BUSINESS AND INVESTMENT ENVIRONMENT IN
NIGERIA
UNIDO-ITPO AND NIPC ONLINE DELEGATE PROGRAMME 2020
Mohammed Baba
Deputy Director, Investor Relations
Virtual Meeting| September 2020
Nigeria in the global
context
How the world will look in 2050
Most populous countries
China China India
India India China
3
USA USA Nigeria 410.6m
Russia Indonesia USA
Japan Brazil Indonesia
Germany Pakistan Pakistan
7
Indonesia Nigeria Brazil
190.9m
Brazil Bangladesh Bangladesh
Britain Russia Congo DR
Italy Mexico Ethiopia
France Japan Mexico
Bangladesh Ethiopia Egypt
2017 2050
1950
Forecast
Source: United Nations World Population Prospects: the 2017 Revision, medium variants
3
What investors tell
us
Africa’s perceived barriers to investment…
Business environment is
most important barrier…
… incentives are least
important barrier
Source: EY’s 2015 Africa Attractiveness Survey 5
Nigeria’s business
environment
improvement efforts
Improved ease of doing business ranking: Nigeria (131/190)
Nigeria’s ease of doing business ranking improved by 15 steps and 4.01 points
… positive national doing 2020 DB Ranking
business score …
Rank Difference
Starting a business 105/ 190 +5
Dealing with construction
permits 55/ 190 +94
Getting electricity 169/ 190 +2
Registering property 183/ 190 +1
DB Year Rank Difference *DTF Difference
Getting credit 15/ 190 -3
2020 131/ 190 +15 56.9 +4.01
Protecting minority investors 28/ 190 +10
2019 146/ 190 -1 52.89 +1.37
Paying taxes 159/ 190 -2
2018 145/ 190 +24 51.52 +6.89
Trading across borders 179/ 190 +3
2017 169/ 190 +1 44.63 -0.06 Enforcing contracts +20
73/ 190
2016 170/ 189 0 44.69 +1.14 Resolving insolvency 148/ 190 +1
Source: World Bank, Doing Business 2020 * The distance to frontier (DTF) score measures the distance of each economy to the “frontier”,
7
which represents the best performance observed on each of the indicators across all economies
Subnational reforms equally important
Sokoto
Katsina
Jigawa
Yobe
Zamfara
Kebbi Borno
Kano
… positive subnational Bauchi
Kaduna
doing business scores Gombe
Niger
Adamawa
Plateau
Kwara FCT
Nassarawa
Oyo
Taraba
Osun Ekiti
Kogi
Benue
Ondo
Ogun
Enugu
Edo
Anambra
Lagos Ebonyi
Cross
Delta Imo Abia River
Akwa
BayelsaRivers
Ibom
In the past 4 years, 29 Nigerian states implemented
43 reforms across the four areas benchmarked.
Kaduna, Enugu, Abia, Lagos and Anambra showed the
largest advance toward the global good practice frontier
Source: World Bank, Doing Business in Nigeria 2018 8
Why Nigeria
Despite the challenges, there are very many reasons to invest in Nigeria…
₦
Large growing Sophisticated financial Improving business Strategic location Generous investor
population markets climate protections
Abundant natural Large tech-savvy population Young, energetic, Generous investment Growing middle class
resources entrepreneurial population incentives
Resilient, hard-working An essential component of Optimistic mobile population Large population of Strategic time zone
“can-do” spirit every Africa strategy consumers GMT +1
14th
Fast growth Abundant economic 3rd most populous Largest economy Language:
projections opportunities country by 2050 by 2050 English
Private sector-led Two decades of political Huge unfilled demand Home to many large local Favourable weather
economy stability and international brands
10
Ideal gateway economy for leveraging AfCFTA
Nigeria is more ready than most African
3’05’ Tunis economies
1.Large domestic market makes Nigeria the ideal
5’45” Cairo
gateway economy
2.Expanded market for Nigerian goods and
ECOWAS
5’ Dakar services, creating jobs and economic growth
5’20” Addis Abba
3.Nigeria’s manufacturing value addition is more
than 7x the average of the top 20 economies in
Africa
4.Effective trade remedies will allow action against
▪ 4 International airports and injurious practices by foreign countries and
major seaports in Lagos, companies
Calabar and Bonny island
▪ 3,798 km of railway tracks 5.Many Nigerian companies, particularly in the
and 168,000 km road
network
services sector, have long developed the capacity
