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INVEST IN NIGERIA 2012-13

Invest in

NIGERIA

2012-13

Published in partnership with the Nigeria High Commission, London

Investing in the global community

By providing advanced telecommunications services across Nigeria

Mubadala is an investment and development company that is deploying capital in those sectors and geographies that hold exciting potential, and promise tangible returns for partners and stakeholders. Launched in 2008, Etisalat Nigeria, our joint venture with Etisalat, is now the fourth largest mobile operator in the country and the fastest growing.

Since making the first official call on its network, the company has expanded its operations to provide mobile and data services to over twelve million people. For more information on this and other projects, please visit mubadala.com

A business completely focused on agriculture

As a pure-play agricultural solutions provider, AGCO aims to promote sustainable growth through superior customer service, innovation, quality and commitment. AGCO has developed a focused African strategy to ensure these commitments deliver real benefits to the continent. ©AGCO Corporation. 2012

www.agcocorp.com

Invest in

NIGERIA

2012-13 Lawrie Holmes

Editor

Barry Davies

Editor-in-chief Sub-editors

Emily Eastman, Laura Pledger

Art director

Jean-Philippe Stanway James White

Art editor

Malcolm Green

Production and distribution manager

Elizabeth Heuchan

Editorial production assistant

Martin Cousens

Sales director Sales executives

Dalila Benabdallah, Melanie Vaughan

Managing director

Andrew Howard

Chief executive

Alan Spence

Chairman

Paul Duffen

Pictures: Alamy, Corbis, Demotix, Getty, iStockphoto, Press Association, Rex Features, Shutterstock ISBN: 978-1-906940-64-5 Printed by Buxton Press

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In partnership with the Nigeria High Commission, London Nigeria House, 9 Northumberland Avenue, London WC2N 5BX Tel: 020 7839 1244 Web: www.nigeriahc.org.uk Email: hc@nigeriahc.org.uk

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Invest in NIGERIA 2012-13

Achievements and activities of NEXIM Bank, geared to the current transformation agenda Mr Roberts U Orya Managing Director/Chief Executive Officer NEXIM Bank

Introduction

The Nigerian Export-Import Bank (NEXIM) was established by Act 38 of 1991 as an Export Credit Agency (ECA) to diversify the external sector of the Nigerian economy. It currently has authorised and called-up share capital of naira (N)50 billion ($306 million), held equally by the Federal Ministry of Finance, represented by the Ministry of Finance Incorporated (MOFI), and the Central Bank of Nigeria (CBN). Functions • Provision of export credit guarantee and export credit insurance facilities to its clients; • Provision of credit in local and foreign currencies to its clients in support of exports; • Establishment and management of funds connected with exports; • Maintenance of a foreign exchange revolving fund for lending to exporters who need to import foreign inputs to facilitate export production; • Maintenance of a trade and market information system in support of export businesses.

Activities/initiatives undertaken Sourcing / Facilitating Investment Capital • US$20 million commercial line of credit from EXIM India The bank secured a US$20 million commercial line of credit from the Export Import Bank of India (EXIM India), following the signing of an agreement with EXIM, India in November 2011. The US$20 million line from EXIM India is an enhancement of a US$5 million LOC, which was granted to NEXIM in 2007. • Collaboration with the Export-Import Bank of the United States The bank continued its collaborative arrangement with the Export-Import Bank of the United States, through which lines of credit will be made available to Nigerian

The bank’s achievements under the current managing director include: Corporate Transformation In 2010, the Bank commenced a transformation programme with a five-year strategic plan, which has the following strategic objectives: • Having a clear market focus and becoming a major contributor to non-oil exports; • Building a world-class institution that absorbs best-in-class corporate governance and risk management practices; • Becoming a relevant player in the export market and significantly influencing government trade policies; • Building a profitable institution with robust balance-sheet size; • Building a highly skilled and motivated workforce. One of the major highlights of the corporate transformation is the redefinition of the target sectors to be promoted by NEXIM to include the high-growth sectors, namely manufacturing, agriculture, solid minerals and services, all of which come under our MASS Agenda. We have also redefined our target markets, with a greater emphasis now placed on encouraging and developing exports to the regional market of ECOWAS, while not losing sight of other markets in the rest of Africa,

exporters wishing to import inputs from the United States. The US EXIM line, when made available, would be non-funded and transaction specific, which will help to boost the bank’s activities under the Foreign Input Facility. • US$50 million Afrexim Line of Credit The bank continued to manage the US$50 million AFREXIM commercial line of credit, which was availed by leveraging on the bank’s balance sheet to provide funding support to three projects in the cumulative sum of US$38 million, with US$ 16million currently outstanding as contingent liability to the bank as at year end 2010. • US$200 million African Development Bank (ADB) Sovereign Guaranteed Loan The bank concluded arrangements / negotiations with the ADB towards securing

Asia and other developed regions. The current market focus is aimed at deepening trade in the ECOWAS region in line with the ECOWAS protocols. Other aspects of the transformation were the establishment of new corporate governance and risk-management structures, as well as the Rebranding and Information Technology Upgrade. The bank recorded an increase in operating profit, which rose by 217 per cent to N599.63 million ($3.7 million) from the N189.39 million ($1.2 million) that was realised in the period ended 31 December 2010. The total funding support to the non-oil export sector under the bank’s various facilities during the period amounted to N8.54 billion ($52.3 million), comprising of N6.26 billion ($38.4 million) and US$15.03 million. This represented an increase of N1.66 billion ($10.2 million) or 19.44 per cent compared with the equivalent period in 2010. The bank’s intervention covered various sectors, which include manufacturing (61 per cent), agriculture (14 per cent), solid minerals (14 per cent) and services (11 per cent). The developmental impact of NEXIM’s intervention through loans disbursed during the year was expected to create/sustain over 5,575 direct jobs and generate/sustain foreign exchange earnings of about US$178.60 million annually.

a US$200 million Sovereign Guarantee Loan, with US$50 million to be disbursed as first tranche. The loan is expected to facilitate funding intervention to SMEs in sectors of the economy including the creative arts / entertainment industry. Intervention in the Entertainment Industry The Nigerian entertainment and creative industry has high growth potentials in terms of job creation and foreign-exchange generation opportunities, and falls under the bank’s mandate of promoting the export of services. In this regard, in line with the company’s strategic focus and Mr President’s policy initiatives towards the creative arts and entertainment industry, NEXIM played a leading role in facilitating structured funding intervention and capacity-building to the industry in 2011.

Trade Facilitation/Development Initiatives ECOWAS Trade Support Facility (ETSF) In line with the bank’s strategic initiatives of enhancing intra-regional trade, the bank introduced the ECOWAS Trade Support Facility (ETSF), designed to achieve the following developmental objectives: • Facilitating formal/recorded trade within the ECOWAS sub-region; • Deepening intra-regional payment system; • Increasing Nigeria’s trade flows within ECOWAS from the current level of 8.5 per cent of total non-oil exports; • Broadening trade and market access for Nigerian goods and services, especially manufactured goods; • Promoting the development of SMEs/ Small and Petty cross-border traders and facilitating their integration into the formal sector of the economy. A seed fund of N500 million ($3.1 million) was set aside in 2011, of which N155 million ($950,395) was disbursed to two beneficiary projects, which have cumulatively exported over 200 tonnes of manufactured goods valued at US$1,032,500 as at 31 December 2011.

The Regional Sealink Project The Regional Sealink Project was conceived in response to the huge gap that had existed as a result of the absence of a regional marine transport to facilitate trade in the ECOWAS region. This challenge has made it difficult to transport large volumes of goods, particularly perishable commodities, within the region in a cost-effective and timely manner. The Sealink initiative has been conceived as a private-sector project, culminating in the establishment of a regional maritime company to be owned and funded by private investors. The key objective is to enhance trade flows from Nigeria to ECOWAS and the entire African region from the respective current levels of 11 per cent and 8.5 per cent, create employment and enhance the contribution of the non-oil sector to Nigeria’s foreign-exchange earnings. Other objectives include mitigation of nontariff barriers and infrastructural deficiencies so as to unleash the intra-regional trade potentials as evidenced by ECOWAS intra-regional cargo haulage, which has grown from 4.7 million tonnes to 13.4 million tonnes in the last decade without corresponding improvement in basic road/rail and logistics infrastructure.

Activities in 2012

NEXIM has continued to make significant progress on its development projects in 2012. Its intervention in the entertainment industry led to the flag-off of the production of the Doctor Bello movie announced during a world press conference in April 2012. The bank has projected to disburse about N32 billion ($196.2 million) during the year in support of non-oil export, which will lead to 24,000 jobs being created/sustained and foreign-exchange generation of about $230 million annually. NEXIM HOUSE Plot 975, Cadastral Zone A0, Central Business District, Abuja E-mail: neximabj@neximbank.com.ng Phone: +234 9 460 3642 - 45 www.neximbank.com.ng

NIGERIA�ELECTRICITY�LIABILITY�MANAGEMENT�LTD/GTE FEDERAL GOVERNMENT�OF�NIGERIA POWER�SECTOR�REFORM Pursuant to the implementation of the provisions of the Electricity Power Sector Reform Act, 2005, (EPSR), the�National�Council�for�Privatisation�in�pursuant�to�Section�8�of�the�Electric�Power�Sector�Reform Act,�incorporated the Nigeria Electricity Liability Management Ltd/gte (NELMCO) as a company limited by guarantee of the Federal Government of Nigeria with registration number RC 664658. NELMCO is one of the companies created from the unbundling�of�the�Power�Holding�Company�of�Nigeria�(PHCN)

MANDATE To�assume�and�administer�the�stranded�debts�and�non-core�assets�of�PHCN pursuant�to�the�provisions�of�EPSR�Act�2005.

Dr.�Sam Agbogun MD/CE�NELMCO

To�assume�and�manage�Pension�liabilities�of�employees�of�PHCN. To�hold�the�non-core�assets�of�PHCN,�sell�or�dispose�of�or�deal�in�any�manner for�the�purpose�of�financing�the�payment�of�debts�or�other�related�matters. To�take�over�the�settlement�of�PHCN's�Power�Purchase�Agreement�(PPA)�debts obligations,�legacy,�debts�and�other�liabilities��as�may�be�determined�by�the National�Council�on�Privatisation�from�time�to�time. To�sell,�let,�mortgage,�dispose�of,�deal�in�any�of�the�property�or�non-core�assets�of the�company�as�may�be�expedient�with�a�view�to�promoting�its�objects. To�do�all�such�other�things�as�are�incidental�or�may�be�thought conducive�to�the attainment�of�the�above�objects�or�any�of�them.

STATUS

In�August�2010,�the�Federal�Government�of�Nigeria�through�its�Government�Notice No.�374�issued�its�Official�Gazette�No.85�Vol.97�dated�20th August 2010�containing the�details�of�the�transfer�of�Assets,�Liabilities,�and�Staff�etc�to�NELMCO.

Vision To�be�a world-class manager�of�liabilities and�stranded Assets�in a�transitional electricity�market

Mission

To�ensure sanctity�of�contracts and�settlement�of rd pension�and On�23 October,�2011,�the�Shareholders�of�PHCN,�that�is,�the�BPE�and�MOFI�executed third�party the�Transfer�Instrument�that�formally�transferred�all�PHCN�Non- Core�Assets,�Liabilities liabilities and�relevant�Staff�to�NELMCO. NELMCO�commenced�start�up�activities�in�January,�2010�and�is�now�fully�operational.

Core�Values

Nelmco’s�Functions Liability�Management Debt�&�Liability�Management Assets�Management Pension Management Superannuation�Fund�Mgt. Consultancy�&�Procurement

Corporate�Services Budgets Finance�& Accounts Procurement HR Administration

Honesty, Integrity, Accountability, and Transparency

PENSION

Plot�1359B, Alfayyun�Street,�Wuse�Zone�3, Abuja,�P.�M.�B.�136,�Garki Abuja, Tel�:+234�7098513425,�+234�7098513426,��E-mail:�info@nelmcong.org website:�www.nelmcong.org

TMT

Contents 32

Forewords

Goodluck Ebele Jonathan

Dalhatu Sarki Tafida

Nigeria’s progress and annual growth is encouraging. This article takes a look at how this progress can be sustained in the long-term

President of Nigeria

Nigeria High Commissioner to the United Kingdom

Realising Nigeria’s investment potential Nigeria has become one of the world’s fastest-growing economies and has good investment potential across all sectors

Working to achieve the Millennium Development Goals Despite strong efforts towards meeting the MDGs, Nigeria’s oil wealth could prove an obtacle to the country’s development

The Policy Agenda

Democracy and reform: looking to the future

Progress in governance reform Legislation is in place to tackle corruption and raise accountability to improve democracy, transparency, justice and development Invest in NIGERIA 2012-13

How Airtel is setting the pace in Nigeria

Bharti Airtel has brought a breath of fresh air to the market since it took over the reins in Nigeria 18 months ago, promising to take the country’s telecoms industry to a higher level. The network has demonstrated uncommon commitment to subscribers, with exciting offerings that have since redefined the scheme of things in the market and consistent tariff reductions that truly empower subscribers to talk more than ever before. With rapid growth of over 20 per cent in its market share in less than 19 months, Airtel is building a concrete foundation as it increases its investments to over $700 million within the first year of operation.

A bouquet of exciting offers and human kindness

True to its brand promise and aspiration, Airtel has ensured that mobile users enjoy very affordable call rates. Its pioneering approach to price cuts has meant that it has continually been first to implement a series of sometimes unsettling, surprise price cuts across all networks. Airtel’s goal is to meet every individual’s communication needs and to give each member of society across Nigeria the opportunity to enjoy telecoms services. Airtel changed the face of marketing, pricing and tariff structure in the Nigerian telecoms sector when it announced the launch of 2Good. This was on 1 December 2010, barely two weeks after the launch of the Airtel brand in Nigeria. The 2Good offer, in the

Airtel’s goal is to meet every individual’s communication needs and give everyone the opportunity to enjoy telecoms services words of many telecoms pundits, was not just revolutionary in design and benefits but created a real stir as it shook the very foundations of the country’s telecommunications landscape. The company followed the launch of 2Good with 2Good Extra, which extended 2Good benefits to post-paid customers. In a short period, Airtel delighted Nigerians with several offerings such as Big Family, Big Family Extra, 2SIMS, Easy Recharge (Wazobia Recharge), My Airtel My Offer, SPOC packages for SMEs and post-paid customers and Club 10, among several others. Airtel’s business operation in Nigeria has also had a recognisable human face throughout its one year of operation. With its Corporate Social Responsibility strategy and focus on education, the company has demonstrated uncommon commitment to its CSR vision. Within three months, Airtel built, furnished and handed over a multi-million naira sixblock classroom - Oremeji Primary School 2,

in Tolu Complex, Ajegunle - as part of its adopt-a-school project. The facility came complete with blackboards, desks and chairs, uniforms and textbooks for all the pupils.

Awards and recognition

Since 2003, when awards first started in the telecommunications sector, the company has consistently taken home the Best Customer Care Operator of the Year awards - to the admiration of her loyal consumers and partners.

Conclusion

The Airtel story is synonymous with the story of telecommunications in Nigeria. It has been quite revolutionary on all fronts. Airtel has maintained its flagship status of being the first in virtually all key elements in the market, driving prices to an exciting all-time low, while providing extremely innovative offerings to consumers.

