P age |1

Corporate
Nigeria
Investing in
Nigeria: A Strategy
Guide
Group 3_Sec B
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |2

Acknowledgement
We would like to take this opportunity...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |3

Contents

1. Nigeria: Quick Glance……………………………………………04
...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |4

Nigeria: Quick Glance
Official Name:
Federal Republic ...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |5
Memberships in International Organizations
ACP (African...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |6

Nigeria: Country Profile
50 years of struggle begin to...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |7
President Jonathan assumed office on 6 May 2010
and pai...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |8
per year; the central region, beginning with the
Nigeri...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Pag e |9
although this has yet to be exploited on a
commercial s...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 10
(30,000 km) are paved, are in poor condition due
to...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 11

Nigeria: Geographical
Overview
Jewel of West Afric...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 12
Mountains, the Shebeshi Mountains, the Alantika
Mou...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 13
Oil and Gas, by value, are the most important
miner...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 14

Nigeria: Socio-Cultural
Overview
Nigeria Turns 50
...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 15
these differences in human conditions and hence
inv...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 16
The other constraints for business environment
face...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 17
rule under President Obasanjo, and following
Yar’Ad...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 18
independent regulator established in 1992, the
indu...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 19

Nigeria: Demography
Nigeria is the most populous c...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 20

Nigeria: Educational
Overview
Nigeria has made con...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
P a g e | 21
Statistics (a publication assisted by USAID among
o...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
governments establish and manage
secondary schools in Nigeria. A...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
and Matriculation Board (JAMB). Private
universities are far les...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
strong enough to sponsor their own study,
but also experientiall...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Observing the growing reputation, the
venture capitalists are co...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Nigeria: Political
Overview
Before the amalgamation of the Nort...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
avoided a potentially dangerous political
vacuum, instead seeing...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Under the privatization programme as
announced on July 20, 1998 ...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Nigeria: Legal
Framework
Company registration
Nigeria is essent...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

P a g e | 30

Value Added Tax (VAT)

Companies Income Tax (CIT)...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Tax Treaties
Nigeria has a number of tax treaties
referred to a...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Commission, the Central Bank of Nigeria and
the Corporate Affair...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Nigeria: Economic
Overview
Prior to 2008, the Oil rich Nigeria ...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Gross Domestic Product (PPP)
Gross Domestic Product (GDP) is th...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Macro-Economic Trend
Macro-economic policies are framed by the
...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

The Business Environment
For investors to invest in Nigeria, kn...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
The business environment for the investors
is becoming more cond...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Foreign Direct Investment:
Nigeria has made it into the top 20 ...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide
Nigerian economy, Investment Climate,
Legal and Regulatory Frame...
Corporate Nigeria- Investing in Nigeria: A Strategy Guide

