Published on March 2, 2014
Investing in Nigeria A Strategy Guide
Country Snapshot • Official Name: Federal Republic of Nigeria • Capital and Seat of Government: Abuja (approx. 2.2m residents) • Form of Government: Federal Republic. Presidential Democracy • Area: Approx. 923.800 sq km • Population: 2012, approx. 166.2 million (annual growth rate of 7.46%) • Religious Groups: Muslims (50%). Christians (40%), indigenous religions (10%) • Languages: English (official), Hausa. Yoruba, Igbo, Fulani • Currency Naira: NGN = 100 Kobo: 159.4 NGN = 1USD: 217.87 NGN = 1 EUR (Jan 2014) • Ranked 30th in terms of GDP in the world ($522.18 bn as 2014 estimate) Major Cities Lagos Kano Abuja Port Harcourt
Nigeria: Industry Overview Energy •9 bn tons oil reserves •5.2 tn cubic meters of Natural Gas •Accounts for 72% of revenue •95% of Foreign Exchange •10% of world’s LNG production •NNPC, Total, Elf, ExxonMobil are the major players Banking & Finance Major Industries Telecoms Transporta tion •Regulated by CBN •Operates under Banking Ordinance Act, Nigeria 1952 •However, effectively controlled after 2009 •Afribank, Intercontinental Bank, Union Bank, Oceanic Bank and Finbank are some major players Manufactur ing Solid Minerals Major Industries •8th fastest growing market in world •Attracted $26 bn since 2001 •Teledensity reached to 67.2 % in 2012 •Regulated by Nigerian Communications Commission •Controlled by Infrastructure Concession and Regulatory Commission (ICRC) •Air traffic increased by 21% in 2012 •Cargo movement grew by 62.3% •Air France, BA, Emirates are the major players •Contributes to 6.3% of GDP •Most suffering industry due to lack of power supply •Govt. investing heavily now, in 2012 invested US$ 4.2 bn •53% of demand is met by imports from China, France, US, UK Construction Agriculture •Less than 2% of GDP •Major Solid minerals inlude coal, lead, zinc •Heavily ignored sector due to Oil mining •100 % FDI •Now reforms are made under Nigeria’s Minerals and Mining Act, 2007 •Fastest growing market in the world, around 6.2% •Accounts for 4.3% of GDP •Heavy Govt expenditure on Infrastructure is boosting its growth •Much more investment is expected in the future •Contribute 36% of GDP •Employs 60% of the workforce •Major goods are yams, cassava, peanuts, millets and rice •Major importers are UK, US, Canada, Germany, France
A sea of Solid Minerals Solid Minerals • Large Amount of Minerals are yet to be fully explored. • Pro-mining reforms • 100% FDI • The new national solid mineral policy. • Year 2007 - “Mining Year”(Enacted Minerals & mines act) • Reforms in Power Sector • A large community of skilled geoscientists and engineers • The World Bank is supporting the government by providing finance for the Sustainable Management of Mineral Resources (SMMR) project. • IRON ORE Over 3 billion tones of iron ore found in Kogi, Enugu, Niger, Zamfara & Kaduna States are yet to be fully explored. The exchange control regulations have been liberalised to ensure a free flow of international finance. GYPSUM About one billion tones of gypsum deposits are spread over many states in Nigeria. TALC Estimated reserve of over 100 mn tones of talc obtained in Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States. KAOLIN An estimated reserve of 3 billion tonnes of good kaolinitic clays has been identified. BITUMEN About 42 billion tones – almost twice the amount of existing reserves of crude petroleum. LEAD/ZINC Estimated 10 mn tons of lead/zinc veins spread over eight States in Nigeria ROCK SALT Salt springs at Awe (Plateau State), Abakaliki (Enugu State) and Uburu (Imo State), while rock salt is available in Benue State. Total reserve of 1.5 bn tones has been indicated COAL There are nearly 4.00 billion tonnes of indicated reserves in 17 identified coalfields.
Characteristic Measures Taken By Nigerian Government NIPC Privatization EFCC TCP • Formulated in 1995 • Instrumental in setting Nigeria’s investment policy • Main aim is to encourage ,promote investment in Nigeria • Policy adopted by Nigerian government in 1998 • 40% will be retained by government,40% for strategic investors and 20% will be sold to the Nigerian public • Deals with enforcement of laws to combat economical and financial crimes • Pivotal for attaining corporate governance in Nigeria • Platform for investors to verify contract • Can be accessed through www.efccnigeria.org OSIC • Single Window Clearance mechanism • Any business can be started in maximum 28 days NCCN • Formed by president Mr. Jonathan • Aim is to safe-guard investments in Nigeria • Improve Nigeria’s global competitiveness ranking
Major Challenges Project Funding • However, the progress made in the regulatory reform, so far, is expected to stimulate activities Administrative Delays • Though under the mining Act. Of the country 28 days one-stop concept is introduced. Infrastructure • The ongoing privatization of the national utility & reform of the power sector are stimuli for private Security Political Interference Illegal Mining • The Niger Delta area of the country is now a peaceful region following the success of the ongoing amnesty programme. • However, the political situation in the country is stabilizing & good fiscal and tax incentives are being put in place to promote mining • However, with the enactment of the Mining Act, foreign investors are guaranteed unfettered operation of their legitimate business in the country.
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