Dutch

 Mul:na:onal  Businesses,  Dutch  Government  and  the  

Promo:on  of  Produc:ve  Employment  in  Sub-­‐Sahara  Africa:      
A  Compara:ve  Study  of  Kenya  and  Nigeria    

Government  Policy  and  Foreign  

Investment  in  Nigeria  

Dr.  Ifediora  C.  Amobi   Start-­‐Up  Seminar  

Execu4ve  Director   IDS/UNOBI,  Nairobi  
African  Heritage  Ins4tu4on,  Enugu   13th  –  14th  November,  2014  
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Outline  

•  Interes(ng  Facts  –  Economic  Indicators  

•  Nigeria’s  FDI  Policy  Thrust  
•  FDI  Policies  before  and  a>er  1995  
•  What  is  Nigeria  Doing?  
•  Who  is  Responsible?  

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NIGERIA:  Economic  Indicators    

Over  the  last  four  years  (2010-­‐2013),  Nigeria  aPracted  over  US$27  billion  in  foreign  direct  
investment,  making  it  one  of  the  top  FDI  des(na(ons  on  the  African  con(nent  
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FGN’s  FDI  Policy  Goal  

The  policy  thrust  of  the  Federal  Government  of  Nigeria’s  

Foreign  Direct  Investment  is  to  increase  the  presence  of  
transna.onal  corpora.ons  in  the  country  in  order  to  
bridge  capital,  management,  skills  and  technology  
gaps,  and  to  support  the  competence  of  local  
companies  and  the  local  workforce  towards  achieving  
world  standards  
 

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FDI  policies  in  Nigeria  before  and  aJer  1995  

•  1972  -­‐  indigeniza(on  policy  started  with  the  Nigerian  Enterprises  

Promo(on  Decree  (NEPD).    
•  The  decree  imposed  several  restric(ons  on  FDI  entry  
•  About  22  business  ac(vi(es  were  exclusively  reserved  for  
Nigerians,  including  adver(sing,  gaming,  electronics  
manufacturing,  basic  manufacturing,  road  transport,  bus  and  
taxi  services,  the  media  and  retailing  and  personal  services.    
•  Foreign  investment  was  permiPed  up  to  60%  ownership  and  
provided  that  the  proposed  enterprise  had,  based  on  1972  
data,  share  capital  of  ₦200,000  ($300,000)  or  turnover  of  
₦500,000  ($760,000).    

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FDI  policies  in  Nigeria  before  and  aJer  1995  

•  1977  -­‐  NEPD  (ghtened  restric(ons  on  FDI  entry  by:    

(a)  expanding  the  list  of  ac(vi(es  exclusively  reserved  to  
Nigerian  investors  (e.g.  bus  services,  travel  agencies,  the  
wholesaling  of  home  products,  film  distribu(on,  newspapers,  
radio  and  television  and  hairdressing);    
(b)  lowering  permiPed  foreign  par(cipa(on  in  the  FDI-­‐restricted  
ac(vi(es  from  60%  to  40%  and  adding  new  ac(vi(es  
restricted  to  40%  foreign  ownership  such  as  fish-­‐trawling  and  
processing,  plas(c  and  chemicals  manufacturing,  banking  and  
insurance;  and    
(c)  crea(ng  a  second  list  of  ac(vi(es  where  permiPed  foreign  
investment  was  reduced  from  100%  to  60%  ownership,  
including  manufacturing  of  drugs,  some  metals,  glass,  hotels  
and  oil  services  companies.  
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FDI  policies  in  Nigeria  before  and  aJer  1995  

•  1989  -­‐  NEPD  was  relaxed  and  amended  so  as  to  leave  a  single  
group  of  40  business  ac(vi(es  in  which  foreign  par(cipa(on  was  
completely  prohibited  unless  the  value  of  the  enterprise  
exceeded  ₦20  million  ($2.7  million  in  1989).    
•  In  addi(on,  foreign  investors  could  hold  only  a  share  of  up  to  40%  
insurance,  banking,  oil  produc(on  and  mining.    

•  1995  -­‐  the  Nigerian  Investment  Promo(on  Commission  Act  

opened  all  sectors  to  foreign  par(cipa(on  except  for  a  short  
nega(ve  list  (including  drugs  and  arms)  and  allowed  for  100%  
foreign  ownership  in  all  sectors,  with  the  excep(on  of  the  
petroleum  sector  (where  FDI  is  limited  to  joint  ventures  or  
produc(on  sharing).   7  
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FDI  Inflows  to  Nigeria,  1970  -­‐  2007  

According  to  UNCTAD,  “FDI  inflows  into  Africa  rose  by  four  percent  to  $57  billion,  with  Nigeria’s  inflow  
standing  at  $5.6  billion  in  2013”.  
 