Trade & Current Account
Nigeria recorded a Current Account surp...
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  1. 1. P age |1 Corporate Nigeria Investing in Nigeria: A Strategy Guide Group 3_Sec B
  2. 2. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |2 Acknowledgement We would like to take this opportunity to thank Prof. Aravindan for giving us such an interesting project to work on. This project has made us more aware of the opportunities and issues related to Nigeria and have impregnated us with a sense of awareness not only towards the immediate scenario but the entire trend in total. During the course of our research we came across certain areas related to the ups and downs of the Nigerian Economy and the potential implications. Our Project – “Corporate Nigeria- Investing in Nigeria: A Strategy Guide” strives to imply, focus and elaborate all possible aspects and issues related to Nigeria. Thanking You, Achintya PR Ankit Uttam Arun KS Manish Watharkar Nishigandha Pankaj Kumar Prashant Patro
  3. 3. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |3 Contents 1. Nigeria: Quick Glance……………………………………………04 2. Nigeria: Country Profile………………………………………..06 3. Nigeria: Geographic Overview………………………………11 4. Nigeria: Socio-cultural Overview…………………………..14 5. Nigeria: Demography……………………………………………19 6. Nigeria: Educational Overview……………………………...20 7. Nigeria: Political Overview…………………………………...26 8. Nigeria: Legal Framework…………………………………….29 9. Nigeria: Economic Overview…………………………………33 10. Nigeria: Industrial Overview…………………………………43 10. Nigeria: Special Investment Destinations………………70 11. Bibliography………………………………………………………...72
  4. 4. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |4 Nigeria: Quick Glance Official Name: Federal Republic of Nigeria Area: Approx. 923.800 sq km Conventional Short Form: Nigeria Population: 2012, approx. 166.2 million (annual growth rate of 7.46%) Capital and Seat of Government: Abuja (approx. 2.2m residents) Ethnic Groups: More than 250 Form of Government: Federal Republic. Presidential Democracy [“Fourth Republic”] was introduced in 1999 Religious Groups: Muslims (50%). Christians (40%), indigenous religions (10%) Head of state and Government President Goodluck Jonathan, Grand Commander of the Order of the Federal Republic (GCFR), President and Commander-InChief of the Armed Forces of the Federal Republic of Nigeria. New elections will be held in 2015. Languages: English (official), Hausa. Yoruba, Igbo, Fulani Currency Naira: NGN = 100 Kobo: 159.4 NGN = 1USD: 217.87 NGN = 1 EUR (Jan 2014)
  5. 5. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |5 Memberships in International Organizations ACP (African, Caribbean and Pacific States), AU (African Union), Commonwealth, ECOWAS (The Economic Community of West African States), FAO (Food and Agriculture Organization), G77, G15, G24, IAEA (International Atomic Energy Agency), IBRO (International Bank for Reconstruction and Development). ICAO (international Civil Aviation Organization), ICC, ICFTU (International Confederation of Free Trade Unions), IDA (International Development Association), IFAD (International Fund for Agricultural Development), IFC (International Finance Corporation), IFRCS (International Red Cross and Red Crescent Movement), IHO, ILO (International Labour Organization), IMP, IMO (International Maritime Organisation), Interpol, IOM (International Organization for Migration), IPU (Inter-Parliamentary Union), ITU (International Communication Union), MICA (Multilateral Investment Guarantee Agency), MINURSO, MONUC, OAS observer (Organization of American States), OIC (Organization of Islamic Conferences), ONUB, OPCW (Organisation for the Prohibition of Chemical Weapons), OPEC, UNCTAO, UNESCO, UNHCR, UNIDO, UNITAR, United Nations and Sub-Organizations (UNAMSIL), UNMEE, UNMIL, UNMIS, UNMOVIC, UNOCI, UPU (Universal Postal Union), WCO (World Customs Organization), WFTU (World Federation of Trade Unions), WHO, WIPO (World Intellectual Property Organization), WMO (World Meteorological Organization), World Bank, WTO. Major Media Outlets Press Champion, Comet, Daily Independent, Daily Sun, Daily Times, Daily Trust, Guardian, New Nigerian, News-watch, Punch, Tell, This Day, Vanguard, various daily papers, weekly magazines and political magazines. Television and Radio Africa Independent Television (AIT), Channels TV, Degue Broadcasting Network (DRN), GalaxyTV, Minaj TV, Nigerian Television Authority (NTA), Federal Radio Corporation of Nigeria (FRCN), Ray Power, Voice of Nigeria and Private Broadcasting. Macroeconomic Indicators for Nigeria GDP (Current USD billions) GDP Growth rate % GNI per capita (USD) Inflation rate % 2002 467 2.9 310 4.0 2003 58.3 11.2 360 2.1 2004 72.3 6.0 400 2.0 2005 97.0 5.9 520 6.2 2006 114.7 6.0 640 3.1 2007 165.7 6.1 930 5.7 2008 207.1 6.0 1170 11 2009 216.1 4.3 1273 11 2010 229.5 7.8 1306 15.6 2011 245.2 7.4 1347 13.2 2012 262.6 6.5 1431 12.2 (Source: World Bank)
  6. 6. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |6 Nigeria: Country Profile 50 years of struggle begin to bear fruit Nobody could have predicted that on 1 October, 1960 – when Nigeria declared independence – that half a century later the country would finally have a stable democracy, be taking the first steps towards weaning itself off its ruinous oil habit and be firmly on course towards becoming a global economic giant. The journey hasn’t been easy. There has been a civil war, military coups, religious conflict, huge levels of corruption and a sustained insurgency that has yet to be resolved. But, as the last fireworks fade from the sky and the country returns to the daily grind, Nigerians can look to the future with confidence, remembering the words of one of their most famous sons, Chinua Achebe: ‘The damage done in one year can sometimes take ten or twenty years to repair.’ It looks like those repairs are finally starting to be made. Proving that it is now a mature democracy, 2010 has seen Nigeria make the peaceful transition from Umaru Yar’Adua’s administration to that of former vice-president Goodluck Jonathan. After Yar’Adua’s life-threatening heart condition saw him make a withdrawal from public life in 2009, Jonathan was appointed by the Senate in February 2010 to serve as acting president, avoiding a potentially dangerous power vacuum. Despite predictions that he would make a recovery, Yar’Adua sadly died in May this year.
  7. 7. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |7 President Jonathan assumed office on 6 May 2010 and paid tribute to his predecessor, saying: ‘Nigeria has lost the jewel on its crown and even the heavens mourn with our nation tonight.’ Barack Obama and Nobel Laureate Wole Soyinka also marked Yar’Adua’s passing. President Jonathan has inherited a stable economy, with an oil sector slowly recovering after years of violence and increasingly vibrant agriculture and tourism sectors. Recent months have already seen him act quickly and decisively to remove the taint of corruption from Nigeria’s government, as well as appointing a cabinet with a combination of energy and experience. With a total area of 356,669 square miles, Nigeria is the world’s 32nd largest country, and the most populous country in Africa, with an estimated population of just over 149 million people. The country has a relatively high birth rate – just under two % (36.65 births per 1000 people) – and a fast growing economy to match. At the end of 2008, the country’s real GDP growth rate was 6.1 %, and in 2009, despite the global recession, the country had a positive estimated rate of three %, expected to rise to 4.4 % by 2010 year end, and to 5.5 % by 2011. Partly due to the 2009 crisis in its banks, which dried up lending, the country currently has an inflation rate of about 11 %. But the naira, which has remained stable at between 149 to the dollar and 153 over the past year, is expected to act as a brake to stop inflation pushing higher. Nigeria’s GDP is estimated at USD357.2 billion purchasing power parity (PPP – or USD167.4 billion official exchange rate) putting it at 32nd place in a global table of purchasing power parity – above many European nations and the third highest of the African nations, after South Africa and Egypt. Not only that, the country is in Goldman Sachs’ ‘Next Eleven’ list – countries identified as having a high potential of becoming the world's largest economies in the 21st century, good news for the country’s hopes of being among the world's leading 20 economies by 2020. Population and Geography Containing over 250 ethnic groups, Nigeria has an abundance of diverse cultures, from the Hausa in the north to the Yoruba in the southwest and Igbo and Edo in the southeast. The Muslim Hausa, the most numerous group, have become integrated with town-dwelling Fulani. Rural Fulani, mostly cattle herders, remain more separate and speak Fula rather than Hausa. There are several other major ethnic groups in the north too – the Nupe, Tiv and Kanuri. In the south, a quarter of the Yoruba are Muslim, half are Christian and the remainder follow indigenous beliefs, although there is no clear division between these two belief systems. The Igbo (or Ibo) are mostly Christian, as are other ethnic groups in the southeast, such as the Ijaw – the fourth largest Nigerian ethnic group – Efik, Ibibio, and Annang. Again, indigenous beliefs play a substantive role in their interpretation of Christianity. Most Nigerian Muslims follow the Sunni sect, while Roman Catholicism and established Protestantism are the two most popular forms of Christianity. However, breakaway sects incorporating more traditional beliefs are gaining followers. Of the estimated 521 languages spoken in the country, apart from English, the most commonly spoken are Hausa, Yoruba and Igbo, with Kanuri popular in the northeast. In order of size, Nigeria’s major cities are Lagos (approx. 20 million inhabitants), Kano (3.6 million), Ibadan (3.5 million), Kaduna (1.6 million) and Port Harcourt (1.1 million). Abuja, the capital, has a metropolitan population of 780,000. The country’s topography is effectively divided into three zones: the far north, the sahel to the edge of the Sahara, consists of arid semidesert with less than 508 mm (20 inches) of rain
  8. 8. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |8 per year; the central region, beginning with the Nigerian Sudan, consists of savannah – grassy plains with patchy tree cover and a rainfall of between 508 and 1524 mm (20 to 60 inches) per year, becoming more humid in the centre of the country; the far south has a tropical rainforest climate, with 1524 to 2032 mm (60 to 80 inches) of rainfall. In the southern region, heading south, the rainforest gives way to freshwater swamp and then finally to mangroves and the coast – Nigeria has a coastline of approximately 500 miles (800 km). Beyond that, the country’s territorial waters extend 12 nautical miles out to sea, complemented by an exclusive economic zone that stretches 200 nautical miles offshore. Of Nigeria’s three regions, the south is the most extensively developed, containing all of the country’s major industrial centers, as well as its oil fields and seaports. Traditionally, the north of Nigeria has had closer contacts with its north African neighbors across the Sahara than the rest of Nigeria, although this is changing as the internal transport infrastructure improves. The far north has two areas of dense population, in the Sokoto and Kano-Katsina areas. Due to its climate and soil quality, Nigeria’s vast central area is the least developed of the three regions, although there are a few small densely populated areas in the southern Tiv areas and the tin fields of the Jos plateau. Nigeria’s most notable geographic feature is the valley of the Niger and Benue rivers, which meet in the centre of the country, forming a Y shape. Other features include the Jos plateau rising up from central Nigeria, with its expanse of lava surfaces and countless extinct volcanoes. The plateau covers about 8000 sq km (3000 sq miles) and has an average elevation of 1280 m (4200 ft). The home to the country’s tin industry’s highest point is Shere hill (1780 meters/5800 feet). The most mountainous part of Nigeria is the Cameroon highlands, along the southeastern border with Cameroon, with the two highest points in the country: Chappal Waddi (2419 metres/7936 feet) in the Gotel Mountains and Mount Dimlang (2042 metres/6699 feet) in the Shebshi Mountains. Economy – Main Sectors Nigeria’s major export partners, chiefly for oil and gas but also for cocoa and rubber are the US (41.4%), India (10.4%), Brazil (9.4%), Spain (7.2 %) and France (4.6%) Major import partners, for commodities such as machinery, chemicals, manufactured goods, food and live animals are China (13.8 %, Netherlands (9.6 %), US (8.4 %), UK (5.3 %), South Korea (5.2 %) and France (4.3 %). Although Nigeria is most well known for its oil and gas wealth, it is rich in many other resources too. The country possesses significant coal reserves, tin and columbite in the Jos plateau, extensive iron ore deposits in Lokoja and Kwara state, as well as limestone in many regions. Other resources include niobium, lead, zinc, kaolin, gold, topazes, sapphires, aquamarines and rock salt. The northeastern region contains uranium,
