Nigeria is a country of over 150 million. A recent conference in London highlighted the case for investing in Nigeria and accessing a regional market of 300 million people.

With recent market turmoil and lost confidence in structured credit products, fund managers and OECD banks are now seeking modest equity stakes in sound emerging markets, as they can demonstrate higher earnings potential in coming years.

Nigeria is a country of over 150 million people - by far the biggest in Africa. It boasts an expanding, entrepreneurial workforce, a progressive government with a proactive agenda of attracting foreign direct investment and access to a further regional market of 300 million people.

Creating an Enabling Environment

The benefits of investing in Nigeria were the basis of a conference held in London earlier this year where top officials including HE Goodluck Jonathan, Vice President of Nigeria, cabinet ministers and representatives from the World Bank and private sector companies laid out the business case.

The conference, hosted by DMA, in association with Africa Matters Ltd., was opened by Baroness Lynda Chalker, followed by a welcome address from HE Senator Dalhatu Sarki Tafida, the Nigerian High Commissioner to the UK.

Nigeria……boasts an expanding, entrepreneurial workforce, a progressive government with a proactive agenda of attracting foreign direct investment and access to a further regional market of 300 million people.

In his presentation, Mustafa Bello, the Executive Secretary of the Nigerian Investment Promotion Commission, outlined the efforts being made by the Nigerian government to promote investment. Key among these are the government’s intentions to diversify the economy away from oil to non-oil sectors, and drive investments into critical infrastructure sectors, such as power and transportation. The government also plans to enhance productivity within the agriculture sector, including agro-processing and manufacturing, and improve operations at the sea and air ports as well as customs operations.

It is measures such as these that will, said Mr. Bello, create an enabling environment in which the private and public sectors can work in partnership for poverty eradication and wealth creation.

The Business Case for Investment

With a population that accounts for 20% of Africa, vast arable land (over 60% of Nigerian land area is suitable for agriculture and remains under utilized), a strategic position at the hub of West and Central Africa giving it access to large markets, as well as a resourceful and cost effective workforce with 60% youth, Nigeria has many qualities to attract overseas investment.

As sub-Saharan Africa’s second-largest economy, after South Africa, Nigeria is attracting greater interest from strategic direct investors. While European and US companies have traditionally been the major investors, Chinese and Arab investors are now making big inroads into West Africa’s No.1 market.

Investment opportunities exist in Nigeria across a wide range of sectors, including power/energy, oil and gas, agriculture, banking, tourism, manufacturing, ICT and pharmaceuticals.

To encourage investment, the Nigerian Government has put a range of statutory incentives in place to lower the cost and increase the effectiveness of doing business within its borders. Companies are able to benefit from a tax holiday of up to 5 years and a number of capital allowances such as VAT at only 5%. Within the country’s free zones, there is no personal income tax requirement, no foreign exchange regulation and 100% repatriation of capital and profit.

The NIPC, as the Nigerian government agency charged with responsibility for promoting and co-ordinating both foreign and domestic investments into Nigeria operates under legislation which guarantees investors against any nationalisation or expropriation of their business by the government.

As part of its role, the Commission arranges and facilitates meetings with relevant Government Agencies or State Governments in Nigeria, co-ordinates site visits as part of pre-investment activities and post investment services, and provides assistance to investors through dedicated account teams. By taking responsibility for removing the bottlenecks faced by investors in establishing and running business, the Commission seeks to reduce the cost of doing business in Nigeria.

Changing Perceptions and Image

A major challenge that Nigeria continues to face in its efforts to attract investment, however, is the often negative public perception of the country as a focal point of crime and corruption.

As High Commissioner Tafida observed at another recent event highlighting Nigeria, “it is unfortunate that a negative perception of our country leads to disinvestment. Yet thousands of hard-working Nigerians are making significant contributions to their country. The good stories are not being told and Nigerians all over the world must reject unfair labeling.”

Every country has its challenges, he noted. “What matters is the efficacy of government in tackling those challenges for the benefit of the electorate.”

Ongoing Challenges

According to DMA’s ‘Investing in Nigeria’ report, achieving President Umaru Musa Yar’Adua’s ‘Seven Point Agenda’ will help transform Nigeria into a vibrant diversified economy, which can create seven million new jobs and attract private-sector capital (including FDI) into the agricultural, mining and manufacturing sectors.

“Essential elements for micro-reforms are addressing power shortages; building an efficient industrial base; food security through a 5-10 fold hike in yield and production; reforming land ownership; updating the dilapidated transport network; improving the educational system, with emphasis on science and technology; and strengthening national security, particularly in the Niger Delta, the most prolific zone in the Atlantic basin”, says the report.

If the country’s hard-won gains and reform momentum made to date are preserved and intensified, says the report, “the next decade could prove Nigeria’s best since the 1960’s.”

As the Nigerian President is apt to say, “The business of Nigeria is Nigeria.” However, to ensure that business continues to see Nigeria as a favoured destination, he says, “Hard work by all is required.”