Head Office: Airtel Networks Limited Plot L2, Banana Island, Ikoyi, Lagos Tel: +234(0)8221901500 – 3 www.ng.airtel.com

Nigeria Vision 2020 Vast investment opportunities are bringing Nigeria closer to realising its ambition of becoming a top 20 economy by 2020

Oil, Gas and Minerals

Promoting free and fair elections

Capitalising on Nigeria’s oil resources

Step on the gas

Local players

NEITI: the Nigerian Extractive Industries Transparency Initiative

105

Oil and the Niger Delta

Non-oil and solid minerals

Banking on Nigeria

Sovereign wealth

110

Nigeria has a newfound confidence in itself, investing in a sovereign wealth fund to best utilise the country’s significant oil wealth

Energy

Project and trade finance A pre-eminent trade hub with the second strongest economy in Africa, Nigeria offers an attractive selection of business opportunities

The government has set up a mimimum local content target in oil and gas to address income inequality and improve skills and employment

A petrochemicals industry emerges

The depth of fraud and corruption that pervaded Nigeria’s banking system is being eliminated through tough, reformative action

The Nigerian Gas Master Plan is part of a drive to diversify the country’s economy and maximise the value of its natural gas reserves

101

Nigeria’s economic uplift Emerging economies are prospering despite the continuing effects of the global financial crises

Local oil companies are tasked with developing sites to boost refining capacity

Set up to overcome governance abuses in the resources industry, the NEITI standards are providing mutual benefit to involved parties

Institutions across the country are delivering change, with reform of the democratic process at the forefront of development agendas

The Economy and Finance

116

Major investors who are prepared to back the development of large plants could transform Nigeria’s petrochemicals industry

Controversial reforms in the oil sector are dividing opinion in Nigeria, but are central to securing the country’s economic future

Nigeria has efforts under way to exploit its natural resources and non-oil sectors

Powering up Development is gaining momentum across the energy sector and is set to address and tackle the country’s chronic electricity problem Invest in NIGERIA 2012-13

Proudly supporting Nigeria's financial sector and the nation's travelling public for over 25 years

The world's trusted source of foreign exchange

www.travelex.com

120

Alternative and renewable energy A look at sustainable energy options, with renewables set to head rural electrification

142

Healthcare: a growing market Healthcare reform is improving national health and creating new opportunities for private-sector investment

Industrial Infrastructure

124 132

Agriculture and Water Travel and transport improvements A new policy is set to improve and update Nigeria’s transport networks

Supporting the IT sector Hailed as the Nigeria’s next big growth area, the ICT industry could depend on foreign investment and native-born IT talent

A political drive by the Nigerian government coupled with private-sector interest is placing the farming industry on the verge of a revival

Media, Tourism and Culture A rich cultural diversity

160

A cinematic experience

Tackling education and vocational training

164

Directory

Nigeria is assigning resources to develop a robust and forward-looking education system

170

Index of advertisers

Ringing the changes in the mobile market Nigeria is experiencing explosive growth in the use of mobile phones and internet technologies

138

Growing the agriculture sector

156

Social Infrastructure

135

146

Nigeria is showcasing its unique cultural mix to a growing number of tourists

The ‘Nollywood’ phenomenon is having a profound effect on the Nigerian film industry

Invest in NIGERIA 2012-13

We have the right solution for every business At Courteville, we create innovative solutions to fit strategies that drive business processes forward

(Left to right) Group Captain MO Salami (ret’d) Chairman, CBS, Mr Adebajomo ED, NSE and Mr Adebola Akindele GMD, CBS

need to grow revenue exponentially, and reduce leakages and inefficiency in systems. Adebola Akindele, Group Managing Director, Courteville Business Solutions plc

Incorporated in 2004 as Courteville Investment Limited, a financial and business advisory services company, the firm is now focused on providing cutting-edge solutions to leading organisations through development of robust business models, revenue-stream improvement and costmanagement processes. These solutions ultimately lead to improved performance for our clients across the board. The team is able to achieve these results with the support of a strong research and development group, which is encouraged to develop new ideas and processes to improve business operations in both the private and the public sectors. This mandate emphasises the

Company philosophy

One of the first major innovations delivered by the team was AutoReg enterprise platform, a motor vehicle administration and documentation system. AutoReg has since become a huge success as a platform for vehicle

No matter the sector or business, we have a solution for improved service delivery data capture and revenue collection in Nigeria and Sierra Leone, operating in 19 states of Nigeria and capturing over 75 per cent of more than 14 million vehicles on Nigerian roads. In recognition of our superior standards and innovativeness, we received double ISO certification in ISO 9001:2008 standard by

2011. The company was officially listed on the Nigerian Stock Exchange on 1 April 2009 and has consistently paid dividends to its shareholders, maintaining an enviable streak of profitability, even in the face of the global financial crisis and economic depression. Courteville is a dynamic, forward-looking organisation with a culture of excellence and creativity. It is this philosophy that influenced a name change to COURTEVILLE BUSINESS SOLUTIONS – a new name to drive our mission of “touching the life of every citizen of the world”. The new name enables us to deliver our brand message in clearer terms – no matter the sector, no matter the business, we have a solution for improved service delivery and, ultimately, revenue generation.

www.courtevillegroup.com

FOREWORD

Goodluck Ebele Jonathan President of Nigeria

igeria’s aim of becoming one of the world’s 20 biggest economies by 2020 remains on track, despite the fact that the world is still living in the shadow of the financial crisis that started five years ago. We understand that investment decisions of institutions the world over are going to be driven by an ever-reducing set of high-quality opportunities, as they rebuild in the shadow of the crisis. With that in mind, I am proud to say that Nigeria has been at the forefront of a global effort to reform banking systems that were vulnerable to systemic risks threatening to topple the global order. It is also fair to say that this country, through its exceptional financial policymakers, including Finance Minister Dr Ngozi Okonjo-Iweala who stood for presidency of the World bank this year, has been able to reshape its financial system to make it able to effectively support this fast-growing country. Whether at the national level or through the largest banks, the stock market or local levels, an infrastructure is being put in place that should instil greater confidence in partners looking to take a more active interest in working with Nigeria, while the fight against corruption continues apace. These improvements were necessary to create the bedrock for growth in Nigeria’s economy, in which energy resources of course play a key role. But it is the changes to the political process, witnessed in last year’s elections, that set the standard for how a modern, democratically thinking country should operate that is of huge importance to our partners. Observers in the wider world are aware of how important this is for Nigeria to face up to its challenges, including religious sectarianism, that are a potential roadblock to becoming a secure and modern economy. Observers of Nigeria will understand that it is best judged in how far its gains have been in these economic areas, as well as in its continuing efforts to modernise society in the areas of healthcare and education. Nigerians display a great passion for tackling the shortfalls where they exist in these areas, and understand that these improvements can only come if power supplies and transport infrastructure are vastly improved. Yet these areas too offer great investment opportunity and a way of partnering with Nigeria as it moves faster down the path of becoming one of the top 20 economies in the world by 2020. Of course, the other key characteristics of being a modern functioning economy, such as a fully developed technological base and infrastructure, will come in time as electricity becomes available at all times throughout the country. It will also happen as larger numbers of well-educated Nigerians in various areas return to the country to live and work after developing skills overseas. With improving transport infrastructures such as rail and port facilities, Nigeria can look more confidently at how it develops its under-rated mineral and agricultural assets. The potential of Nigeria’s vast landscape in these areas has been overlooked over the years because of the success of the oil industry, but their importance will only increase, especially given Nigeria’s strategic importance in west Africa alongside countries demanding these assets. Another area to consider is Nigeria’s petrochemical industry, which will inevitably take greater advantage of Nigeria’s oil supply as facilities improve.

Invest in NIGERIA 2012-13

FOREWORD

But it is inevitably the oil industry and world events that determine the oil price that will have a powerful, short-term effect on Nigeria’s fortunes. The current high oil price ensures that Nigeria’s income can continue to grow from natural resources, but this should improve further as greater efficiencies and more local players are able to participate in this industry. How this can be achieved will also depend on a careful assessment of the manner in which this resource is harnessed and utilised. Being the world’s eighth largest exporter, as well as being the second largest supplier of oil to the US, means that Nigeria has a huge role to play in how the global economy develops. Both on a global level and a national level, Nigerians have woken up to the responsibilities that owning this powerful asset assumes. With this in mind, the sovereign wealth fund was created to ensure that capital raised from the sale of oil assets is carefully managed. This in turn ensures the best returns which can then be employed both to maintain the economy and improve the welfare of Nigerians in the long-term. As the country’s wealth improves, the trappings of a highly developed state will be seen more clearly. Not only will the cultural values of the country – espoused by our greater writers and globally renowned film industry – develop further, but tourism is also likely to become a growing industry for us. In turn, that creates a further burden on ensuring, for example, that a number of our airports are of an international standard to cope with the increased traffic. But those are the challenges of a country keen to deliver on its ambitions of becoming one of the most important economies in the world in the years to come, and we are ready to meet them. Invest in NIGERIA 2012-13

Ahmadu Bello University, Zaria, Nigeria (1962-2012) The Ahmadu Bello University (ABU) Zaria was established on 4 October 1962. It will, therefore, celebrate its Golden Jubilee in October 2012, and the preparations for this occasion are well under way. With a student population of more than 30,000, ABU is easily the largest university in sub-Saharan Africa. From its foundation, the University has had a clearly defined vision and mission, which is set out as follows: (i) Vision: it shall be a world-class centre of learning and research that is responsive to the needs of its immediate community, nation and the world at large; (ii) Mission: to advance the frontiers of learning and break new ground through

teaching, research and the dissemination of knowledge of the highest quality. To live up to its mandate, the Ahmadu Bello University has, over the years, established 12 faculties, nine research institutes and centres and three agricultural colleges. All these institutions are now ICT-compliant. The expansive university is coordinated and operated through a multi-campus system, which takes care of the needs and comfort of students, lecturers and administrators. The effectiveness of this strategy is manifested in the output of most of the academic and research units of the university. We will illustrate this development with respect to only a few of the units, as outlined here.

pilot projects in the six agro-ecological zones of the country for easier access to the technologies and innovations by farmers. Improved technologies in the techniques of forage production and utilisation by animals complements other disciplines in improving productivity in livestock. The Institute collaborates with other national research institutes and international research and development organizations – such as the IAEA, IDRC, ILRI and IITA – to carry out its mandates and achieve its goals.

Faculty of Pharmaceutical Sciences, ABU, Zaria Shika Brown® broilers: the result of years of research

National Animal Production Research Institute (NAPRI), ABU, Zaria

This is the only Institute in Nigeria that is charged with improving the productivity of all livestock (such as cattle, sheep, goats, pigs, poultry, rabbits, camels, donkeys etc) through breeding/genetics, nutrition and the socioeconomics of production. Many years of breeding/selection have resulted in an egg-laying strain of chicken registered as Shika Brown® to produce parent stock for commercial hatcheries. Similar work is ongoing to develop the broiler strain. Dairy technologies and innovations in artificial insemination, breeding/selection and nutrition have produced crossbreeds to increase the milk production of farmers’ herds. Research into sheep and goat production has led to the establishment of sheep and goat

The Faculty is charged with the task of producing high-quality pharmacists for the manpower needs of the nation and also conducting advanced research in pharmaceutical sciences. The stature of the faculty research team has grown remarkably and two areas are now excelling: herbal medicine research, with the potential to screen thousands of medicinal plants for bioactive compounds – a herbal preparation, Herbal 25, for the management of malaria is one of the successes in this area; and neuropharmacology – the Faculty is an Academic Institutional member (AIM) of the International Pharmaceutical Federation.

Institute for Agricultural Research (IAR), ABU, Zaria

The Institute for Agricultural Research (IAR), Samaru, has been the bedrock of crop research in the Savanna region of Nigeria since 1922.

Sir Ahmadu Bello KBE MHA, Sardauna of Sokoto, first Chancellor of the University

The mission of IAR is to generate, disseminate and impart improved agricultural technologies for enhanced crop production and utilisation to achieve national self-reliance in food and industrial raw materials, with sufficient surplus for export. The IAR’s mandate is to conduct research and provide, among others, the following services to agriculture: (a) Genetic improvement of cowpea, cotton, groundnut, maize, sorghum, castor, jatropha, artemisia and sunflower; (b) Proffer solutions to the problems of production of all agricultural food crops grown in the north-west agroecological zone covering Jigawa, Kaduna, Kano, Katsina, Kebbi, Sokoto and Zamfara states. The problems include genetic, socioeconomic, agronomic, soil and water management, mechanisation etc. Significant progress has been made in the development and release of high-yielding, disease- and pest-resistant, drought-tolerant varieties of crops that are acceptable to farmers, processors and consumers. Several of the IAR’s most recent achievements are in the field of research outputs, including: (a) Cultural operations technologies Over the years, IAR has introduced, bred, tested, selected and formally released for production numerous improved crop varieties, alongside their appropriate production packages, pest, disease and

Centre for Energy Research and Training (CERT), ABU, Zaria The Centre for Energy Research and Training, Ahmadu Bello University, Zaria, is a centre of excellence in nuclear science, energy and technology. The Centre has as its mission the promotion of the peaceful application of nuclear science and technology in the fields of agriculture, health, environment, solid mineral development, petroleum resources and other relevant sectors of the economy. The Centre has been carrying out soil-fertility mapping to improve on the application of fertiliser in agriculture. It has also set out a geochemical map, analysed food and other items suspected to be contaminated with radioactivity, and successfully determined the source of a petroleum seepage from a petrochemical plant – which had contaminated nearby ground water – using a radiotracer technique. It has also provided dosimetry services to radiation

weed control, harvesting, processing and storage techniques. (b) Crop-based technologies Important crop varieties from IAR include: 1. Cowpea: Nine varieties of cowpea for different ecologies have been developed and released for production. 2. Cotton: There are 13 cotton varieties that have been developed and released to cotton farmers in Nigeria. SAMCOT 11, SAMCOTT 12 and SAMCOTT 13 are the latest varieties released. They are long staple and resistant to alteranria leaf spots and bacterial blight diseases. 3. Groundnut: 23 varieties have been developed in collaboration with ICRISAT and released to farmers in different ecologies. The most popular are the rosette and drought-resistant varieties. 4. Maize: 14 maize varieties have been released to farmers in different ecological zones. Of the newly released varieties, SAMMAZ 11 is Striga hermonthica resistant, while SAMMAZ 12 and SAMMAZ 13 are extra-early white and yellow grains respectively. SAMMAZ 14 is quality protein maize, which has higher levels of lysine and tryptophan, the two limiting essential amino acids in maize. A lot of the maize consumed in every house in Nigeria in one form or the other is a product of IAR in collaboration with IITA and other national research institutes. Maize is

users in the country, as well as other radiation protection services, and provided analytical services, using nuclear and other related analytical techniques, to both government and the private sector in the country. It has also provided training to Nigerians in the application of nuclear techniques in various industrial processes. Since 2004, the Centre has been operating a nuclear research reactor (Nigeria Research Reactor-NIRR-1) providing analytical services using neutron activation analysis and the training of Nigerians in nuclear science and technology. The Centre also has an array of other research facilities available, such as XRF, both isotopic and tube-type, and the AAS, 14-meV Neutron Generator and Diviner 2000 (a soil moisture monitor). We are now on the verge of installing an isotopic mass spectrometer, which we are sure

SAMMAZ 13 breed produce at IAR, ABU

indispensable in the attainment of national food security and as a raw material in many agro-based industries. 5. Sorghum 45 sorghum varieties suitable for Sahel, Sudan and Guinea Savanna ecologies have been developed and released in collaboration with ICRISAT. Among the most prominent are SAMSORG 17 and SAMSORG40, which are suitable for malt production. Nigerian breweries have since been using these varieties as a substitute for barley. The bulk of foreign exchange needed to import barley is therefore conserved. 6. Artemisia, jatropha, castor and sunflower: these are a relatively recent addition to our mandate crops. Research efforts are rigorously being made to improve these crops in relation to the

Nigeria Nuclear Research Reactor NIRR-1 at CERT, Ahmadu Bello University, Zaria

will prove to be a very important facility. This facility will be able to serve not only Nigeria, but also the West Africa sub-region in the areas of water-resource management.

needs of the end users, particularly those of the pharmaceutical industry and the biofuel prospectors. a. Food technology/product development In order to promote the industrial usage of some agricultural produce, IAR has the Food Science/Product Development Programme. The unit researches into the industrial use of farm produce, as well as training individuals, groups and organisations on processing and the utilisation of farm produce. b. The development of farm and off-farm machineries A number of on-farm and off-farm machineries have been developed and perfected by the Agricultural Mechanization Programme of the Institute. The equipment includes crop threshers, weeders, planters, solar dryers, onion storage rack, mini-silo for grains storage and so on. Entrepreneurs who are willing to collaborate with us for mass production are welcome.

