Download investing in nigeria

INVESTING IN NIGERIA
YEWANDE SADIKU
EXECUTIVE SECRETARY/CEO
NIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC)
SINGAPORE | 20 APRIL 2017
Private and Confidential
Reasons to invest in Nigeria
Demographics
1 Young & skilled workforce
2
High urbanization rate &
growing middle class
Description
▪
Young and skilled workforce with 43% of the population under 15 years, improved labour productivity and
over 1.8 mn new graduates every year
▪
High urbanization rate with 48% of the population in urban areas and 168 mn people forecasted to live in big cities
by 2030. Rising consumer spend projected to increase by $94bn in 2025
▪
Robust financial markets with 7 of the top 25 banks in Africa and the second largest Stock Exchange on the
continent
▪
Implementation of a strategic plan to tackle short term macro-economic challenges. Active anti-corruption
campaign and decline in casualties from security incidents.
▪
84 mn hectares of arable land, 9th largest gas reserves and 44 exploitable minerals in proven commercial
quantities
▪
Largest market in Africa with proximity to other west African markets. Land borders with Benin, Cameroon, Chad
& Niger & 4 international airports
▪
56 companies with revenues over $500 mn and 2nd largest cluster of large companies in Africa
▪
Investor friendly climate with strong appetite to encourage private sector investments. Generous statutory
incentives with 14 Free Trade Zones
Institutions
3 Vibrant financial systems
4
Improving business
conditions
Opportunities
5
Abundant land & natural
resources
6 Largest market in Africa
7
2nd biggest cluster of large
companies
8 Investor friendly climate
1
Nigeria remains a key strategic market in Africa
Increasingly friendly business
environment
0
20
Southern Africa
Within Southern Africa:
 South Africa ranks high in terms of “ease-to-do-business”, making
the country a logical entry point for investment in Africa
 Second largest GDP on African continent, and 5th largest population
(55 million)
 Emerging black middle class with increasing purchasing power
 Perceived favorably from a risk-return perspective by international
investors in search for emerging market yield
South Africa typically offers itself as the “doorstep-to-Africa” to new
investors to the continent
Within East Africa:
 Kenya is the trade and finance hub for
East Africa
 Highest “ease-of-doing-business” in
the East African hub
Natural entry point to establish African
presence from East Africa
40
East Africa
West Africa
Note: Size of
bubble reflects
relative GDP of
each country
60
South Africa
Ease of doing business (ranking)
Botswana
80
Zambia
Kenya
100
Ghana
Within West Africa:
 Nigeria’s population is the largest on the
African continent and eight largest in the
world
 Largest GDP in Africa
 Large hydrocarbon resources, the largest gas
reserves and second largest oil reserves in
Africa
Nigeria is the emerging economic locomotive of
the African continent
Uganda
120
Tanzania
140
Togo
160
Côte d'Ivoire
Senegal
Ethiopia
Cameroon
Nigeria
Equatorial Guinea
180
Angola
200
0
20
40
60
80
100
120
140
160
180
200
Population (millions)
Increasing population
SOURCE: World Bank Doing Business 2017
2
Nigeria is the largest economy in Africa
Comparative statistics
Macroeconomic Metric 2015
Nominal GDP (US$,bn)
GDP per capita (US$)
Real GDP (% change p.a)
Population (m)
Population growth rate (%)
Labour force (m)
Headline inflation (%)
Doing business ranking
Macroeconomic Metric 2015
Nominal GDP (US$,bn)
GDP per capita (US$)
Real GDP (% change p.a)
Population (m)
Population growth rate (%)
Labour force (m)
Headline inflation (%)
Doing business ranking
Nigeria
Ghana
Cote d'Ivoire
481.1
2,710.4
2.7
182.2
2.7
57.3
9.0
169
37.4
1,363.8
3.9
27.4
2.3
11.7
17.2
108
Singapore
Brazil
Russia
292,739
52,888.7
0.805
5.535
1.19
1,772.3
8,668.4
3.8
204.5
0.8
3.61
-0.54
2
Sources: Economist Intelligence Unit, World Bank Doing Business Report, 2017
31.8
1,398.8
8.4
22.7
2.4
8.3
1.3
142
Senegal
Burkina Faso
Benin
Liberia
11.1
613.0
4.0
18.1
2.9
–
1.0
146
4.0
547.9
5.5
7.3
2.7
–
1.8
154
India
China
Nigeria
South Africa
1,324.5
9,040.9
3.7
146.5
0.1
2,072.0
1,580.4
7.5
1,311.0
1.2
11,181.0
8,217.5
6.9
1,361.0
0.8
481.1
2,710.4
