INVESTMENT OPPORTUNITIES IN THE NON-OIL SECTOR

 

Investment Climate (Enabling Environment)
    1. The investment climate in Nigeria today is one of the most favorable in the developing countries. As part of the effort to ensure a conducive climate for foreign investor, government has designed and implemented appropriate fiscal monetary policies. The country, with her population of over 100 million people constitutes a fertile ground for the growth of profitable businesses. There is, in the country, adequate skilled manpower and unskilled labour to support investment project management. The cost of labour is cheap. Land is easily available on application to the Land Allocation Committee in the Office of the Administrator of each State in Nigeria or privately through purchase or lease from individual land owners.
    1. Agricultural land development is facilitated by the National Agricultural Land Development Authority (NALDA). There are investment management support services provided by the Industrial Development Centers (IDCs) to small-scale industrialists and by the Agricultural Development Programs (ADPs) to farmers.

The Industrial Scene

Apex organizations in the private sector, such as the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigerian Association of Small-Scale Industries (NASSI), Nigerian Employers consultative Association (NECA), Federation of Farmers’ Association of Nigeria (FOFAN), etc exist in the country and cater for the healthy development of the private sector of the economy. There are Chambers of Commerce and Industry located in each State capital and major cities of the country. Membership of the Chambers are open to all individuals and corporate bodies engaged in meaningful commercial activities. The Chambers are themselves members of NACCIMA. The apex organizations are the means through which liaison between the government and the organized private sector is established and fostered. The organizations can assist potential investors and industrialists in finding their way in the field of commerce and industries in the country.

There are more than two thousand five hundred industrial establishments in Nigeria covering a wide range of activities and product mix, namely: mining and quarrying, textiles, wearing apparel and leather production, wood and wood products (including furniture), paper and paper products, printing and publishing, chemicals, petroleum, coal, rubber and plastic products, non-metallic mineral products, machinery (including electrical and communication equipment) miscellaneous manufactured products, electricity, gas and water as well as repair services. Together, they form a sound basis for the development of a whole range of other numerous down-stream industries for the production of intermediate and capital goods as well as consumer goods. In this connection, the government economic policy favors and places priority on greater investment in manufacturing and agricultural industries, and in export production. Government also encourages private sector participation in the economy and the policy now is to privatize most of the industrial enterprises set up by the government in the early stages of the country’s industrialization.

The government has open-door policy on ownership of enterprises in Nigeria whereby foreigners can own as much as hundred percent (100%) shares in industrial enterprises in Nigeria.

Companies and firms intending to operate in Nigeria are required to register with the Nigerian Investment Promotion Commission after incorporation under the Companies and Allied Mattes Decree 1990.

Foreign companies and firms as well as Nigerian companies operating in Nigeria are required to pay tax on profit earned in Nigeria at the rate of 30% of the Corporate profit. However, loses are allowed to be carried forward against future profit for period of four (4) years.

Protection of Industrial Investment and International Trade Business

The investment climate in the country affords trade protection to domestic industries through Nigeria’s tariff system; while Nigeria’s membership of the World Bank’s Multi-lateral Investment Guarantee Agency (MIGA) as well as the operation of the bilateral Investment Promotion and Protection Agreement (IPPA) make for protection of foreign investment in Nigeria. The instrumentality of the patents and Design Decree of 1970 affords protection and transferability of shares of joint owners of patent or design registered in Nigeria; while that of the Trade Mark Act of 1956 affords protection of the exclusive right of a proprietor of a trade mark. Also, government is prepare to enter into Bilateral Investment Protection Agreement with other countries with respect to the investments by their nationals.

Exchange Control Regulations

Unconditional repatriation of Capital, profit and dividends is allowed, while technical fees and royalties on imported technical services and technologies are payable. Repatriation of proceeds from disposal of assets is allowed. Foreign Exchange transactions are carried out at the Autonomous Foreign Exchange Market.

Investment Opportunities

The numerous investment opportunities in the country are predicated on her abundant natural and human resources. The abundant natural and human resources in the country include: human resources in the form of well educated administrators, managers and professionals in almost all works of life as well as unskilled manpower; food crops such as rice, maize, sorghum, millet, cow pea, cassava, yam, potato, fruits and vegetables such as leave vegetables, tomatoes, onion, okro, pepper, carrots, citrus, pineapple, banana, mango, papaw, etc; cash/industrial crops such as groundnut cotton, soya-bean, wheat, beniseed, shea-nut, ginger, sunflower, sugarcane, cocoa, rubber, oil palm, coffee, tea, cashew, coconut, gum arabic, etc; livestock such as sheep, goats, poultry, pigs, rabbits, cattle, camels and other sources of meat; fish inclusive of prawns, tuna and tuna-like fishes, crabs, oysters, periwinkles, shark, etc; forest products such as fuel wood, veneer and plywood, various trees and plants, wildlife species such as guinea fowls, crocodiles and snails, watersheds and minerals such as coal of which known reserve is 650 million tones; columbite of which known reserve is 32,098 tones; iron ore of which known reserve is 258.70 million tones, kaynite of which known reserve is 0.5 million tones, lignite of which known reserve is 71,120000 tones, tin ore of which known reserve is 10,546 tones, clays (kaoline) who 1996 production figure was 97,661 metric tones, limestone of which 1996 production figure was 2,032,494 metric tones was, marble of which 1986 production figure was 14,932 million metric tones in the country.