  9. 9. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Pag e |9 although this has yet to be exploited on a commercial scale. agriculture will be increasingly important to Nigeria. Oil and gas exports are still hugely important to the Nigerian economy, accounting for 90 % of foreign exchange earnings and about 80 % of budgetary revenues. The country is a member of the Organization of Petroleum Exporting Countries (OPEC). By mid 2010, oil production in Nigeria was estimated at 2.3 million barrels per day, thanks to a successful peace deal with the Niger Delta rebels, originally brokered by former president Yar’Adua. In contrast, before the ceasefire, 2009 production figures had been estimated as low as 800,000 barrels. Timi Aliabe, Special Adviser to Goodluck Jonathan on Niger Delta Affairs, estimates that production will rise to five million barrels once a retraining programme for ex-militants in the Niger Delta – who are also key stakeholders in the region – gets under way. Nigeria has a thriving communications sector – the fastest growing in Africa and eighth fastest in the world. Mobile and fixed line subscriptions combined are estimated to have had a 125 % annual growth rate since 2000. The sector is becoming highly attractive to foreign investors, with USD11.5 billion invested in 2007, a 41.1 % increase on the previous year. By April 2010, there were 56.32 million active lines in Nigeria – Africa’s highest tele-density at over 40 %. Even though only 20 % of the country, mainly urban areas, has mobile coverage, this is enough to provide for a number of highly competitive mobile networks. Attempts are being made, through the Wire Nigeria (WiN) project and State Accelerated Broadband Initiative (SABI) to roll out broadband access across the country. At the close of 2007 there were 117 internet service providers in Nigeria, with an estimated 6.75 users per 100 inhabitants. As well as a vast quantity of daily, Sunday and weekly newspapers and several privately owned television and radio stations, the state-owned Nigerian Television Authority runs a network of television stations throughout Nigeria. Publicly-funded radio broadcaster the Federal Radio Corporation has 25 stations across the country, claimed to be the largest radio network in Africa. The Nigerian film industry, known as Nollywood, is the second largest in the world, producing at least 200 videos a month. One 2008 estimate put its worth at at least USD250 million, although some insiders valued it as highly as USD2.3 billion. Despite oil production falling by 8.2 % in 2008, the National Bureau of Statistics and OECD have estimated that the oil and gas sector constituted 32.3 % of GDP by the end of 2009 – but provided about 80 % of government revenue. It is estimated that the country has 36 billion barrels of oil, with vast natural gas reserves of over 5.215 trillion cubic meters (well over 100 trillion cubic feet). The agriculture sector – long neglected in favor of oil – is slightly larger, contributing 36.5 % of GDP in 2009, thanks to a good harvest. The sector, which accounts for about two thirds of the nation’s employment, grew by 7.4 % in 2008, slightly below the 2007 figure. Notable agricultural products include palm oil, cocoa and groundnuts. Significant crops are sugar cane, yams, cassava, taro, pearl millet, citrus fruits, sorghum, cowpeas and maize. The neglect of this sector has lead to Nigeria needing to import food, as production fails to keep up with urban growth. Given the continuing problems in the troubled oil sector and new biofuels potential, it seems likely
  10. 10. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 10 (30,000 km) are paved, are in poor condition due to a combination of heavy traffic and substandard maintenance. Public private partnerships in many states are finally seeing some much-needed repairs to the road network, and developments of roads such as the Lagos-Ibadan expressway. The country also has 5,300 miles (8,600 km) of waterways, and there is a programme underway to revitalize major ports including Bonny, Calabar, Koko, Port Harcourt and Sapele, in partnership with the private sector. The two biggest airports are Abuja International and Lagos Murtala Muhammed – also being expanded through a public private partnership – although there are almost 70 smaller ones. Infrastructure In 2006, after protracted negotiations, Nigeria became the first African country to completely pay off its Paris Club group of debtors – an estimated USD30 billion. Since 2008, the country has been developing a Medium Term Sector Strategy for growth for the years 2009-11, as a means of more clearly co-coordinating the government’s medium-term goals. Former president Yar’Adua identified seven key sectors as part of his Seven Point Agenda as a means of diversifying away from oil. Notably, these include transport, power generation, education, reducing corruption and combating insurgency in the Niger delta. President Jonathan has emphasized the need to continue developing these areas, in particular power generation, education and eliminating corruption. This agenda broadly correlates with the National Economic Empowerment and Development Strategy (NEEDS) and Vision 2020 plan as a means of putting Nigeria in the world's leading 20 economies by 2020. The three strategies aim to stimulate GDP growth, reduce poverty, ensure a stable economy and generate employment. However, many of the 120,000 miles (193,000 km) of roads, of which less than 19,000 miles Plans are also in progress to privatise Nigeria’s railway network, with 30-year concessions granted to private companies. The government aims to reopen rail links between Nigeria’s seaports and inland container depots as a means of reducing pressure on the roads and finish the 11.8 mile (19 km) long Ajaokuta-Itakpe-Warri standard gauge line. There are also about 2,200 miles (3,505 km) of narrow gauge railways in Nigeria, although these are unsuitable for heavy freight. Disruptions to gas supplies and a drop in reservoir water levels adversely affected the country’s power generating capabilities in 2008. Power outages are having a knock-on effect on the manufacturing sector. However, the government has launched an ambitious USD4060 billion plan over the next six years to address this, in conjunction with the private sector, as well as performing emergency repairs in the short term. Although these are big problems, they aren’t insurmountable. President Jonathan’s administration has identified Nigeria’s weak spots. It is also ensuring that actions are taken so that the country can take its place at the table with the 20 other leading economies in 2020.
  11. 11. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 11 Nigeria: Geographical Overview Jewel of West Africa Nigeria is situated in the West African region and lies between longitudes 3 degrees and 14 degrees and latitudes 4 degrees and 14 degrees. It has a land mass of 923,768 sq.km. It is bordered to the north by the Republics of Niger and Tchad; it shares borders to the west with the Republic of Benin, while the Republic of Cameroun shares the eastern borders right down to the shores of the Atlantic Ocean which forms the southern limits of Nigerian Territory. The 800km of coastline confers on the country the potentials of a maritime power. Land is in abundance in Nigeria for agricultural, industrial and commercial activities. At its widest, Nigeria measures about 1,200 km from east to west and about 1,050 km from north to south. The country's topography ranges from lowlands along the coast and in the lower Niger Valley to high plateaus in the north and mountains along the eastern border. Much of the country is laced with productive rivers. Nigeria's ecology varies from tropical forest in the south to dry savanna in the far north, yielding a diverse mix of plant and animal life. The broad, mostly level valleys of the Niger and Benue rivers form Nigeria's largest physical region. The Niger enters the country from the northwest, the Benue from the northeast; the two rivers join in Lokoja in the south central region and continue south, where they empty into the Atlantic at the Niger Delta. Together, they form the shape of a Y. Population densities and agricultural development are generally lower in the Niger and Benue valleys than in other areas. North of the Niger Valley are the high plains of Hausaland, an area of relatively level topography averaging about 800 m above sea level, with isolated granite outcroppings. The Jos Plateau, located close to Nigeria's geographic center, rises steeply above the surrounding plains to an average elevation of about 1,300 m. To the northeast, the plains of Hausaland grade into the basin of Lake Chad; the area is characterized by somewhat lower elevations, level terrain, and sandy soils. To the northwest, the high plains descend into the Sokoto lowland. Southwest of the Niger Valley (on the left side of the Y) lies the comparatively rugged terrain of the Yoruba highlands. Between the highlands and the ocean runs a coastal plain averaging 80 km in width from the border of Benin to the Niger Delta. The delta, which lies at the base of the Y and separates the southwestern coast from the southeastern coast, is 36,000 sq km of low-lying, swampy terrain and multiple channels through which the waters of the great river empty into the ocean. Several of the delta's channels and some of the inshore lagoons can be navigated. Southeastern coastal Nigeria (to the right of the Y) consists of low sedimentary plains that are essentially an extension of the southwestern coastal plains. In all, the Atlantic coastline extends for 850 km. It is marked by a series of sandbars, backed by lagoons of brackish water that support the growth of mangroves. Large parts of Africa's Bight of Benin and Bight of Biafra fall along the coast. Because of the Guinea Current, which transports and deposits large amounts of sand, the coastline is quite straight and has few good natural harbors. The harbors that do exist must be constantly dredged to remove deposited sand. Inland from the southeastern coast are progressively higher regions. In some areas, such as the Udi Hills northwest of Enugu, escarpments have been formed by dipping rock strata. Farther east, along Nigeria's border with Cameroon, lie the eastern highlands, made of several distinct ranges and plateaus, including the Mandara
  12. 12. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 12 Mountains, the Shebeshi Mountains, the Alantika Mountains, and the Mambila Mountains. In the Shebeshi is Dimlang (Vogel Peak), which at 2,042 m is Nigeria's highest point. rivers that merge into the Yobe River, which then flows along the border with Niger and empties into Lake Chad. Climate Land Boundaries Nigeria shares borders with Cameroon (1,690 kilometers) in the east, Niger (1,497 kilometers) in the north, Benin (773 kilometers) in the west, and Chad (87 kilometers) in the northeast. Disputed Territory Nigeria and Cameroon have held bilateral meetings to resolve disputes concerning the two countries’ shared land and maritime boundary. Nigeria has not fulfilled its pledge to cede the Bakasi Peninsula, which juts into the Gulf of Guinea, to Cameroon, despite the International Court of Justice’s ruling in favor of Cameroon in 2002. Length of Coastline Nigeria’s coastline along the Gulf of Guinea totals 853 kilometers. Maritime Claims Nigeria claims a territorial sea of 12 nautical miles, an exclusive economic zone of 200 nautical miles, and a continental shelf to a depth of 200 meters or to the depth of exploitation. Topography Nigeria has five major geographic regions: a low coastal zone along the Gulf of Guinea; hills and low plateaus north of the coastal zone; the NigerBenue river valley; a broad stepped plateau stretching to the northern border that has elevations exceeding 1,200 meters; and a mountainous zone along the eastern border, which includes the country’s highest point, Chappal Waddi (2,419 meters). Principal Rivers Nigeria has two principal river systems: the Niger-Benue and the Chad. The Niger River, the largest in West Africa, flows 4,000 kilometers from Guinea through Mali, Niger, Benin, and Nigeria before emptying into the Gulf of Guinea. The Benue, the Niger’s largest tributary, flows 1,400 kilometers from Cameroon into Nigeria, where it empties into the Niger River. The country’s other river system involves various Temperatures across the country are relatively high with a very narrow variation in seasonal and diurnal ranges (22-36t). There are two basic seasons; wet season which lasts from April to October; and the dry season which lasts from November till March. The dry season commences with Harmattan, a dry chilly spell that lasts till February and is associated with lower temperatures, a dusty and hazy atmosphere brought about by the North-Easterly winds blowing from the Arabian peninsula across the Sahara; the second half of the dry season, February - March, is the hottest period of the year when temperatures range from 33 to 38 degrees centigrade. The extremes of the wet season are felt on the southeastern coast where annual rainfall might reach a high of 330cm; while the extremes of the dry season, in aridity and high temperatures, are felt in the north third of the country. Vegetation In line with the rainfall distribution, a wetter south and a drier northern half, there are two broad vegetation types: Forests and Savanna. There are three variants of each, running as near parallel bands east to west across the country. Forests Savanna Saline water swamp Guinea Savanna Fresh water swamp Sudan Savanna Tropical (high) evergreen Sahel Savanna Rainforest.
  13. 13. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 13 Oil and Gas, by value, are the most important minerals. They are exploited and produced in the Niger Delta basin and off-shore on the continental shelf and in the deep-sea of the territorial waters. Nevertheless, there are significant non-oil mineral deposits on land many of which have been identified and evaluated: coal, iron ore, gypsum, kaolin, phosphates, lime -stone, marble, columbine, baryte and gold. There is also the mountain vegetation of the isolated high plateau regions on the far eastern extremes of the country (Jos, Mambilla, Obudu). The savanna, especially Guinea and Sudan, are the major grains, grasses, tubers, vegetable and cotton growing regions. The Tropical evergreen rain forest belt bears timber production and forest development, production of cassava; and plantation growing of fruit trees - citrus, oil palm, cocoa, and rubber, among others. Resources: Agricultural, Mineral and Marine Nigeria, in addition to its huge population is endowed with significant agricultural, mineral, marine and forest resources. Its multiple vegetation zones, plentiful rain, surface water and underground water resources and moderate climatic extremes, allow for production of diverse food and cash crops. Over 60 per cent of the population is involved in the production of the food crops such as cassava, maize, rice, yams, various beans and legumes, soya, sorghum, ginger, onions, tomatoes, melons and vegetable. The main cash crops are cocoa, cotton, groundnuts, oil palm and rubber. Extractions from these for export and local industrial use include cocoa flour and butter, rubber crumb, vegetable oil, cotton fibre and yarn. The rain forests have been well exploited for timber and wood products of exotic and popular species.