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FOREWORD

Dalhatu Sarki Tafida Nigeria High Commissioner to the United Kingdom

would like to personally welcome you to this edition of Invest in Nigeria, which provides the reader with a comprehensive overview of the various sectors of Nigeria’s economy that are likely to be of particular interest to overseas investors. Nigeria’s relationships with our global partners is something we sincerely appreciate. Without building on the historic and economic ties that bind us together we are less likely to succeed in our stated aim of becoming a top 20 economy by 2020. We are very keen to embrace those partners’ interests in working with Nigeria – partners who are looking at our country with an understanding of the huge investment opportunities it offers. Those opportunities can be best grasped when viewing the rapid changes that are taking place in Nigeria – not just in economic terms, but also in the transformation of the political landscape and policy agenda. Reform of the political process has been a central plank in the process of becoming a modern democracy that shares the same values as leading economies around the world. By creating the right infrastructure we are well placed to achieve the Millennium Development Goals as we move closer to 2015. Last year’s elections were a clear reflection of the exceptional progress that has taken place in this respect. That said, there are plenty of challenges ahead. Investors who are aware of Nigeria’s potential will also be aware of the challenges the country is undertaking to deliver modern infrastructure. Those challenges can be found in the need to quickly update the existing road and rail network to one capable of supporting such a rapidly developing economy, and airports of international standard are needed to service increasing numbers of passengers. Having the right power station capability and effective power distribution is also key to ensuring that economic development can be maintained at the current trajectory. Investors will also be aware of the tremendous strides that Nigeria has taken towards creating a stable financial system that will be a vital backbone to a growing economy. In recent years, Nigeria’s leading financial policymakers have worked tirelessly to tackle a banking system that was in need of updating. We have gone much further than most countries in light of the financial crisis, recreating a system capable of withstanding further shocks that may take place by stripping out failing universal banks. What we are left with is a system that can be effective in supporting growth. The Nigerian Stock Exchange and local financial initiatives are also playing a key role in ensuring stable development of the economy at every level. The recently developed sovereign wealth fund – a noteworthy sign to international partners of Nigeria’s long-term interest in stabilising its revenues from energy production – is another step in the right direction. By ensuring we have the right measures in place, both economic and democratic, Nigeria can look to the outside world with fresh excitement about partnering in various respects. As leading financial institutions have identified, Nigeria has all the right characteristics for becoming a global powerhouse economy. With the efforts put in place so far, and a willingness and determination to foster better relations with partners around the world, Nigeria is excellently placed to make progress and move forward. Invest in NIGERIA 2012-13

Pushing boundaries An emerging leader in the energy sector

SIRIUS GROUP In search of profitable business opportunities during a downturn, Sirius Group is currently diversifying its operations. The Group has diversified into power with an ongoing 600MW coal power plant project in West Africa, which involves over 69 million tonnes of coal concession, $5bn PPA to supply over three billion kilowatt hours per annum and in excess of $1bn infrastructure development over a 15-year period. This is expected to kick off in the last quarter of 2012 and will provide over 10,000 jobs. Additionally, the group has taken its first steps into upstream through its subsidiary, Sirius Energy Resources (SER). SER has acquired the rights to exploration of the Grein block in the neighbouring Niger Republic, in the vicinity of which other companies are already producing. The block covers approximately 22,020 square kilometres and falls within the oil-rich Cretaceous-Tertiary West African Rift system, running all the way from Mali to Kenya. The bordering blocks, Tenere and Agadem, are operated by CNPC and have reserve estimates of one to three billion and 0.5 billion barrels of oil respectively. Similarly, Equatorial Guinea is another country of significant interest for Sirius Group, as the company is involved with GEPetrol for entering into exploration and oilfield development partnership. Other future projects for the group include a plan of expansion and partnership in Kazakhstan in areas of exploration, refining and product lifting. The Group has a holding company, Sirius Corporation LLC, strategically located in Dubai, UAE, with a commodity trading office in the United Kingdom. The holding Company is responsible for overseeing all of Sirius’ global operations, specifically in the energy trading, power and mining sectors of the economy. With the group’s plan to go public in a couple of years, its focus has been to develop a diversified business structure, which will make it a one-stop shop for investors. This geographical diversification will give additional resilience to the business structure in its entirety and boost potential investors’ confidence in the group, due to its interest in a wide geographic range, spanning different industries. Tony RAPU Managing Director and CEO

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the policy agenda

Realising Nigeria’s investment potential

A new road leads from Abuja’s airport to the city centre. Major changes are under way across Nigeria to upgrade critical infrastructure

Invest in NIGERIA 2012-13

the policy agenda

Nigeria has experienced a decade of democracy, a credible election in 2011, and is now positioned as one of the world’s fastest-growing economies. Heather McKenzie considers the country’s investment potential in light of the recent transformation policy outlined by President Goodluck Jonathan

etween 2003 and 2010, Nigeria recorded average GDP growth of 7.6 per cent, in part driven by an ambitious reform agenda and almost a decade of political stability. With the largest population in Africa – around 167 million people – and significant reserves of natural resources, Nigeria is attracting increasing interest from international investors. The World Bank’s Country Brief on Nigeria states: “With these large reserves of human and natural resources, Nigeria is poised to build a prosperous economy, significantly reduce poverty, and provide health, education and infrastructure services to its population needs.” But there are challenges ahead for Nigeria if it is to fulfil such potential. At a meeting in January 2012, at the London School of Economics, Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), said the Nigerian economy was still plagued by some daunting challenges, despite its robust growth. These challenges, which have slowed down the transmission of growth into higher employment opportunities, include weak links between the main growth drivers of agriculture and manufacturing and the high cost of infrastructure. “The need for low-cost, long-term infrastructure financing requires more than the Central Bank of Nigeria alone can tackle,” he said. “Major bottlenecks and supply-side constraints, including an enabling legal framework, have slowed the responsiveness of some CBN reform measures.”

In a developing economy such as Nigeria’s, the central bank should not only offer price stability, but also play a developmental role to support positive economic transformation and rapid growth, he said. In its appraisal report of its economic and power-sector reform programme in Nigeria, the African Development Bank Group (ADB) pointed out that the second-round effects of the global financial crisis and its associated economic downturn had adversely impacted the economic outlook of Nigeria. “This situation still presents tremendous macroeconomic challenges for Nigeria, as oil continues to play a dominant role in the economy, accounting for over 95 per cent of exports and nearly 80 per cent of government revenue. It also threatens the significant gains from reforms successfully implemented by the Federal Government of Nigeria (FGN) since 2003, and the subsequent economic performance achieved so far.”

Signs of economic improvement Overall, recent developments indicate that the macroeconomic framework of Nigeria is improving as a result of past successful reforms, the government’s response to the global crisis and the improving external environment, said the ADB. However, major constraints remain and have been exacerbated in the context of the global crisis, it added. Challenges faced by the government include maintaining macroeconomic stability, ensuring the banking sector’s soundness and addressing power-sector bottlenecks. This will create an enabling environment for private activities in order to sustain growth in the non-oil sector, create jobs and reduce poverty. Major changes are under way in the country to diversify the economy beyond petroleum, improve food sufficiency, upgrade critical infrastructure and increase private-sector participation in the economy, says Niyi Yusuf, managing director of consultancy firm Accenture Nigeria. He cites seven important changes that “have the Invest in NIGERIA 2012-13

Foreign policy and the investment environment in Nigeria today The Nigerian economy has undergone a major transformation, which is reflected in its impressive growth profile. With an almost eight per cent growth rate in 2011, the economy is rightly ranked as one of the fastest growing in the world. The Nigerian Government is targeting a sustainable double-digit growth rate, which makes the country an attractive proposition for emerging-market investors. Nigeria has fantastic economic potential, with: • an estimated population of 160 million people, it is Africa’s most populous nation; • a low-cost labour pool; • the largest domestic market in sub-Saharan Africa; • oil reserves: it is the sixth largest oil producing country in the world; • the most viable natural gas region in Africa; • huge reserves of several types of critical solid minerals; • an expansive and fertile land for agriculture; • a massive, dynamic and human capital resource; and • an attractive geo-strategic location. Nigeria’s potential as an economic powerhouse is not in doubt. This current positive trajectory makes it an investor’s haven. But Nigeria cannot do it all alone; and the Government’s approach is one of partnership. It is therefore, inviting credible and committed foreign investors to come and join it in the enterprise of translating the great potential of the country into sustainable economic growth and development. Nigeria’s foreign policy is now therefore investment-driven: while the Government is committed to providing an enabling environment, its Embassies and High Commissions worldwide have been mandated to promote Nigeria’s impressive investment environment and opportunities. Prospective foreign investors can now view summaries of Nigeria’s investment documents on Government websites. Foreign investors in Nigeria could expect to get good returns on their investment; there is a superb, world-class infrastructure; discernable and consistent business policies; security of lives and property; the government is committed to the rights of investors; there is ease of commencing business operations, etc.

In other words, the new Nigerian investment environment is one where stable electricity supply, sterling and efficient port facilities, expansive and modern transportation networks, potable water supply, and security of lives and property can be taken for granted as existing official bottlenecks to business operations are being dismantled towards minimising the cost of doing business and the period of starting new ones. The Nigerian Government is committed to providing and sustaining this investment environment. The following areas of reform soundly attest to that commitment:

Governance

Nigeria is a stable democracy. Military rule ended with the inauguration of a civilian administration in May 1999. The country has since organised three general elections, in 2003, 2007, and 2011, all resulting in a civilian-tocivilian handover of power. Reform of the democratic process is a crucial aspect of the current administration of President Goodluck Jonathan’s transformation agenda.

Legal framework

With few exceptions, the Nigerian Investment Promotion Commission (NIPC) Decree of 1995 allows 100 per cent foreign ownership of firms outside the petroleum sector, where investment is limited to existing joint ventures or production-sharing agreements. Nigerian laws apply equally to domestic and foreign investors. Nigeria regulates investments in line with the World Trade Organization (WTO) Trade Related Investment Measures (TRIMS) Agreements. Foreign companies operate successfully in Nigeria’s service sector, including telecommunications, accounting, insurance, banking and advertising.

Privatisation

Nigeria has maintained liberal market-oriented economic policies, including privatisation. The Privatization and Commercialization Act of 1999 established the National Council on Privatization to implement the programme. The Bureau of Public Enterprises has focused on key sectors, including telecommunications and power, and calls for core investors to

acquire shares in enterprises that were formerly state-owned. The government has substantially opened up the telecommunications sector.

Expropriation and compensation

The Companies and Allied Matters Decree of 1990 prohibits the nationalisation or expropriation of foreign enterprises, except in cases of national interest. The government has not expropriated or nationalised foreign assets since the late 1970s.

Investment and dispute settlement

Disputes between corporate bodies and the Government of Nigeria, as well as between Nigerian businesses and foreign investors are handled by Nigeria’s civil courts.

Import policies

In September 2008, the Government issued the 2008-2012 Common External Tariff (CET) Book that harmonises its tariffs with its West African neighbours under the Economic Community of West Africa States (ECOWAS) CET. The CET has five tariff bands and import duties were reduced on several items. The five are: zero duty on capital goods, machinery, and essential drugs not produced locally; five per cent on imported raw materials; 10 per cent on intermediate goods; 20 per cent on finished goods; and 35 per cent on luxury goods. The Nigeria Customs Service (NCS) and the Nigerian Port Authority (NPA) have exclusive jurisdiction over customs service and port operations. The modernisation and professionalisation of the NCS and NPA have resulted in reduction of port congestion and the very welcome 48-hour clearance time. To reiterate, Nigeria today is an investor’s haven. The Government supports competitive business practices and protects private property rights. It is hereby inviting credible and committed foreign investors to partner it in its developmental project. This is an important pillar of Nigeria’s foreign policy today. It is within this investment-friendly foreign policy that the NIIA is making strenuous efforts to give a new life to Nigeria’s diplomacy. Nigeria’s foreign policy is increasingly driven by the people. In the many NIIA brainstorming

Mandate The NIGERIAN INSTITUTE OF INTERNATIONAL AFFAIRS was established in 1961 as an independent and non-profit making organisation and became a government-funded Institute in 1971. The Act of 1971 (CAP.31 1) establishing the Institute states its objectives as follows: (a) To encourage and facilitate the understanding of international affairs and of the circumstances, conditions and attitudes of foreign countries and their peoples; (b) To provide and maintain means of information upon international questions and promote the study and investigation of international questions by means of conferences, lectures and discussions and by the preparation and publication of books, reports or otherwise as may seem desirable so as to develop a body of informed opinions on world affairs; (c) To establish contacts with other organisations with similar objectives. Structure Patron and Supervisor The President of the Federal Republic of Nigeria is the Patron of the Institute. Until 2006, the Institute was supervised by the Vice-President of the Federal Republic of Nigeria. At present, that responsibility rests with the Minister of Foreign Affairs. The Governing Council The Governing Council of the Institute consists of the following members appointed by the President: • A Chairman • The Director-General; a representative of the Ministry of Foreign Affairs • Three Persons from Federal Universities in Nigeria. However, no two persons shall be appointed from the same University. • Six persons with special interest in international affairs The Director-General: Professor Bola A. Akinterinwa, PhD, Sorbonne The Director-General is appointed by the President. He is both the Chief Executive and the Chief Research Officer of the Institute. The Department of Research and Studies The Research and Studies Department was established in 1961. It is headed by a Research Professor who is responsible to the Director-General. The Department has the following divisions: • International Law and Organisations • Security and Strategic Studies • International Politics • International Economics • African Politics and Integration

sessions on various issues in Nigeria’s foreign policy, civil society organisations, academics, businessmen and media professionals have taken active part. So have seasoned, retired ambassadors and public servants. Indeed, the NIIA has deepened its cooperation with several other research institutions with a view to also explain the place of investment in Nigeria’s foreign policy.

Library and Documentation Services Department The Library is computerised. Some of the subscriptions, especially for journals are online. The Press Library has a stock of more than 380,000 newspaper clippings. There are seven professional Librarians, including the Director. Administration and Finance Department The Department renders support services. It ensures that resources necessary for the smooth running of the institute are made available, as well as ensuring the proper maintenance of equipment. The Department is headed by a Director who supervises 15 qualified Administrative and Accounting Staff. Publications The NIIA has two major journals and several publications, such as: • The Nigerian Journal of International Affairs (NJIA) • The Nigerian Forum • Survey of Nigerian Affairs • Public Lecture Series • Monograph Series The Dialogue Series The Dialogue Series with sister institutions were instituted as one of the channels for fulfilling the mandate of the Institute. It is an intellectual exercise designed to explore with opinion formulators in other countries some carefully delineated current policy issues in international relations. To this extent, the Dialogue Series enable Nigeria through the NIIA to assess the sincerity or otherwise of other nations on foreign policy issues, particularly those relating to African affairs. It is also an avenue for the country’s perception of key global issues and pattems of relations with Nigeria. Collaboration with other Institutions The NIIA was fashioned after the Royal Institute of lnternational Affairs (RIIA), also known as Chatham House. The relationship with Chatham House has been revamped. Chatham House had provided valuable assistance to the Institute. The NIIA is in collaboration with many institutions, such as the South African Institute of International Affairs (SIIA); Babangida School of International Studies, University of Liberia; Kofi Annan International Peacekeeping Training Centre (KAIPTC); Indian Council of World Affairs (ICWA); International Peace Institute (IPI), New York; the Institute of Global Governance, South Africa; and China Institute for Contemporary lntemational Relations (CICIR). Teaching and Award of Diploma The NIIA is involved in teaching at the Foreign Service Academy and Military Institutions such as the National Defence College, Abuja and the Command and Staff College, Jaji. The Institute in the past has awarded postgraduate Diploma in International Relations; plans are under way to upgrade the teaching programme.

Investment serves as a catalyst in the efforts being made to promote economic growth and development which, in turn, will ensure the well-being of the people. And true enough, a well-developed global community without Nigeria can only create a vacuum. In other words, an undeveloped Nigeria can only be to the detriment of the developed countries. It is, therefore, necessary for investors to take

Nigeria more seriously, put resources together and reduce global poverty and threats to global peace and security by ensuring new flows of direct investment funds to Nigeria. 13/15 Kofo Abayomi Road, Victoria Island, Lagos, Nigeria Tel: +234-01-9500983; Email: director-general1@hotmail.com, dgeneraI@niianet.org

the policy agenda

prospects of leading to double-digit growth in GDP in the coming decade – we have had above seven per cent GDP growth since 2007 – and can lead to Nigeria becoming one of the top 20 economies in the world”. These are: • Privatisation of utilities/electrical power to improve generation to above 20,000MW by 2020; • Deregulation of the downstream oil industry; • Liberalisation of the upstream oil industry and increase of local content; • Focus on the gas industry to boost power and export; • Transformation of the agricultural value chain for six strategic crops to boost food production and reduce imports; • Policy to improve broadband access nationwide; and • Private-sector investments in public-private partnership mode to provide critical infrastructure. Overarching these changes is The Transformation Agenda; a set of priority policies and programmes proposed by President Jonathan that will run until 2015. The aim of the agenda is to address the lack of continuity, consistency and commitment to agreed government policies, which has resulted in the growth and development of the Nigerian economy without a concomitant improvement in the welfare of the country’s citizens, affected by unemployment, inequality and poverty. The agenda covers the macroeconomic framework and economic direction of the country, including an aim to ensure greater harmony between fiscal and monetary policy, and to pursue sound macroeconomic policies. It also tackles job

Olusegun Aganga, Nigeria’s trade and investment minister, seeks to enhance the country’s intra-African trade

Invest in NIGERIA 2012-13

creation, charging the government with pursuing policy measures to invigorate sectors of the economy and improve their employment-generating potential; for example, a youth employment safety-net support programme, which includes conditional cash transfer and vocational training. Other areas addressed by the agenda include: public expenditure management; governance; justice and the judiciary; foreign policy and economic diplomacy; legislature; education; the health sector; labour and productivity; infrastructure policies, programmes and projects; information and communications technology; power; the Niger Delta (whereby investment will be made to encourage peace and stability, and drive sustainable socio-economic development in the area in order to reduce poverty and unemployment, and improve security); and transport. “The Transformation Agenda is a serious attempt to provide critical human and physical infrastructure, to transform and modernise the Nigerian economy,” says Yusuf. “It is required to diversify income sources, reduce import dependency, transform the economy and improve the competitiveness of Nigeria.”