National Research institutes in Nigeria and other Nigerian innovators and investors have developed domestic technologies which use primary raw materials available in the country for industrial production. The government would like to see the indigenous technologies employed with the assistance of foreign investment, as necessary, in the manufacturing sector. This is another area in which ample investment opportunities exist in the country. Similar opportunities exist in processing the products off the basic steel industry for intermediate goods such as flat sheets.

Export manufacture and marketing is another area of investment opportunities in the country heavily supported with the most attractive set of government incentives.

Agricultural plantation, ranching, food processing, forestry development and fishing are also favored in the administration of government incentives; therefore agriculture is an area of lucrative business for both local and foreign investments.

Industrial Policy and Priorities

The exploitation of these copious investment opportunities which exist in the country has to be done with the guidance of the government industrial policy and proprieties. The Government industrial Policy is rapid industrialization of Nigeria: Elements of this include:-

    1. Providing greater employment opportunities;
    1. Increased export of manufactured goods;
    2. Improving the technological skills and capability available in the country;
    3. Increased local content of industrial output;
    4. Attracting foreign capital
    5. Increased private sector participation in the manufacturing sector; and
    6. Dispersal of industries

The Role of the Public and Private Sectors in the fulfillment of the Industrial Policy

The role of the Nigerian Government in the fulfillment of the policy comprises:-

  1. provision of adequate industrial infrastructural facilities such as roads, telecommunications, pipe-borne water, electricity and ready made factory facilities in industrial estates;
  2. provision of extension services such as those already being offered by the agricultural extension services program of the Federal Ministry of Agriculture and Rural Development and by the Industrial Development Centers (IDCs) of the Federal Ministry of Industry as technical and managerial assistance to small scale industrialists as well as in the development of indigenous enterpreneurship;
  3. provision of advice and guidance to investors on industrial project management, on procedure for establishing industries, and on industrial investment opportunities in Nigeria;
  4. assistance on project financing through the operation of government owned development banks;
  5. provision of fiscal incentives for the encouragement of activities in industrial sector;
  6. provision of government commissioned economic feasibility study reports and industrial project profiles in respect of selected special projects in government preferred sub-sectors of industry as well as provision of vital industrial data for use by prospective investors, economic planners and industrialists;
  7. provision of necessary policies and measures as strategies for rapid industrialization of the country;
  8. undertaking of industrial investment only in the area of industries that are basic and of strategic importance to the national economy or to the security of the nation.
  9. Acquistion of, and assisting the private sector to acquire technological and industrial know-how required for industrial development in the country.

    10. The role of the Private Sector, Nigerian or Foreign

    At the moment, the whole gamut of investment promotion is now open to participation by private entrepreneurs and investors, both local and foreign investors. The private sector is expected to exploit to the fullest the resources, human and material (in the forms of manpower, agricultural produce and mineral available locally in Nigeria as well as the assistance and industrial investment incentives being provided by the Nigerian Government. The primary role of the private sector will be in exploiting and transforming these resources into goods and services required for the well-being of the Nigerian populace as well as for export trade for purposes of foreign exchange earnings. The private sector is also expected to partake actively, through judicious placement of investment, in the privatization of public sector project and collaborate with the Government in improving the long term growth and development prospects of the country.

    The Role of Foreign Private Investment
  10. developing alternative industrial raw materials locally as substitutes for imported ones;

(ii) local fabrication of industrial and agricultural equipment and tools;
(iii) adapting existing production facilities to using locally available raw materials;
(iv) funding industrial research and development with a view to developing locally,
raw materials for existing industries in Nigeria;
(v) provision of industrial know-how, technological expertise, plant, machinery,
technical and managerial skills and services, contribution to risk capital required
in Nigeria for industrialization purposes.

