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 20 th 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
N IGERIA – P ROFILE : GOOD PEOPLE GREAT NATION Official Name - Federal Republic of 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 4
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 5
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) 6 Source: CBN, Abuja
REAL GDP GROWTH RATE (%) 2000 - 2008 12.00 10.60 10.00 2000 8.00 6.60 2004 6.20 6.00 2006 5.30 6.00 2007 2008 4.00 2.00 2000 2004 2006 2007 2008 0.00 7 Real GDP Growth Source: CBN, Abuja
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) 8 ― US$3.5billion (Feb 2009)
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 9
NIGERIA: 19 TH RECIPIENT OF GLOBAL FDI INFLOW 2007-2008 (B ILLIONS OF D OLLARS ) 316 United S tates 271 118 Fr ance 158 108 China 84 97 United Kingdom 183 70 Russian Feder ation 55 66 S pain 28 63 Hon Kong, China 54 60 Belgium 111 47 Ausr alia 44 45 Br azil 35 2008 45 2007 Canada 108 44 S weden 22 42 India 25 38 S audi Ar abia 24 25 Ger m any 56 24 Japan 23 23 S ingapor e 32 22 Mexico 27 20 Niger ia 12 10 18 Tur key 22 0 50 100 150 200 250 300 350
NIGERIA: TOP 10 RECIPIENTS OF FDI INFLOW IN AFRICA, 2007-2008 (B ILLIONS OF D OLLARS ) - UNCTAD 25 20 20 16 15 12 12 2007 10 2008 9 9 10 6 5 4 5 3 3 3 3 3 2 2 2 2 2 0 a a y o a a a o a n t i c p r c i g l i i a h r o s y i r c r e n e d a i g g f o A n g g o m u n E u r C i S N l o A A h T a M t J u o b S a r A n a y 11 b i L
Nigeria’s Output Growth versus Peer Countries Average 2000 – 2008 (%) 12
THE REAL GDP G ROWTH R ATE CONSISTENCY OF NIGERIA WITH SELECTED COUNTRIES (2006-2009) 14 12 10 8 2006 2007 6 2008 2009' 4 2 0 Nigeria South Africa Ghana Cote dÍvoire Tunisia Ethiopia Cameroon -2 13 2009’ Data projection Sources: CBN, SA Reserve Bank, World Economic Report (2008)
THE NIGERIAN BUSINESS ENVIRONMENT Achievements 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 14 Prowess of local financial institutions and development of markets
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
BASIC INVESTMENT LEGISLATIONS • The Nigerian Investment Promotion Commission Act 16 of 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. 16 • There are other sector specific regulatory legislations.
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 17
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 18 � For more information ( CLICK )
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 19
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 20
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 21 � Inter-modal facilities (Road/Rail/Sea Port)
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. 22 � For more information (CLICK)
INVESTMENT OPPORTUNITIES: MANUFACTURING Automobiles industry: � opportunities for establishing local plants abound with: � establishment and provision of automobile service centres 23
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