  14. 14. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 14 Nigeria: Socio-Cultural Overview Nigeria Turns 50 October 1, 2010 will be a day of celebration for Nigeria: a historic milestone marking 50 years of independence, five decades of progress, a half century spent traveling the difficult road from a socially fractious colonial outpost to a strong, united and prosperous nation. Nigeria gained independence from Britain in 1960, but the country itself was formed in 1914 when the British government amalgamated three of its colonial territories: Lagos, which it annexed in 1861; the Southern Provinces, over which it established rule between 1885 and 1894; and the Northern Protectorate, which it controlled by 1903. Until 1914, the three were governed by Britain as separate but related territories. Between 1922 and the constitution signed into law in 1947, a policy of regional representation saw increased local involvement in the government of the country. The constitution of 1954 created regional governments, and the first federal elections took place in 1959. It was not until 1963 that Nigeria – which for three years had existed as a British dominion – broke all ties with its former colonial master and established itself as a republic within the Commonwealth. Population and Geography Home to a population of around 150 million people, Nigeria is the most-populous country in Africa and one of the world's fastest growing countries, with population growth estimated at a rate of just over 2.3% a year. The Nigerian people are a diverse mix of more than 250 ethnic groups, which can be roughly divided into 50% Muslim, 40% Christian and 10% who hold traditional indigenous beliefs. The official language is English, although 478 other languages are spoken across the country. Nigeria has a total land area of 923'000 sq km, a coastline of 853 km and territorial waters that extend 12 nautical miles out to sea. It is situated on the west coast of Africa, bordered by the Atlantic Ocean in the south and Niger and Chad on the north. Benin lies to the west, while Cameroon represents the eastern border. The capital city, Abuja, is in the centre of the country and has a population of 3m, while Lagos, to the south-west, is twice its size and has an estimated population of 18m. The country's terrain varies considerably, with lowlands in the south, hills and plateaus in the central region and plains in the north. Coastal swamps and tropical forests dominate the southern terrain, while the north is mostly savannah and semi-desert. A Rich Cultural Diversity With over 250 ethnic groups and a variety of languages spoken, it’s little surprise that Nigeria’s culture is so diverse. The country is internationally famous for its writers and musicians, with notable artists including writer Chinua Achebe, juju musician King Sunny Ade, afrobeat musician Fela Kuti, Nigerian gospel singer Onyeka Onwenu, writer Ben Okri, playwright Ken Saro-Wiwa, Nobel prize winning writer Wole Soyinka, actor Nkem Owoh, director Chico Ejiro and British/ Nigerian artist Yinka Shonibare. The Hausa and Fulani, Yoruba and Igbo make up the three major ethnic groups in Nigeria. Both Hausa and Fulani come from the Muslim north. The Yoruba, who come from southwestern Nigeria, are mostly farmers, and practice both Islam and Christianity. The Igbo of the southeast are usually Christian. There is a notable overlap between organised religion and traditional indigenous beliefs – it is common for Muslims and Christians to also observe some degree of indigenous practices. Smaller groups include the Ibibio, the Edo, the Tiv and the Nupe. Thus, some of the cultural factors that have been documented by studies which accounted for
  15. 15. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 15 these differences in human conditions and hence investor scepticism are discussed below. The “Commanding Heights” Philosophy This involves state ownership of all major industries, state mobilization, direction of investment resources, and state planning. This policy implies that the state is found in every sector of the economy, private sector initiative is restricted while foreign investors see the economy as an unpredictable economy. Under successive military governments in Nigeria much power was concentrated in the Federal Government, this largely prevented free market competition and the emergence of a viable private sector that could accelerate economic development. Though, with the advent of genuine democratic governance, the Nigerian government is said to have considered the privatization of public enterprises as an alternative option to getting rid of economic recession, price fluctuation and technological backwardness. Military Rule The emergence of the military on Nigerian political scene for twenty-nine years prevented foreign investment because military authoritarianism was not conducive for the rule of law which used to be grounds for smooth capitalist business. Thus, for almost three decades of military rule in Nigeria, the business environment suffered many setbacks, this was because the draconian government removed professionalism in economic planning and replaced it with mediocrity. Thus, the growth of military regimented lifestyles consequently facilitated the growth of statist culture, corruption and authoritarianism. As a vicious circle, authoritarian government built hostile environment and prevented foreign investment, while many domestic industries were closed down under the aegis of bad economic policy and inflation. Under the regimes of Gen. Ibrahim Babangida and late Sanni Abacha, Nigeria's economic development reached its stalemate. While the former regime introduced SAP that compounded the economic conditions of Nigerians, the later perpetuated a lot of human rights abuse, which subsequently earned Nigeria sanctions from top capitalist nations like the United States and the United Kingdom. Though, the military has been disengaged from Nigerian politics since May 1999, political analysts opined that majority of ex-military leaders are still in the corridors of power. Entrepreneurial Achievement While the Nigerian state cannot but accept the blames being passed on it, it should be noted that many of its citizens lack the will and the achievement personality style to aid development. Experiences in contemporary Nigerian society have shown that most Nigerians lack achievement motivation, and often prefer to engage in activities that are less stressful and less tasking. Much of their labour power is devoted to earning illegal profits. Although, government has recently embarked on activities that will increase public awareness on the importance of entrepreneurship for economic growth in a depressed economy, like that of Nigeria; there are still many people in the country, who are yet to understand the need for them to be self reliant through entrepreneurship. The Culture of Violence as a Threat to Capitalist Development Whether in government enterprises, private sector businesses or international trades, many social scientists who have written extensively on the Neo-liberal economic agenda have argued that violence an impedes development. Violence creates hostile environment for economic growth and also creates fear in business people. A violent environment can never be conducive for peaceful trade negotiation. From the Nigeria Civil War of 1967-1970 to several religious clashes in the North, ethnic clashes in the South, insurgence of Niger Delta crisis and Political and Sectanan clashes in the North. Adams (2000) commented that violent political, ethnic and religious clashes are evidences of the failure of the Nigerian state.
  16. 16. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 16 The other constraints for business environment faced by the firms are as shown in the graph below. But now, the Federal Government has implemented the following reforms to overcome these constraints and attract investors from outside. situation continued to deteriorate until, in 1966, a group of mostly Igbo army officers launched the country's first military coup. Nigerian Media National state-run television and radio broadcasting is complemented by state-run radio and television stations. Radio remains the key source of information for Nigerians, as television viewing and internet usage tends to be concentrated in the affluent population centers in the cities. There are also more than 100 national and local newspapers and periodical publications. From Independence to Civilian Democracy The early years of Nigeria's independence were difficult. The regional structure laid out in the 1960 constitution created internal conflicts, with neighboring regions vying for greater control of the federal government. Violence and vote rigging marred the 1964 federal elections, and the In the years that followed, Nigeria lurched from one military ruler to the next. There were three abortive attempts at democratic elections and the formation of a republic – one of which was instigated in 1979 by General Olusegun Obasanjo, the then military head of state who would lead the country after its return to civilian democracy 20 years later. Despite the efforts of progressive political thinkers, military rule continued, largely uninterrupted, throughout the 1980s and 90s. But out of all this internal strife, Nigeria has been reborn. The return to civilian democracy in 1999 has ushered in a programme of political, economic and social reforms that is now bearing fruit. In 2007, the first civilian handover of power in the country's history took place, with President Umaru Yar'Adua taking office after eight years of
  17. 17. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 17 rule under President Obasanjo, and following Yar’Adua’s sad death in 2010, a second civilian transfer was carried out, to President Goodluck Jonathan. A Vast Potential, Ready to be realized The administration of President Jonathan has a golden opportunity to continue the drive towards foreign direct investment to spur the drive towards an industrialized mining sector. Proven reserves of tin, coal, iron ore, copper, lead and zinc have been surveyed with a view to mechanized extraction. There are also significant gemstone reserves, including sapphire, ruby, aquamarine, emerald, tourmaline, topaz, garnet, amethyst, zircon, and fluorspar. The simplification of the process for securing mining rights has boosted international interest and confidence in the sector. As well as the large under-exploited quantities of solid minerals, Nigeria also offers plentiful opportunities for commercial farming. The sector, while underdeveloped, currently produces a range of agricultural produce, such as cocoa, peanuts, palm oil, corn, rice, cassava and yams. The north of the country also supports livestock farming. Banking Reform prosperity that started more than ten years ago. A focused policy of privatization, deregulation and liberalization has opened the door to investment in Nigeria, and the world's leading economies have started to pay close attention to this jewel of the West African coast. Nigeria is endowed with vast natural resources. While the oil industry has dominated the economy for decades – with output of around 2 million barrels a day in 2010 – the administration is determined to implement a policy of diverse exploitation of the country's other natural resources. The Ministry of Mines and Steel Development is currently overseeing the exploration and promotion of Nigeria's solid mineral resources, and is actively encouraging The radical reform of the banking sector started in earnest in 2004 and was overseen by the Central Bank of Nigeria. It led to the consolidation of Nigeria’s banks, and strengthened the sector against future shocks. Like the rest of the world, Nigeria’s banking sector had to come to terms with the challenges posed by the global financial crisis. But a bank bail-out in 2009 followed by decisive action by the strong Central Bank of Nigeria to audit and evaluate banks and CEOs has renewed confidence in the sector and put the country’s banks on a proper footing for sustained growth. There exists a banking infrastructure that complements the vast opportunities on offer to investors in Nigeria, and with confidence in the sector growing, Nigeria can be considered well and truly open for business. Telecoms Goes from Strength to Strength The Nigerian telecoms sector is one of the country's major success stories. Governed by the Nigerian Communications Commission (NCC), an