2.7
182.2
2.7
314.6
5,773.2
1.3
54.5
1.0
109.2
76.6
501.8
806.3
57.3
21.1
9.0
123
15.5
40
4.9
130
1.5
78
9.0
169
4.5
74
3
13.8
910.7
6.5
15.1
3.1
6.5
0.1
147
Togo
8.5
779.1
5.2
10.9
2.7
–
0.3
155
2.1
455.9
0.3
4.5
2.4
1.6
7.8
174
Nigeria is the largest economy in Africa
Nigeria’s GDP remains the highest in Sub-Saharan Africa
supported by its population and diverse economy
Despite a currency devaluation, GNI is above many African peers
GNI (US$) per capita (2015)
US$ billions (2015)
600
500
7,000
6,080
481.1
6,000
5,000
400
314.73
4,000
300
2,820
3,000
200
2,000
100
37.69 31.42
13.67 13.11 8.48
7.17
6.85
4.40
4.17
Niger
Guinea
Sierra
Leone
Togo
0.89
1,000
Liberia Guinea- The
Bissau Gambia
0
2.03
1.06
1,490
1,480
1,420
Zambia
Ghana
Cote d'Ivoire
0
Nigeria S. Africa Ghana
Côte Senegal
d'Ivoire
Mali
Benin
South Africa
Nigeria
Nigeria’s debt profile is low compared to African and developed market economies
100%
Debt as % of GDP (2015)
91.6%
70.8%
80%
60%
39.3%
Liberia
Benin
43.8%
45.1%
49.8%
Côte
d'Ivoire
S. Africa
52.9%
53.0%
GuineaBissau
Guinea
56.8%
30.9%
40%
20%
39.2%
48.9%
62.3%
13.6%
0%
Nigeria
Mali
Sierra
Leone
Niger
Sources: IMF World Economic Outlook, Oct 2016, National Bureau of Statistics, World Bank Development Indicators
Database, 2015
4
Senegal
Togo
Ghana
The
Gambia
Strong growth has been driven by non-oil sectors
GDP at constant 2010 prices by sector
N trillion, 2016
Contribution
% of GDP
Services1
19.82
29.2%
Agriculture
16.61
24.4%
Trade
17.2%
11.67
Construction and real estate
10.9%
7.42
6.30
Manufacturing
Oil and gas
9.3%
5.73
0.3
Utilities
Solid minerals
0.09
Total
68.0
8.4%
0.5%
0.1%
100%
1 includes accommodation and food services, transport and storage, post and courier, publishing, motion pictures, broadcasting, arts, entertainment and recreation, administrative and support services,
financial institutions and insurance, professional, scientific and technical services, telecom, and public services (e.g., education)
Sources: Central Bank of Nigeria, National Bureau of Statistics
5
Nigeria is strategically located with access to ECOWAS and the continent
Population across Africa, 2015 (million)
5h45’ Cairo
395
5h Dakar
5h20’ Addis Abba
217
183
▪ 4 International
▪
▪
airports and major
seaports in Lagos,
Calabar and Bonny
island
3,798 km of railway
tracks and 168,000 km
road network
Land borders with
Benin, Cameroon,
Chad & Niger and a
natural hub for the
region
143
61
East Africa North Africa
5h40’
Johannesburg
* Rest of West Africa excluding Nigeria
Source: UN Habitat 2016 Report
166
6
Nigeria
West Africa*
Central
Africa
Southern
Africa
Nigeria is richly endowed with land and mineral resources
▪
84 million hectares of arable land with
60% available for cultivation
▪
44 exploitable minerals in proven
commercial quantities
▪
▪
Sokoto
Iron ore
Katsina
Jigawa
Largest producer of crude oil in Africa
Yobe
Zamfara
Kebbi
Borno
Kano
9th largest gas reserves with 181 trillion
cubic feet of proven reserve
Bauchi
Kaduna
Limestone
Akwa Ibom
Anambra
Bayelsa
Borno
Cross-River
Adamawa
Plateau
Delta
Rivers
Bayelsa
Akwa Ibom
Lagos
Source: VARIOUS
FCT
Kwara
Oyo
Taraba
Ekiti
Kogi
Benue
Ondo
Ogun
Enugu
Edo
Anambra
Imo
Delta
Bayelsa
Rivers
Ebonyi
Cross
River
Abia
Akwa
Ibom
Gold
Kaduna
Kebbi
Kwara
7
Bitumen
Ogun
Ondo
Edo
Nassarawa
Lagos
Crude oil & Natural gas
Gombe
Niger
Osun
Anambra
Benue
Delta
Kogi
Coal
Enugu
Plateau
Benue
14 operational FTZs with 9 more under construction
Sokoto
Katsina
Kebbi
Maigatari
Yobe
Border Free
Zone
Jigawa
Kano Free
Trade Zone
Zamfara
(KFTZ)
Borno
Kano
Bauchi
Kaduna
Gombe
Niger
Adamawa
Ogun
Guandong FT
Zone
Snake
Island
Int. Free
Zone
Plateau
Fct
Kwara
Nassarawa
Oyo
Taraba
Osun
Ogun
Lagos
Ekiti
Kogi
Benue
Ondo
Enugu
Olokola Free
Edo
Trade Zone
Anambra
Lagos Free
Trade Zone
Ladol Logistics
Free Zone
Delta
Imo
Calabar Free Trade Zone (CFTZ)
Ebonyi
Abia
Ibom
Rivers
Bayelsa Science &
Lekki Free Zone
Airline Services
EPZ
Tech. FZ
Cross
River
Akwa
Ibom
Tinapa Free
Zone & Resort
ALSCON EPZ
8
Sebore
Farms
EPZ
Nigeria is expected to drive 15% of Africa’s household consumption growth by
2025
Summary
▪
▪
▪
▪
▪
Africa’s household
consumption has continued to
grow at a robust pace. 60% of
consumption growth has come
from an expanding population,