Transforming growth into tangible change Samir Gadio, emerging markets strategist at Standard Bank in London, says the key challenge for Nigeria is structural transformation. “The main concern is the extent to which the economic growth rate has translated into tangible change on the ground,” he says. “In reality, poverty and inequality are still very high in the country, and there is also a big infrastructure gap – there is virtually no functioning electricity grid, for example, and many people have to use generators.” Another concern is the slow pace of government reform and opposition to the Sovereign Wealth Fund bill by some state governors, who fear they may lose revenue as a result. In January it was reported that the Nigerian government would produce a new draft of the law to overhaul its oil and gas industry, which had been with parliament since 2008. “Such uncertainty about legislation means international companies are reluctant to invest more money in the oil sector,” explains Gadio. He also says there is a mixed perception of Nigeria among investors from overseas. “International investors are looking at emerging markets and, in doing so, they are increasingly looking at Africa. On the one hand, Nigeria is recognised as one of the leading economies in Africa – it is too big to ignore. South Africa and Nigeria have liquid markets in a continent characterised by the illiquidity of its assets. Also, Nigeria has a large population, which provides a potentially

the policy agenda

Nigeria: map and statistics Area:

923,768 sq km Land: 910,768 sq km Water: 13,000 sq km

Population: Growth rate:

significant consumer story. At the same time, there is a perception that there is not a great deal of transparency in public policy, but this may be starting to change gradually.” Nigeria has been identified by Goldman Sachs Asset Management (GSAM) as a country that could achieve growth market status in the medium term. Jim O’Neill, chairman of GSAM, says growth market economies will be the driver of the world economy in the coming decade. These economies include Brazil, Russia, India and China, as well as what O’Neill calls the “Next 11” or “N11”, which are the next most-populous countries beyond these four. Nigeria is among the N11, being

Around 170,123,740 (July 2012 est) 2.553% (2012 est)

Source: CIA – The World Factbook, www.cia.gov

a country that has 20 per cent of Africa’s population, and it could become a growth economy within the next 20-30 years. Nigeria’s potential is also cited by JPMorgan Chase, which is opening a branch in Nigeria. John Coulter, the bank’s chief executive for sub-Saharan Africa, has said that senior management identified significant growth opportunities in Nigeria over the next decade. Moreover, the bank’s clients are increasingly investing in the country and in Africa in general. ■ Heather McKenzie is a freelance editor and journalist in the financial services industry Invest in NIGERIA 2012-13

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NOSAK GROUP We are a diversified business group with interests in key sectors of the Nigerian economy, including agriculture, manufacturing, international trade and particularly the importation of industrial chemicals for distilleries, pharmaceutical industries, paints and allied industries. With over 20 years of experience in birthing and running businesses, we remain a leading national and regional player with eyes on the world at large. GRAND PETROLEUM An integrated energy trading company in Nigeria’s downstream sector with strong international alliances and state-of-the-art facilities, such as a 30,000 MT tank farm in the Calabar and a 25,000 MT lubricant plant in Lagos. NOSAK HEALTHCARE The pharmaceutical arm of the group, we are affiliated to major global players in the healthcare industry in Europe and South East Asia. We have a robust product profile and a state-of-the-art manufacturing base to produce various local drug labels for everyday needs. NOSAK DISTILLERIES We enjoy the distinction of being the pioneer in this business sector. We were incorporated in 2001 to manufacture various industrial and consumer chemicals, particularly ethanol. We have two modern distilleries for ethanol production at the Amuwo Odofin Industrial Layout in Lagos, to meet 70 per cent of Nigeria’s local demand. NOSAK HAULAGE A provider of logistics, bulk haulage and distribution services to other corporate organisations within the private and public sectors of the economy, with a fleet size of 90 trucks and haul of 215,000 MT per annum. NOSAK PLASTICS The industrial packaging subsidiary manufacturing high-quality and durable plastic containers for corporate organisations. Our products range from one-litre bottles to 250-litre drums. NOSAK FARMS Since 1991, we’ve made an impact in cash cropping. Today, the farm is a forward-integrated agro-allied company, with its main thrust in integrated oil palm plantation. CCD STORES CCD is a trading concern that focuses primarily on the importation and distribution of a wide range of consumer goods to largely retailers, cooperative societies and sales outlets.

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the policy agenda

Democracy and reform: looking to the future

A woman casts her vote in northern Nigeria during the 2011 elections. Extending democracy and reform will play a key role in enabling future prosperity

Invest in NIGERIA 2012-13

the policy agenda

Nigeria has made enormous strides in recent years in its journey towards democracy. Adrian Holliday assesses the road ahead and whether President Goodluck Jonathan can continue with his reform agenda, create jobs and draw quality investors to the country

here’s no getting away from the facts. Nigeria has a starkly unequal distribution of resources, startling ethnic and socioeconomic fault lines, and there are real concerns about Islamist group Boko Haram’s campaign of violence. Yet Nigeria has come a long way since 1999, when military rule under General Abdulsalami Abubakar came to an end and democracy took hold, says London-based Norton Rose lawyer Bayo Odubeko. “What people have to remember is that Nigeria is a country that only gained independence from the British in 1960,” he says. “We have been building our democratic and political system over these past 50 years. Nigeria has not had the same sort of timeline that the UK and other developed countries have had to develop more robust and accountable systems.” Looking back over the past 12 years, he believes that “[democracy] has been a key part in rebuilding Nigeria and the increased foreign direct investment it has attracted. The important thing is to maintain democratic and political accountability, and while we’re not there yet, we’re on track.” Elizabeth Donnelly, Africa programme manager at London’s Chatham House, an independent international think tank, says the country has achieved a lot in terms of its young democracy. “There have been two peaceful transitions of power,” she says. More recently, there has also been the creation of the economic and financial crimes commission. “It is a testing time for Nigeria, but the progress at last year’s elections and in the reform agenda is encouraging.”

Potential powerhouse A lot of Nigeria’s issues, such as the large gaps between rich and poor, its fractious and fledgling democracy, go back to colonial times. Nigeria is a hugely diverse country in terms of religious and ethnic complexion; managing and governing such diversity is a stupendous challenge, but Nigeria is also an African powerhouse – or it could be. With a population of 170 million people and as a huge producer of oil, Nigeria is expected to see its economy

climb to $400 billion by 2016, from $268 billion this year, according to the International Monetary Fund (IMF). It is envisaged that Nigeria’s gross domestic product (GDP) could even overtake that of South Africa by 2025. Certainly, there has been a substantial power shift to the south of the country in terms of central government over the past 12 years. President Goodluck Jonathan, the former vice-president, inherited his position upon President Umaru Yar’Adua’s death in 2010, following a long illness. Jonathan then went against the ruling People’s Democratic Party’s tradition of presidential power-sharing between north and south. It was a seemingly smooth, almost meteoric rise to power. Military amnesties followed.

Steps to encourage investment Tim Newbold, of pan-African communications consultancy AfricaPractice, is hopeful for the future, but he doesn’t play down the challenges facing President Jonathan. “A series of vital economic reforms are on the agenda this year, including the privatisation of the power industry and the restructuring of the upstream oil and gas sector through the Petroleum Industry Bill, which should kick-start investment when it is passed. Alongside that you have potential for the complete removal of the fuel subsidy, which would encourage refining investment in Nigeria,” he says. “The interesting thing here is that most people don’t object to the basic economic argument behind this move. It is whether the government can be trusted to use the savings to drive the economy. It’s the trust deficit issue that drove protests in January, and how the government is seen to address the underlying issues, that will be key to Nigeria’s success in 2012.” The fuel subsidy is a highly sensitive issue. The Economist claims it costs Nigeria $7 billion every year, sucking cash from the state and filling the pockets of various middlemen en route, yet President Jonathan has vowed to deal with the issue this year. If he succeeds where other Nigerian leaders have failed, the achievement will boost support for him and, in the longer term, may even encourage more people to become involved in local and national politics. Recently, President Jonathan persuaded World Bank managing director Ngozi Okonjo-Iweala to return home from Washington to become ‘super-minister’ for finance and the economy. The governor of Nigeria’s Central Bank, Lamido Sanusi, is also a reformer and uncompromising with regard to spending. “Subsidies should be paid from savings and not from borrowing and deficits,” he declared during a BBC radio interview in January 2012. Invest in NIGERIA 2012-13

Sustainable business, social reponsibility About our business

British American Tobacco (BAT) was founded in 1902. We were born international, with roots in Africa, the Americas, Asia and Europe. We are the only international group with significant interest in tobaccoleaf growing, working with thousands of farmers internationally. We take a long-term view, focusing on the quality of our business and how we work. So we also seek to be recognised as industry leaders and to be the first-choice partner for governments, NGOs, investors and potential employees. We will only do this by continuing to demonstrate that we are a responsible tobacco group, with a sustainable business, outstanding people and superior products. That is why our strategy to deliver our vision has four elements around which all our efforts revolve: Growth, Productivity, Responsibility and building a Winning Organisation. For more than a century, British American Tobacco has built a reputation as a leading, fast-moving consumer goods business with brands sold in over 180 markets through more than 15 million retail outlets. The British American Tobacco Group purchases about 400,000 tonnes of tobacco leaf a year, grown by some 250,000 farmers with about 80 per cent by volume coming from suppliers in emerging economies. The company has been in Nigeria since 1912, and in 2012 will be celebrating its 100th anniversary. In 1951, Nigeria Tobacco Company Limited (NTC) was incorporated as a subsidiary of British American Tobacco Limited. British American Tobacco Nigeria was incorporated on 11 July 2000 and subsequently merged with Nigerian Tobacco Company on 6 November the same year. The company is a fully owned subsidiary of the British American Tobacco Group. On 24 September 2001, the British American Tobacco Group formally signed a Memorandum of Understanding (MoU) with the Federal Government of Nigeria, with the immediate requirement being the establishment of a new factory in Ibadan. On 17 June 2003, BAT Nigeria completed and commissioned its factory in Ibadan. BAT Nigeria has continued to invest in technological developments, while at the same time ensuring

BAT Nigeria commissioned its factory in the western Nigerian city of Ibadan in June 2003

employee skills are well developed. Our manufacturing processes have been certified by the Standards Organisation of Nigeria, in compliance with ISO 9001:2008. The investment started a process that has impacted all aspects of the tobacco industry, from leaf growing, through to the manufacture and distribution of tobacco products. BAT Nigeria commenced export operations to West and Central Africa in 2006. Currently, we export our products to 14 countries within the subregion. Statistics have shown that more than 70 per cent of Nigerians are classified as poor and living below the poverty line of less than one dollar a day. Poverty is especially severe in rural areas, where many people have little or no access to essential services because infrastructure is limited. The BATN Foundation was established by BAT Nigeria as a community empowerment organisation to help improve the livelihood of Nigerians, especially in rural areas of the country. The foundation was incorporated on 13 November 2002 as a Company Limited by Guarantee. Its establishment is in fulfilment of the MoU that BAT Nigeria entered into with the Federal Government of Nigeria in September 2001.

Corporate organisations can assist in developing socioeconomic sustenance in emerging economies The BATN Foundation operates throughout Nigeria on a series of local initiatives and projects, with focus on the following key areas: • Agricultural development • Potable water supply • Environment protection • Vocational skills development

BAT Nigeria’s contribution to socioeconomic development

• Total value of social investment in the country since inception in 2002 is more than N1.3 billion; • The BATN Foundation applies rigid project-screening, monitoring and follow-up processes to ensure that its investment is effective;

BAT Nigeria has continued to invest in technological developments at the Ibadan plant

• As at end of 2011, 108 community projects have been executed in the 36 states of the Federation and the Federal Capital Territory; • At November 2011, 75 students have obtained scholarships to study agriculture and related disciplines under the BAT Nigeria/BATIA (British American Tobacco Iseyin Agronomy) scholarship scheme; • Capacity-building workshop was organised for scholarship awardees in partnership with the Fate Foundation; • As part of our CSR initiatives, $170,000 has been committed to the University of Lagos, in partnership with USAID and Kansas State University, to enhance the academic curriculum of the Faculty of Business Administration in specific areas. It is often believed that, with the technical knowledge and rapidly increasing interests of many corporations in building sustainable markets, corporate organisations can assist governments in emerging economies in developing socioeconomic sustenance, particularly at the rural level. By listening to the expectations of our stakeholders in successive dialogue sessions, BAT Nigeria as an organisation and a business realised that one of the most important social

interventions required from a business such as ours is the provision of voluntary financial and technical support for the development of citizens and communities in which we operate.

Economic contributions

• Total tax payment as at the end of 2011 totalled N 158.2 billion; • Facilitation of the FDI of NAMPAK Limited in Nigeria. NAMPAK Limited invested $34 million in the country by building a printing and packaging plant in Ibadan; • Capacity-building programmes for the Nigerian customs, CPC and SON in support of the fight against illicit trade; • Other capacity-building programmes include support to EFCC, NIPC, NOTAP, Nigerian Immigration Service, Ministry of Commerce, Ministry of Finance, Nigerian Copyright Commission, and the intellectual Property Lawyers Association; • The company’s ‘Proudly Nigerian’ campaign was launched in 2002 to coincide with Nigeria’s drive for greater international visibility and appreciation, following the country’s return to democratic governance; • We directly employ about 850 full-time staff across the country. Each summer

we also hire up to 400 temporary staff for leaf processing. We have 850 farmers on contract, 400 employed via business partners in direct distribution and other services, and we also buy goods from about 610 local companies. In addition to this, a large number of wholesalers and retailers are known to derive some income from the selling of legal, regulated, tax-paid tobacco products. The Nigerian community seeks in many ways to encourage the private sector to volunteer its resources to fight poverty. BAT Nigeria’s performance in this regard has been widely appreciated and applauded by stakeholders.

For more information, visit: www.batnigeria.com Tel: +234 1 4617500-2 Fax +234 1 4617515

the policy agenda

There is no doubting Nigeria’s entrepreneurial spirit. Its economy, despite the country’s problems, has been seeing average annual growth in excess of seven per cent

With most people in Nigeria relying on private generators for power, investment in electricity networks is much needed

Samir Gadio, emerging markets strategist at Standard Bank, thinks that Nigerian politicians have two options for broadening the country’s economy, and creating more jobs in the longer term, if it is serious about loosening its dependency on the oil and gas sector. “You could argue that Nigeria could be an attractive market for Asian companies, but it is complex. There are substantial electricity [supply] worries. You need to rely on generators, which are very expensive – about 30 per cent of total costs in the Nigerian manufacturing sector.”

Routes to growth The second route, says Gadio, is agriculture. “It has been overlooked, which is typical of oil-producing countries. There is a push on the government side to boost the primary agricultural sector. You could argue that Nigeria has a similar climate to that of Ghana, so there is cocoa potential, not to mention other commodities such as coffee, cotton in the north of the country, and rubber,” he says. Invest in NIGERIA 2012-13

There is no doubting Nigeria’s entrepreneurial spirit. Its economy, despite well-documented problems, has been seeing average annual growth in excess of seven per cent.

The international front On the international front, President Jonathan’s stature and reputation has been boosted following support for reform in Libya and Côte d’Ivoire. The European Union has made promises to support Nigeria with expertise and technical help regarding the Boko Haram problems and security worries in the Niger Delta. If Jonathan can continue with his reform agenda, create jobs and draw high-quality private investors to the country – as well as keeping the lights on – then the roots of democracy will dig deeper into the country. Despite all the very considerable challenges, there is much hope. ■ Adrian Holliday is a business and financial writer who contributes to publications including The Observer and The Sunday Times

INNOSON WASTE BINS & PALLETS

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IVM 6660 A

IVM 6660 A The Innoson IVM 6660 A medium bus is one of the vehicles being manufactured at the IVM Innoson Plant, Nnewi, Nigeria. It is suited for intercity use, executive transportation, school and staff bus with well-spaced, comfortable seats. Designed and built with a full air conditioning system and hard-disc DVD TV player. Seat capacity: 26, driver inclusive. IVM 6540 2.7 L The Innoson IVM 6540 2.7L bus comes in two varieties - the 17+1 (18) and 20+1 (21) seater. Stylishly designed with enough legroom, equipped with seat belts on all seats in accordance with road-safety standards. Fully air conditioned, power steering, power windows, CD player, powerful Wi-Fi speakers and high fuel economy. Also equipped with catalytic converter (EURO III) and ABS.

IVM 6540 2.7 L

IVM 5251

IVM 5003 Swing-arm refuse truck and IVM 5251 Series garbage compactor The IVM refuse disposal vehicle comes in heavy-duty and semi-heavy-duty models. Designed with improved rugged structure and payload for a complete and all-round refuse collection and disposal.