  18. 18. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 18 independent regulator established in 1992, the industry has thrived following increased investment. This revolution of the industry was largely sparked by the entry of mobile operators into the market in 2001. The NCC listed tele-density in April 2010 at 56.3% – representing almost 79m subscribers – compared to 29.98% in December 2007. The farreaching reforms instigated by the NCC have lead to hundreds of companies offering a variety of telecom and value-added services, and the market value of the sector is projected to hit USD10 billion in 2010. Although foreign direct investment has flowed into the industry since 2001, it is estimated that a further USD25 billion will need to be secured if 100% teledensity is to be achieved by 2020, in line with Nigeria's Vision 2020. A similar explosion in Internet access and usage has also taken place, with the most recent reliable estimates showing almost 24 million Nigerians using the Internet. Although this means the proportion of population with Internet access is relatively low, the NCC has launched a number of programmes to extend Internet connectivity to as many users as possible. The State Accelerated Broadband Initiative (SABI) offers incentives to the private sector to build and operate broadband infrastructure in state capitals and major commercial centers, while the Rural Broadband Internet Access (RUBI) scheme encourages providers to extend connectivity to rural areas. A Commitment to Tackling Corruption As part of his inaugural speech in 2007, President Yar'Adua laid out his commitment to tackling the issue of corruption, which in the past had plagued all levels of government in Nigeria, and his successor, President Jonathan, has vowed to continue his work. As well as the negative impact that government-level corruption had on the day-to-day lives of ordinary citizens, it also had severe consequences for the level of foreign direct investments the country could attract. A combination of the work carried out by both the Economic and Financial Crimes Commission and the Attorney General's office, including several high-profile investigations into the activities of former state governors, has helped to instill the idea that corruption will not be tolerated in – and is incompatible with – a vibrant, prosperous Nigeria. Looking to the Future It cannot be denied that the last 50 years for Nigeria have sometimes been difficult. Furthermore, it is clear that there are still significant challenges ahead. The country's infrastructure requires immediate attention if it is to support the growing economy; the country's resources must be carefully managed and exploited in a way that will benefit the population as a whole; and the relative peace in the Niger Delta must be maintained if the country is to remain stable. But as the country reaches a halfcentury of independence, there exists the will and the opportunity for Nigeria to meet these challenges and take the next step forward in its history – to realize its vast potential and step into the limelight as a strong, secure and open global economy.
  19. 19. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 19 Nigeria: Demography Nigeria is the most populous country in Africa and 2nd economic power in the continent. It consists of 36 federal states which has more than 700 local governments. The economy is mainly driven by oil production. The population of Nigeria is 174,507,539 (July 2013 est.) estimates for this country explicitly take into account the effects of excess mortality due to AIDS; this can result in lower life expectancy, higher infant mortality, higher death rates, lower population growth rates, and changes in the distribution of population by age and sex than would otherwise be expected. The age wise distribution is as follows Age (years) 0-14 15-24 25-54 55-64 Above 65 Population (%) 48.3 19.3 30.1 3.8 3 Male (in Mns) 39.12 17.20 25.84 3.01 2.39 Female (in Mns) 37.33 16.45 26.69 3.60 2.84 Total dependency ratio of Nigeria is around 89%. Again the youth dependency ratio is 83.8%, elderly dependency ratio is 5.2% and potential support ratio is 19.3%. The Median age of total population is 17.9 years. Males have median age 17.4 years, whereas for female it is 18.4 years The Population Growth rate for the year 2013 is 2.54%. The birth rate is 38.78 and death rate is 13.2. The overall migration rate has a negative trend which is -0.22. The 49.6% population resides in urban and it is growing at a rate of 3.75%. The most populous cities are Lagos (10.203 million); Kano (3.304 million); Ibadan (2.762 million); Abuja (1.857 million); Kaduna (1.519 million). The overall sex ratio is 943.33. The life expectancy of entire population is 52.46 years. Males have a life expectancy of 49.35 years, whereas female have slightly higher life expectancy of 55.77 years. The total literacy rate is 61.3% which includes male literacy rate 72.1% and Female literacy rate is 50.4%. Total health expenditure for the year 2011 was 5.3% of GDP. Nigeria is the most populous country in Africa, the second biggest economy, the third largest military power and the biggest oil producer (10th oil producer in the world). Its seven most populous cities each house more than one million people, and about one out of two West Africans is from Nigeria. Since its return to democracy in 1999, Nigeria has enjoyed 13 years of uninterrupted democratic rule. However, security concerns are on the rise, in particular since the emergence of the radical Islamist sect Boko Haram which has killed more than 1 000 people since 2009. Moreover, Movement for the Emancipation of the Niger Delta (MEND) militants have abandoned a three-year-old ceasefire. The successful political transition from a northern to a southern leader in April 2011 proved that “a Nigerian, irrespective of where he or she comes from, who is popular with Nigerians generally has a good chance of winning the presidency” (Ambassador Bristol). North-South antagonism will continue to play a visible role in Nigerian politics. It is ranked 156th out of 187 countries in Human Development Index. (Sourece: Federal Ministry of HRD, Nigeria)
  20. 20. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 20 Nigeria: Educational Overview Nigeria has made considerable progress in the domain of education. The education system in the country is supervised by the state. There are 27 federal and state-owned polytechnics in Nigeria. Nigeria is making a steady progress in the development of education. Many universities and schools have been established by the state. Primary education in Nigeria is in the native language but brings in English in the third year. Higher Education has developed considerably over the years, which has resulted in a healthy literacy rate. Education in Nigeria is managed by the state. Nigeria operates on a 9-3-4 system, i.e. primary & Junior Secondary School continues for 9 years, Senior Secondary for 3 years and University first degree is for 4 years. Nigeria currently has 36 states with a Federal Capital Territory and a population of over 150 million people. Of this population, approximately 30 million are students. English is the only language used in schools, for reading, writing and speaking. Education in Nigeria is the shared responsibility of the federal, state and local governments. The Federal Ministry of Education plays a dominant role in regulating the education sector, engaging in policy formation and ensuring quality control. However, the federal government is more directly involved with tertiary education than it is with school education, which is largely the responsibility of state (secondary) and local (primary) governments. The education sector is divided into three sub-sectors: basic (nine years), post-basic/senior secondary (three years), and tertiary (four to seven years, depending on the major or course of study). Education in Nigeria is provided by public and private institutions. According to Nigeria’s National Policy on Education (2004), basic education covers education given to children 3-15 years of age, which includes pre-primary programs (ages three to five), and nine years of formal (compulsory) schooling consisting of six years of primary and three years of junior secondary. Post-basic education includes three years of senior secondary education in either an academic or technical stream. Continuing education options are provided through vocational and technical schools. The tertiary sector consists of a university sector and a non-university sector. The latter is composed of polytechnics, mono-technics and colleges of education. The tertiary sector as a whole offers opportunities for undergraduate, graduate, vocational and technical education. There are currently (2011) 117 federal, state and private universities accredited in Nigeria as degree-granting institutions Annually, an average of 1.5 million students take the Unified Tertiary and Matriculation Examination (UTME) for entrance into Nigerian universities, polytechnics and colleges of education. Universities have the capacity to absorb less than 40 percent of these test takers. The other 60 percent tend to go to their second and third choice categories of institutions— polytechnics and colleges of education. Many Nigerian students also apply to institutions abroad. In 2011, 40 percent of the students who sat for the UTME made the minimum cut-off grade of 200 (out of 400) for entry into Nigerian universities. There are currently various government reforms and initiatives aimed at improving the Nigerian educational system. These include the upgrade of some polytechnics and colleges of education to the status of degree-awarding institutions, the approval and accreditation of more private universities, and the dissemination of better education-related data, including the recently published Nigerian Educational
  21. 21. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 21 Statistics (a publication assisted by USAID among others). short of addressing the educational needs of the country. As a result, an increasing number of families and students are looking at alternative educational opportunities within the region and further abroad. Primary and Secondary School Primary education (grades 1-6) is free and compulsory, and offered to children aged 612. The curriculum is geared toward providing permanent literacy, laying a sound basis for scientific, critical and reflective thinking, and also in equipping children with Approximately 60 percent of the population will be between the ages of 13 and 45, fall far the core life skills to function effectively in society. Secondary School A majority of senior secondary school students proceed in the academic stream from junior secondary school. However, there is also a technical stream, in addition to vocational training outside of the school system, or apprenticeship options offering a range of terminal trade and craft awards. Private organizations, community groups, religious bodies, and the federal and state
  22. 22. Corporate Nigeria- Investing in Nigeria: A Strategy Guide governments establish and manage secondary schools in Nigeria. All private and public schools offer the same curriculum but most private schools include the Cambridge International Examination curriculum, which allows students to take the IGSCE examinations during their final year in high school. It is also important to note that some private schools offer GCE A-levels, which usually serve as a gap year after graduation for students that are interested. Students take the Senior Secondary Certificate Examination (SSCE) at the end of grade 12. The Senior Secondary Certificate (SSC) is awarded to successful candidates. The certificate lists all subjects in which the student is successful. The SSCE replaced the West African GCE O and A levels in 1989, although those examinations are still available to students who wish to take them (see above). The SSC is issued by the West African Examination Council (WAEC) or the National Examination Council (NECO), depending on the examination board used. Technical & Vocational Education Technical and vocational education is available for graduates of junior secondary school. A two-tier system of nationally certified programs is offered at science technical schools, leading to the award of National Technical/Commercial Certificates (NTC/NCC) and Advanced National Technical/Business Certificates. The lower level program lasts three years after Junior Secondary School and is considered by the Joint Admission and Matriculation Board as equivalent to the SSC. The Advanced program requires two years of pre-entry industrial work experience and one year of full-time study in addition to the NTT/NCC. The advanced degrees are typically P a g e | 22 considered equivalent to an undergraduate degree. All certificates are awarded by the National Business and Technical Examinations Board (NABTEB). Tertiary Education Presently there are 117 universities; 36 federal, 36 state and 45 private universities. The National Universities Commission (NUC) is the government umbrella organization that oversees the administration of higher education in Nigeria. The 36 federal universities and dozens of teaching hospitals and colleges are under its purview. State governments have responsibility for the administration and financing of the 36 state universities. The NUC approves and accredits all university programs. In addition to universities, there are 59 federal and state polytechnic colleges and several privately owned polytechnics, monotechnics and colleges of education across the country. Admissions For entrance into a Nigerian institution of higher learning, students are required to take the Unified Tertiary Matriculation Examination (UTME).. The minimum mark required on the UTME for admission to university is 200 (out of 400). In addition, each institution has cut off marks for various programs, so a minimum of 200 marks does not guarantee admission, especially for highdemand programs and institutions. Universities also conduct additional screening before a final admission decision is made. For the UTME, students must take exams in English and three subjects related to their proposed major. All admissions to bachelor degree programs at all Nigerian universities are organized through the Joint Admissions