and the rest from rising
incomes
Africa’s consumption growth
has been the second fastest of
any region after emerging Asia
Household consumption is
projected to grow by US$645
billion to US$2.1 trillion by
2025
Nigeria will remain the region’s
single largest consumer
market, accounting for 15% of
overall growth in consumer
spending to 2025
The biggest spending
categories will be food and
beverages, housing, consumer
goods, education, and
transportation services
Total household consumption (US$,bn), 2015 - 2025
Share of
consumption
growth %
18
15
7
114
94
48
18
14
116
91
15
13
98
84
2,065
1,420
Consumption,
2015
Nigeria
Egypt
South Africa
East Africa
Francophone Rest of North
Africa
Africa
Rest of SSA Consumption,
2025
10%
22%
9%
Nigeria
13%
26%
13%
South Africa
2025
US$2,065bn
2015
US$1,420bn
9%
Egypt
East Africa
11%
17%
Francophone Africa
Rest of North Africa
16%
Rest of SSA
14%
15%
13%
Sources: Oxford Economics: IHS; African Development Bank; McKinsey Global Institute analysis
9
12%
Nigeria is experiencing short-term macroeconomic challenges
GDP growth slowed…
Inflation rose sharply…
Annual growth rate, %
%
5.5
20
6.2
15
4.2
10
2.8
5
0
-1.5
2012
13
14
15
12345678910
111
21
31
41
51
61
71
82
92
02
122
32
42
52
62
72
83
93
03
13
233
43
53
63
73
84
94
04
14
24
344
54
64
74
85
95
05
15
25
35
455
65
75
86
96
06
12
Jan-12
2016
Feb-17
Foreign reserves declined…
Exchange rates widened…
USD Billion
Naira/USD
60
600
50
500
40
400
30
300
20
200
10
100
Inter-Bank
Parallel Market
0
0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61
Jan-13
Sources: Central Bank of Nigeria, National Bureau of Statistics
Jan-15
Feb-17
10
Feb-17
Nigeria is making progress in its anti-corruption campaign
Number of political office holders who declared their assets
Anti-corruption campaign news
“Trial to proceed as former National Security
Adviser loses application on contempt of court
over $2.1Bn Arms deal scandal”
– The Guardian, March 2016
12,985
9,271
“Keeping his promise, Buhari announces
recovery of N3.4 trillion in one year”
7,602
– ThisDay, June 2016
“Alleged Corruption: 7 Judges arrested”
– Vanguard, October 2016
“Federal Government saves N48 billion from
implementation of Treasury Single Account”
– Punch, November 2016
2012
Sources: National Bureau of Statistics, press search
2013
2014
11
Security incidents have started trending downward
Monthly deaths from security incidents
Success stories
4000
“Chibok families reunited with 21 girls
kidnapped by Boko Haram”
– theguardian, October 2016
3500
3000
“Boko Haram ousted from Sambisa forest”
2500
– BBC news, December 2016
2000
“Nigerian police arrest man suspected of Lagos
bridge bomb plot”
1500
1000
– Reuters, December 2016
500
“Navy says crime in maritime sector has
reduced in Niger Delta”
– The Guardian, December 2016
0
“4 oil company kidnap victims rescued by
security operatives”
– NTA news, January 2017
Deaths Per Month
12 per. Mov. Avg. (Deaths Per Month)
Above represents incidents motivated by political, economic or social grievances
Sources: Council on Foreign Relations, press search
12
Key structural reform programmes to enhance growth
The current administration has proposed eight key programmes to promote economic and social development
1. War Against Corruption
2. Food Security
► Strengthen the powers of the anti-graft
agencies
► Re-organization and modernisation of the
agricultural sector
► Increase civic education against corruption
► Supplying adequate raw materials for
industrial processing and manufacturing
8. Affordable Health Care
► Reduce infant mortality rate to 3% by 2019
► Reduce maternal mortality rate by more
than 70%

3. Accelerated Power Supply
► Expansion of electricity generation and distribution
► Increase power availability from renewable energy
sources
► Reduce HIV / AIDS infection by 50% and
other infectious diseases by 75%
► Improve life expectancy by an additional 10
years
4. Integrated Transport Network
► Survey of Federal highways and State roads
7. Accelerated Economic Growth
► Building of up to 200km of modern standard
railway lines annually
► Restore and strengthen financial
confidence through more robust monitoring,
supervision and regulation of all financial
institutions
