Priority Areas of InvestmentThere are
over 2000 industrial establishments in the country presently. Among these are
a giant oil industry, iron and steel complexes, steel rolling mills, pharmaceutical
industries, food processing, car assembling and the up-coming Export Processing
Zone (EPZ). Government economic policy favours and places priority on greater
investment in agricultural production and agro-processing industries, manufacturing
and export production. The economy offers low costs of production, abundantly
skilled and versatile human resources and access to a vast local market of over
100 million people and beyond in the sub-region.
Sectoral highlights are addressed in the following sections:
Priority Areas of InvestmentThere are four Industrial Sectors which are considered priority areas of development because of their linkage effects on the other sectors and potential catalytic role in the overall growth of the industrial sectors. These priority areas which are most favoured in the administration of government industrial incentives are:
Metallurgical/Engineering Industries
Specifically the industrial projects desired from these sectors are:
In addition to the twelve identified priority areas mentioned above, investors are welcome to also participate wholly or jointly with Nigerians in the following specific projects:
Investment Opportunities in AgricultureThe agricultural potential of Nigeria is barely being tapped and this explains the inability of the country to meet the ever increasing demand for agricultural produce. Although the agricultural sector remains a dominant employer of labour, serious investment is needed across the board to enhance production and increase the contribution of the sector to GDP Investment is required in the following priority activities:
Cereals: Maize, rice, sorghum, corn, millet, wheat
Others
Commercial growing of flowers and ornamentals and experimental orchards for more temperate fruits - apples, grape vines and pears have been successfully established in the high plateau regions
Average Annaul (1990-1998) Output of Major Agricultural Commodities In Nigeria Crop Production ('000 Tonnes)
These are widely used in food and beverage sub-sectors like flour mills, breweries, chemicals, pharmaceuticals, pulp and paper, wood products and industrial starch.
Investment Opportunities in The Oil and Gas SectorForeign and domestic investors are being encouraged through improved fiscal incentives in the, Nigerian oil and gas sector. In the Upstream and Downstream sectors, the following are some of the areas where there are pressing needs for investors.
Refineries consume a lot of chemicals and utilize a broad range of spare parts. There is tremendous scope for small scale joint venture manufacturing concerns with foreign
warehousing arrangements that will ensure continuity of supply at competitive prices.
Other investment opportunities contingent upon refining and Ancillary activities are the manufacture of special products such as:
While indeed those opportunities remain viable, far more challenging opportunities may be explored in the areas of product transportation, by road and coastal tankers.
Associated with products distribution and marketing is a chain of manufacturing and maintenance businesses such as lubricating oil reprocessing, LPG bottles and accessories, oil cans reconditioning, etc.The nations pipeline and depot network consists of 3,001 km of pipeline of varying sizes as well as sixteen (16) storage depots. These pipelines and networks traverse the length and breadth of the country. The system therefore must be maintained in a healthy state for effective ind efficient distribution of products
Opportunities for Investment in The Solid Minerals SectorNigeria is endowed with numerous mineral resources. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors' participation in this sector.
Below is a profile of solid mineral deposits in Nigeria
An estimated reserve of over 100 million tonnes of talc has been obtained in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States. There are only two medium size talc processing plants currently operating in Nigeria and both are located in Niger State. The colour of the Nigerian talc varies from white through milky-white to grey: The talc industry represents one of the most versatile sectors of the industrial minerals of the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only local demands but also that of the international market as well.
There are over 3 billion tonnes of iron ore found in Kogi, Enugu, Niger, Zamfara and Kaduna States. Iron is currently being mined at Itakpe (Kogi State), which is more or less at the center of the region of crystalline iron deposits. The large deposit of oolitic iron ores of Kogi and Enugu States are yet to be fully explored. Itakpe iron ore is being beneficiated to 67% Fe. To feed Aladja and Ajaokuta Steel complexes. Besides there are three inland rolling mills at Oshogbo, Jos and Katsina in addition to some privately owned rolling mills in Lagos and Kano.
There are proven reserves of both alluvial and primary deposits of gold with proven reserves in the schist belt covering the western half of Nigeria. At present exploitation of alluvial deposits is being carried out mostly by artisan miners in a few places in the country. A number of primary deposits, which are sufficiently big for large scale mechanised mining, have been identified in the northwest and southwest parts of the country. Private investors are invited to stake concessions on these primary deposits. It is interesting to note that the primary deposits are of relatively high grade and at shallow depth. Production costs will easily be as low as about $50 per ounce.