▪ Land borders with Benin, to serve the rest of Africa
Cameroon, Chad and Niger 5’40” Johannesburg
and a natural hub for the 6.Complements Nigeria’s national development
continent agenda and can catalyse economic diversification
11
Selected Nigerian companies and their networks in Africa
Company Sector African operations
UBA Services (Banking) 20 Benin, Burkina Faso, Cameroun, Chad, Cote d’Ivoire,
Congo Brazzaville, Gabon, Ghana, Guinea Conakry, Kenya,
Liberia, Mali, Mozambique, Nigeria, RDC, Senegal, Sierra
Leone, Tanzania, Uganda, Zambia
Dangote Group Manufacturing (Industrial, 12 Cameroun, Cote D’Ivoire, Congo, Ethiopia, Ghana, Liberia,
Food & Beverages) Nigeria, Senegal, Sierra Leone, South Africa, Tanzania,
Zambia,
GTBank Services (Banking) 10 Cote D’Ivoire, Gambia, Ghana, Kenya, Liberia, Nigeria,
Rwanda, Sierra Leone, Tanzania, Uganda
Globacom Telecommunications 5 Benin, Cote d’Ivoire, Ghana, Nigeria, The Gambia
Interswitch Tech Ecosystem (Digital 3 Kenya, Nigeria, Uganda
payments and Commerce)
Paga FinTech 2 Ethiopia, Nigeria
12
Potential winners and losers from COVID-19
W
in
ne
rs
Entertainment
Trade & Tourism
Banking &
Manufacturing Finance
Real Estate
Potential ICT
Potential
Losers Mining & Winners
Quarrying
Education
Chemicals &
Pharmaceuticals
Food &
Construction Beverages
Oil & Gas
Human Health &
Transportation Social Services
Agriculture
rs
& Storage
se
Lo
Source: NBS, Nigerian Gross Domestic Product Report (Q2 2020) 13
Investment
promotion efforts
iGuide Nigeria
§ An easy-to-use online investment guide
that provides investors with up-to-date and
pertinent information on the processes,
procedures and basic costs of doing
business in Nigeria
§ It provides information on starting
business, labour, production factors, land,
taxes, investor rights, growth sectors and
opportunities
§ The information will enable investors to
make better informed decisions on Nigeria
as a preferred investment destination
§ Available at:
§ www.theiguides.org/nigeria
§ www.nipc.gov.ng
UNECA – United Nations Economic Commission for Africa 15
UNCTAD – United Nations Conference on Trade and Development
Selection of investment incentives in Nigeria
Pioneer status incentive Deduction for research and Rural investment allowance
• For companies in industries development • For companies >20km from
recognised as “pioneer” • For companies undertaking R&D government facilities who incur
• Allows a company income tax holiday activities for commercialization capex for providing electricity, water,
for 3-5 years • Allows 20% investment tax credit on tarred roads, etc for the purpose of a
• Dividends also exempt from tax trade or business
qualifying expenditures
• Allowance rates:
•100%: no facilities, 50%: no electricity, 30%: no
water, 15%: no tarred road
Investment tax relief Export expansion grant Export processing zones
• Similar to rural investment • Post-shipment incentive for non-oil incentives
allowance, but only available for 3 exports • 100% capital allowance
years max for companies who have • Qualifying exports must fully • Rent-free land during construction
not enjoyed pioneer status repatriate proceeds within 300 days
• Full holiday from federal, state and
local government taxes
Source: Compendium of Investment Incentives in Nigeria
16
WIP: OSIC Lab
Currently in pilot phase
Transparent platform for speedy resolution of investment related issues
3 weeks Investor advised
Investor raises
issue of resolution
MDAs hear Comprehensive
OSIC Lab investor’s issues all-of-government
meeting called together solution agreed
Increase confidence
Drive practical
Members include… in business
policy reforms
environment
Encourage new Encourage continued
and existing investment/protect
investors existing jobs
Protect existing
investments/jobs and
encourage new
investments/jobs
17
What NIPC can do for investors
Assist investors to navigate challenges in investing in Nigeria
Assist with connecting prospective foreign investors with domestic partners
Facilitate discussions with government agencies and policy makers
