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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