► Improve and modernize aviation infrastructure
6. Devolution of Power
5. Free Education
► Ensure that the Local Government system
of administration is autonomous
► Fully implement and enforce the provisions of the Universal
Basic Education Act 2004
► Up to 10% of the annual budget for this critical sector
► Substantial investments in training programmes
13
Planned capital expenditure on infrastructure will further diversify the
economy
Sectoral Focus
Blocked Leakages
Critical Infrastructure
Agriculture
Services
Oil & Gas
Capital
Expenditure
Solid Minerals
Manufacturing
Industrialisation
Diversified &
Increased Revenue
14
Construction &
Real Estate
Huge infrastructure deficit requires attracting more investment
Key metric
Benchmarks
101
Transport`
Energy
ICT
Social
Infrastructure
Housing & Regional
Development
Vital Registration &
Security
Agriculture, Water
& Mining
▪
▪
▪
▪
▪
Km road per 100 km2
Consumption per capita (kWh)
21
21
136
498
68
68
4,803
135
140
24
28
Mobile phone penetration (%)
Number of hospital beds per
100,000 people
5
7
9
19
30
17
Houses per 100 people
▪ Number of policemen per
205
130
100,000 people
▪
2,384
30
31
34
Nigeria
India
282
317
79
79
Brazil
South Africa
Access to sanitation (%)
Sources: World Bank World Development Indicators
15
Major sources of foreign capital inflows into Africa
Top investing countries in Africa in 2015
Global FDI flow
600
541
504
500
468
431
2013
429
400
2014
2015
Italy ; 11%
323
Others ; 35%
306
300
UK
238
168
176
170
165
200
United States ;
10%
100
France ; 9%
52 58 54
85
56
USA
35
0
Developing
Asia
Europe
North America Latin America
& Caribbean
Africa
Transition
Economies
Finland ; 3%
Morocco; 5%
China; 3%
% Share of top 5 FDI destinations, 2011 – 2015 (US$, bn)
Nigeria
11%
South Africa
9%
Egypt
8%
Ghana
6%
Source: FDi Markets, World Investment Report 2016 (UNCTAD Report)
16
United Arab
Emirate ; 6%

Business Services, Sales, Marketing & Support and
Manufacturing were the top three business activities for
FDI projects into Africa in 2015

Extraction projects remained the fastest growing business
activity by capital investment accounting for 23% in 2015
(joint top with Electricity)

Infrastructure-related business activities such as
Electricity, Construction and ICT & Internet Infrastructure
made up 13% of all projects into Africa and accounted for
44% of capital invested
Mozambique
9%
Others
57%
Bahrain ; 6%
Germany ; 4%
United
Kingdom ; 7%
Switzerland
Top recipients of FDI in Africa
Top 5 FDI destinations in Africa, 2011 – 2015 (US$,bn)
10,000
8.9
8.3
8,000
7.1
6.9
6.0
6.2
6,000
5.8
5.6
5.6
4.6
4.7
4.6
4.9
4.3
4.2
3.7
3.6
4,000
3.2
3.4
3.3
3.1
1.8
2,000
5.9
4.9
4.8
4.2
3.3
Nigeria
South Africa
Mozambique
Egypt
(483)
(2,000)
2011
Sources: World Investment Report 2016 (UNCTAD)
2012
2013
17
2014
2015
3.2
3.2
Ghana
Major sources of foreign capital inflows into Nigeria
Foreign capital inflow by country 2016* (US$, bn)
Foreign capital inflow by type (US$, bn)
21
20
US$,bn
%
UK
1.70
40%
USA
0.74
17%
0.46
11%
0.27
6%
0.18
4%
16
17
8
15
9
13
6
5
6
5
4
1
1
2
1
1
2
3
1
2010
2011
2012
2013
Foreing Direct Investment
Other Investment
2
2
1
2
2
1
2014
2015
2016*
3
Foreing Portfolio Investment
Foreign capital inflow by sector 2016* (US$, bn)
3%
3% 0% 0%
Netherlands
SHARES
7%
30%
SERVICING
BANKING/FINANCE
11%
OIL AND GAS
PRODUCTION/MANUFACTURING
Switzerland
CONSTRUCTION/ENGINEERING
TRADING/COMMERCE
22%
AGRICULTURE
Singapore
24%
OTHERS
Sources: Central Bank of Nigeria, National Bureau of Statistics
18
* Excludes December 2016 figures
Sector opportunities
Agriculture
Power
Solid minerals
Manufacturing
Healthcare
Education
19
Current Power status
▪
Generation capacity materially
below World Bank Emerging
Market targets due to:



poor operational efficiency,
infrastructure maintenance
& low equipment reliability
Gaps in the Power Value Chain
Estimated max.
transmission capacity
12,522
5,381
shortage of capital to
finance the required
expansion of power capacity
~6.9% commercial and
36.5% collection losses
unreliable gas supply
3,262
Distribution system burdened
by sub-standard distribution
lines & overloaded
transformers. Lack of cost
recovery/reflective pricing.
Inadequate metering and
billing systems. Power theft.