Industrial Priorities

(a) Manufacturing industries:

The priority area of industrial investment which are favored in the administration of government industrial incentives are those described here-below:

    1. industries which can either immediately or in a few years time source their raw materials locally e.g. in the agro and agro-allied sub-sectors for which there are abundant natural resources in Nigeria, including food preparations, e.g. fruit drinks, cereal milling, feed mills and vegetable oil processing;
    1. industries which support food production program through local manufacture of chemicals, equipment and light commercial vehicles in particular, and chemical as well as petrochemical based manufacturing industries in general;
    2. industries with multiplier effect such as flat sheet mills and machine tools industries, including foundries and engineering industries for spare parts production;
    3. basic industries such as the petrochemical and liquidified natural gas project in which the government welcomes foreign partnership;
    4. processing of agricultural produce and minerals available locally into industrial raw materials as manufacture: intermediate goods required by existing industries in Nigeria;
    5. investment in research institute particularly in the area of adaptive research and commercialization of local inventions;
    6. there are nine (9) priority sub-systems that possess the ability to stimulate the laying of a favourable industrial base and provide a catalyst to industrialization in Nigeria. These pilot sub-systems are:-

The Government of Nigeria welcomes investors’ participation not only in these but also in the following project areas:-

Export manufacture

In recent studies by the Federal Ministry of industry, activities identified in respect of export market potential include:

  1. Agric processing: food and beverages;
  2. Textiles: yarn/textiles, apparel, leather and product of leather (footwear of rubber and plastics, etc);
  3. Wood: furniture;
  4. Paper: paper products;
  5. Iron and steel and non-ferrous metals;
  6. Fabricated metals products; and
  7. Consumer durables.

    8. It is recommended that industries in Nigeria should specialize in these sectors in which it is found that Nigeria has comparative advantages relative to the operation of such industries in other countries.

    Agricultural Industries

    The main policy here is sufficiency in food production and surplus for use as industrial raw materials for export. The priority areas include:-

  8. all aspects of direct agricultural production, but in particular, rehabilitation of groundnut, cotton cocoa and oil palm production, fish production and forestry;
  1. investment in processing of agricultural produce, storage facilities;
  2. investment in agricultural input supply and distribution;
  3. agricultural mechanization, e.g. adoption and use of farm equipment (such as bull dozers, tractor, etc) including the provision of land clearing and land preparation services;
  4. agricultural support activities including research and funding of research activities;
  5. water resources development, especially for irrigation and flood control infrastructures along river basins;
  6. development of earth dams and construction of wash bores and tube wells;
  7. development and fabrication of appropriate small-scale and mechanized technologies for both on-farm processing (e.g. threshing) and secondary processing of agricultural produce for consumption or storage.

(d) Mining and Mineral Extraction (Non-Oil)

There are tremendous opportunities in this sector also, and government has invested heavily in the generation of vital information on minerals. Outstanding among these are coal, gypsum, barytes, kaolin and talc. Nigeria has one of the best quantity coal deposits in the world with the lowest sulphur content. The names, location, quantity and possible industrial exploitation of some solid minerals are as follows:-

  1. Baryte: 41,000 and 70,000 tones of which are found in Benue and Plateau States respectively are used as inert volume and weight filler in drilling mud, rubber, glass, paper, etc, or as extender in the paint industry, and as chemicals in the manufacture of glass, heavy printing paper and plastics;
  1. Coal: 82.2 million tones, 189 million tones and 32 million tones, of which are found in Enugu, Benue and plateau States respectively, Sis used as fuel and in industrial production of tar, gas and non edible oils;
  2. Diatomite: 200,00 tones of which are found in Borno State is used in making insect control powder, bond for furnace brick works, and mineral fillers and filters;
  3. Lignite: 71.12 million tones of which is found in Delta State, is used in industrial production of tar, gas, oil and (nitrate) fertilizer;
  4. Columbite: 14,223 tones of which are found in Plateau State is employed in nuclear engineering and of part of alloys for gas turbines and for space missiles;
  5. Iron Ore: 30.48 million tones, 162.5 million tones and 45.72 million tones of which are found in Agbaja Plateau, Okene in Kogi State and Enugu State respectively is used for making steel, transformer and motor cores, ferrous sulphate from waster liqueur of the steel picking process or by the direct reaction, metals for electrical shielding, electro-magnetic devices, electric bells, electric fan cage, equipment rack, instrument body, engineering works, hydrated salt, iron oxide pigments, various salts of iron and ferrites, chemicals, etc;
  6. Tin: 10,546 tones of which are found in Plateau State, is employed in plating, production of tin oxide used in paint, paper and ink industries, production of tin oxide resistors, electric lead wires, etc.

40 billion barrels most of which are found in Ondo State, employed in Road Construction, Automotive Fuels, Sulphur Pitch, Thenol and petrochemical Feedstock

Page Transmitted 14 January 2003

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