  23. 23. Corporate Nigeria- Investing in Nigeria: A Strategy Guide and Matriculation Board (JAMB). Private universities are far less popular. The University of Lagos was the most popular choice with 99,195 applicants (for 6,106 places), followed by Ahmadu Bello University (89,760), the University of Nigeria Nsukka (88,177), Nnamdi Azikiwe University (84,719) and the University of Benin (80,976). Technical and Vocational Higher Education Higher technical education is provided at technical colleges, polytechnics and colleges of education. Entry to colleges and polytechnics is based on JAMB-administered entrance examinations combined with results from secondary and vocational schools. The National Diploma is a two-year program and grants access to Higher National Diploma programs. The Higher National Diploma (HND) is a two-year program that typically requires one year of work experience after the National Diploma, which is required for admission. The HND is not equivalent to a university degree. HND graduates will typically take a one year postgraduate diploma certificate before applying for a master’s degree in any Nigerian university. Education has always been an instrument of empowerment for Nigerian population. And, the country is not lagging behind, at all, in exploring the latest educational developments. Online learning is one of the most innovative ideas education has ever developed. The reason for taking up this latest educational approach is quite clear. On the one hand, online education enables Nigerian students to make ways to international P a g e | 23 universities through distance learning courses, and on the other hand, sitting at the peaceful environment of home these students prepare themselves for globally lucrative jobs. Technologically Advanced Learning With simply having a PC or tablet and an internet connection Nigerian students can reach out to the classrooms of world’s best universities carrying legacy of past and excellence of present, say, UK universities. Cost-friendly learning Yes, it may sound unbelievable, but technology and Nigerian governmental initiatives have made it possible for students of Nigeria to get international education in most affordable price. When cost of higher education is growing to the limits of impossibility worldwide, online UK distance learning courses bring a whole new educational experience for Nigerian students for some nominal monitory investments. Job-Centric Education Online distance education features some incredible benefits by its own virtue. And, when this virtue is consolidated by eminence of UK educational excellence students can obviously expect some phenomenal achievements. UK universities involve global industrial leaders and prominent employers in designing their distance learning courses, so that students can be benefited by truly jobcentric education. Practical & Theoretical Knowledge All at the Same Time Besides, these distance courses come with so great length of flexibility in schedule that students get affluent scopes to invest their spare time into some relevant full-time jobs, doing which they not only become financially
  24. 24. Corporate Nigeria- Investing in Nigeria: A Strategy Guide strong enough to sponsor their own study, but also experientially potent enough to impress employers when they step into their job search. Many students are seen to take some apprenticeships beside their convenient schedule for study. Freedom of Study The greatest flexibility of online study with UK universities is the 24/7 availability of online tutors whom students can contact as per their convenient time for any study related assistance. World Masters’ Views UK university-based distance learning courses are not just peerless in their content, as excellence has been ascribed on them by the world, but also they provide their students to get expert advice from industrial gurus whose suggestions and experience enrich online students. These masters of industry give their knowledge depth and dignity, and with these matchless expert advices Nigerian distance learners make their high claim for the best jobs in the global industry. Nigeria has indeed started its rise to a successful future where students will surely make the country proud with unprecedented achievements, and UK distance education is paving their way to a glorious tomorrow. Online education is highly beneficial in Nigeria One must continue their higher education, in order to earn a college degree, that will which fetch them better jobs. Students in developing nations like Nigeria, usually start working right after they pass out of school as most don’t have an option. Nigeria does have good colleges but as they are not funded by the government, the P a g e | 24 colleges don’t run properly. Politics has taken a toll on the education system, harming it in ways more than one. However, technology has saved Nigerian students as more than half the population these days resort to online education. Renowned colleges and universities from all over the world provide online study programmes which help students achieve undergraduate and postgraduate education. Recently, Intel launched a solution of education that will help learners in Nigeria, access low-cost and free resources of digital learning. The education solution, Intel Explore and Learn Marketplace, has been launched and is designed is such a way, so as to help learners of various age groups. Learners can benefit from this education solution through learning materials that are interactive like books, instruction videos, examination papers and podcasts. The education solution was launched in Lagos and is supposed to help students at elementary and advanced education levels. According to the country manager of Intel West Africa, Bunmi Ekundare, the education solution will benefit students as well as education community stakeholders, like parents and teachers. With these new educational tools and online study programmes, students in Nigeria are bound to do well for themselves and achieve success. MOOC Targets High as the Demand Rises MOOC is a comparatively new online learning phenomenon that has developed quite fast from what it was five years ago. MOOC is a household name now with considerable media attention and major interest from higher learning institutions.
  25. 25. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Observing the growing reputation, the venture capitalists are considering it as a lucrative business opportunity to be exploited properly. MOOC can be seen as an an extended version of the existing distance learning approaches through online with regard to free access to courses and convenience; it also comes with an opportunity to think afresh. This new education system is eager to learn from the introducing business models targeting customers comparatively new to the market; also planning working under new policies to approach a diverse environment. MOOC offers an engaging learning format Learners interested about higher education are more enthusiastic about massive open online courses as they seem to be more helpful according to the news and reviews. Students completed MOOCs say their user friendly format is the biggest attraction. MOOCs, have always strived hard to rope in world-class instructors and exploit the technical advancement to offer more engaging programmes to the learners; so their classes with video instruction that they used from the beginning drew attention of the worldwide learners toward this fresh education system. MOOCs growing to offer more Although people opting for online education have varied range of reactions regarding the classes on internet, curiosity for MOOCs has always been common and is increasing every day. Access to quality material and innovative ways of gaining shared learning experiences are the most important ones among the many benefits that open online courses include. Most studies confirm that learners experienced MOOC own skill and aptitude in social networking via P a g e | 25 internet, helpful technical ideas, work management qualities and many other skills essential to the recent people but haven’t been widely shared so far. With millions of students applying for their courses and providers investing more efforts to allow it to be more effective, MOOCs are heading toward making a history for sure.
  26. 26. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Nigeria: Political Overview Before the amalgamation of the Northern Protectorate, Southern Protectorate and the Lagos Colony in 1914, there was no country called Nigeria. Each region existed independently of the other with their distinct culture, history, law and customs. In 1861, the Lagos colony became parts of the British Empire in Africa. The smooth penetration of Lagos paved way for the British overlords to seek further incursion through Native administration into the Southern region, of what is now called Nigeria. In the process of winning the territory for their metropolis, the British overlords were left with two options, one to impose their ways of life on the native population, two, to adapt the cultural practices of the native population to their culture in order to put the British as people that also appreciated the traditions of the African people. Considering the long time effects of this on the colonial occupation of Nigeria, the British used the second option and thereafter introduced the Indirect Rule System of government. It was this system that brought the so called hurriedly conceived 1914 amalgamation of the two protectorates and the Lagos state colony which gave birth to the Nigerian colonial state and the Nigerian culture. For most parts of the colonial era, agriculture was the mainstay of the Nigerian economy (Dibie, 2000), up till the 1960s. The agricultural economy provided both food and cash crops for Nigerians. A large portion of the Nigerian government revenues was coming from this sector. When oil was discovered in large quantity in Oloibiri in P a g e | 26 Rivers State in 1956, government started shifting its attention to oil relying on its exportation to metropolitan nations. Economic development at this period was largely determined by government who were controlling over 60% of the oil wealth. Nigeria’s Political Structure Constitutionally Nigeria is a federal republic with 36 states and a federal capital territory, Abuja. It has the elements of US with president holding executive power and of the UK make up of upper and lower houses. Federal Ministry of Foreign Affairs The Ministry of Foreign of Affairs (MFA) is the statutory department of the Federal Government of Nigeria charged with the responsibility for the formulation, articulation, and pursuit of Nigerian foreign policy trust and objectives. These objectives reflect the domestic, political, economic, technological, social and cultural aspirations of the Nigerian people. Foreign Affair Minister-Viola Onwuliri (2013–present) Nigeria has made it into the Top 20 Global Destinations for FDI Nigeria receives the largest amount of Foreign Direct Investment (FDI) in Africa. Foreign Direct Investment inflows have been growing enormously over the course of the last decade: from USD1.14 billion in 2001 and USD2.1 billion in 2004, Nigeria’s FDI reached USD11 billion in 2009 according to UNCTAD, making the country the nineteenth greatest recipient of FDI in the world Reforming and strengthening institutional frameworks It is testament to the country’s newfound political stability that in 2010 Nigeria has
  27. 27. Corporate Nigeria- Investing in Nigeria: A Strategy Guide avoided a potentially dangerous political vacuum, instead seeing the peaceful transition of power from Umaru Yar’Adua to his former vice-president Goodluck Jonathan. At the beginning of 2009, few could have expected the next year to be marked by a new president, followed by a succession of political scandals as President Jonathan made new and vigorous attempts to stamp out the corruption that has dogged the Nigerian political sphere for so long. Investment Framework And Bodies Specific measures were taken include repeal of two legislations (i) Exchange control act of 1962, (ii) Nigeria Enterprises Promotion Decree of 1962. Both these acts restricted and discouraged foreign investors. In 1995, the Nigerian Investment Promotion Commission Act laid out the framework for Nigeria’s investment policy. Under the Act, 100% foreign ownership is allowed in all industries except for oil and gas, where investment is constrained to existing joint ventures or new productionsharing agreements. Investment from both Nigerian and foreign investors is prohibited in a few industries crucial to national security: the production of arms and ammunition, and military uniforms. Investors can repatriate 100% of profits and dividendsIn January alone, foreign direct investment (FDI) inflow into Nigeria was estimated at $5.2bn (N800bn). National Competitive Council Of Nigeria The government has taken some steps to safeguard these investments. The inauguration of the National Competitiveness Council of Nigeria, by President Jonathan in February this year, is a step in this direction. The 18-member board, chaired by the P a g e | 27 Minister of Trade and Investment, has the mandate of increasing productivity and sales for local businesses, as well as the creation of more markets for made in Nigeria products. The council is expected to further improve Nigeria’s global competitiveness ranking. Legal Framework For Business Activities Methods Of Conducting Business All business enterprises must be registered with the Registrar-General of the Corporate Affairs Commission (Registrar of Companies). A foreign investor wishing to set up business operation in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary. Business activities may be undertaken in Nigeria as a: (i) Private or Public limited liability company; (ii) Unlimited liability company; (iii) Company limited by guarantee; (iv) Foreign Company (branch or subsidiary of foreign company) (v) Partnership/Firm; (vi) Sole Proprietorship; (vii) Incorporated trustees; (viii) Representative office Privatization