4,055
287
is weak, unreliable & does not
cover all regions of the
country. High outages on
132KV and 330KV networks
due to vandalism, line
constraints, and more
-75%
7,200
~12.5% technical
loss
▪ Existing transmission network
▪
~7.4%
transmission loss
Estimated max.
distribution capacity
1,746
447
216
1,065
3,879
3,592
1,864
Installed
Capacity
NonAvailable
Capacity1
Nonoperational
Capacity1
Capacity
operational
for generation
Generation
Transmission
losses
Capacity2
transmitted
Transmission
Distribution
losses
Capacity2
distributed
Distribution
Note:
1Refers to average daily capacity of units non-available and non-operational from Jan to Aug 15 2015; assumes peak demand
2Effective capacity for transmission and distribution post losses; assumes peak demand
Source: “Nigeria Energy Power Report ‘2016’ (Data as at 15 August 2015)”
20
Opportunities in the Nigerian Power sector
 Large gap between power demand
and supply

 Ongoing implementation of power
sector reforms and deregulation of
the sector
It is estimated that only 46% of
the population have access to
power
Untapped
demand
 Nigeria with a population of 183
million will require 170,000 MW
generation capacity; current
power generated is <4,000 MW,
166,000 MW remains unsatisfied
 One of the largest gas reserves
in the world – estimated to
support in excess of 16,000 GW
of power generation per year
for the next 200 years

Investment
Environment &
Reforms
Abundant
power
generation
resources
Fiscal
incentives
 Successful privatization of PHCN
power assets; about $3 bn in
proceeds
 Guarantees from multilaterals
such as Power Africa and USAID
have helped de-risk the market
and set precedence for foreign
investors
 5-year income tax holidays & duty
exemption for equipment for gas
fired Generating Companies
 Partial Risk Guarantees (“PRGs”)
Massive quantities of untapped
coal reserves, however, no
operational coal-based power
plant as yet
 World Bank MIGA instrument to
insure against political risk
 MYTO Tariff Model
 Guaranteed minimum 20% return on
investment for the efficient
operators
21
Nigeria can generate more electricity with its vast natural gas reserves
Overview

Top 10 Gas Reserves in 2014 (tcf)

Nigeria is the ninth largest natural gas reserve holder in the world and
the largest in Africa.

Among countries with the highest proven reserves, Nigeria generates
one of the lowest power outputs using gas

Russia
Nigeria had an estimated 181 trillion cubic feet (tcf) of proven natural
gas reserves as of December 2014, substantially larger than its oil
resources in energy terms.
1688
Iran
1193
Qatar
885
United States
The USA efficiently utilizes its gas reserves to operate its gas power
plants hence a generation of 2,775bn kWh annually from gas.
338
Saudi Arabia
291
Turkmenistan
265
United Arab Emirates
215
Venezuela
196
Nigeria
181
Algeria
159
1688
Proven gas reserves
4,103
1193
Electricity net generation (bn Kwh)
885
338
1,006
258
Russia
Iran
Source: US Energy Information Administration
265
293
36
Qatar
291
United States
Saudi Arabia
215
19
Turkmenistan
22
196
103
United Arab
Emirates
181
124
Venezuela
29
Nigeria
159
60
Algeria
The Agricultural Sector
Overview
 The agricultural sector plays a key role as Nigeria’s key growth driver
 The sector is the second largest contributor to GDP (21% in 2015) and
provides employment for over 70% of the population
 Nigeria has some of the richest natural resources for agriculture
production in the world
 Abundant and reliable rainfall in over two thirds of the country
Opportunities
 Nigeria is the most populous country in Africa and a fast-growing
population will increase domestic consumption
 A young and growing population provides a large pool of labour
 Favourable climate, fertile land and water resources ideal for exportoriented production
 84 million hectares of arable land, of which only 40% has been
cultivated
Initiatives
 New US$9 million equity fund from the African Development Bank for
small and medium sized agribusinesses
 Machines and equipment enjoy duty waivers
 Capital allowance of up to 50% for plant and equipment
23
The Manufacturing Sector
Overview
 Productivity in the manufacturing sector has continued to improve due to various intervention
programmes by government
 The sector’s average capacity utilization has grown from 35% in the 1990s to an average of 55%
in the last three years.
 The average contribution to GDP has grown to 10% in 2015
 Lagos and its surroundings are home to about 60% of Nigeria’s industrial base. Other key
industrial centres are Kano, Aba, Port Harcourt, Ibadan and Kaduna
 Nigeria’s most important manufacturing sub-sectors include cement, food processing and fast
moving consumer goods
Opportunities
Agro-allied and Agro Processing
 Food Processing (Beverages, Packaged Foods, etc.)
