THE NIGERIAN - MARKET OVERVIEW (PART TWO)

Nigeria can be a lucrative market for companies that can learn to navigate a complex and evolving business environment. Established multinationals that have mastered operating in this chaotic regulatory environment.......
make substantial profits despite the country’s low-income levels and logistical difficulties. The Nigerian Government continues to promote Nigeria as a rewarding target for Foreign Direct Investment (FDI). Foreign capital flows into all major sectors of the economy with the United Kingdom, United States, Canada, France, and China being the main source.

China has re-emerged as a major development, trade, and investment partner of the Nigerian government especially considering Western skittishness in investing in Nigeria due to the recession and restrictive government controls in foreign exchange and international trade. 

China is Nigeria’s largest contractor and partner in infrastructure projects with the total volume of projects estimated at $77 billion. These projects cut across infrastructure sectors – road, rail, power, construction – and are largely implemented by Chinese state-owned enterprises and financed by the Export-Import Bank of China.

To pull Nigeria out of recession, the government released an Economic Recovery and Growth Plan (ERGP) in March 2017 which, amongst other objectives, prioritizes the diversification of the Nigerian economy. The Government’s sectoral focus – and by extension, areas ripe for investment – are as follows:

Agriculture and food security: Invest in the sector to achieve national self-sufficiency in tomato paste, rice, and wheat, and become a net exporter of rice, cashew nuts, groundnuts, cassava, and vegetable oil by 2020. Grow the sector by about 7% and prime agriculture as a job creator and a foreign exchange earner.

Energy (power and petroleum products): Ensure energy sufficiency in petroleum products and become a net exporter by 2020. Optimize at least 10 GW of operational power capacity by 2020. Increase local oil production to 2.5 mbpd by 2020, expand oil sector infrastructure, and boost local refining.

Transportation infrastructure: Partner with the private sector to strengthen the transport infrastructure to aid the achievement of ERGP targets and build a competitive global economy.

Industrialization: Drive industrialization with emphasis on Small and Medium Scale Enterprises focusing on priority sectors such as agriculture, Fast Moving Consumer Goods, and manufacturing.

Interventions in these sectors will be undertaken against the backdrop of macroeconomic targets of low inflation, market reflective exchange rates, sustainable fiscal balances, diversified fiscal revenue base through improved tax and customs administration, and sub-national fiscal coordination amongst others.