The occurrence of Bitumen deposits in Nigeria is indicated at about 42 billion tonnes almost as twice the amount of existing reserves of crude petroleum. When fully developed, the industry will no doubt meet local requirements for road construction and also become a foreign exchange earner for the country
The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hypochloric acid and hydrogen peroxide exceeds one million tonnes. A colossal amount of money is expended annually to import these chemicals by various companies including tanneries, food beverages, paper and pulp, bottling and other industries including the oil companies. There are salt springs at Awe (Plateau State), Abakaliki (Enugu State) and Uburu (Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tonnes has been indicated, and further investigations are now being carried out by government to ascertain the quantum of reserves.
Gypsum is an important imput for the production of cement. It is also used for the production of Plaster of Paris (P.O.P) and classroom chalk, etc. A strategy for large-scale mining of gypsum used in the cement industries is urgently required to sustain existing plants and meet future expansion. Current cement production is put at 8 million tonnes per annum while the national requirement is 9.6 million tonnes. About one billion tonnes of gypsum deposits are spread over many states in Nigeria
An estimated 10 million tonnes of lead/zinc veins are spread over eight States of Nigeria. Joint venture partners are encouraged to develop and exploit the various lead/zinc deposits all over the country:
These are the main constituents of the mud used in the drilling of all types of oil wells. The Nigerian baryte had specific gravity of about 4.3. Over 7.5 million tonnes of baryte have been identified in Taraba and Bauchi States. Large bentonite reserves of 700 million tonnes are available in many states of the Federation ready for massive development and exploitation.
Nigerian Coal is one of the most bituminous in the world owing to its low sulphur and ash content and therefore the most environment friendly There are nearly 3.00 billion tonnes of indicated reserves in 17 identified coalfields and over 600 million tonnes of proven reserves.
Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aquamarine, Emerald, Tourmaline, Topaz, Garnet, Amethyst; Zircon, and Flourspar which are among the world's best. Good prospects exist in this area for viable investments.
An estimated reserve of 3 billion tonnes of good Kaolinitic clays has been identified.
Large deposits of Tantalite are known to occur in Nasarawa, Gombe and Kogi States as well as the Federal Capital Territory. The deposits are both alluvial and primary in the numerous pegmatite bodies that infest these areas. Grades of well over 50% Ta205 are found. Private investors are invited to stake concessions for the development and exploitation of tantalite in these areas.
Given the large deposits of brown coal in the tertiary sediments east and west of River Niger; Nigeria can cash in on foreign investors' technology to produce coal pellets for industrial use, coal briquettes for domestic use; that is, to replace firewood.
Incentives and Strategies for Investment
There are two options available to a company or an individual to enter into the mining industry in Nigeria.
Through the acquisition of an existing mining property from the original owner. Approval must be obtained from the Ministry of Solid Minerals Development for such a purchase.
By obtaining on application, either a Prospecting Right (PR), an Exclusive Prospecting Licence (EPL), or a Special Exclusive Prospecting Licence (SEPL), the application should state financial and technical capability qualifying the applicant for entry into the mining sector.
Investment Opprtunities in The Power, Steel and Aluminium SectorsThese sectors come under the purview of the Federal Ministry of Power and Steel. The performance of these three sectors has been below expectation for reasons ranging from obsolete equipment to lack of funds. The injection of capital resources has been identified as necessary for the successful reversal of the fortunes of the sector. The individual sectoral requirements are discussed in the following paragraphs.
Government has concluded plans towards revitalization of installations of the National Electric Power Authority, NEPA to enable it meet its total installed capacity of 6000MW Sufficient funds are being injected for the rehabilitation of ageing plants and equipment. In order to allow full private sector participation in power generation, transmission and distribution, government has accepted to deregulate the sector by the year 2000. This will allow local and foreign investors to build, own and operate and/or transfer independent electricity: All laws that inhibit private sector participation in the power sector are being reviewed with a view to amending them and encouraging investment. This step will complement the de-consolidation of the industry as far as the state-owned NEPA is concerned. The hitherto largely over-centralised operations of this agency will be decentralised.
Guidelines and framework for Independent Power Producers (IPP's) are now being put together following the interests and applications already put forward by independent producers from all around the world.
Investment Opportunities exist for hydro-power generation in Mambilla Fall, Adamawa State and Agbokin fall in Cross-River State. NEPA will readily negotiate a Memorandum of Understanding (MOU) with any foreign. energy company to cover the following areas:
NEPA and the foreign company will then set up a joint committee for the purpose of achieving these objectives.