 Sugar Production
 Palm Oil Processing
 Leather and Leather Products
 Rubber Products (Tyre)
 Cocoa Processing
Metals and Solid Minerals Products
 Cement Production
 Automobile Assembly
 Basic Metal/Steel
 Aluminium
 Chemicals
Source: Federal Ministry of Industry, Trade and Investment
24
Oil & Gas Related Industries
 Petrochemicals
 Fertilizer
 Methanol
 Refineries
 Plastics
Construction and Light Manufacturing
 Housing
 Cotton, Textile and Garment
 Electronics
 ICT Equipment
Nigeria’s health indicators lag behind other markets
6
Basic health indicators, 2014
Fertility rate (birth per
woman)
2
Health expenditure (% of
GDP)
9%
4%
2
2
5%
6%
2
17%
2
9%
68%
93%
94%
95%
99%
100%
Life expectancy at birth,
male (years)
52
55
67
74
77
79
Life expectancy at birth,
female (years)
53
59
69
77
81
83
Mortality rate, infants (per
1,000 live births)
72
Mortality rate, under-5 (per
1,000 live births)
113
Improved water source (% of
population with access)
Nigeria
34
39
41
50
South Africa
India
Investment Opportunities
 Mobile Clinics
 Pharmaceutical
Manufacturing
 Smallholder Specialist
Clinics
Source: World Bank, World Development Indicators
 Specialist Hospitals
 Diagnostic and Trauma
Centre
25
10
6
4
11
7
4
China
USA
UK
Success Stories: major international investors in Nigeria
SOURCE: Nigerian Investment Promotion Commission
26
National investment laws
To ensure a sustainable and conducive business environment
▪
Corporate and Allied Matters Act of 1990
– All enterprises must be registered with the Corporate Affairs Commission (CAC)
▪
The Nigerian Investment Promotion Commission Act 16 of 1995
– Allows foreigners to invest and participate in the operation of any Nigerian enterprise without
restrictions
– Allows 100% ownership assured except investments: listed under the ‘negative’ lists or covered
by the Nigerian Content and Cabotage Acts
– Protects against expropriation of investment: NIPC Act guarantees no enterprise shall be
nationalized expropriated by any government of the Federation
– Special Incentives: The Act empowered the NIPC (Nigeria IPA) to negotiate, in consultation with
appropriate Government agencies, special incentives for strategic or major investments
▪
The Foreign Exchange (Monitoring & Miscellaneous Provisions) Act 17 of 1995
– Allows repatriation of Profit: investors are free to repatriate their profits and dividends net of
taxes through any authorized dealer in freely convertible currency
27
Several statutory incentives and sector specific incentives
Fiscal Incentives
• Pioneer Status: 3 - 5 years’ tax holiday for eligible activities
• Capital Allowances:
• Research & Development - 140% of expenses incurred
• Investment in infrastructure - 20% of costs incurred
• Raw materials utilization (60 - 70%) - tax credit of 20% for 5 years
• Tax relief on interest income in the agriculture/agro-allied sector etc
Duty Waivers
• 0% import duty & import VAT for agricultural equipment and machinery
for agro-based production activities
• 0% import duty & import VAT for commercial aircrafts and spare parts
imported for local use
• 0% import duty & import VAT for machinery imported to develop solid
mineral resources
• 0% duty for power generation and distribution machinery
28
Nigeria-Singapore Investment Promotion & Protection Agreement
1
2
3
4
5
6
7
8
Protection
Fair and equitable treatment
Implication
Protection under customary international law, includes the obligation not to deny
justice in criminal, civil or administrative court proceedings embodied under the
legal systems of both parties
Full protection and security
Each party to provide to the other’s investors, the minimum level of police
protection standard of treatment for foreigners under customary international law
Most Favored Nation treatment Accord investors of the other Party, treatment no less favorable than that which
it accords (in like circumstances) to investors of a third State/country
National Treatment
Accord investors of the other Party, treatment no less favorable than that which
it accords (in like circumstances) to its own Nationals
Compensation for losses from Pay compensation to investors of the other party for losses owing to armed
strife
conflict, civil disturbances, war, etc if compensation is being extended to any
party.
Investors also have an absolute right to compensation where the loss suffered
comes from the actions of Host Government forces
Guarantee on transparency
Proactively publish its laws and regulations to guide investors of the other Party
Non-Derogation
In the event of a conflict between the provisions of the IPPA and other norms,
the more favorable rules will apply to the investor
5-year “survival clause”
All investments made before the termination of the IPPA continue to enjoy the
protection and guarantees under the IPPA for 5 years after such termination
29
Nigeria is considered a difficult place to do business
Benchmarking metrics
Ranking out of 189 (2016)
181
169
114
Overall: Ease of
doing business
73
62
24
139
Sub-components of Ease of Doing Business:
108
102
Starting
a business
120
151
141
Key insights
111
▪
Nigeria moved up one place from in
the Ease of Doing Business in 2016
but still ranks 36 out of 47 in subSaharan Africa
▪
Drastic, fast-paced business
reforms must be conducted
simultaneously to improve the
business environment and attract
foreign investors
▪
Reforms must be adopted within
the next 12 months to reflect in the
2018 Ease of Doing Business
report (out October 2017)
6
182
168
127
121
Getting
