The Nigerian Investment Climate and Opportunities

Engr. Mustafa Bello, FNSE

Executive Secretary/CEONIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC)

Presentation Outline • The Nigerian Economy • Global Competitiveness • Prevailing Business and Investment

Climate • Investment Opportunities in the Economy• Incentives • NIPC and the Investor • Conclusion

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Nigeria’s Economic Blueprint: The Vision 20:2020

• Making the Nigerian economy one of the top 20 by the year 2020 with a GDP of USD900bn per Capita

• Attracting US$130billion private capital over the next 10 years

• Optimising key sources of economic growth by enhancing production for real sector’s competitiveness and for exports

• Guaranteeing productivity by strengthening linkages between key sectors of the economy

• Fostering sustainable social and economic development by ensuring national security and enhancing infrastructure.

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Nigeria’s Economic Performance

6.00%6.20%6.40%6.60%6.80%7.00%7.20%7.40%7.60%7.80%

2011 Q1 2011 Q2 2011 Q3 2011 Q4

Average rate of economic growth stood at 7.31% in 2011

Economic Growth

Nigerian Investment Promotion Commission 4Sources: CBN, DMO,NBS

Nigeria’s Economic Performance cont’d

Nigerian Investment Promotion Commission 5Sources: CBN, DMO,NBS

Nigeria’s Economic Performance cont’d

• The External Reserve as at 10th of May 2012 stood at US$36.76 billion

• External Debt Profile with ample fiscal space– US$5.91 billion – March 2012

• Industrial Capacity Utilisation – 56.98% (1st Half 2011)

Nigerian Investment Promotion Commission 6Sources: CBN, DMO,NBS

Nigeria’s Real GDP GrowthNigeria’s Real GDP Growth is robust despite challenges in the area of

Infrastructure and the recent global economic recession

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Source: NBS

Global Real GDP Growth – 2011 & 2012

Source: World Economic Outlook 2012

BRICs High Income

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Nigeria has maintained an average growth of about 7% in the last three years

While World GDP continues to shrink, Nigeria is expected to sustain its growth at about 7%

World’s Fastest Growing Economies - 1

Nigerian Investment Promotion Commission 9Source: National Bureau for Statistics (NBS)

World’s Fastest Growing Economies - 2 Nigeria’s economy is rated as the world’s topmost ‘global growth generator’ (3G) of the next 40 years ........ CIRANigeria’s economy is rated as the world’s topmost ‘global growth generator’ (3G) of the next 40 years ........ CIRA

Citi Investment Research and Analysis 10Nigerian Investment Promotion Commission

Nigeria’s Economy: ‘too large to ignore’• 8th largest population in the world – over 167 million people

– 4th largest population under the age of 20• 10th world largest reserves of oil and gas

– 36.2 billion barrels of oil – 184 trillion Cubic Feet of natural gas

• 4th largest equity market in the MSCI Frontier Market index– Largest outside of the Gulf Cooperation Council (GCC)

• 5th fastest growing economy in 2010 covered by Citi Investment Research and Analysis (CIRA) economists – China, Taiwan, Singapore & Qatar

• 1st among the N-11 leading ‘global growth generators’ (3G) over the next 40 years– Prospects of growing its global GDP share to 2.5% in 2050, overtaking

Italy, France, and UK• Home to emerging world’s largest cement companies

- The DANGOTE GROUP11

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Drivers of Nigeria’s Economy • Rule of law

– anchored on good governance, transparency, accountability, zero tolerance on corruption

• Robust Private Sector – Public Private Partnership (PPP) initiatives

• Commitment to creating Enabling Business Environment – Stable Democratic System – Infrastructure re-engineering and expansion – Strong and virile Financial and Insurance sector – Business Entry procedures – simplified and streamlined – The Public Service reform – removal of bureaucratic huddles – Improved International Image

• Low External Debt ($5.00+ exposure currently)– Debt position with a lot of fiscal space

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Government Policy Thrust On Investment • Emphasis on FDI to fund Transformation Agenda

– On a Win-Win Basis

• Promote and attract value-added industrialization

• Make FDI work for local economy; i.e. job creation, value-chain, out-sourcing etc– SMEs must benefit from the activities of TNC’s in the economy

• Promotion of non-oil sector prioritized

• Target and attract FDI into key priority sectors– Power, Infrastructure, Agriculture, Solid Minerals, & Non-extractive Oil & Gas

activities

• Commitment to Privatisation, Commercialisation and Liberalisation Programme

• Promotion of export oriented activities Nigerian Investment Promotion Commission

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Nigeria’s Business Climate: Challenges

• High Rate of Unemployment • Dependence on Oil Revenue • Overdependence on Imports• Huge Infrastructure deficit • Security Concerns • Low Capacity in PPP management • Lack of access to Long-term fund• Incidences of Corruption

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Nigeria’s Business Climate: Strengths

• Stable Macroeconomic and Political environment • Predictable Public Fiscal Framework • Favourable Credit Rating • Improved International Image• Predictable Investment Legal and Regulatory Frameworks• Political Will to implement Reforms• Growing Private Sector• Supportive Investment Facilitation Mechanism • Strong and Virile Local Financial and Development Institutions • Huge Internal Market

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Nigeria’s Business Climate: Opportunities