  28. 28. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Under the privatization programme as announced on July 20, 1998 by H.E Gen Abdulsalami Abubakar, Government will retain 40% of the telecom, electricity, petroleum refineries, coal and bitumen production, tourism, and spill-over from the first phase of privatization equities of the affected enterprises whilst 40% will be alienated to strategic investors with the right technical, financial and management capabilities. The remaining 20% will be sold to the Nigerian public through the Stock Exchange. President Olusegun Obasanjo in his Presidential order to the Vice President of the Federal Republic of Nigeria dated 6th July 1999, directed that as the first step in the phased implementation of the administration's privatization programme, action was to be initiated to enable the sale of shares listed on the Lagos Stock Exchange and owned by the Federal Government and its agencies in Commercial and Merchant Banks, Cement Plants, Petroleum Marketing Companies The sales are to be completed by December, 1999 and Core Investors are to be encouraged to buy into any of the privatized enterprises which will be paid in foreign currencies. The second phase will consist of hotels and vehicles assembly plants, amongst others. The third phase will involve work on the companies currently being prepared for privatization or currently being audited, including NEPA, NITEL, NAFCON, Nigeria Airways, Refineries, etc EFCC EFCC is a financial unit which is charged with the responsibility of coordinating the various institutions involved in the fight against money laundering and enforcement of P a g e | 28 all laws dealing with economical and financial crimes in Nigeria. EFCC has been successful not only in creating anticorruption awareness among Nigerians but also in proven cases of economic and financial crimes. Till date commission has achieved more than 500 convictions. Besides commission has made seizures and recoveries of well in excess USD 6.5 billion. EFCC has become a barometer for public and private sector functionaries, a benchmark of national growth and development and a reference institution for attaining corporate governance in Nigeria. Nigeria has lost more than USD300billion to corruption. EFCC has been strengthened to combat with this monster. TCP (Transparency Clearance Platform) To assist foreign investors government has designed TCP so that prospective foreign investors can verify contract offers and proposals before jumping at them.TCP can be accessed through www.efccnigeria.org or through telephone hotline provided on websites. The image of Nigeria has improved considerably in the recent years. It is bound to improve because of commitment of the government to tackle economic and financial crimes. Foreign investors have been coming to Nigeria in droves from all over the world over the last few years and they have taken advantage of the current congenial business environment created by the government to step up their volume of investments
  29. 29. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Nigeria: Legal Framework Company registration Nigeria is essentially a free enterprise country, subject only to regulations as are necessary for the national interest. Registration of companies in Nigeria is a Federal law. Thus, company registration processes in Nigeria are national and the same procedures apply to all parts of the country. The authority charged with the responsibility of registering companies is the Corporate Affairs Commission CAC). The CAMA provides, with certain exceptions, that no foreign company shall carry on business in Nigeria unless it is incorporated in Nigeria. The three primary types of incorporated companies all of which could be public or private companies are: unlimited liability company, company limited by guarantee and company limited by shares. The unlimited liability company holds little or no interest for investors as the liability of its members as no limit. A company limited by guarantee limits the liability of its members to the amount of their respective guarantees but this type of company is typically not for commercial purposes. The most common type of company for investment purposes is the company limited by shares in which liability of the members is limited to the amount, if any, unpaid on the shares they hold respectively. To register a limited liability company in Nigeria, the promoters are required to comply with the requirements set out by the law under the Act. There must be a minimum of 2 shareholders and 2 directors. The P a g e | 29 minimum share capital for a private company is N10,000 while that for a public company is N500,000 However, a company wishing to employ expatriates will need to have a minimum share capital of N10,000,000 in order to meet the minimum share capital requirement for expatriate quota application. In addition to the memorandum and articles of association, the promoters of the new company are also required to fill and submit the following incorporating documents. Foreign Enterprises, Expatriates & Immigration A Nigerian company with foreign investors is required to be registered with the Nigerian Investment Promotion Commission (NIPC), established under the NIPC Act, 1990. The Immigration Act also requires foreign investors to obtain Business Permit from the Federal Ministry of Internal Affairs (FMIA) before operating or doing business in Nigeria, albeit a company can commence business soon after incorporation. Tax and Fiscal Regulations Taxation in Nigeria is enforced by the three tiers of government i.e. Federal, State and Local Governments, each with its sphere clearly spelt out in the Taxes and Levies (approved list for collection) Act of 1998. Of importance here are tax regulations pertaining to investors both foreign and local. The importance of tax regulations cannot be over-emphasized as most transactions with any government ministry, department or agency cannot be concluded without evidence of a Tax Clearance Certificate certifying that all taxes due for the three immediately preceding years of assessment. The following are some of the relevant tax regulations in the country.
  30. 30. Corporate Nigeria- Investing in Nigeria: A Strategy Guide P a g e | 30 Value Added Tax (VAT) Companies Income Tax (CIT) VAT was introduced by the VAT Act No.2 of 1993, to replace the old sales tax. The Value Added Tax is a consumption tax levied at each stage of the consumption chain and borne by the final consumer. It requires a taxable person upon registering with the Federal Board of Inland Revenue (FBIR) to charge and collect VAT at a flat rate of 5% of all invoiced amounts of tax able goods and services. All businesses (old and new) are required to be registered with VAT office as VAT collection agents. Tax is payable for each year of assessment of the profits of any company at a rate of 30%. These include profits accruing in, derived from, brought into or received from a trade, business or investment. Also companies paying dividends to its shareholders are first of all obliged to pay tax on its profits at the companies’ tax rate. Generally in Nigeria, company dividends or other company distribution whether or not of a capital nature made by a Nigerian company is liable to tax at source of 10%, however, dividends paid in the form of bonus share or scrip shares to individual share holders is not subject to tax, where also, a company is a shareholder in another company, then such dividends are excluded from the profits Personal Income Tax The legal basis for this tax is found in the provisions of the Personal Income Tax Decree (now Act) No. 104 of 1993. Thus every taxpayer in Nigeria is liable to pay tax on the aggregate amount of his income whether derived from within or outside Nigeria, the salaries, wages, fees, allowances, and other gains or benefits, given or granted to an employee are chargeable to tax. The Employers of labour are deemed to be agents of the tax authority for the purpose of remit outside Nigeria, the salaries, wages, fees, allowances, and other gains or benefits, given or granted to an employee are chargeable to tax. The Employers of labour are deemed to be agents of the tax authority for the purpose of remitting taxes deducted from salaries due to employees. A person is deemed resident in Nigeria if he resides in Nigeria for 183 days in any 12-month period. Expatriates holding residence permits are liable to tax in Nigeria even if they reside in the country for less than 183 days in any 12-month period. Once residence can be established, the relevant tax authority of the territory is the tax authority in which the taxpayer has his place of residence or principal place of business. of the company for the purposes of computation of tax.
  31. 31. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Tax Treaties Nigeria has a number of tax treaties referred to as "double taxation" agreements with a number of countries, these are designed to ensure that the tax payable in Nigeria on the profits of a Nigerian company being remitted into the country are reduced by the amount of "foreign Tax" paid abroad and vice versa where an overseas company receives profits from Nigeria that have already been taxed in Nigeria. Some of these countries include the UK 1st January, 1988, France 1st January, 1991, The Netherlands 1st January, 1994, Belgium 1st January, 1990, Canada 1st January, 1993 and Pakistan 1st January, 1990. Nigeria - Investment Incentive Investing in any of the sectors of the economy discussed in these 'Doing Business in Nigeria' pages will require enormous capital outlay. The Federal Government of Nigeria taking cognizance of this fact, has over the years formulated a number of policies and measures to boost the investor’s confidence in the country and to prevent the prospective investor from being consumed by the overheads costs it will encounter. The incentives may be grouped under two headings: Incentives to promote local production and incentives to promote exportation. Incentives to Promote Locals Pioneer Status This is a tax holiday status granted by the Government to industries regarded as high priority for Nigeria’s economic development. The grantee enjoys a tax relief for an initial period of 3 years renewable for a further period of 2 years. The Industrial Development (Income Tax Relief) Act cap 179 Laws of Federation of Nigeria declares a number of P a g e | 31 industries as pioneer and any company within the categorized industries producing products declared as pioneer may apply to the Nigerian Investment Promotion Council to be conferred pioneer status. Labour Intensive Production Mode Where the area of investment requires massive labour involvement, there will be a 15% tax concession for 5years. Massive labour involvement in this regard will entail hiring 1000 persons or more. Local Value Added This essentially applies to engineering industries that use some finished imported products as inputs. Such industries are given a 10% tax concession for 5 years. The idea is to encourage local fabrication rather mere assemblage of completely knocked down parts. Infrastructure Development: Where the investor embarks on providing basic infrastructure such as roads, water, electricity where they do not exist, it will be entitled to 20% tax deduction of the costs of providing such amenities. Investment in Economically Disadvantaged Areas Investors in such areas are entitled to a 100% tax holiday for 7 years and an additional 5% depreciation allowance over and above the capital depreciation. Research and Development Concessions The law grants 120% tax-deductible expenses where the research is to be carried out in Nigeria, tax concessions are extended to 140% where the research and development is on local materials. Corporate Governance There is growing emphasis of corporate governance best practices among Nigerian companies. The Securities and Exchange
  32. 32. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Commission, the Central Bank of Nigeria and the Corporate Affairs Commission has published best practices codes in support of corporate governance in Nigeria. The SEC and CAC have issued a Code of Corporate Governance for Public Companies in Nigeria. The CBN has also issued its Code for Banks and Other Financial Institutions, and the National Insurance Commission has issued a Code for Insurance companies. Foreign direct investment Apart from the investment guarantee assurance of the NIPC ACT countries are welcome to execute and enter into bilateral Investment Promotion and Protection Agreements (IPPA) with the Nigerian government. P a g e | 32
  33. 33. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Nigeria: Economic Overview Prior to 2008, the Oil rich Nigeria was plagued by political instability, inadequate infrastructure and poor macroeconomic management. This was because the military rulers failed to diversify the economy away from its over dependence on the capital intensive oil sector which provides 95% foreign exchange earnings and 80% of budgetary revenues. In August 2000, As a result of signing the IMF stand-by agreement, Nigeria received a debt restructuring deal from the Paris Club and a $1 billion credit from the IMF, which were contingent on economic reforms. In April 2002, Nigeria pulled out of this program after failing to meet the spending and exchange rate targets which made it ineligible for additional debt restructuring deals from Paris club. In Nov 2005, Abuja won Paris Club approval for a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments. Since 2008, the government began to show the political will to implement the marketoriented reforms urged by the IMF, such as modernizing the banking system, removing subsidies, and resolving regional disputes over the distribution of earnings from the oil industry. As a result of the reforms, the GDP rose strongly in 2007-12 because of growth in non-oil sectors and robust global crude oil prices. President Jonathan has established an economic team that includes experienced and reputable members and has announced plans to increase transparency, diversify economic growth, and improve fiscal management. P a g e | 33 Lack of infrastructure and also casual and slow implementation of reforms are key impediments to growth. The government has been working towards addressing these issues by developing stronger public-private partnerships for roads, agriculture, and power. Nigeria's financial sector was hurt by the global financial and economic crises, but the Central Bank governor has taken measures to restructure and strengthen the sector which includes imposing mandatory higher minimum capital requirements. From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country's standard of living through a variety of reforms, including macroeconomic stability, deregulation, liberalization, privatiz ation, globalization and also several measures regarding issues like transparency, and accountability. NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).