electricity
166
118
62
181
Getting
credit
59
42
59
28
2
7
185
Enforcing
contracts
143
116
119
127
102
13
Nigeria
SOURCE: World Bank ease of doing business index
Ghana
South Africa
Kenya
Angola
30
Rwanda
Georgia
Nigeria relative to best-in-class across indicators
Results on individual indicators
100
Starting a business
90
Protecting minority investors
80
Getting credit
70
Dealing with construction permits
60
Enforcing contracts
50
Registering property
40
Resolving insolvency
30
20
10
0
Nigeria scored 44.63
points in Distance to
Frontier in the World
Bank’s Doing
Business 2017,
giving it a ranking of
169th overall, out of
190 countries
Getting electricity
Paying taxes
Trading across borders
0
20
40
60
DTF score
31
80
100
Despite the challenges, Nigeria is a key strategic market in Africa
Increasingly friendly business
environment
0
20
Southern Africa
Within Southern Africa:
 South Africa ranks high in terms of “ease-to-do-business”, making
the country a logical entry point for investment in Africa
 Second largest GDP on African continent, and 5th largest population
(55 million)
 Emerging black middle class with increasing purchasing power
 Perceived favorably from a risk-return perspective by international
investors in search for emerging market yield
South Africa typically offers itself as the “doorstep-to-Africa” to new
investors to the continent
Within East Africa:
 Kenya is the trade and finance hub for
East Africa
 Highest “ease-of-doing-business” in
the East African hub
Natural entry point to establish African
presence from East Africa
40
East Africa
West Africa
Note: Size of
bubble reflects
relative GDP of
each country
60
South Africa
Ease of doing business (ranking)
Botswana
80
Zambia
Kenya
100
Ghana
Within West Africa:
 Nigeria’s population is the largest on the
African continent and eight largest in the
world
 Largest GDP in Africa
 Large hydrocarbon resources, the largest gas
reserves and second largest oil reserves in
Africa
Nigeria is the emerging economic locomotive of
the African continent
Uganda
120
Tanzania
140
Togo
160
Côte d'Ivoire
Senegal
Ethiopia
Cameroon
Nigeria
Equatorial Guinea
180
Angola
200
0
20
40
60
80
100
120
140
160
180
200
Population (millions)
Increasing population
SOURCE: World Bank Doing Business 2017
32
Strong correlation between “Ease of Doing Business” and economic prosperity
SOURCE: World Bank – ‘Doing Business’ report; Lit. Search
33
Government’s commitment to improving Nigeria’s business environment
▪
Chaired by HE VP; Vice Chair HM
FMITI
▪
10 Honourable Ministers, Head of
Service and CBN Governor
▪
Meet frequently to provide steer,
coordination across ministry and
debottleneck challenges
▪
Directly report to the FEC
▪
Champions of initiatives at MDAs,
e.g., FIRS, CAC to work with the
EBES to implement reforms
▪
Secretariat reports to the Council
▪
Routinely interfaces with the
nominated reformers at MDAs, State
Governments, as well as the other
implementers at multilateral agencies
and private sector
FEC
Monthly
reporting
Council
(PEBEC)
Key partnerships and
technical supporters
▪
Development
agencies, e.g. World
Bank, Government of
Singapore
▪
Advisors: consulting
firms, technology
companies
▪
Secretariat
(EBES)
Heads of MDAs
Private sector
companies/
stakeholders
Dotted line report
Solid line report
Partner relationship
34
The case for reform is clear, and has been prioritized by this Administration
The reform agenda
▪ A challenge as broad as “the Business Environment” requires prioritization, across two lenses: (i)
The private sector’s most pressing concerns; (ii) The World Bank’s Ease of Doing Business
(EODB) rankings
▪ Following engagement with the private sector, 3 top priorities:
– Entry and Exit of Goods
– Entry and Exit of People
– Transparency: availability and consistency of information
▪ With our consultative partners, we have prioritized 7 indicators, with the aim of moving Nigeria up
at least 20 places in the EODB rankings:
– Trading Across Borders
– Starting a Business
– Getting Credit
– Dealing with Construction Permits
– Paying Taxes
– Registering Property
– Getting Electricity
35
Lessons from and experiences of countries with success stories…….
Country
Georgia
Rwanda
▪ In 2004 Georgia focused on
driving growth by providing a
business friendly environment
and leveraging its central
location to become a trade hub
Reforms
▪ Measures include
– Liberalizing trade
– Reducing corruption
– Improving government
services
▪ In 2007 a “National Doing
Business Task Force” drove
reforms to improve the
business environment
▪ Measures include
– Streamlining construction
–
–
permitting
Introducing a new
simplified fixed fee for
property registration
Extending hours of customs
and introducing risk-based
inspections
143
112
Effect on
EoDB
ranking
to improve its business
environment in four major
dimensions – starting a
business, registering property,
getting credit, getting electricity
▪ Measures include
– Reducing the time it takes
–
–
to assess and pay stamp
duty
Making property transfers
faster
Reducing delays for new
connections to electricity
for new businesses
129
108
-21
32
8
SOURCE: World Bank Doing Business 2017
▪ In 2015 Kenya took giant steps
-111
-104
2005
Kenya
2008
2014
36
2014
2015
2016
Short term National Action Plan to jumpstart reforms
1 Prioritized initiatives/reforms
The Plan detailed, by reform
Module, what initiatives were
prioritized for the next 60 days,
sharing both the pain point and
PEBEC’s proposed solution
2 Ownership and impact
