private-public partnerships ◼ Achieve economic diversification, inclusive

and sustained growth Results Objective

Agriculture Manufacturing Power Supply Solid Minerals Transportation Gas

Pre-Labs 8 weeks Labs 6 weeks Post-Labs 3 weeks January 15 - May 12 2018

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Compendium of Investment Incentives in Nigeria

◼ Compilation of fiscal incentives in Nigerian

tax laws and duly approved sector-specific incentives

◼ 6 principal sections

– Investment policies and protections – General tax-based incentives – Sector-specific incentives – Tariff-based incentives – Export incentives – Special Economic Zones

◼ First step in understanding impact of

incentives in achieving Government’s economic objectives and considering incentive reforms

◼ Available at www.nipc.gov.ng

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UNECA – United Nations Economic Commission for Africa UNCTAD – United Nations Conference on Trade and Development

iGuide Nigeria

◼ An easy-to-use online investment guide that

provides investors with up-to-date and pertinent information on the processes, procedures and basic costs of doing business in Nigeria

◼ It provides information on Starting Business,

Labour, Production Factors, Land, Taxes, Investor Rights, Growth Sectors and Opportunities

◼ The information will enable investors to

make better informed decisions on Nigeria as a preferred investment destination

◼ Available at:

– www.theiguides.org/nigeria – www.nipc.gov.ng

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WIP: Investment opportunity profiling

◼ Profile investment opportunities across

Nigeria

– Existing opportunities – New projects (brownfield or greenfield) – Public Private Partnership projects – Prospective investors seeking opportunities

◼ Standardised template

– To be used by all IPAs in Nigeria – Supported by a Toolkit for Investment Profiling

◼ Database of investment opportunities

– Maintained by NIPC – Analysed, by economic impact, sector, region, state – Summarised, for presentations and matchmaking – Abridged, in deal books – In full, for serious investors

Coming soon!

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Tracking Global Sectoral Investments

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Global sectoral investing countries, 2016

500 1,000 1,500 2,000 2,500 3,000 20 40 60 80 100 120

Number of projects FDI outward stock (US$' m) 100,000 200,000 300,000 400,000 500,000 600,000

50 100 150 200 250

Number of projects FDI outward stock ($' m)

Agriculture Solid Minerals

Source: Investment Map by International Trade Center (ITC) Based on cumulative values as at 2016

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Global sectoral investing countries, 2016

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Number of projects FDI outward stock ($' m) 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 5,000 10,000 15,000 20,000 25,000 Number FDI outward stock ($' m)

Manufacturing Services

Source: Investment Map by International Trade Center (ITC) Based on cumulative values as at 2016

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Global sectoral investing countries, 2016

5,000 10,000 15,000 20,000 25,000 30,000 35,000 100 200 300 400 500 600 Number of projects FDI outward stock ($' m) 100,000 200,000 300,000 400,000 500,000 600,000 700,000 500 1000 1500 2000 2500 3000 3500 Number of projects FDI outward stock ($' m)

Real Estate & Construction Business Services

Source: Investment Map by International Trade Center (ITC) Based on cumulative values as at 2016

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Global sectoral investing countries, 2016

Power Oil Refining

Source: Investment Map by International Trade Center (ITC) Based on cumulative values as at 2016 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

50 100 150 200 250 300 350 400

Number of projects FDI outward stock ($' m) 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 50 100 150 200 250 300 350 400 450 500 Number of projects FDI outward stock ($' m)

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Why Canada?

Source: NIPC Intelligence

#1 investor in Nigeria #4 investor in solid minerals Top 10 Jobs creator in Nigeria Top 10 investor in oil refining Top 10 investor in services Strategic business partner

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Investor Obligation and Protections in the NIPC Act

ICSID = International Centre for Settlement of Investment Disputes

Registration Obligation

• Enterprises in which

foreigners can participate are required to register with NIPC before commencing business Ownership

• Nigerians and

foreigners can invest in any sector, except for those on the negative list

• No restriction on

foreign percentage

• wnership

Guarantees

• Government will not

nationalize or expropriate any enterprise

• Right of access to

courts and fair and adequate compensation if acquisition is in national interest/for public purpose

• No restriction on

repatriation by foreigners of investment returns

• r sale proceeds

through an authorized dealer Dispute Resolution

• Amicable resolution

by mutual discussion

• r arbitration of

investor/government disputes

• Provisions of any

Bilateral Treaty with the investor’s country will apply

• Right of recourse to

international arbitration under ICSID Rules

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About NIPC

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Nigerian Investment Promotion Commission (NIPC) was established by the NIPC Act 16 of 1995 to encourage, promote and co-ordinate investments in Nigeria

• Promote Nigeria as an attractive investment destination
• Provide information on investment opportunities and capital sources

Project Attractive Investment Image

• Promote investments in Nigeria, by Nigerians and non-Nigerians
• Co-ordinate all investment promotion activities in Nigeria

Investment Promotion

• Provide support services to investors and register enterprises in Nigeria
• Match-make investors with specific projects and advise on partners for JVs
• Provide information on investment incentives and approve Pioneer Status

Incentive applications Investment Facilitation

• Initiate and support measures that enhance the investment climate
• Evaluate the impact of investments and incentives in Nigeria and make

appropriate recommendations

• Advise Government on policy matters to promote Nigeria’s economic development

Policy Advocacy

NIPC’s principal functions

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One-Stop Investment Centre (OSIC) at NIPC

▪ Houses 27 agencies to facilitate investments and reduce time required to process regulatory approvals and permits ▪ Provides assistance with information and requirements from incorporation to expansion ▪ Also supports with business visa facilitation

Sample business entry scenarios

Software development and creative industry Drug Manufacturing for export

Type of Business Generic Agencies Specific/Sector Agencies

Power Generation

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Yewande Sadiku Executive Secretary/CEO infodesk@nipc.gov.ng

• sicinfodesk@nipc.gov.ng

NIGERIAN INVESTMENT PROMOTION COMMISSION Plot 1181 Aguiyi Ironsi Street Maitama District Abuja www.nipc.gov.ng

For further details, please contact us