• Cost effective human resources; agile and entrepreneurial youth population

• Huge potential in the non-oil sectors • Policies support Import Substitution Projects • Liberalized economy• Investment Opportunity in all sectors of the

economy• Growing middle class population

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Basic National Investment legislations• The Nigerian Investment Promotion Commission Act 16 of 1995

– Ownership – 100% ownership assured except investment

– listed under the ‘Negative ‘ lists– covered by the Nigerian Content and Cabotage Acts

– Investment Protection Guarantees– Non-expropriation of Investment: The NIPC Act 16 of 1995 guarantees that

‘no enterprise shall be nationalized or expropriated by any government of the federation’

• 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. Nigerian Investment Promotion Commission 17

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Framework for Doing Business• All business enterprises must be registered with the

Corporate Affairs Commission. – 24 hrs delivery assured

• Investments with foreign equity must obtain a business permit from NIPC to operate. – 24 hrs delivery assured

• Investors are free to repatriate their profits and dividends net of taxes through any authorized dealer in freely convertible currency.– All capitals imported for investment purposes must be

declared to obtain Certificate of Capital Importation for repatriation purposes

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Framework for Doing Business• Companies in manufacturing activities must obtain

SONCAP certification for it’s products from the Standards Organization of Nigeria (SON).

• Prevailing Corporate Income Tax is 30% per annum.

• Engagement of foreign professionals requires expatriate quota slots from relevant authorities – Facilitated at the One Stop Investment Centre (OSIC)

• Processing of incentives and negotiation of concessions is facilitated by NIPC

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Investment Opportunities• Investment Opportunities exist in all sectors of the

economy, especially: Infrastructure

Power – Generation, Transmission & Distribution Transportation – Rail, Air, Road

Agriculture & Agro Allied Services

Telecommunication, Postal Services Health Care Services Banking & Financial services Tourism/Hospitality Education Waste Management & Treatment

Mineral Mining Manufacturing

Pharmaceuticals, Textiles & Garments, Automobiles, Iron & Steel Oil & Gas (up-and down-stream operations)

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Incentives • Natural

– Large internal market • 140 million (As at 2006 Census) Nigerians and possible access to over

360 million ECOWAS and Economic and Monetary Community of Central Africa (CEMAC) market

– Huge deposit of natural gas – 1.84 trillion cubic feet– Youthful population – about 60% of population– Robust and Virile Private Sector such as Dangote, Honeywell,

Nestle,Unilever, etc.– 36 strategic mineral resource endowment

• Coal deposit is 2.6 billion tonnes (www.mmsd.gov.ng) OR (www.miningcadastre.gov.ng)

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Incentives • Fiscal Incentives

– Up to 5 years Income Tax Holiday under the Pioneer Status for qualified activities

– Very low VAT regime – 5%– Income Tax of 30%– Investment in Infrastructure – 20% of cost per annum for

5 years – Research & Development – use of local inputs – 140%– Minimum local raw materials utilization – 20% for 5 years– Other Capital Allowance for Specific sectoral activities – Free market – easy entry and exit procedures– Transferability of profit, dividends, etc with ease.

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The NIPC • NIPC Act No. 16 of 1995 confers on NIPC the responsibility to:

– co-ordinate, promote and facilitate domestic and foreign investments into Nigeria

– support and provide necessary assistance and guidance to foreign and domestic investors in Nigeria

– develop and implement innovative, focused and effective Investment promotion strategies

– target & attract investment into the economy

– advise government on policy matters • fiscal and non-fiscal measures designed to promote industrialization and

sustain the enabling environment Nigerian Investment Promotion Commission 23

The One-Stop Investment Centre (OSIC)• OSIC is government’s strategy at

– streamlining the investment procedures• remove all bottlenecks in business legalization procedures

– provide prompt, efficient and transparent service– coordinate investment facilitating related agencies

• 26 government Ministries and Agencies• Services at the Centre, includes and not limited to

– Business Incorporation/ Registration, Grant of Approvals, Permits/License and Investment Information & Data

• More centers to be opened in Lagos, Port-Harcourt and Kano

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NIPC & The Investors• Arrange and facilitate meetings with relevant

Government Agencies/State Governments in Nigeria

• Arrange and coordinate site visits as part of pre-investment activities and post-investment services

• Provide prompt assistance to investors through dedicated Account Officer/Team to projects

• Advise/advocate for policy changes that favorably affects and support investments

• Creation and management of Investment Fund to fund investment projects in critical sectors

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Stimulating Private Sector Growth • Proactive action towards enhancing business

environment challenges – Inaugurated two Business Committees

• Doing Business Committee – To address policy issues inhibiting competitive business

environment – To coordinate policy reforms that would stimulate private

sector growth

• Competitiveness and Investor After-Care– To instil fair and transparent business operational

procedures– To eliminate discretionary concessions and privileges – To enhance the image of the economy and build investors’

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Thank YouThe Executive Secretary/CEO,

Nigerian Investment Promotion Commission (NIPC)Plot 1181 Aguiyi Ironsi Street

Maitama District, Abuja, Nigeriamustafa_bello@nipc.gov.ng

osicinfodesk@nipc.gov.ng, infodesk@nipc.gov.ng

www.nipc.gov.ng

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