For each reform Module, we
shared what impact Nigerians
can expect if we complete our
mission; we also shared who is
responsible if we don’t, for full
transparency
3 Firm time commitment
In line with the PEBEC mandate
and with a view of the EODB
rankings, PEBEC committed to
completing all initiatives shown by
April 21, 2017
1 Selected from a total of 56
8
22
60
12
Indicators
Initiatives1
Days
MDAs
37
60-day National Action Plan with clear outcomes in each major reform area
▪
STARTING
STARTING A
A
BUSINESS
BUSINESS
CONSTRUCTION
PERMITS
▪
▪
▪
GETTING
CREDIT
▪ Publish laws and fees
▪ Operationalize e-planning platform
▪ Clearer application of regulations and
▪
GETTING
ELECTRICITY
▪
▪
PAYING
TAXES
▪
▪
Reduction in procedures required to get
connected to the grid
Far shorter time required to get connected in
Lagos and Kano, starting with 2 of the 11
DisCos
TRADING ACROSS
BORDERS
▪
Passage of two bills – Collateral Registry and
Credit Bureau - to strengthen legal framework
Facilitation of improved credit scoring and
access for MSMEs
Removal of in-person requirements for TIN,
with company registration
E-Filing and E-Payment processes to
improve tax adherence and ease of payment
World standard guidelines on import
procedures (e.g., palletization and advance
manifests)
50% reduction in import and export times,
driven by streamlined examination processes
▪ 48 hour visa processing timeline across
Simplification of application process e.g. by
eliminating sworn affidavit
Reduction in time to obtain Governor’s
consent by 50%
SOURCE: PEBEC NAP-60 National Action Plan
▪
▪
requirements (e.g., Soil tests)
▪
REGISTERING
PROPERTY
More convenient, fully online application
process
Elimination of requirements to hire lawyer
Number of days required to register a
business reduced from 10 to 2
ENTRY AND EXIT
OF PEOPLE
38
▪
▪
missions abroad
Simplification of Visa-on-arrival
Fix infrastructural deficits at Nigerian airports
The potential impact is transformational
N 2.6bn
116,000 minutes
PROVISIONAL - SUBJECT TO CHANGE
saved by SMEs in
registration costs to start
business annually
of traveler time
saved daily
60% 130%
increase in MSME
access to credit
reduction in time to
register property
20 place
23,500 hours
increase in Nigeria’s
position in World
Bank DB rankings
saved by exporters
annually
SOURCE: Team Analysis, The Credit Crunch - CBN/IFC
39
Partnership with the private sector will accelerate implementation in key areas
Done!
▪ Starting a Business:
– Fully operationalize online company name search
– FIRS e-payment/e-stamping solution integrated
▪ Entry & Exit of People:
– Simplify visa-on-arrival process, incl. e-submission
– Sign & issue new 2017 immigration regulations
– Consolidate arrival and departure forms
▪ Trading Across Borders
– Mandate use of pallets for imports to Nigeria
– NCS to schedule and coordinate export examinations
Ongoing / Areas for engagement
▪
Entry & Exit of People:
– Eliminate manual baggage search with scanners
– Overhaul key traveler infrastructure at Lagos airport
▪
Starting a Business:
– CAC lawyers to handle statutory declaration of compliance
– Server colocation for 99% application portal uptime
Trading Across Borders:
– Reduce documentation required for import/export
– Optimize pre-shipment process for exports
▪
40
Reforms must have a lasting impact
Institutionalization
Collaboration
Continuous Improvement
▪
▪
Build the capacity of the Agencies to deliver
▪
Strong political will and determination by the government to
effect changes and improvement
▪
Foster cooperation between the ministries, Agencies and also
across States, National Assembly and Private Sector
▪
Effective coordination between all the relevant agencies to
provide a unified view of implications and improvements
▪
Proper planning to eliminate the critical binding constraints
▪
Be a “moving-target” to make Nigeria a progressively easier
place to do business
▪
▪
Means to constantly measure and monitor the improvements
Strengthen the capabilities of the Agencies for the long-term, to
sustain the improvements on an on-going basis
Effect a hands-on implementation support for the changes and
improvements
41
NIPC promotes and facilitates business investments to Nigeria
Strategic Roles
▪ Established by the Nigerian Investment Promotion Commission Act to:
▪ Promote, co-ordinate and monitor all investments in Nigeria
▪ Initiate measures to enhance investment climate
▪ Assist incoming and existing investors by providing support services
▪ Collect and share information on investment opportunities and sources of capital
Services
▪ Provision of investment information
▪ Matchmaking investors with opportunities and partners
▪ One-Stop Investment Centre
 Connected to 27 agencies to facilitate investments and reduce time required to commence
business operations
 Provide assistance with company incorporation processes
 Process regulatory approvals and permits
 Support with issuance of visas on arrival
▪ Administration / processing of Pioneer Status Incentive
42
Business entry scenarios at NIPC’s One-Stop Investment Centre (OSIC)
Generic Agencies
Type of Business
Specific/Sector Agencies
NBS
Software development
and creative industry
NCC
NOTAP
CAC
FIRS
Power
Generation
NIPC
ICRC
NERC
FMI
NAFDAC
NIS
NEPC
MAN
Drug Manufacturing
for Export
NCS
43
PCN
SON
Thank you
Yewande Sadiku
Executive Secretary/CEO
+234 8034020099
[email protected]
NIGERIAN INVESTMENT PROMOTION COMMISSION
Plot 1181 Aguiyi Ironsi Street
Maitama District
Abuja, Nigeria
www.nipc.gov.ng
44