  34. 34. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Gross Domestic Product (PPP) Gross Domestic Product (GDP) is the value of all final goods and services produced within a nation in a given year. A nation's GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States in terms of Dollar Currency. Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, and technology and entertainment sectors. It is ranked 30th in the world in terms of GDP (PPP) as of 2013, and the 2nd largest economy in Africa (behind South Africa) and on track to become the richest country in Africa in 2014 and is also on track to become one of the 20 largest economies in the world by 2020. Its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a P a g e | 34 large proportion of goods and services for the West African region. Nigerian GDP at purchasing power parity (PPP) has almost trebled from $170 billion in 2000 to $451 billion in 2012, although estimates of the size of the informal sector put the actual numbers closer to $630 billion. Correspondingly, the GDP per capita doubled from $1400 per person in 2000 to an estimated $2,800 per person in 2012. Nigeria's revenue from petroleum is about $52.2 billion. This accounts about 11% of official GDP figures. Therefore, though the petroleum sector is important, it remains in fact a small part of the country's overall vibrant and diversified economy. In 2012, the GDP was composed of the following sectors: 1. 2. 3. 4. Agriculture: 40%; Services: 30%; Manufacturing: 15%; Oil & Gas: 15%
  35. 35. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Macro-Economic Trend Macro-economic policies are framed by the Government of Nigeria considering the advices by the Central Bank of Nigeria. The priorities are set by the Government and the policies are framed accordingly. The trend of macro-economic climate in Nigeria deals with three important sectors of the economy. They are (i) agriculture, (ii) services and (iii) industries. Agriculture:        Nigeria ranks 6th worldwide and 1st in Africa in farm output. Poor government policies and lacks basic infrastructure facility towards agriculture Still, the sector accounts for 26.8% of GDP and 2/3rd of the employment. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Cocoa, rubber, processed foods are exported The sector suffers highly from extremely low productivity Agriculture has failed to keep pace with the rapid population growth Services:      Ranks 63rd in world in services output. Low growth in this sector due to low power generation. The banking sector has witnessed a significant growth over the last few years Rigid monetary policies to by the CBN has made the functioning of banks tough The cost of doing business in Nigeria is high and this has led to the slow  P a g e | 35 growth of private sector led economic growth. Even though there are signs of improvement in the economy, Nigeria’s high cost of doing business includes setting up of essential infrastructure, the threat of crime and associated need for security counter measures, the lack of effective due process, and nontransparent economic decision making, especially in government contracting. Industry:  Ranks 44th in world 3rd in Africa in factory output.  In 2000, oil and gas exports accounted for more than 98% of export earnings  The economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75% of the total economy.  The types of crude oil exported by Nigeria are Bonny light oil, Forcados crude oil, Qua Ibo crude oil and Brass River crude oil.  Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oil-producing region continue to plague Nigeria's industrial sector.  Nigerian high tariffs and non-tariff barriers are gradually being reduced  The stock of U.S. investment is nearly $7 billion, mostly in the energy sector.
  36. 36. Corporate Nigeria- Investing in Nigeria: A Strategy Guide The Business Environment For investors to invest in Nigeria, knowing where the Nigerian economy stands in the aggregate ranking on the ease of doing business is useful. Also useful is to know how P a g e | 36 it ranks relative to comparative economies and relative to the regional average. The economy’s rankings on the topics included in the ease of doing business index provide another perspective.
  37. 37. Corporate Nigeria- Investing in Nigeria: A Strategy Guide The business environment for the investors is becoming more conducive over the years due to high amount of reforms and presently a new business can be started in 28 days whereas, earlier it was taking 3 to 6 months. Even though currently, the ranking is at 147th, lot of reforms has been taking place so as to attract the investors. Getting essential services like electricity, water, construction permits etc. were bottlenecks earlier but due to extensive reforms in this field, Nigeria has been successful in attracting investors by providing them essential utilities that is important to run the business. But still, a lot of reforms need to be done in regards to providing a conducive atmosphere for the investors. Foreign Trade Zones & Foreign Investments The country offers investors abundant natural resources, a low-cost labor pool, and potentially the largest domestic market in sub-Saharan Africa. Even though lot of reforms are being taking place in terms of reforms of building a conducive environment for the investors, much of Nigeria’s market potential remains unrealized because of a long list of impediments to investment like inadequate power supply, lack of infrastructure, delays in the passage of announced legislative reforms, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system etc. Attracting foreign investments has been one of the major objectives for the Government of Nigeria and lot of reforms have been P a g e | 37 undertaken including setting up of Foreign Trade Zones which provides advantages with respect to taxes and duties to encourage exports which resulted in many foreign companies setting up a manufacturing plant to take this advantage. Foreign Trade Zones/Free Trade Zones:  The Government of Nigeria (GON) established the Nigerian Export Processing Zone Authority (NEPZA) in 1992 to attract export-oriented investment.  NEPZA allows duty-free import of all equipment and raw materials into its export processing zones. Up to 25 percent of production in an export processing zone may be sold domestically upon payment of applicable duties.  Investors in the zones are exempt from foreign exchange regulations and taxes and may freely repatriate capital.  Oil and gas companies use the Onne FTZ as a bonded warehouse for supplies and equipment and for the export of liquefied natural gas.  The GON also encourages private sector participation and partnership with state and local governments under the FTZ program, resulting in the establishment of the Lekki FTZ (owned by Lagos state), and the Olokola FTZ (owned by the federal government), and several such FTZs to encourage trade.  Workers in FTZs may unionize, but may not strike for an initial ten-year period.
  38. 38. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Foreign Direct Investment: Nigeria has made it into the top 20 global destinations for FDI. Foreign Direct Investment inflows have been growing enormously over the course of the last decade. Foreign Direct Investment inflows have been growing enormously over the course of the last decade. The Oil & Gas sector receives 75% of China’s FDI in Nigeria. Other major sources of FDI include Italy, Brazil, the Netherlands, France and South Africa. Some of the highlights of FDI in Nigeria:  The foreign direct investment (FDI) in Nigeria in 2012 reached $7.2 billion.  Total FDI inflow amounted to $8.9 billion in 2011, mostly in the oil and gas industry, and representing about 55 percent of total FDI in West Africa and 21 percent of total FDI in Africa.  This figure places Nigeria as the largest recipient of FDI in Africa.  Some of the inflows from FDIs reaches telecommunications, real estate (including commercial and residential), and manufacturing, but total investment in the non-oil and gas sector remains small relative to investment in the oil and gas sector. Investment Framework and Bodies:  In 1995, the Nigerian Investment Promotion Commission Act was instrumental in setting up framework for Nigeria’s investment policy.  100% investment is allowed in all industries except for oil & gas, where investment is constrained to existing Joint venture or a new productionsharing agreement. P a g e | 38  Investment from both Nigerian and foreign investors is prohibited in a few industries crucial to national security like the production of arms and ammunition, and military uniforms. Prospects for Future Investment:  Nigeria has a range of resources and industries ready for development and global interest in the economy is rising.  Outside of petroleum, the country has largely untapped mineral resources including coal, iron ore, lead, tin and zinc, and the country’s expanses of arable land make agriculture and agro processing viable and attractive.  Nigeria's telecom industry is flourishing and certain areas of manufacturing, like cement and beverages, are increasingly drawing in investors.  Between 2001 and the end of 2009, the telecom sector received USD18 billion in FDI, on the back of a liberalized regime that has made Nigeria Africa’s biggest mobile market. Towards developing the FDI inflows, the GON has come up with a program called The One Stop Investment Centre (OSIC) which is an investment facilitation mechanism where relevant Agencies of Government are brought to one location (Single window clearance system), co-ordinated and streamlined, to provide efficient and transparent services to investors. The services at the center include:  Simplified administrative procedures for the issuance of Business approvals, Permits/ Licenses  Company incorporation  Provision of investment information; statistical data and information on the
  39. 39. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Nigerian economy, Investment Climate, Legal and Regulatory Framework as well as Sector and Industry specific information to aid existing and prospective investors in making informed business decisions. Foreign Economic Relations Nigeria's foreign economic relations revolve around its role in supplying the world economy with oil and natural gas, even as the country seeks to diversify its exports, harmonize tariffs in line with a potential customs union sought by the Economic Community of West African States(ECOWAS), and encourage inflows of foreign portfolio and direct investment. In October 2005, Nigeria implemented the ECOWAS common external tariff, which reduced the number of tariff bands. Prior to this revision, tariffs constituted Nigeria's second largest source of revenue after oil exports. P a g e | 39  The CBN has since engaged in several rounds of policy tightening, maintaining core inflation levels in the 11-12 percent range, despite the impact of electricity price hikes, an almost 50% increase in gasoline prices, significantly higher global food prices, and flood-related domestic food price pressures.  Foreign exchange reserves stood at $44 billion in December 2012.  The CBN has taken a highly expansive view of its role in Nigeria’s economic development, using its balance sheet to support investment in the power sector, small and medium enterprise (SME) loans, and commercial agriculture.  Management of GON fiscal policy has remained a persistent challenge due to Nigeria’s heavy reliance on oil revenue and its history of pro-cyclical spending and civil service hiring during periods of high global crude oil prices. Inflation Banking  Central Bank of Nigeria (CBN) monetary and exchange rate policies have come more closely into alignment in 2012.  The IMF criticized the CBN in 2011 for maintaining artificially-low interest rates and intervening heavily in the foreign exchange market to prevent devaluation of the Naira.  In early 2011, real interest rates remained negative, inflation hovered at 12 percent, and CBN reserves had fallen from $62 billion in 2008 to $33 billion. Inflation Rate in Nigeria is reported by the National Bureau of Statistics, Nigeria. Inflation Rate in Nigeria averaged 10.43 Percent from 2006 until 2013, reaching an all-time high of 15.60 Percent in February of 2010 and a record low of 3 Percent in July of 2006. In Nigeria, the Consumer Price Index (CPI) measures the change over time in prices of 740 goods and services consumed by people for day-to-day living. The index weights are based on expenditures of both urban and rural households in the 36 states.
  40. 40. Corporate Nigeria- Investing in Nigeria: A Strategy Guide Trade & Current Account Nigeria recorded a Current Account surplus of 10.80% of the country's Gross Domestic Product in 2012 as reported in the annual report of the Nigeria Budget Office. From 1980 until 2012, Nigeria Current Account to GDP averaged 1.5 Percent reaching an all-time high of 37.9 Percent in December of 2008 and a record low of -18.7 Percent in December of 1986. The Current account balance as a percent of P a g e | 40 GDP provides an indication on the level of international competitiveness of a country. Usually, countries recording a strong current account surplus have an economy heavily dependent on exports revenues, with high savings ratings but weak domestic demand.

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