“Only  Nigeria,  South  Africa,  Mozambique,  Egypt,  Morocco,  Ghana  and  Sudan  had  FDI  inflows  above  $3  
billion.”  
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Foreign  Investment  in  2014  
Principal  Sources  of  FDI  into  Nigeria  
FDI  New  Projects   FDI  Capital  Invested  
United  States   United  States  
United  Kingdom   Canada  
South  Africa   France    
India   China   Sectors  that  APract  FDI  into  Nigeria  
France   India   FDI  New  Projects   FDI  Capital  Invested  
Oil  &  Natural  Gas   Petroleum  (Oil  &  Gas)  
Financial  Services   Petroleum  Services  

FGN  Priority  Sectors   Telecommunica(ons   Telecommunica(ons  

•  Power   Business  Services   Hotels  &  Tourism  
•  Infrastructure  
•  Agriculture   Food  and  Tobacco   Chemicals  
FMCG   Real  Estate  
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NIGERIA:  Major  investments  in  the  last  12  months  

Investor   Project   Amount   Loca:on  

Nestlé   Produc(on  of  Maggi  Products   ₦12  billion   Sagamu,  OG  
Nestlé   Set  up  a  Distribu(on  Center   ₦5.4  billion   Agbara,  OG  
Dangote  Cement   6  Million  Metric  Ton  Cement  Plant   ₦140  billion   Ibese,  OG  
Lafarge  WAPCO   2.5  Million  MT  Cement  Plant   ₦75  billion   Ewekoro,  OG  
Lafarge     90  Mega  WaP  Power  Plant   ₦23  billion   Ewekoro,  OG  
Western  Metal   52  MW  Power  Plant   ₦1  billion   Magboro,  OG  
Products  (WEMPCO)    
WEMPCO   Steel  Plant   $1.5  billion     Ibafon,  OG  
WEMPCO   Ceramic  Tiles  &  Nail  Prod’n  Plant   $700  million   Ibafon,  OG  
Shoprite   Retail  Chain  Store   $200  million   Onitsha,  AN  
SABMiller  Brewery     500,000  Hectoliter  Beer  Plant   $100  million   Onitsha,  AN  
Teragro  -­‐  Transcorp   Benfruit  -­‐  26,500  MT/yr  Fruit  Plant   ₦1  billion   Makurdi,  BN  
Indorama  Corp   1.4M  MT  Urea  Fer(lizer  Project   $1.2  billion   Port  Harcourt,  RV  
PZ  Wilmar   30,000  Ha  Oil  Palm  Planta(on   ₦100  billion   Calabar,  CR  
PZ  Wilmar   Refinery   ₦9  billion   Lagos,  LA  
ICH  Group   InterCon(nental  Hotels   ₦30  billion   Lagos.  LA  
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So  What  is  Nigeria  Doing?  
•  Legisla(on  
•  Passed  the  Nigerian  Investment  Promo(ons  Commission  Act,  1995  
•  Passed  the  Nigerian  Oil  and  Gas  Industry  Content  Development  Act,  2010  
(Local  Content  Act)  
•  Aggressively  pursing  a  private  sector-­‐led  growth  strategy,  post  NEEDS.  
•  Laws  that  previously  hindered  private  sector  investments  have  been  
either  amended  or  repealed  
•  A  Na(onal  Council  of  Priva(za(on  has  been  established  to  oversee  
divestment  to  private  sector  operators  
•  Encouraging  investors  to  par(cipate  across  all  sectors  of  the  economy,  and  
not  only  in  oil  and  gas.  
•  Providing  a  package  of  incen(ves  for  various  sectors  of  the  economy  to  
prospec(ve  and  exis(ng  investors  
•  Nigerian  Investment  Promo(on  Council  (NIPC)  has  been  strengthened  to  
enable  it  serve  as  an  effec(ve  One-­‐Stop  Investment  Centre.    
•  A  new  visa  policy  to  enable  investors  
11   obtain  visas  in  48  hours  
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So  What  is  Nigeria  Doing?  
•  Exis(ng  “Expatriate  Quota”  requirement  has  been  replaced  with  
“Work  Permit”  
•  Pioneer  Status  –  a  ‘tax  holiday’  concession  to  pioneer  companies  
located  in  economically  disadvantaged  areas  
•  Tax  relief  for  Research  and  Development  –  up  to  120%  tax  ded.  
•  Raw  materials  u(liza(on  -­‐  30%  tax  concession  
•  Access  to  land  and  land  rights  
•  Export  incen(ves  
•  Improving  the  business  environment  
•  In  June  2014,  Nigeria  launched  the  Nigeria  Industrial  Revolu(on  Plan  
to  also  aPract  foreign  investment  in  the  right  environment  
•  United  Na(ons  Industrial  Development  Organisa(on  (UNIDO)  gave  its  
nod,  in  Vienna,  on  Wednesday,  for  the  establishment  of  an  
Investment  and  Technology  Promo(on  Office  (ITPO)  in  Nigeria    
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Who  is  Responsible  for  Driving  Foreign  Investment?  

•  Federal  Government  of  Nigeria  –  Global  des(na(on  through  

Vision  20:2020  
•  Federal  Ministry  of  Finance  
•  Federal  Ministry  of  Industry,  Trade  and  Finance  
•  Federal  Ministry  of  Petroleum  
•  Federal  Ministry  of  Communica(ons  Technology  
•  State  Governments  and  the  Federal  Capital  Territory  

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But  Are  We  There  Yet?  

INDICATORS Nigeria Africa OECD

Starting a Business (days)   28 27.3 9.2
Dealing with Construction Permits (days)   116 155.7 149.5
Getting Electricity (days)   260 138.3 76
Registering Property (days)   77 57.2 24
Paying Taxes (hrs/yr)   956 310.8 175.4
Trading Across Borders (time to export)   22 30.5 10.5
Enforcing Contracts  (days)  447 650.4 539.5
World  Bank:  Doing  Business  2014  

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THANK  YOU  

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