IVM 6800 The Innoson IVM 6800 is the mini luxury bus, the ultimate in style and reliability with air conditioning. Most suited for long-distance travels, with comfortable seats and more legroom for your comfort. It combines luxury and economy for the comfort and safety of passengers while ensuring cost effectiveness in operation and optimal return on investment. It is also equipped with a hard-disc DVD TV player. Seat capacity: 33, driver inclusive.

IVM 6800

IVM 5000 The Innoson IVM 5000 minibus 14 +1 (15) seater is designed and built for both commercial and private uses. It has a very low running cost as well as easy maintenance and efficient fuel economy with air conditioning. IVM 6125 The 70 seat (45-25 seats) bus offers an excellent option for urban mass transportation. The IVM 6125 bus more than meets your needs as a Mass Transit Bus. Powered by six strong, water-cooled cylinders, a diesel engine and a transmission system that assures excellent utilisation of available power. Power steering ensures easy manoeuvrability. Full air brake; drum type with dual-circuit service brake system. Fully air conditioned with ample leg and headroom.

IVM 5000

Also equipped with the following: Route plate, ABS and automatic slack adjuster, front and middle double swing-in-doors, curtain, retarder. IVM 5003 IVM 6125

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the policy agenda

Working to achieve the Millennium Development Goals

Continuing progress has been made towards the Millennium Development Goal of universal education by 2015

Invest in NIGERIA 2012-13

the policy agenda

Nigeria’s efforts towards meeting the Millennium Development Goals have resulted in many positive achievements, but the country’s oil wealth could prove to be an obstacle to development, as Bija Knowles discovers

“N

igeria is running behind in the goals, but I am optimistic that with necessary support from all stakeholders, the goals will be attained.” These were the words of Precious Gbeneol, senior special assistant to President Goodluck Jonathan, in reference to the Millennium Development Goals (MDGs) during an address to Nigeria’s Youth Parliament at her office in Abuja in January 2012. The MDGs were devised by the world’s leading development organisations and developing countries with the aim of placing key human development factors at the heart of the international agenda. The goals range from ending extreme hunger and poverty to reducing child mortality, and improving the quality of maternal healthcare. So, what has Nigeria accomplished since the eight MDGs were launched in 2000, and what is the likelihood that all of the goals will be achieved by the target date of 2015? There are no easy answers; measuring and planning for the MDGs is dogged by an absence of reliable, recent data on many of the indicators. This is due, in part, to a lack of funding for data generation and management, as well as a lack of infrastructure and inter-state cooperation. The politicisation of data is also a factor – officials may be reluctant to share data for fear of the political or financial consequences.

Evaluating progress The data that is available shows that steps have been made in some areas. For example, the targets on reducing child mortality and improving maternal health could be attainable by 2015. However, achievements in other areas have been painfully slow. The goal of environmental sustainability is looking unreachable, as the forest area in Nigeria shrunk from 14.4 per cent in 2000 to 9.9 per cent in 2010. The first of the eight MDGs aims to eradicate poverty and hunger. One of the targets is to halve (from 1990 to 2015) the proportion of people whose income is less than $1 a day. According to the United Nations (UN), the proportion of people living in extreme poverty in developing regions has fallen from 46 per cent to 27 per cent globally. In contrast to this global figure, Nigeria is one of many countries in sub-Saharan Africa that are still far from making progress towards this target.

In 2010, 68 per cent of the population was living on less than $1.25 per day. However, there have been some success stories, such as the National Special Programme for Food Security, which has helped to almost double agricultural yields and farmers’ incomes. World Bank figures on the second MDG of universal primary education show that 74.4 per cent of children completed primary school (78.8 per cent of boys and 69.7 per cent of girls) in 2010. The percentage of children completing primary school peaked at 88.7 per cent in 2006, before falling to 70 per cent in 2008, and it has been rising slowly since. Another important indicator on educational progress is literacy – in 2009, 71.8 per cent of 15- to 24-year-olds were considered literate, according to UN data, compared with 68.9 per cent in 2003. According to the 2011 MDG Report from the UN, of the total number of primary age children in Nigeria who do not attend school, about three-quarters are unlikely to have any exposure to education. “This pattern indicates that barriers to education in Nigeria are especially difficult to overcome,” the report concludes. It suggests that for those living in extreme poverty, there are few pathways out of poverty.

Steps towards equality Gender equality is the third MDG. In 2011, the proportion of seats held by women in Nigeria’s national parliament was seven per cent, or 25 out of 358 seats – a figure that has remained stable since 2008. Significant progress has been made in reducing child mortality, the fourth MDG. The mortality rate for the under-fives reduced from 213 per 1,000 live births in 1990 to 143 deaths per 1,000 live births in 2010. Meanwhile, infant mortality (up to one year old) dropped from 126 per 1,000 live births in 1990 to 88 in 2010, according to UN figures. Maternal mortality, one of the indicators in improving maternal health (MDG 5), decreased from 980 per 100,000 live births in 2000 to 840 in 2008. A further indicator, the proportion of births attended by a skilled health professional, also shows improvement, from rising from 38.9 per cent in 2008 to 43.5 per cent in 2011. MDG 6 aims to combat HIV, AIDS, malaria and other diseases. The first target of this goal is to halt and reverse the spread of HIV and AIDS by 2015. Educating young people in how to protect themselves is one of the key ways of stopping the spread of this disease. In Nigeria in 2009, 70 per cent of men and women aged 15-24 were aware that they could protect themselves by using a condom every time Invest in NIGERIA 2012-13

the policy agenda

they had sexual intercourse, while just 52 per cent had been aware of this in 2005. Despite this increased spread of knowledge, only 49 per cent of young people aged 15-24 reported using a condom during higher-risk sex. Key to another of the targets of MDG 6 – to halt and reverse the incidence of malaria – is the use of mosquito nets treated with insecticide. The 2011 UN report found that, while there has been an increase in the percentage of children under five sleeping under a treated net (from just one per cent

northern states in 2009 (following initial reluctance among some communities to use the vaccine) led to a 90 per cent decline in cases of wild poliovirus type 1, and a 50 per cent decline in overall cases compared with 2008. Nigeria, and the rest of the developing world, is now looking to 2015. Progress has been made in health and education, but this hasn’t been distributed equitably across Nigeria’s geopolitical zones, with the northern states lagging behind. Ironically, one obstacle to development could be the country’s oil wealth. With its natural resources, Nigeria is now considered to be a middle-income country (MIC), despite a large portion of the population living in extreme poverty. 1. A 2010 report from the Institute of Development Eradicating Studies at the UK’s University of Sussex suggested extreme poverty and that three-quarters of the world’s poor (totalling hunger one billion people) now live in MICs. The 8. 2. Developing a global financial crisis has spurred several political Universal partnership and developmental bodies to consider primary education for development withdrawing aid from MICs, even though this would have a detrimental effect on the Nigerian federal government’s ability to ensure public spending accountability at state level. 3. 7. The Millennium Promoting Environmental Corruption is another problem. Development Goals gender equality sustainability Despite the democratic election of a leader in 1999, Nigeria has slid down the Corruption Perceptions Index; from 90th place in 2000 to 143rd in 2011. The rise of the fundamentalist 6. 4. Islamic group Boko Haram in the north Tackling HIV and Improving AIDS, malaria and maternal health of Nigeria is also hindering development. other diseases Uche Igwe, a member of the Institute of 5. Development Studies, points out there are many Reducing unseen implications of political unrest: “With the child mortality military on the streets there is a violent environment where more women are raped and killed. When they see soldiers on parade, they do not go to hospital to access maternal healthcare because they are frightened.” Nigeria’s proposed financial budget for 2012 committed in 2000 to six per cent in 2010), Nigeria is still lagging far a large proportion of money – N921.91 billion ($5.8 billion) behind almost all other sub-Saharan countries in its distribution – to national security. This was deemed necessary in light of of anti-mosquito nets. the violence surrounding the 2011 election and attacks by Nigeria is one of five countries with the highest number of tuberculosis cases and it is one of the three remaining nations Boko Haram, but the amount far exceeded the N682.92 billion where polio is endemic. According to the Polio Eradication ($4.3 billion) allocated to education and health. ■ Initiative, Nigeria is “one of the most entrenched reservoirs of wild poliovirus in the world”. However, progress has been made Bija Knowles is a freelance writer and editor, contributing to towards fighting the disease: operational improvements in the publications including gtnews, Euromoney and Financial Times Invest in NIGERIA 2012-13

the policy agenda

The Nigerian National Assembly in Abuja. New legislation has brought improvements in democracy, justice and transparency

Progress in governance reform

Governance and corruption have dogged perceptions of Nigeria for decades, but the situation is changing. Heather McKenzie considers the raft of legislation that aims to tackle corruption and raise accountability

n May 2011, President Goodluck Jonathan signed into law the Freedom of Information Act in a move perceived as an important step in the improvement of democracy, transparency, justice and development in Nigeria. “With the new law, Nigerians finally have vital tools to uncover facts, fight corruption, and hold officials and institutions accountable,” said Ene Enonche, coordinator of Right to Know, an organisation established to champion the right to access officially held information at all levels of public

institutions and to establish legal standards for these rights in Nigeria. The legal affirmation of this right is a necessary precondition for the establishment of open and democratic government in the country. Under the Act, all publicly funded institutions will have to be open about their operations and expenditure, while citizens will have the right to access information about their activities. Whistleblowers who report wrongdoing by their employers or organisations will be protected from reprisal. Other anti-corruption and governance-reform bodies in Nigeria welcomed the move. Maxwell Kadiri, associate legal officer at the Open Society Justice Initiative, said the law would “profoundly change how government works in Nigeria”. The Freedom of Information Act was first submitted to parliament in 1999, only to be stalled and eventually vetoed in early 2007, by the then President Olusegun Obasanjo. Invest in NIGERIA 2012-13

the policy agenda

“The improved governance and fight against corruption witnessed in the past few years have improved the international perception of Nigeria” In the same year, the law was returned to both chambers of the country’s National Assembly and was eventually passed in May 2011. The Act covers seven key areas: • Guarantees right of access to information held by public institutions, irrespective of the form in which it is kept, and is applicable to private institutions that utilise public funds, perform public functions or provide public services; • Sets a requirement for all institutions to proactively disclose basic information about their structure and processes, and mandates them to build the capacity of their staff to effectively implement and comply with the provisions of the Act; • Provides protection for whistleblowers; • Makes adequate provision for the information needs of illiterate and disabled applicants; • Recognises a range of legitimate exemptions and limitations to the public’s right to know, but makes these subject to a public interest test, which may, in deserving cases, override such exemptions; • Creates reporting obligations on compliance with the law for all institutions affected by the Act. Reports are to be provided annually to the Federal Attorney General’s office, which will make them available to the National Assembly and the public; and • Requires the Federal Attorney General to oversee the effective implementation of the Act and report on execution of this duty to Parliament annually.

Institutional reform The Freedom of Information Act is only one of a number of corporate governance and anti-corruption reforms that have been undertaken in Nigeria over the past decade. In 2001, the Economic and Financial Crimes Commission (EFCC) was established to help in the fight against what was then considered a preponderance of economic and financial crimes in Nigeria, including money laundering. According to the EFCC, these crimes had severe negative consequences for Invest in NIGERIA 2012-13

the country, leading to decreased foreign direct investment in and harming its national image. During a recent presentation, the United Nations Development Programme (UNDP) outlined some of Nigeria’s achievements in institutional and governance reform. It pointed out that between 1960 and 1999, the EFCC estimated that about $400 billion in oil revenues had been stolen by the country’s rulers. Over the same period, two-thirds of the population had been living in poverty. The lack of infrastructure, high unemployment and poverty levels led to insecurity and conflict, said the UNDP. Reforms in Nigeria began in 1999, and have since continued. The first move was the Minerals and Mining Act of 1999 (subsequently repealed, and replaced by the Minerals and Mining Act of 2007), followed by the Petroleum Industry Bill of 2008, the Public Procurement Act of 2007, the Niger Delta Development Commission Act of 2000, and the Sovereign Wealth Fund Act of 2011, as major moves towards improving the country’s governance environment. The European Commission (EC) is helping to fund the Niger Delta reforms to the tune of about ¤200 million via the European Development Fund, as part of the European Union’s 2011 Annual Action Plan for Nigeria. Andris Piebalgs, commissioner for development at the EC, said the commission’s support for Nigeria will help the country to consolidate peace in the Niger Delta and improve governance. Among the funding initiatives is support for state and local governance reform. The programme will aim to improve transparency, accountability, and the quality of public finance and human resources management across six states in the area. The programme will also build the capacities and processes of these states in public finance programming and management, and will work towards improving the delivery of social services at local level. The 2011 Action Plan also includes support for anti-corruption programmes in Nigeria. Funding will be used to help strengthen the institutional and operational capacity of the main anti-corruption agencies in the country, and provide

the policy agenda

Lamido Sanusi, governor of the Central Bank of Nigeria, says that reform measures have restored public confidence to the banking sector

them with effective support to coordinate their activities, formulate policy and prepare legislation. Any nation with poor governance and a high level of corruption is bound to receive poor rating from outsiders, leading to a reduction in its attractiveness, says Niyi Yusuf, managing director of consultancy firm Accenture Nigeria. “The improved governance and fight against corruption witnessed in the past few years have improved the international perception of Nigeria. However, we still need to sustain our efforts as a nation in these two areas to further improve the international perception of Nigeria and to make the country a destination of first choice for investors.” Yusuf highlights the Freedom of Information Act, the strengthening and independence of the anti-corruption agencies, reform of the oil and gas industries, the Nigeria Extractive Industry Transparency Initiative, the establishment of the Bureau of Public Procurement and judiciary reform as helping to improve governance and reduce corruption.

Financial regulation In the finance sector, the Securities and Exchange Commission (SEC Nigeria) and the Central Bank of Nigeria (CBN) have both introduced corporate governance codes. The SEC’s code, launched in 2003, makes provision for best practice to be followed by publicly quoted companies and all other companies with multiple stakeholders registered in Nigeria. The CBN’s

code, introduced in 2006, is aimed at addressing a number of weaknesses in the corporate governance of banks in the country. Such weaknesses include: board oversight and ineffectiveness; fraudulent practices of board members, management and staff; the overbearing influence of chairmen, managing directors or chief executives, particularly in family controlled banks; and weak internal controls. CBN governor Lamido Sanusi says substantial progress has been made and that significant public confidence has been restored to the banking sector with the reform measures adopted by the central bank. One of the turning points in Nigeria’s anti-corruption and governance reform programme occurred in 2011, says Samir Gadio, emerging markets strategist at Standard Bank in London. “A new generation of reformers has come into power in the country. The finance minister, head of the SEC and the governor of the Central Bank, to some extent, changed the way the market has behaved and should continue to do so.” However, Gadio warns that unless there is a sustained period of growth and a decline in poverty, corruption at the low level, such as bribery of police officers, will continue. “At a high level, such as in politics, corruption has been declining for many years. There is a much greater possibility in Nigeria that politicians caught up in corruption scandals will be exposed to public condemnation. Such corruption is no longer tolerated by the population.” ■ Invest in NIGERIA 2012-13

the policy agenda

Promoting free and fair elections

A voter shows the indelible ink on her thumb to signify that she has cast her ballot – one of the measures to help prevent electoral fraud Invest in NIGERIA 2012-13

the policy agenda

Reform of the democratic process is a crucial aspect of President Jonathan’s agenda. Rekha Gupta Menon looks at the achievements of institutions such as the Electoral Reform Committee and the Independent National Electoral Commission in delivering change

igeria, the largest democracy in Africa, has had a long and painstaking path to democratic rule – one which has been marked by turmoil and instability. While the country gained independence from colonial rule in 1960, for several years it was under a succession of brutal military dictatorships. It has only been since 1999 that the country has enjoyed a sustained period of civil rule. Even then, for much of the past 13 years, the country has yet to reach the desired level of democracy. The benefits of equality, justice and opportunity have not been delivered in full to its people. Despite being endowed with abundant natural resources – Nigeria is Africa’s top oil producer and among the world’s largest producers, earning over $60 billion annually through oil and gas exports – the country’s human development indicators are among the lowest in the world, and a large proportion of its population lives in acute poverty. Corruption is rife across all levels of government, and the common concerns of the country’s citizens include basic issues such as electricity, availability of running water, education and transport. Responsible governance has long been one of the key elements missing from Nigeria’s democratic set-up. Out of the four national elections held since the end of military rule in 1998, the first three elections, held in 1999, 2003 and 2007, were universally derided as being unfair and fraudulent. The 2007 elections that brought Umaru Yar’Adua of the People’s Democratic Party to power were so marred by widespread rigging, violence and mismanagement that even the newly elected president conceded that the elections were flawed. He appointed a panel, comprising government officials, former judges and civil-society representatives, to recommend changes to the country’s electoral institutions. This Electoral Reform Committee (ERC), presided over by former chief justice Mohammed Uwais, submitted its report in December 2008, recommending several reforms, such as the introduction of independent candidates, the prosecution of electoral offenders and the establishment of new legislative bodies to deal with the problem of election irregularities.

