Post on 12-Jan-2016
ATTRACTING FOREIGN DIRECT INVESTMENT THROUGH GLOBAL PARTNERSHIPS
presentation made at the: 17TH NIGERIAN ECONOMIC SUMMIT
Thursday November 10, 2011
THE HONOURABLE MINISTER OF COMMUNICATION TECHNOLOGY MRS OMOBOLA JOHNSON
Ministry of Communication Technology
Outline
• Attracting FDI– Conditions Precedent – Country Competitiveness
• Investment Requirements, Challenges and Goals of Priority Sectors– Oil & Gas, Power, Agriculture, Transport, ICTs
• Building Global Partnerships
2© 2011. Federal Ministry of Communication Technology
Attracting Foreign Direct Investment and Building Global Partnerships
Conditions Precedent are fairly well known....
• Opportunity– Of Markets
• Stability– Of Governments
• Consistency– Of Policy
• Certainty– Of Regulation and regulatory environment
• Ease of Doing Business– Doing Business Index
© 2011. Federal Ministry of Communication Technology4
But FDI is finite and country’s compete for these funds......
• Nigeria’s Competitive Strengths :– Existence of a large and attractive domestic market with high unmet
demand for basic (and public) goods and services• Increasingly sophisticated and growing middle class
– Good competitive domestic market; however foreign competition impeded by
• Prevalence of trade barriers, high trade tariffs, and burdensome customs procedures
– Good labour market efficiency; exhibiting high degree of flexibility. More efficient use of labour is however required and gender imbalances persist in the workplace
– Improving business sophistication• Good quantity of local suppliers engaged in a range of activities along
value chains; however improvements required with respect to quality of local suppliers
© 2011. Federal Ministry of Communication Technology5
But FDI is finite and country’s compete for these funds......
• Nigeria’s Competitive Weaknesses :– Significant improvements required in strengthening public
institutions including• Enforcement of property rights and intellectual property• More efficient government spending• Accountability – auditing and reporting standards• Arresting the declining security situation
– Significant improvements required in availability and quality of physical infrastructure – transportation, power, ports, ICT
– Significant improvements required with respect to healthcare; impact of health issues on businesses is significant
© 2011. Federal Ministry of Communication Technology6
But FDI is finite and country’s compete for these funds......
• Nigeria’s Competitive Weaknesses:– Significant improvements required in the quality of education and the
quality of entrants into the workforce– Significant improvements required in technological readiness.
Currently low adoption of ICT by individuals and businesses with negative impacts on productivity
– Development opportunities still exist in the financial market• low access to capital
• high cost of capital, when it can be accessed
• Size of the capital markets (number of companies and market cap)
– Whilst there is capacity to innovate, significant improvements are required in harnessing such capacities – especially university-industry collaborations and government’s adoption of advanced technological products
© 2011. Federal Ministry of Communication Technology7
Best performing Nigeria
Global Competitiveness Index 2011-2012
South Africa (50) 127
Infrastructure South Africa (62) 135
- quality of electricity supply Egypt (74) 139
Market size South Africa (25) 34
Labour market efficiency Kenya (37) 70
Technology readiness South Africa (76) 106
The resultant effect.......
© 2011. Federal Ministry of Communication Technology 8
102102
5050
9494
127127
6262
135135
7575
103103
2525
7777
2727
3434 7070
141141
3737
9595
106106
9595
9898
7676
Source: The Global Competitiveness Index Analyzer 2010 – 2011
http://gcr.weforum.org/gcr2011/
Rank out of 142 countries
A large and attractive market is only a starting point
Investment Requirements, Challenges and Goals of Priority Sectors
Investment Requirements, Goals and Challenges of Priority Sectors
OIL & GAS POWER AGRICULTURE TRANSPORT ICT
Total proposed investment in sector: N571.16bn
Total proposed investment in sector: N880.98bn
Total proposed investment in sector: N745.24bn
Total proposed investment in sector: N2.216tn
Total proposed investment in sector: N26.620bn
Maximize the benefits of Nigeria’s hydrocarbon resources
Meet demand for adequate and sustainable power in Nigeria, and at affordable costs
Create a sustainable, vibrant and technology enabled Agricultural sector that can meet the needs of the country
Develop a world class infrastructure that will support all other sectors of the economy, particularly the productive sector
Develop a ICT sector to drive and expand national production and soft sectors (inc. governance, public services, media etc.)
• High level of foreign content
• Focus on export of unprocessed crude and low refining capacity
• Lack of enabling environment in the Niger Delta
• Liberalization and privatization of the downstream sub-sector
• Inadequate and ageing physical assets; overloaded transformers; and frequent vandalisation
• Lack of implementation of policies (e.g. Nigerian Gas Master plan) and weak coordination of obligations
• Low productivity - poor input; weak inter-sectoral linkages; ageing operators etc.
• High risk of investment
• Non competitiveness – informal marketing structure.
• Weak domestic policies/institutions
• Dilapidated infrastructure - rail, waterways, ports, and roads as well as environmental constraints and piracy,
• Institutional reform and resolution of legal disagreements between States and Federal Govt.
• Inadequate funding
• Disjointed and Inadequate policies plus weak/absent legal and regulatory frameworks;
• Weak PPP framework (barrier to participation by Private Sector)
• Poor state of the nation physical and social infrastructure particularly power
© 2011. Federal Ministry of Communication Technology10
1
1 Figures refer to estimated minimum public sector investment required to achieve objectives set out in the Vision 20:20:20 Plan
Building Global Partnerships require a vibrant private sector........