Assist investors with quality information to help them implement their investment plans in
Nigeria
Facilitate investor input into the policy making process
OSIC Lab provides a platform for resolving challenges faced by investors
Work behind the scenes; easier for policy makers and regulators to change positions if
persuaded privately, not confronted in public
This allows us to achieve the desired objective without compromising their independence
However, we cannot compel any government agency to do what we advice
The arguments we make need to be carefully thought through and driven by facts and data
18
Nigeria-Japan
relations
Japan: Nigeria investment interests, 2014-2018
Investments by capex ($’m) & jobs Top investment interests by sector $261 m
Capex Jobs Created 1,073 1,143
3% 4%
Aut omotive OEM
9% Business services
Non-automotive transport
10% OEM
Software & IT services
56%
218 212 18% Consumer products
120 81
31 59 Other
10 18
2014 2015 2016 2017 2018
Investment destinations $261 m Top investment interests
Projects Capex ($’m) Employees
1 CFAO Group 1 73.9 1,007
Honda Automobile Western
9% Lagos State
2
Africa
1 73.9 1,007
9% 3 SI-UK 2 46.4 66
Ogun State
9% 45% 4 Yamaha Motor 1 26.2 200
Rivers State 5 NEC XON 1 17.8 212
Fede ral Capital Territory 6 Miniso 1 7.2 136
7 Canon 1 5.7 34
28% Not Specified
8 Trend Micro 1 5.2 18
9 Sony Music Entertainment 1 4.7 25
Source: fDi Markets 20
20
Why Japan?
#2 #7 #5
global investor investor in Africa investor in Nigeria
Top 10 Nigeria’s top 20 Nigeria’s top 20
investor in services import partner export partner
Top 10 #5 #5
investor in solid investor in oil investor in real
minerals refining estate
Source: NIPC Intelligence 21
21
Success stories
22
About NIPC
NIPC’s principal functions
NIPC was established by the NIPC Act* in 1995 to encourage, promote and co-ordinate
investments in Nigeria
Project Attractive • Promote Nigeria as an attractive investment destination
Investment Image • Provide information on investment opportunities and capital sources
Investment • Promote investments in Nigeria, by Nigerians and non-Nigerians
Promotion • Co-ordinate all investment promotion activities in Nigeria
• Provide support services to investors and register enterprises in Nigeria
Investment • Match-make investors with specific projects and advise on partners for JVs
Facilitation • Provide information on investment incentives and approve Pioneer Status
Incentive applications
• Initiate and support measures that enhance the investment climate
Policy Advocacy • Evaluate the impact of investments and incentives in Nigeria and make appropriate
recommendations
• Advise Government on policy matters to promote Nigeria’s economic development
*Nigerian Investment Promotion Commission Act, Chapter N117, Laws of the Federation of 24
Nigeria 2004
Investor Obligation and Protections in the NIPC Act
Registration
Ownership Guarantees Dispute Resolution
Obligation
•Enterprises in which •Nigerians and •Government will not •Amicable resolution
foreigners can foreigners can invest nationalize or by mutual discussion
participate are in any sector, except expropriate any or arbitration of
required to register for those on the enterprise investor/government
with NIPC before negative list •Right of access to disputes
commencing •No restriction on courts and fair and •Provisions of any
business foreign percentage adequate Bilateral Treaty with
ownership compensation if the investor’s
acquisition is in country will apply
national interest/for •Right of recourse to
public purpose international
•No restriction on arbitration under
repatriation by ICSID Rules
foreigners of
investment returns
or sale proceeds
through an
authorized dealer
ICSID = International Centre for Settlement of Investment Disputes 25
For further details, please
contact us
Mohammed Baba
Deputy Director, Investor Relations
Plot 1181 Aguiyi Ironsi Street
Subscribe to the NIPC Newsletter Maitama District
http://eepurl.com/dkvoU1 Abuja
Investment information
[email protected] www.theiguides.org/nigeria
[email protected] www.nipc.gov.ng