Plans by the Ministry to revitalise the Steel sector are underway. As a first step to reviving the sector, technical audit and cost estimate for completion of Ajaokuta Steel Project are being contemplated. The Ministry is also planning to rehabilitate the Delta Steel Company and three in-land Steel Rolling Mills in the country with a view to making them function effectively Staff training and development is also being given attention because local skilled manpower availability can motivate an investor into the industry. These efforts are aimed at putting the sector in a state of readiness for foreign investment.
In consonance with the nation's technical and economic co-operation policies for this sector, some areas of joint co-operation have been identified, and investors will be encouraged to invest in the sector. Discussions will centre on the joint venture commercial operation of the completed units of the Ajaokuta Steel Project. Investors will be encouraged in the following areas:
The Aluminium Smelter Company of Nigeria, ALSCON, is a joint venture project in which Nigeria owns 70% of the equity shares, while the remaining 30% is shared between AG Ferrostaal of Germany with 20% shares and Reynolds Inc. of US with 10% shares. The present administration is making efforts to ensure that the aluminium smelter plant is properly funded. It has given invitation to private investors to invest in the company and/or take part of Nigeria's 70% shares. The plant is one of the best and biggest in the world with the most modern technology: A number of countries have signed or are negotiating trade and economic cooperation agreements with Nigeria. Since the essence of these bilateral agreements is to foster unity: boost economic growth and technological co-operation, foreign investors should take advantage of existing bilateral ties and harken to the call to invest in the ALSCON project as in other projects in the power and steel sectors.
Investment Opportunities in Telecommunications Industry in NigeriaThe deregulation of the telecommunications sector in 1992 through Decree 75 was to allow for private sector participation in the sector and expand the nation's communication facilities. The Nigerian Communications Commission (NCC) was established consequently to regulate the performance of the sector. The liberalisation thrust was further strengthened by the Nigerian Communications Commission (Amendment) Decree No. 30 of 1998 which deleted those provisions in the first decree that inhibited competition in the sector thus enhancing the expected role of private sector enterprises.
The functions of Nigerian Communications Commission include:
The telecommunications industry in Nigeria is far from been developed. There is a dearth of infrastructural facilities and this has placed a constraint on the provision of services to existing and potential customers. There is therefore an urgent need to expand the infrastructures in this sector if it is to effectively play its role in the economic, social, political, cultural and in fact overall development of the Nigerian society and properly integrate it into the international community. Such desired expansion can no be achieved under the
present dispensation where the needed equipment are usually imported with the attendant problems of foreign exchange procurement, freighting cost, long delivery period etc. There is therefore no other realistic option than the local manufacture of these equipment and spares.
Local manufacture of switching and transmission equipment is required since no single company exists in Nigeria or even neighbouring countries for this purpose. Hence any company that goes into the venture will have its market beyond the frontiers of Nigeria.
In Nigeria, there are three companies engaged in the production of telecommunications cables using imported copper and other local resources like poly vinyl chloride materials for insulation. There is no company that is currently producing fibre optic cables in the country.
The copper cable producing Companies are producing only low pair capacity cables of 50, 100, 200 pairs. There is need for a plant that will produce high pair capacity cables that will enhance massive provision of lines to the teaming population.
With Nigeria's population that is over 108 million people, an installed telephone capacity of about 700,000 lines and a telephone penetration of 0.65 lines to 100 persons, it is abundantly clear that telephone service to the populace is grossly inadequate. Even with the Government introduction of competition in the sector and the subsequent licensing of Private Telecommunications Operators (PTOs), the market has not experienced any noticeable change. Although some of the PTO's have commenced operation for over two years, they have not been able to collectively introduce up to 100,000 telephone lines into the country's telecommunications network.
Hence, the sector is still a virgin land for investors wishing to provide and operate private network links employing cable, radio communications, data services, INTERNET Business and Satellite communication, Payphone services and Cellular radio phone services.
Apart from the absence of local manufacture of equipment and inadequate services, another major problem that has seriously affected the growth of the industry is insufficient financial resources. The industry is a capital intensive one and the banks in the country appear not to have strong financial muscle to handle massive investment in the sector. The industry has not also attracted individuals' co-operative initiatives probably as a result of the low level of income per capita in the economy. Hence joint venture partnership between foreign investors and Nigerians will be a veritable source of investment capital for the sector. At present there is no joint venture enterprise in the sector. The Nigeria Turkey joint venture for the local manufacture of telecomms equipment initiated over five years ago was not concluded as a result of the political climate during this period. It is hoped that with the return of democracy in Nigeria, negotiation will once more commence on the issue.
Transport Sector
Foreign Shipping Companies can engage in provision of Liner Services through joint sailing agreement with Nigerian shipping companies.