• Foreign Direct Investment is coming into the private sector and not government
• Domestic private sector hindered by the same things that constrain FDI
• Absorptive capacity of the Nigerian private sector– Organised private sector is small relative to GDP– Most industry sectors are fragmented – Large informal market– Rent seeking tendencies – Poor productive capacity
© 2011. Federal Ministry of Communication Technology11
Building global partnerships require .....
– Consistent sectoral policies and demonstrable political will to execute
• Particularly where investments have long gestation periods e.g. infrastructure
• Also requires alignment of interests of Federal and State governments around the country’s competitiveness
– Predictability of doing business• Increasing predictability with respect to taxes payable, labour
laws and incentives; and strengthening contract enforcement and the rule of law
– An ability of government to engage the private sector constructively
• Public and private sectors play different but interrelated roles in creating a productive environment. Public sector should seek to create conditions that engender productivity and foster private sector development
• Requires knowledgeable and competent public sector representatives in discussions and negotiations with private sector
© 2011. Federal Ministry of Communication Technology12
Building global partnerships require.....
– Demonstration by country of internal skills and capacity to leverage investments in its economy
• Where skills and capacity are absent country must demonstrate a commitment to build capacity
• Should be complemented by improvements in social infrastructure including Sanitation, Housing, Health, Security and Education
– Strengthening the financial market, in particular creating a liquid and transparent capital market
• Increases channels through which businesses can access capital and also provides exit opportunities for international investors
• Continuation of reform of financial sector– Collaboration between MDAs to implement cross cutting
initiatives• Promoting and achieving seamless interactions between
businesses and various public institutions• Collaboration on initiatives is also required between States and
Federal Government
© 2011. Federal Ministry of Communication Technology13
Attracting FDIs and Building Global Partnerships in the Nigerian ICT Sector
The Global ICT Industry
Telecommunications• Mobile Network Operators• Satellite Operators• Fixed-wireless Operators• Fixed-wireline Operators• Internet Service Providers• Network infrastructure
Providers
Value Added Services• Technology Consulting• Shared Services• Content Development• Content Providers• Training and Educational
Services• Transaction
Services/Switching
Infrastructure Services• Disaster Recovery /
Business Continuity• Infrastructure Outsourcing• Application Hosting• Data Center
Equipment Suppliers• Assembly• Sale and Distribution• Maintenance and Repairs
Devices• Assembly• Sales and Distribution• Maintenance and Repairs
Support Services• Distribution Channel
Operators• Sale and Distribution of
consumables
Software• Development• Sale and Distribution• Installation and
Customisation• Support & Maintenance
Business Process Outsourcing
• HR• FInance• etc
Call Center Operations• Outsourced
15© 2011. Federal Ministry of Communication Technology
Legend High growth
Medium growth
Low growth
Mobile Network
Operators
Satellite Operators
Fixed WirelessOperators
Fixed Wire-lineOperators
Internet Service Providers
Device Sales & Distribution
Device Maintenance & Repairs
Device Assembly
Infrastructure Services
Training & Education
Transaction Services
Equipment Maintenance & Repairs
Equipment Sales &
Distribution
Equipment Assembly
Call Center Operations
Research & Development
Support Services
Software Development
Access Provision
Business Process Outsourcing
Converged Services (Data, voice & media)
Annual Maintenance & Support (servers & storage)
Software Maintenance & Support
The Nigerian ICT Industry
SoftwareInstallation & Customization
Software Sales &
Distribution
Value Added Services
16© 2011. Federal Ministry of Communication Technology
Infrastructure Service Providers
Attractiveness of the ICT Sector in Nigeria: What are we doing to attract investments?
© 2011. Federal Ministry of Communication Technology17
• Harmonise disparate policies into a single national ICT policy
• Develop and implement targeted initiatives for identified priority sub-sectors– Expand definition of Universal Access beyond basic voice to include
provision of broadband and thereby bring to the fore the deployment of nation-wide backbone infrastructure
– Promote and support initiatives that focus on the development of the last-mile
– Promote local development of software - e.g. through establishment of Software Innovation Venture Capital Fund
– Establishing ICT Parks equipped with physical/service infrastructure; security; proximity and access to skilled human capital etc.)
• Promote regulation to increase competitiveness in the market and achieve level playing fields in a broad range of sub-sectors
Attractiveness of the ICT Sector in Nigeria: What are we doing to attract investments?
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• Promote legislation that facilitates/supports the digital economy and information society (cybersecurity, electronic transactions, privacy, intellectual property etc.)
• Partner with other MDAs (Trade and Investment, Finance, Labour) to create incentives for local device production and call centre operations– Tax and other incentives, waivers, pioneer status etc
• Create and implement frameworks to guide the establishment and governance of collaboration and partnerships between Nigeria and countries with developed IT industries– Emphasising “partnerships of equals and/or peers” and optimising the
matching of skills with (Nigerian) markets
• Promote/Facilitate industry consolidation and industry clustering
• Align Federal and State interests regarding taxation and levies on the ICT industry
ATTRACTING FOREIGN DIRECT INVESTMENT THROUGH GLOBAL PARTNERSHIPS
presentation made at the: 17TH NIGERIAN ECONOMIC SUMMIT
Thursday November 10, 2011
THE HONOURABLE MINISTER OF COMMUNICATION TECHNOLOGY MRS OMOBOLA JOHNSON
Ministry of Communication Technology