Some of the reforms suggested by the ERC were implemented. However, one of the most important developments took place in 2010, when President Goodluck Jonathan, who had taken office following Umaru Yar’Adua’s death, installed respected academic and civil-society activist Professor Attahiru Jega as head of the Independent National Electoral Commission (INEC). His appointment met with stiff resistance in several quarters, but played a key role in shaping the process for the most recently held general elections in April 2011. Professor Jega put in place a new and credible voting register, and retrained his staff, whom he deployed to 120,000 polling stations across the vast country, all in just six months. Furthermore, the officials put in place a new voting system that helped to curtail fraud. The mammoth election exercise, with over 70 million registered voters and around 325,000 poll workers, resulted in President Jonathan’s re-election. Despite some violence, international observers lauded the elections, rating them as credible, and “largely free and fair”.

A solid foundation Johnnie Carson, the United States Assistant Secretary of State for African Affairs, said in a statement: “Nigeria has just completed its most successful elections since its return to multi-party democracy in 1999. Despite some technical imperfections, those elections represent a substantial improvement over the flawed 2007 electoral process. This reverses a downward democratic trajectory, and provides the country with a solid foundation for strengthening its electoral procedures and democratic institutions in the years to come. The Nigerian people have shown to the world their resilience and will to have their voices heard. These elections were a real opportunity to choose their leaders.” Speaking at a media briefing in Abuja on 18 April 2011, the chair of the Commonwealth Observer Group, former Botswana president Festus Mogae, said that the elections marked a genuine celebration of democracy in Africa’s most populous country and a key member of the Commonwealth. “Previously-held notions that Nigeria can only hold flawed elections are now being discarded, and this country can now shake off that stigma and redeem its image. Notwithstanding the organisational deficiencies that resulted in the 2 April National Assembly elections being aborted after they had started, and in spite of persistent procedural inconsistencies and technical shortcomings, the elections for the National Assembly and Presidency were both credible and creditable, and reflected the will of the Nigerian people.” Invest in NIGERIA 2012-13

the policy agenda

The April 2011 elections were a landmark event in Nigeria’s political landscape, reconfirming the government’s commitment to democracy, but challenges remain Women queue at a polling station in northern Nigeria. Independent monitors endorsed the credibility of the April 2011 elections

challenges remain, such as the need to align interests across Nigeria’s multi-ethnic, multilingual and religious landscape. With 170 million people, Nigeria is the most populous country in Africa, and it has more than 250 ethnic groups with varying languages and customs. There are deep divisions between the Muslim-dominated north and Christian-dominated south. In order to prevent hostility between regions and religions, since 1999 there had been an unwritten political power sharing agreement, often referred to as ‘zoning’, through which the presidency is expected to alternate between the Christian south and Muslim north.

Highlighting the north-south divide

Mogae added: “The success of the electoral process must be attributed in large measure to the respect and confidence enjoyed by the Independent Electoral Commission, and in particular by its chairman, Professor Attahiru Jega. In him, the nation was able to look up to a person of deep integrity, transparency and commitment, who was determined to make every Nigerian’s vote count. His willingness to accept full responsibility for the fiasco of 2 April, and his readiness to postpone the National Assembly elections a second time in response to requests by the stakeholders, helped Nigerians keep faith in the INEC.” In a report on the Nigerian elections, the Observatoire de l’Afrique, a network of independent institutes and experts based in Europe and in Africa, also praised the INEC chairman. “It was recognised that Professor Jega’s independence and integrity have been instrumental in favouring a credible electoral process,” stated the report. There is no doubt that the April 2011 elections were a landmark event in Nigeria’s political landscape, reconfirming the government’s commitment to democracy, but several Invest in NIGERIA 2012-13

The first democratically elected president in the Fourth Republic, President Olusegun Obasanjo, was from the south. He was in power for two consecutive terms and his successor, President Yar’Adua, was from the north. The latter’s untimely death in the midst of his first term in office put Goodluck Jonathan, a southerner, in the presidential seat. There was debate on whether the PDP should field a northern presidential candidate in the 2011 elections, but President Jonathan prevailed and was re-elected, raising questions over the future of zoning arrangements. Moreover, the violence that flared up in the north after the elections, in protest at President Jonathan’s win, was much more severe than in previous years, reflecting a deep rift and resentment among sections of the electorate. Last year’s elections have helped to reinforce Nigerians’ belief that democracy is finally working, but the task before the government is not easy. To build on the gains of the 2011 elections, the government needs to address issues of transparency and accountability in governance, social inequality, justice and corruption, and it must also provide equal access to resources for all. Importantly, the government needs to work towards achieving economic prosperity to meet the aspirations of the country’s citizens. ■ Rekha Gupta Menon is a freelance journalist and has written for publications including the Financial Times, The Banker, Securities Industry News and Professional Wealth Management

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the economy and finance

Nigeria’s economic uplift

A recent opinion poll found that a large majority of Nigerians expect greater prosperity in 2012-13

Invest in NIGERIA 2012-13

the economy and finance

While the effects of the financial crisis continue to undermine attempts at growth among Western economies, Nigeria has joined the pack of nations experiencing increased prosperity. Beth Holmes considers Nigeria’s status in Africa and across the global stage as it steers a course to become one of the world’s top 20 economies

hile the developed nations in the West continue to buckle under ongoing debt crises and severe economic instability, the emerging nations are not only beginning to catch up, but to forge ahead. According to the International Monetary Fund (IMF), Nigeria’s economy, which is fuelled mostly by oil exports, is expected to be worth $400 billion by 2016. Meanwhile, a recent survey by Gallup of economic optimism around the globe found that Nigerians are the most optimistic about the year ahead, with more than eight out of 10 saying that they expected a “year of economic prosperity” in 2012. With economists at investment bank Morgan Stanley predicting that Nigeria’s gross domestic product (GDP) will probably overtake that of South Africa by 2025, the prospects for the country are bright and seem to be a far cry from the instability that has dogged its progress in decades past. It is up to the policymakers, the investment community and the population at large to take advantage of emerging opportunities, and help to position Nigeria as the most influential African voice on the world stage. Although issues of security continue to be a challenge, a transparent and consistent focus on key strategic policies at the macroeconomic level have helped to make Nigeria an economic success story, and may help to turn the nation’s international aspirations into reality.

Nigeria has lived through distinct periods of growth and development under various policy regimes, from the pre-oil boom decade of 1960-70, through the oil boom of the 1970s and to the current day. A succession of development plans was introduced from the 1960s to provide a framework for development and restructuring. The First National Development Plan (1962-68) was introduced to kick-start the economy, with priority given to agriculture and industrial development. The Second National Development Plan (1970-74) focused on rebuilding the infrastructure that had been damaged during the country’s civil war.

Response to the oil boom The Third National Development Plan (1975-80) was launched as a response to the large oil revenues that the country enjoyed during the oil boom of the 1970s, but the subsequent collapse of international oil prices meant that a Fourth National Development Plan (1981-85) was introduced. Two changes of government seriously disrupted the implementation of this final programme and, consequently, the performance of the economy during the fourth plan period was generally poor. In 1986, the government accepted the IMF-sponsored Structural Adjustment Programme (SAP), which was aimed at creating a more market-friendly environment that would encourage private enterprise. Some of the benefits that accompanied increased deregulation

were lost in 1994, with the actions of the new military government, which, over five years, reregulated after interest rates reached an all-time high of 48 per cent in commercial banks and 60 per cent in non-bank financial institutions. A series of reforms aimed at halting economic decline and stimulating growth were instigated with the return to democracy. They also improved Nigeria’s image abroad and enabled it to be more proactive – regionally and internationally. Between 2003 and 2007, there was a major initiative to raise living standards though the National Economic Empowerment Development Strategy (NEEDS), which attempted to tackle basic deficiencies such as electricity and water supplies, while also addressing macroeconomic stability through a variety of reforms, including deregulation, privatisation, transparency and accountability. A longer-term economic development programme is the United Nations (UN) sponsored Millennium Development Goals for Nigeria, which covers the years from 2000-15. It commits the country to achieving ambitious objectives concerning poverty reduction, education, gender equality, health, the environment and international development cooperation. International goodwill was further boosted in May 2011, after a successful national election. President Goodluck Jonathan tasked his government with continuing to focus on economic progress, while also tackling concerns over terrorism and militancy. The emergence of the BRIC countries (Brazil, Russia, India and China) as the economic giants of the future also creates an opportunity for oil-rich Nigeria. The country is the primary supplier to Brazil, provides 20 per cent of India’s crude oil, and is Invest in NIGERIA 2012-13

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the economy and finance

Nigeria’s petroleum industry is set for an overhaul of its regulatory and legal framework

also the latter’s largest trading partner in Africa. In addition, Nigeria is the fifth largest supplier of crude oil to the United States. Looking ahead to the remainder of the decade, Nigeria is striving to broaden its economic base by increasing privatesector participation. A number of initiatives are already under way. At the start of 2012, there was a renewed commitment from members of Nigeria’s Bankers’ Committee – made up of the chief executives of banks, financial institutions, and regulatory and supervisory agencies – all underpinning a resolve to create a regulatory framework under which the economy can thrive. In a statement from the Central Bank of Nigeria (CBN), the members said: “We hereby sign this Joint

Commitment Statement with the aim of developing a set of sustainable banking principles for the Nigerian banking sector, to drive long-term sustainable growth whilst focusing on development priorities, safeguarding the environment and our people, and delivering measurable benefits to society and the real economy.”

Improved financial standards Banking is not the only sector to be facing a period of regulatory change. As part of his country’s drive to become a global player, President Jonathan signed the Financial Reporting Council of Nigeria Act 2011 into law, and the staged adoption of International Financial Reporting Standards (IFRS) began on 1 January 2012.

IFRS have already been adopted in most developed economies (with the United States a notable exception) and implementation in Nigeria will help to reassure foreign investors with a credible financial-reporting regime. Oil is critical to Nigeria’s future, so it is unsurprising that the industry has also been earmarked for improvement. The Petroleum Industry Bill (PIB) is a piece of legislation, which, when passed into law by the National Assembly, will radically overhaul the regulatory and legal framework of the Nigerian petroleum industry. The federal government hopes to pass the bill into law during the second half of 2012. The Nigerian Stock Exchange continues to play a crucial role in the economic health of the country, but it Invest in NIGERIA 2012-13

the economy and finance

has been subject to volatility over recent years, which has dented investor confidence. Although the All-Share Index depreciated by 17 per cent over the course of 2011, the Exchange’s chief executive, Oscar Onyema, is driving forward plans to revitalise the market. In 2011, a review of market performance showed that the total turnover value of shares had fallen from N797.55 billion ($4.9 billion) in 2010 to N622.60 billion ($3.9 billion). However, new listings increased from 31 to 33. “The deregulation of the downstream oil and gas sector... will encourage a number of companies operating in that sector to access the capital market and be listed on the stock exchange,” said Onyema. Key initiatives for 2012 include the expansion of the stock market’s product range from two (bonds and equities) to five. These include the gold-backed Exchange Traded Fund, which was launched in December 2011. A series of initiatives is under way to strengthen and expand Nigeria’s fledgling, but fast-growing bond market. The market is fairly developed, with the maturity of obligations ranging from three to 20 years. The 20-year bond is the longest-tenure debt instrument ever offered in Nigeria. It was first issued in November 2008 in an attempt to deepen the bond market. In 2011, the government issued a $500 million bond that pays interest in US dollars for the first time. Called the Eurobond, it was aimed at investors who would like to minimise the risk of currency fluctuation. It struggled throughout the year, but rallied at the start of 2012, as investors bet that oil’s surge to a 32-month high would help investors to overcome their jitters. The Federal Government revealed through the Debt Management Office Invest in NIGERIA 2012-13

(set up in 2000 to centrally manage Nigeria’s debt) that it intends to raise up to N240 billion ($1.5 billion) from the capital markets in the first quarter of 2012. It plans to do this by auctioning 10-year sovereign bonds that mature before the end of March, in order to plug the revenue gap.

Fund for new projects The Central Bank of Nigeria (CBN) has taken the lead in financing the real-estate sector and infrastructure projects by establishing a N500 billion ($3 billion) fund, of which N300 billion ($1.8 billion)

Following in the footsteps of all but two other members of the Organization of the Petroleum Exporting Countries (OPEC), Nigeria launched its own Sovereign Wealth Fund (SWF) in January 2012, to help the country save for the future, invest in strategic infrastructure projects and act as a buffer against volatile oil prices. It is hoped that the fund, which was launched with government seed capital of $1 billion, will help ordinary Nigerians benefit from the billions of dollars of oil revenues that the nation has seen over the past half-century, and

Ngozi Okonjo-Iweala was reappointed as Nigeria’s finance minister in July 2011

is for the power/infrastructure and aviation sectors, and N200 billion ($1.2 billion) for the refinancing and restructuring of banks’ loan portfolios to manufacturers and small- to medium-sized enterprises (SMEs). Also, a N200 billion ($1.2 billion) Small and Medium Enterprises Credit Guarantee Scheme has been created to complement the earlier, N200 billion Commercial Agricultural Fund for loans to farmers. So far, the CBN has released over N190 billion, of which N130 billion has been distributed to SMEs at a fixed rate of seven per cent.

also respond to criticism that savings have been detrimentally affected by years of mismanagement. Many analysts have welcomed the introduction of the fund, but believe that because of its long-term nature, it is more appropriate for investing in local equities on the Nigerian Stock Exchange, rather than investing abroad. This will help to build up a debt profile more safely while deepening the market. On a more regional level, there has been a big increase in local finance initiatives. At the end of 2011, the First Bank of Nigeria and its investment

the economy and finance

banking subsidiary, FBN Capital Limited, signed a Memorandum of Understanding with the Oyo State Government to fund key multibillion-naira developments there. These include the construction of independent power projects, rice and grain cultivation, revitalisation of existing farm settlements and the establishment of new ones, the creation of vehicle-assembly plant and the purchase of mass-transit vehicles.

Access to banking Starting in 2006, the Central Bank of Nigeria started to transition several hundred community banks into official, licensed microfinance institutions. There are now more than 900 such banks, which help to give ordinary Nigerians access to a wide range of banking services while helping to boost SMEs. Plans are afoot to increase the number of microbanks, although there are significant challenges around spreading awareness in an uneducated population and obtaining proper support from regulators. Progress is being made in the right direction, however, and the National Association of Microfinance Banks Lagos State chapter (NAMB-LAG) recently announced plans to work with organisations such as the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Bankers of Nigeria (CIBN), Centre for Management Development (CMD), Nigeria Institute of Management (NIM), and the Industrial Training Fund (ITF) to improve the quality, scope and depth of its capacity building programme. The CBN stated in the revised policy guidelines for microfinance banks that efforts would be made to promote capacity building within the sector. It also introduced the Microfinance

The Central Bank of Nigeria is encouraging more electronic transactions

Certification Programme (MCP); an accreditation initiative to help ensure staff in such banks have the appropriate operational and technical skills. The most immediate impact for ordinary Nigerians, however, has been the introduction of the CBN’s ‘cashless’ policy. In a move to reduce the high level of cash transactions within the economy, a pilot scheme was launched in Lagos state on 1 January 2012, which sets daily limits on deposits and withdrawals of N150,000 ($920) for individuals and N1 million ($6,100) for corporations. By encouraging more electronicbased transactions, the hope is to

minimise issues related to security, cash-management costs and money laundering, while also improving the electronic payment system and centralised back-office systems. Nigeria is on the crest of a wave. If it can continue to follow growthfriendly policies and realise its long-term economic potential, the country is well on its way to becoming one of the world’s top 20 economies by 2020, as predicted by the PwC consultancy at the start of 2011. ■ Beth Holmes is a freelance journalist, specialising in business and finance, and former features editor of Accountancy Invest in NIGERIA 2012-13

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the economy and finance

Banking on Nigeria

New measures to improve the Nigerian banking system spark optimism about the sector’s future

Nigeria has worked hard to overcome an image problem associated with major frauds of the past and has made huge strides to eliminate corruption, largely due to the action taken by the governor of the country’s central bank, as Alex Hawkes discovers

n a speech to students of Bayero University, Kano, in February 2010, Central Bank of Nigeria (CBN) governor Mallam Sanusi Lamido Sanusi described how the financial crisis had revealed the depth of fraud that pervaded Nigeria’s banking system. Some bank chief executives, he explained, had set up special-purpose vehicles to lend money to themselves to manipulate their stock prices, or to buy properties around the world.