Which refers to movement of light vessels between the ports of a given country: Government encourages joint ventures in the ownership and operation of vessels which must be fully registered in Nigeria.
Opportunities abound for African Shipping companies and indeed all foreign shipping companies in joint venture with Nigerians to be involved in the lifting of Nigerian crude and take advantage of the acute shortage of bottoms to lift cargo generated by large volume of cargo for imports and exports.
Opportunities for companies to conduct surveys and map out areas of oil spill and pollution control.
Provision of equipment to meet various requirements.
Provision of training facilities for a large work force indirectly engaged in the Maritime Sub-Sector.
The Nigerian Railway System is on 3" - 6" (1067mm) gauge. Technically the Nigerian Railways System was based on the prevailing technology at its inception early in the century. There is need for modernisation and herein lies the opportunities for investment in this sub-sector. These include:
Conversion of Wagons bearings from the existing plain bearings to Roller
This is intended to upgrade brake efficiency from 66% to 80%.
The existing AB Coupler limits the length of loaded trains.
Modern maintenance system required on a scale consistent with the size and traffic on the Nigerian Railway network.
This will improve revenue collection.
Investment Procedures Within the Nigerian Export Processing Zones
- Payment of 10% deposit of the selling price of the standard factory building within 3 months of approval;
- Payment of the balance 90%, 5 months after;
- Down payment of one year rent required not exceeding 3 months after signing the rental contract. Thereafter, rental charges shall be paid in the first quarter of every year.
- Payment of 40% lease value on approval
- Payment of 30% at the end of the 5th year
- Payment of 30% balance at the end of the 10th year.
- Down payment of 40% on completion of factory building
- 30% at the end of the 5th year
- 30% at the end of the 10th year
Construction must be completed within a period of one year which can be extended for another 6 months.
A plan of the building shall be submitted to the Authority for approval. The land lease contract shall be signed within 2 months after allocation of land. The area occupied by such building shall be between 60% - 70% of the leased land and construction shall start within 3 months after signing the lease contract.
Privatisation Programme The programme of privatisation and commercialisation of state-owned enterprises emerged from many years of exhaustive discussions by stakeholders on how to put Nigerian economy on the path of sustainable growth and development. Since the inception of the programme, which was part of economic deregulation policies; successive governments have continued to emphasise their willingness to successfully conclude the programme.
The inuaguration by President Olusegun Obasanjo of the National Council on Privatisation in July; 1999 demonstrates the present administration's commitment to new institutional reforms necessary for the conclusion of the programme.
The enterprises to be privatised suffer fundamental problems such as: defective capital structure, excessive bureaucratic control or intervention, inappropriate technology; gross incompetence and mismanagement, blatant corruption and crippling complacency which monopoly often engenders. Inevitably these short comings take a heavy toll on the national economy: These are the compelling reasons to divest government of the burden of running these companies at a loss. Instead the private sector which can do the job better is now invited to acquire them.
The government has reviewed all aspects of the programme to ensure that privatisation yields the desired economic recovery benefits and enhances the social life of our people. A three-phase implementation process has now evolved.
(to be completed by December, 1999) include Commercial and Merchant Banks and Cement Plants that are already quoted on the Stock Exchange. Government will dispose of its equities because they are relatively easy to evaluate.
Privatisation of Hotels, and Motor and Vehicle Assembly Plants.
Privatisation of National Electricity Power Authority (NEPA), Nigeria Telecommunications Limited (NITEL), National Fertilizer Company of Nigeria (NAFCON), Nigerian Airways and Petroleum Refineries.To ensure transparency; the programme will involve:
Oil Marketing Companies
Cement Companies
Commercial Banks
Member/Secretary
National Council on PrivatisationSecretariat:
Bureau of Public Enterprises
Plot 447/448, Constitution Avenue
Central Business District,
P.M.B. 442, Garki, AbujaTel: 09-5237397, 5237400, 5237401
Fax: 09-5237396Email: bpe@micro.comm.ng
Investment Opportunities in The Tourism SectorThe Federal Government of Nigeria in its determined efforts to develop and promote tourism into an economically viable industry had in 1991 evolved a tourism policy: The main thrust of the policy is to make Nigeria a prominent tourism destination in Africa, generate foreign exchange, encourage even development, promote tourism-based rural enterprises, generate employment, accelerate rural-urban integration and foster socio-cultural unity among the various regions of the country through the promotion of domestic and international tourism. It also aims at encouraging active private sector participation in tourism development.
The following special investment potentials exist within the country: