Download Nigeria`s Investment Climate and Economic Outlook

Nigeria’s Investment Climate
and Economic Outlook
DR. OKECHUKWU ENELAMAH
HONOURABLE MINISTER OF INDUSTRY,
TRADE AND INVESTMENT
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
Objectives
 Nigeria’s Economy – An Overview
 Economic Climate Reform
o
Improving the Ease of Doing Business
 Nigeria’s Economic Outlook for 2016
 Conclusion
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Economy Overview

Nigeria is the largest economy in Africa, and the 26th largest in the world

Demographic Potential: Most populous country in Africa; youthful
population – median age of 19

Nigeria is Africa’s largest oil producer; government depends on oil and
gas sales for more than seventy percent of revenues, and ninety percent
of foreign exchange

Global slump in oil prices has had an adverse impact on fiscal position,
and on the currency

Growth averaged 6 percent between 2005 and 2014; slowed to under 3
percent in 2015
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Nigeria is facing challenging times, arising
from a combination of domestic and foreign
circumstances

Uncertainty about Policy thrust of new government
o


Implications of Falling Crude Oil Prices on Government Revenues
o
Prices down about 70% since mid-2014
o
Possible adverse effect of Iranian oil
Implications of lower growth in China on Emerging Economies
o

Change of government and uncertainty about economic thrust
Implications for commodity prices and impact on the global markets
Strengthening Dollar
o
Several emerging market currencies have depreciated against the dollar
o
Implication of the winding-down of quantitative-easing
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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… however, the fundamentals of the
Nigerian economy remains strong in the
mid-term
Implication
Size
 Large domestic market
 Large unskilled and semi-skilled labor
 170mm+ people
 Nigeria has largest population in
force that can be employed at low wages
 Potential for innovation and home-grown
technology
Africa and 7th largest in the world
Productivity
and
demographic
potential
 Diversification already underway
 Current low productivity across key
 Potential to significantly improve labor
Abundant
natural
resources
 Nigeria has the 10th largest proven
 Source of additional government
 17 years of democracy
 Elections becoming more credible
 Successful transfer of power to
 Stability of political institutions
 More ownership of the democratic
Strengthening
democratic
institutions
economy sectors
productivity with improved
infrastructure
 Potential to increase contribution of the
working age to the GDP of the country
oil reserves (37mn barrels) and 9th
largest natural gas reserves (~5Tr m3)
 commercially viable minerals and
arable land
revenues and employment
process by citizens
opposition party
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Nigeria has a burning platform to rapidly
accelerate investments into the non-oil
sector
“Our leaders have over relied on oil money to the
detriment of other sectors…Now that the price of oil has
crashed, we are now facing serious economic
challenges…we will engage in commercial agriculture
and mining as well as resuscitate the abandoned agroallied industries…”
– Buhari, 2015 speech
“...The Nigerian economy needs to
move away from dependency on
oil…We are carefully assessing our
exchange rate regime keeping in mind
our willingness to attract foreign
investors”
– 2016 Budget Speech
“Not only do oil and gas account for more than 90
per cent of Nigeria’s export revenues, which have
roughly halved in the past six to eight months, the
government relies on them for 70 per cent of fiscal
revenues. So the 45 per cent fall in Brent crude since
last June has wreaked havoc on its financial health.”
“International business shying from
investing in Africa…”Investor
confidence about the outlook has
remained weak, and financing is likely to
become more difficult and more costly
for everyone”
– IMF, January 2016
– Financial Times, July 2015
“The oil industry, with its history of
booms and busts, is in its deepest
downturn since the 1990s”
– New York Times, January
2016
“I see an immediate priority—a fundamental change …The new reality of low oil prices and low oil revenues means that
the fiscal challenge facing government is no longer about how to divide the proceeds of Nigeria’s oil wealth, but what needs to
be done so that Nigeria can deliver to its people the public services they deserve—be it in education, health or infrastructure.”
– Christine Largarde – Managing Director, IMF
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Building the platform for sustained economic
growth

The new government came into office promising to focus on
three key areas:

o
Security,
o
Anti-Corruption (Governance), and
o
The Economy.
Has demonstrated the political will
o
Fully implementing the Treasury Single Account (TSA)
o
Commenced the plugging of revenue leakages, pursue looted public funds
recovery

Has unveiled a budget that seeks to invest substantially more in
infrastructure than in previous years
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Federal Ministry of Industry, Trade and
Investment’s Vision
 Our vision is built on FOUR Pillars:
o
CREATE an Enabling Environment for Industry, Trade and
Investment in Nigeria
o
IMPLEMENT the Nigeria Industrial Revolution Plan (NIRP)
o
CHAMPION the cause of Nigeria’s MSMEs, as a means of creating
jobs and achieving inclusive growth
o
ATTRACT proactively long-term local and foreign investment
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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As Nigeria aspires to become Africa’s
leading economy, we have to become more
business friendly
ASPIRATIONAL
EASE OF DOING BUSINESS
RANKING TODAY
EASE OF DOING
BUSINESS RANKING IN 5
YEARS
EASE OF DOING BUSINESS
RANKING IN 10 YEARS
Top 50
Top 100
#169
Nigeria has a vision to improve the poor Nigerian business environment
and Ease of Doing Business ranking across key regulations, processes,
support systems, execution capabilities and training amongst other
metrics
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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We are developing a comprehensive
approach for improving the Ease of Doing
Business
• Analyse the root causes
for the poor Nigerian
business environment
• Establish near to
medium term targets (6
to 18 months) to
improve the business
environment, including
approach, responsibilities
and key performance
indicators
• Assess EoDB ranking
across key regulation,
processes, support
systems, execution
capabilities, training
Enabling
Environment
Secretariat
• Monitor the
implementation
against the targets and
indicators
• Define appropriate
support measures to
ensure compliance with
the targets
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
• Communicate regularly
with the investment
community and other
stakeholders
(development partners,
social agencies, etc.)
• Share progress of
objectives and key
intervention initiatives
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Economic Outlook - 2016

Oil prices have risen marginally, now around $40 per barrel, buying some respite from a
challenging fiscal situation – but diversification agenda will continue to be implemented

2016 Appropriation Bill has just been passed into law by Parliament; awaiting Presidential
signing

30 percent of the budget sum has been earmarked for infrastructure projects; in naira
terms; more than three times the total infrastructure spending in 2015

Budget also contains 2.5 billion dollars ‘Social Investment’ spending – CCT, Micro-credit
and Job Schemes

Finance Ministry plans to inject 350 billion naira into the economy over the next quarter,
specifically on infrastructure projects

Presidential-level ‘Ease of Doing Business’ Initiative to be launched soon

Government and Private Sector partnering on multi-billion dollar Infrastructure
Development Fund
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Conclusion

Nigeria is facing a challenging economic situation, largely on account of
the drop in oil prices and non-diversification of government revenues

The new government is committed to taking advantage of the
opportunities presented by the fiscal crisis – to restructure the economy
and diversify government revenues

The work of economic reform will continue to be underpinned by a
focus on security and transparency

Nigeria is open and ready for business and investment
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT
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Thank you
FEDERAL MINISTRY OF INDUSTRY, TRADE & INVESTMENT