“One bank borrowed money and purchased private jets, which we later discovered were registered in the name of the CEO’s son. In another bank, the management set up 100 fake companies for the purpose of perpetrating fraud,” said Sanusi. Afribank had used depositors’ funds to purchase 80 per cent of its initial public offering, paying N25 ($0.15) a share – those shares later collapsing to just N3 ($0.02).

During the crisis the Nigerian stock market, dominated by banks, fell by 45 per cent and has not recovered. But despite the difficulties suffered by the banking sector, there is an air of optimism about the Nigerian financial sector, and about the country’s economy in general. With the CBN cleaning out the system, and with Nigerian banks consolidating to form stronger entities that have the ability to operate not just within Nigeria but beyond, there are hopes that the country’s financial sector could forge ahead. Furthermore, global investment banks are advising their clients that Nigeria is on course to be one of the Invest in NIGERIA 2012-13

the economy and finance

Facts and figures Annual percentage growth in Nigeria’s gross domestic product (GDP) 2003 7.62%

2004 7.9%

3 2 1

2010

2010 6%

The rapid increase in mobile-phone subscribers in Nigeria

2006 3.6%

2000 2.93%

2005 2.82%

2001 0.65%

2007 3.83%

2009 4.35%

2008 3.39%

2001

0 -1

2002 -0.9%

fastest-growing economies in the world over the next 40 years. While there are many caveats to the investment story, hopes that the country can follow Sanusi’s lead and rid itself of corruption are fuelling optimism that Nigeria could soon realise its potential.

Financial reforms By any estimation, the overhaul of the Nigerian financial sector in recent years has been significant. Standard Bank emerging markets analyst Samir Gadio suggests one of the biggest developments was the banking consolidation of 2004, when the government dramatically raised capital requirements, reducing the number of banks from 89 to just 25. “It created larger and bettercapitalised banks, which started to expand across Africa. It was a positive step, but on the prudential side there was clearly a lack of transparency,” says Gadio. Those transparency issues came home to roost during the global financial crisis, when the frauds outlined by Sanusi in his university lecture emerged. His reforms have been dubbed the “Sanusi Tsunami”, so dramatic have Invest in NIGERIA 2012-13

source: World Bank

266,461

they been. The Nigerian Securities and Exchange Commission (SEC) eventually levelled charges against 260 companies and individuals, while the previous management of Nigeria’s Securities and Exchange Commission was removed. Nine banks were nationalised and a body – the Asset Management Corporation of Nigeria (AMCON) – created to buy up non-performing loans from Nigerian banks. Once the process is complete, AMCON will have bought approximately $17.3 billion of bad debts. Corporate governance codes have been updated, including requirements to ensure transparency, accountability and good governance. Directors of boards will also have to pass through a director certification programme. The moves have not made Sanusi popular – daily death threats have forced him to hire armed guards – but they have got him noticed internationally, winning him a string of awards for taking on the entrenched corruption in Nigeria. “The SEC is striving to create markets that are more transparent, sophisticated and credible,” says

96.7 million

Gregan Anderson, an analyst at Business Monitor International. Ratings agency Standard & Poor’s has, following those changes, improved its risk assessment of Nigerian banking, moving it from group nine to group eight, where a lower number signifies reduced risk. The agency cited the willingness of the Nigerian state to support banks as a factor in its decision. Recent results from the banks have also been positive. Ecobank Transnational, which acquired Nigerian lender Oceanic in October 2011, saw its profits before tax grow by 50 per cent year on year for the first three quarters of 2011 (the latest figures). Likewise, First Bank, Guaranty Trust Bank and Zenith Bank have all seen strong profit growth for the same period. “The sector has survived the crisis in 2009. You can’t expect it to rebound very quickly, but some of the signs are positive. Private-sector lending seems to be rising, and confidence has been restored,” says Standard Bank’s Gadio. The optimism about the policies being instituted in the financial sector is bettered only by the optimism about

the economy and finance

Diversifying the economy: oil and gas revenues as a percentage of Nigeria’s GDP 1980s

The importance of agriculture and oil and gas to the economy

2009

Combined percentage of Nigeria’s GDP

60%

35% the Nigerian economy as a whole. In 2005, Goldman Sachs picked Nigeria as one of its ‘Next 11 economies’, the emerging growth centres that are taking over the growth mantle from the BRIC countries – Brazil, Russia, India and China. By 2050, it expects Nigeria to possess the 12th largest economy in the world. Citigroup puts Nigeria in its Frontier 15 – countries that, it says, “have the potential to generate the kind of returns for equity investors over the coming decades that the emerging markets themselves have produced over the past quarter-century.”

Reasons for optimism Business Monitor says Nigeria is one of the most promising markets in the sub-Saharan Africa region: “Despite ongoing challenges, its large youthful population, scope for efficiency gains, emerging middle class and competent (and improving) macroeconomic management all suggest immense potential. Indeed, in several segments of the economy, this optimistic view has already begun to play out.”

16% Between 1971 and 2000, Nigeria’s average rate of growth in its gross domestic product (GDP) was just 3.0 per cent. Since 2000, real GDP growth has more than doubled, to 6.4 per cent. What has changed? In part, argues Citigroup’s Africa economics analyst David Cowan, it is a question of politics, with the country leaving behind its history of military coups and brief civilian governments. “While it would be a long stretch to describe the current political structures as democratic, there still does seem to be a consensus that the 2011 elections were one of the freest and fairest in the country’s history,” he says. The government has run a very small fiscal deficit, of around 1.6 per cent of GDP, in the past 10 years, and privatisation and financial reform has deepened and strengthened the country’s financial system.

The ingredients for growth Fundamentally, the global banks argue, the country has all the raw ingredients for growth. Nigeria’s large population – 170 million people – makes it a good

candidate for fast growth, Cowan says: “For poor countries with large populations, growing fast can actually be quite easy if the government gets the basics right and catch-up growth starts to accelerate.” That view is in keeping with Goldman Sachs’s Next 11 countries exhibiting a common thread of having large populations that are also young: “The N-11 countries have large populations and a majority have a median age of under 30, creating the potential to become a massive consumer base, as well as provide scale to other growth trends.” Nigeria has demonstrated some of that consumer potential. The country has witnessed a mobile-phone revolution – at the end of 2001, there were 266,461 connected mobile lines, increasing rapidly to 96.7 million by the end of 2010. This phenomenal rise has highlighted that Nigeria is not just an oil-rich nation, but also a nation with the potential for huge growth in its consumer markets. The country is also weaning itself off its dependence on oil. Crude Invest in NIGERIA 2012-13

the economy and finance

petroleum and natural-gas production accounted for 35 per cent of GDP in the 1980s, according to figures from the National Bureau of Statistics. This was down to around 16 per cent by 2009. The country’s former vulnerability to changes in oil and gas prices made its growth very volatile. Even so, there is plenty more growth to come from oil, increasingly from offshore rather than onshore fields. The government is reforming the industry under the auspices of its Petroleum Industry Bill, turning the state oil company, the Nigerian National Petroleum Corporation (NNPC), into an independent entity. At the end of December, Standard & Poor’s revised its outlook

Equally, a rebasing will give Nigeria a lower debt-to-GDP ratio, which could make international investors take another look at the country.

Benefits and risks of oil reserves Even given all the changes in Nigeria, there are still plenty of risks to the exciting growth story. Nigeria has the seventh largest oil reserves in the world – a huge benefit, but also a risk, encouraging political corruption. As Citigroup’s Cowan puts it: “If Nigeria’s elites do not focus on fighting over the large rents that result from its resource abundance – as regrettably has been the case a number of times in the past – but instead use the natural-resource rents to

Rebasing Nigeria’s GDP statistics could see the country’s output revised upwards by as much as 60 per cent on Nigeria from stable to positive, citing reform initiatives and attempts to move the country away from its oil dependency. “The authorities have restructured and strengthened the banking sector, and we expect economic growth to remain strong,” the ratings agency said.

The potential of rebasing The Nigerian government is in the process of rebasing its GDP statistics – a move that could see the country’s output revised upwards by as much as 60 per cent. Currently it is third, trailing South Africa and Egypt. “The rebasing has the potential to make Nigeria the largest economy in Africa. That would have a big impact on its profile,” says Business Monitor’s Anderson. Invest in NIGERIA 2012-13

enhance human capital and infrastructure and to encourage private-sector enterprise and employment, the low-hanging fruits of growth are likely to be gathered.” Political uncertainty caused by the recent terrorist activity in the Muslim north of Nigeria adds an extra dimension to those risks. Bismarck Rewane, an analyst at Lagos-based Financial Derivatives, says that many of the government’s policies are sound, but the country’s institutions will require strengthening: “We have the leadership, we have the policies. But the institutions – democracy, the judiciary, the central bank – are fragile.” This is further compounded by policy inconsistency and lack of continuity, which the government is currently addressing.

When the country’s economy is rebased, one thing that will be highlighted again is the low level of its tax revenues as a percentage of GDP. Tax revenues, separated from oil revenues, languish below 10 per cent of GDP. It is expected that the new tax law will help to address the issue.

Obstacles to business Infrastructure issues – particularly around power – are a key stumbling block. And despite the strengthening reforms to the financial sector, Standard Bank’s Gadio argues that there is a disconnect between banking and the general economy in Nigeria. “Economic growth seems to be exogenous, because of the weight of agriculture and oil and gas,” he says. The two make up 60 per cent of GDP, and generally attract capital from elsewhere, he argues. Citigroup’s Cowan suggests that many of these roadblocks will not hinder Nigeria’s growth in the short term, however. The country will have room to grow, he says, before institutional issues prove restrictive. “Nigeria will have its hands full to realise its growth potential. But on the plus side, it does not need to get all its ducks in a row. Sporadic progress, even on power, may well prove sufficient to maintain, and even accelerate, the rate of GDP growth in the coming years, with the possibility of an even greater upside.” Nigeria needs a middle class and efficient state institutions, Cowan says. “But those are problems of middle-income countries and, for now, there is clear daylight between the middle-income countries and Nigeria.” ■ Alex Hawkes is a Mail on Sunday business and financial journalist who has previously worked as a writer for the Guardian

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Driving growth through Mobile Money – putting Nigeria on the fast track Mobile banking, payments and commerce is a proven source for economic development and growth. Prateek Shrivastava, managing director of Monitise Africa, explains how Nigeria can take advantage of it via a shared-services platform. The introduction to the World Bank’s first ever Global Financial Inclusion report opened with the following words: “well-functioning financial systems serve a vital purpose, offering savings, credit, payment and risk-management systems to people with a broad range of needs.” The report looked at 148 countries’ financial systems and painted a picture of financial inclusion around the world as a patchwork quilt, with developing markets lagging behind high-income economies in many areas. However, the authors noted: “there is a bright spot in the expansion of financial services in the developing world: the recent introduction of ‘mobile money’”, citing the area of greatest success as sub-Saharan Africa. The Bank highlighted these figures because of the transformative impact that mobile banking has. For every 10 per cent increase in mobile penetration rates, there is a 0.8 per cent increase in a country’s gross domestic product, the Bank has noted. So, for a country like Nigeria, Africa’s largest mobile market with almost 100 million subscribers yet a market penetration rate of only 60 per cent, the prospect of building a flourishing network for mobile banking, payments and commerce is attractive both to the government and to business. But delivering such a network is a complicated matter, particularly where traditional forms of banking are not present. Challenges include the number of people with a bank account (and those who actively use it) versus those ‘unbanked’, plus the physical infrastructure in terms of access and availability to branches. According to the World Bank, only 30 per cent of adults in Nigeria have a bank account, while 13 per cent used mobile money in the previous 12 months. At Monitise, we believe there are three vital ingredients to bringing financial systems to unbanked people via mobile. Firstly, it cannot be done without financial institutions to provide infrastructure; second, you need stable, proven technology,

and third, a network of agents must provide on-the-ground access to services. Monitise already provides its proven technology platform to 15m customers of over 300 banks across the world as well as being the chosen mobile partner for Visa Inc. and Visa Europe (both are shareholders of London AIM-listed Monitise plc). However, wherever we operate, whether it is India or Indonesia, we know there’s no perfect template for entering a market and a top-down approach will struggle. What works best is bringing a managed service and a best-of-class technology platform into a country and working with local partners to customise it for local use. In Nigeria, we are investing to bring our proven technology and our agent network in the country as a shared platform. Using these two components, we are already helping banks launch cost-effective “mobile only” bank accounts and branchless banking services targeted to reach out to new market segments.

We strongly believe that a safe, secure, bank-grade, pay-per-click model (as opposed to a large upfront capital expense model) will help financial institutions create mobile products and services to draw more Nigerians into the banking system. We have already begun in Nigeria and, in time, we expect the next World Bank report on financial inclusion to paint a much brighter picture.

+44 (0)20 7947 4300 www.monitise.com @MonitiseGroup on Twitter

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Nigeria’s new sovereign wealth fund seeks to capitalise on the country’s substantial oil riches

Sovereign wealth

The creation of a sovereign wealth fund is an attempt to make use of Nigeria’s enormous oil wealth to the best advantage. As Michael Dynes learns, the country’s newfound confidence to invest in itself is a development that appeals to international investors

resident Goodluck Jonathan’s decision in May 2011 to create the Nigerian Sovereign Investment Authority (NSIA), the country’s fledgling sovereign wealth fund, represents a wholesale break with the past. Gone are the days when Nigeria’s ruling elites were content merely to live off the proceeds of one barrel of oil to

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the next. On the contrary, NSIA has set out to enable Africa’s biggest oil exporter to dramatically improve the management of its often squandered natural-resource earnings, while laying solid foundations for future economic prosperity. During her first visit to Nigeria in December 2011, International Monetary Fund managing director Christine Lagarde singled out the creation of the new

investment authority as one of the landmark government decisions most likely to boost investor confidence in the prospects for the Nigerian economy. Despite the dark shadows being cast over global growth by the ongoing debt and anaemic growth difficulties faced by more mature economies, “with the right vision, and the right action, today’s global risks need not become Nigeria’s reality”, she said. Within months of NSIA’s creation, Fitch, one of the leading international credit ratings agencies, announced an upward revision in Nigeria’s sovereign credit rating from ‘negative’ to ‘stable’,

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elevating the country to the upper ranks of its B-rated African peers. Evidence of a commitment to rigorously implement the core mandate of the new state investment arm can be expected to lead to further upward revisions in the years ahead, triggering new inflows of capital from emerging market investors, and putting Nigeria well on the road to realising its aspiration of becoming a leading global economy in the decades ahead. Nigeria’s new state investment arm is the latest to be inaugurated in Africa, following the creation of similar institutions in Angola, Botswana, Libya, Mauritius and Uganda, and Beijing’s China-Africa Development Fund. However, it has the potential to become one of the continent’s biggest. Over time, NSIA’s initial seed capital of $1 billion could grow – depending on the price of oil and how effectively the new institution is managed – into a fund that houses tens of billions of dollars, similar to the amount operated by Abu Dhabi, Kuwait and Singapore.

governments with a reserve revenue stream on which to draw to iron out price fluctuations in the notoriously volatile commodities cycle during times of crisis. The new state investment arm will replace the Excess Crude Account, the de facto sovereign wealth fund established in 2004, as part of the IMF/World Bank inspired reform programme, which, in turn, led to the writing off of some $18 billion in accumulated debt arrears. Although the Excess Crude Account (which holds oil-export revenues in excess of the budget benchmark price) greatly boosted Nigeria’s appeal to emerging market investors, early investor optimism that Nigeria was now seeking to harness its petrodollar wealth to fund future growth has gradually dissipated.

Structure and mandate

At its peak in 2008, the Excess Crude Account held an estimated $20 billion in surplus oil revenues. Following the financial crisis and subsequent global economic downturn, those reserves had fallen to around $300 million by December 2010, as the federal, state and local authorities fought with each other over how to distribute them. Although the oil-price recovery has since helped to replenish some of the reserves held in the Excess Crude Account, the Nigerian Central Bank and Finance Ministry have been fighting a rearguard action to prevent the depletion of surplus revenues demanded by the federal spending ministries, and the state and local authorities.

Despite the good intentions of its architects, the Excess Crude Account had no firm constitutional basis, and the three tiers of government – federal, state and local – were legally entitled to lay claim to a proportion of the surplus revenues accumulated. The Central Bank and Finance Ministry, both anxious about the inflationary pressures that such large disbursements repeatedly unleashed, were effectively powerless to stop them. According to Razia Khan, regional head of economics, Africa, at Standard Chartered Bank, “there were simply no rules about withdrawals, or whom the money belonged to among the three tiers of government in Nigeria”. The new sovereign wealth fund is an effort to overcome those shortcomings. It aims to eliminate the void at the heart of the nation’s finances by establishing strict rules about how the fund will be tapped in future. President Jonathan’s finance minister, Ngozi Okonjo-Iweala, who also has a wider role as coordinating minister for the economy, said the fund would be used solely for “saving for the future, investing in strategic infrastructure, and building a buffer against shocks like the global economic crisis”. The days of funding profligate state election promises are over.

Nigeria has transformed from being a debtor to a creditor nation

NSIA has been designed to house three distinct funds. An Infrastructure Fund will invest in Nigeria’s historically underfunded infrastructure – electricity generation, ports, bridges, and road and rail networks – in an effort to unlock the latent potential of the country’s fast-growing, non-oil sector. A Future Generations Fund will invest in stocks, bonds and other international asset classes; recognising that hydrocarbons are a non-renewable resource that needs to be harnessed to provide new revenue streams to meet the aspirations of generations to come. In addition, a Stabilisation Fund will provide the federal, state and local

Formalising a savings culture Tony Elumelu, chairman of private equity firm Heirs Holdings and ex-head of the Nigerian banking group United Bank for Africa, hailed the sovereign wealth fund as a long-overdue “attempt to formalise a savings culture in Nigeria”. While the Excess Crude Account had no formal legal underpinning and could be raided constantly, “the sovereign wealth fund seeks to institutionalise a savings culture”, he said. Invest in NIGERIA 2012-13

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A previous lack of finance for construction and infrastructure projects is expected to be addressed by the newly created fund

“If well managed and deployed efficiently, the sovereign wealth fund will play a vital role in the economic and social development of Nigeria,” Elumelu said. “The economies of Singapore, the United Arab Emirates, Kuwait, Malaysia, Norway and China have all been boosted by the activities of their respective sovereign wealth funds. My hope and expectation is that Nigeria will replicate that pattern,” he added. Efforts have been under way for some months to recruit a trio of top executives to run the NSIA, including a chief executive officer, a chief investment officer and a chief risk officer. The first post must be filled by a Nigerian, but Invest in NIGERIA 2012-13

the other two will be open to all comers. At least 10 years’ experience will be required for all applicants, who, according to the job description published in national and international media, will be expected to win the confidence of the Nigerian people. “The performance, reporting and transparency of the NSIA,” the job description stated, “must be exemplary, and will enable Nigerians to see and understand how their patrimony is being managed and increased for the future.” In the near decade-and-a-half since the transition to civilian rule, Nigeria’s attempts to revive its economic fortunes have seen mixed results. During that

time, however, Nigeria has transformed from a debtor to a creditor nation. Its elections have evolved from the chaotic to the credible, and its new leaders have set about tackling the institutional and structural constraints that have inhibited the country from realising its full economic potential. The sovereign wealth fund is a clear signal that Nigeria now has the confidence to invest in itself. And, with the country prepared to invest in its own future, foreign investors are likely to follow. ■ Michael Dynes is a business and lifestyle journalist specialising in subjects related to African culture and economics

Zenith Bank plc Zenith Bank was established in May 1990 and started operations in July of the same year as a commercial bank. It became a public liability company on 17 June 2004 and was listed on the Nigerian Stock Exchange on 21 October 2004 following a very successful Initial Public Offering (IPO). The bank is one of the biggest and most capitalised companies on the Nigerian Stock Exchange. It presently has a shareholder base of over 700,000 – an indication of the strength and wide acceptance of the Zenith brand. Zenith Bank Plc has evolved through innovation, dynamism, rare business insight and excellent leadership to become a leading financial institution in Nigeria. Within the first decade of commencing operations, it made its mark in profitability and a number of other performance indices. Over the years, the bank has redefined customer service standards and created diverse service delivery channels. The Zenith brand has become synonymous with the use of Information and Communication Technology (ICT) in banking and general innovation in the Nigerian banking industry. The bank continues to drive its competitive edge through the use of robust ICT platforms in delivering exceptional customer services. Coupled with its strong brand recognition and strategically distributed branch network, the bank has maintained a good share of the Nigerian market. Zenith Bank also continues to reinvent its service excellence strategy to consolidate its exceptional performance. Thus its service channels, especially for electronic solutions (e-products) are re-engineered and strengthened for greater efficiency and effectiveness. Zenith Bank has become a brand prized for its tremendous success in e-banking, global credit guarantee status, niche marketing, cutting-edge competitive advantage in a number of areas of financial services, provisioning and unwavering commitment to technological deployment in line with international best practices. The bank’s competitive advantage as a financial powerhouse for value creation in Nigeria results from the combination of people, talent, proprietary knowledge, strong brand equity, leadership, integrity and excellent relationship management. With over 350 branches, the bank has built on its successes to explore opportunities beyond Nigeria. Consequently, four foreign subsidiaries have been established: Zenith Bank (Ghana) Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited and Zenith Bank (Gambia) Limited. The bank also operates representative offices in South Africa and China: Zenith Bank (South Africa Rep Office) and Zenith Bank (Beijing Rep Office). The bank maintains sound corporate governance culture in line with global best practices. Its core values include service excellence, investment in human capital development, superior asset quality and strong credit culture. Zenith Bank has good and sustainable earnings, a strong capital base, and is reputed for its professionalism and excellent community development initiatives. The bank has become synonymous with excellence. Its impressive growth pattern and performance, over the years, have earned Zenith Bank excellent ratings from local and international agencies. Standard and Poor’s recently affirmed the bank’s ratings at B+/Stable/B. Fitch Ratings (2010 International) confirmed the bank’s ratings at B+ on long-term foreign currency Issuer Default Ratings (IDR). The bank is confident it can sustain its superior performance and growth trajectory in the years ahead by accentuating the positive disposition that drives its determination to be a benchmark for the banking industry in Nigeria.

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The construction industry is among the sectors that can expect to be boosted by growing investor confidence in Nigeria

Project and trade finance Nigeria is offering an attractive selection of trade and project opportunities in its bid to become an international business centre. Antony Collins looks at recent economic reforms that are providing the financial markets with the confidence to back new investments

he case for investing in Nigeria is clear: it has a large population, is rich in resources and is a pre-eminent trade hub. Already it can lay claim to being the second strongest economy in Africa – UK Trade & Investment estimates that British exports to Nigeria are valued Invest in NIGERIA 2012-13

at approximately £1.2 billion annually – and the country has ambitions to become a middle-income market over the next 10 years, which has put it firmly in the sights of investors. Global business interest in Nigeria is also growing. Investment bank Citi told Reuters in February that it expected to see its clients double their investment

levels in the country during 2012, while international investors traded assets in 2011, notably Royal Dutch Shell’s sale of holdings in oil blocks to Nigeria’s Nestoil, Kulczyk Oil Ventures and Elcrest. KFC, Google, United Airlines and Heineken are some of the other major international names to consider investment opportunities in Nigeria. “We have seen a lot of interest from British businesses in our trade missions to Nigeria,” explains Annabel Fogden, head of world trade at the London Chamber of Commerce and Industry. “Companies from a range of

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Public resources and development banks will not be able to cover the substantial costs involved in infrastructure projects. Private capital is a potential financing outlet sectors, including food, construction and training and education have shown interest, with many looking at working with Nigerian agents or distributors rather than open their own business on the ground.”

Challenges to securing finance Forming trade agreements usually means establishing a line of credit. It has been difficult to secure financing for Nigerian investments because of local risks. Efforts have been made to stamp out corruption and violence, but investors remain wary of issues such as delayed or missing payments and non-delivery of products. “Nigeria can be a challenging place. As in any overseas market, it is important to undertake due diligence and ensure the legality of contracts,” Fogden stresses. A deregulated foreign exchange system has helped to ease concerns, but lenders still often require protection for trade financings – for example, invoice financing and export receivablesbacked financing where credit is secured in advance, or e-payments. Banks can also insist on risk guarantees, so that borrowers carry the financial burden if political or civil unrest disrupts business, or they simply place a high price on loans to mitigate that risk. Nigeria’s biggest financing challenge, however, remains its infrastructure: public transport is unreliable, schools and hospitals need investment and power outages are

common. The cost to provide the country with modern and stable transport, power and communication systems is expected to surpass $100 billion, according to sources including the World Bank. The government has made investment a priority. The prime initiative is Vision 20:20, a $5.5 billion plan to achieve 16,000MW of capacity to the grid by 2013. The World Bank, meanwhile, claims that a further $14 billion per year is required over the next decade to deliver transport and social infrastructure projects if the country is to reach its growth targets.

Investment gap The traditional source of funding for such programmes – public resources and development banks – will not be able to cover the substantial costs involved. Private capital, through privatisations and public-private partnerships (PPPs), is a potential financing outlet. “The Nigerian Government simply does not have the funds to provide infrastructure,” observes Oluseyi Bickersteth, the national senior partner in Nigeria at KPMG Professional Services. “The 2012 budget has only 28 per cent going to capital budget. That is why PPPs are important. That is why privatisation is important. In project financing, the key has been government realisation that private financing is crucial and needed.” Eleven distribution organisations and six power stations have already been

offered for privatisation in a bid to open up the energy market. Hundreds of expressions of interest were lodged for the assets following roadshows that took place in Lagos, Dubai, New York, London and Johannesburg. The privatisations are likely to attract asset financing, while non-recourse debt will be required if the PPP programme is to succeed. The PPP model involves projects being funded and maintained by a private company, which assumes the financing and operational risk, while the authorities pay an availability fee for the use of the project. The pathfinder PPP is the $450 million design, build, finance, operate and maintain project for a new terminal and air traffic systems at Lekki-Epe International Airport in Lagos. The tender opened in 2011 with 33 bidders, including divisions of Bouygues, DSC Infrastructure, Grupo Isolux Corsán and Samsung registering interest. Other proposed PPPs include a second bridge across the Niger, two national arenas in Lagos and Abuja and the redevelopment of the General Hospital in Lagos.

Focus on the banks Key to this process will be Nigeria’s banks, which have been able to increase their liquidity after the government provided a $4 billion rescue package during the global economic crisis. This came about after Central Bank of Nigeria (CBN) reforms to recapitalise the banks Invest in NIGERIA 2012-13

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Funding projects such as new highways will help Nigeria to develop into a centre for international business and investment

also required them to abandon the universal banking model and instead obtain licences for ‘core’ businesses, such as investment, commercial or mortgage banking, with non-commercial operations being divested.

Funding revival The rekindled desire to finance has already started to show. Last year, the $265 million NLG2 project, sponsored by NNPC and ExxonMobil, brought in five Nigerian banks during syndication. Meanwhile FHN 26, the project company of First Hydrocarbon Nigerian, which is part-owned by oil company Afren, closed a $180 million debt package arranged by Stanbic and FCMB Capital. “Because of the consolidation in the banking industry, Nigerian banks now have the muscle to finance large projects,” Bickersteth says. “There is certainly more interest in traditional oil and gas, and telecoms. In recent times, power has also attracted international interest.” Invest in NIGERIA 2012-13

Nigerian banks are not capable of funding the proposed investments by themselves. Deals involving solid international sponsors with global backing will play an important role in delivering the capital required. International sources of financing are also starting to emerge. Last year, the CBN finalised rules allowing Islamic banking, owing to the country’s large Muslim population and a growing interest from investors in the Middle East. It also granted to Jaiz Bank the first licence to operate as an Islamic-compliant organisation. The balance of risk (Shariahcompliant financing is more similar to leasing deals, where the financier holds the assets until the borrower fulfils the payment) is attractive to banks, with Western banks also starting to embrace Islamic finance products. International capital markets are also providing financing facilities. There was little movement from Nigerian companies following a boom in the early

1990s, until 2007 when Guaranty Trust Bank issued a $350 million Eurobond. In 2011, Afren issued $450 million of senior secured notes, while the government placed a $500 million bond – its first-ever sovereign bond. Other recent developments include the CBN launching a $3 billion power and aviation infrastructure fund, and Macquarie and Old Mutual closing a $500 million fund – operated out of Lagos and Nairobi – to target infrastructure in sub-Saharan Africa. Such a diverse set of investments by domestic and international sources is central if the government is to deliver its pledges and attract more trade and investment. If strong financing can be put in place, Nigeria will finally have the infrastructure it requires to become a genuinely global economic centre.  Antony Collins is a freelance journalist who has held a number of roles including acting editor of Credit Today and senior reporter at Project Finance International

the economy and finance

Improving Nigeria’s electricity network is a main priority for the government and for major manufacturers of electricity products, enabling the country to become one of the world’s leading economies

Nigeria Vision 2020 Nigeria’s natural resources are vast and underexploited, but the government’s programme of deregulation and privatisation means there are equally huge opportunities open to investors from all over the world. The result could bring the country’s ambition of becoming a top 20 economy by 2020 closer, says Graeme Burton

n the surface, Nigeria ought to be bubbling with prosperity. In addition to vast oil and gas reserves, the country has plentiful supplies of low-sulphur-content, good-quality coal, as well as recently discovered coking coal suitable for iron and steel production, plentiful supplies of iron ore, and reserves of manganese, tin, limestone, lead, zinc, gold, silver and rare-earth minerals. It is with this consideration that the government has committed to the previous administration’s declaration

of intent to place Nigeria among the world’s 20 largest economies by 2020. The Business Support Group, an initiative of the Secretariat of the National Steering Committee of Vision 2020 (NV2020), is intended to engender private-sector support for the NV2020 process. Its priorities are to generate publicity, mobilise resources from the private sector, organise fundraising activities to support NV2020 and provide technical and financial support. With two major rivers – the Niger and the Benue – running through the

country, it should be little surprise that arable land accounts for one-third of Nigeria’s 900,000 square kilometres of land, producing corn, rice, sorghum, cocoa, peanuts, cotton, palm oil and yams, as well as rubber, among many other agricultural products. The country also has plans to use those rivers and their tributaries to generate as much as 67,000 Megawatts (MW) of hydroelectric power by 2030. What more could an ambitious nation need? Unfortunately, with the exception of oil and, until recently, gas much of the country’s resources – both on the ground and underground – have remained underexploited. Now, however, Nigeria’s economy is turning. “The oil sector is the main driver of the economy, accounting for more than 90 per cent of exports and over 80 per cent of government revenue, Invest in NIGERIA 2012-13

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despite accounting for about 15 per cent of GDP,” says Robo Igbu, managing partner at investment company Pilgrims Resources. “However, the non-oil sector is growing faster, with major contributions to growth coming from agriculture, wholesale and retail trade, telecoms, manufacturing, and finance and insurance,” he adds. With a reform-minded government in the Nigerian capital, Abuja, moves are being made to deal with the bottlenecks that have held the country back. However, such is the scale of the infrastructure building required that it cannot possibly be done without a large injection of foreign investment and know-how across the entire economy.

four gigawatts (GW) to 13GW by 2013, according to Nigeria’s minister of power, Professor Bart Nnaji. The power grid also requires substantial upgrades to be able to carry the higher capacity. After 2013, the government will no longer build any additional power stations – it will be up to the private sector to satisfy the country’s power needs.

of West African States (ECOWAS) to liberalise and regulate electricity generation in West Africa under the auspices of the ECOWAS Regional Electricity Regulatory Authority (ERERA). According to Bolanle Onagoruwa, director general of the Bureau of Public Enterprises, privatisation should be completed by the end of 2012. In addition to a roll-out of hydroelectric power, especially for remote and off-grid generation, the government is hoping that when construction of coal-fired power stations is completed by 2013, the country’s coal industry will be reignited. Nigeria is rich in low-sulphur coal – perfect for electricity generation. Nigeria already exports coal to the United Kingdom and Italy, but the potential is huge: the government has privatised nine of 10 development blocks that it had put out to tender, and the winning bidders will no doubt be looking for partners to help in exploiting the vast seams of coal in their blocks. A stable and reliable power industry will aid the development of Nigeria’s metals sector, especially for bauxite smelting and refining to make aluminium, which requires huge supplies of electricity. Today, UC Rusal-owned ALSCON’s plant in Akwa Ibom State produces some 42,000 tonnes of aluminium ingots from bauxite imported from Guinea, which it sells into Nigeria’s booming construction industry.

Nigeria already exports coal to the UK and Italy, but the potential is huge

Paving the way According to Professor Akpan H Ekpo, director general of the West African Institute for Financial and Economic Management, many of Nigeria’s richest resources are in remote locations, and better road and rail links are needed in order to open them up. Investors, he adds, also need reassurance that the government’s newfound enthusiasm for foreign investment will be enduring, and that they will be backed by robust legal reforms and an impartial judiciary. “Nigeria needs good, well-maintained roads to the areas; it needs power close to those areas and it needs to introduce some tax incentives for investors and to guarantee their security,” says Ekpo. Building up the country’s electricity infrastructure is currently the priority. It needs upgrades across the board, estimated at N520 billion ($3.4 billion), just to increase generating capacity from around Invest in NIGERIA 2012-13

To attract outside investment, the government has passed laws deregulating the industry and paving the way for privatisation. The final step will be a withdrawal of subsidies and a sharp increase in the price of electricity later this year. The hope is that the rigours of the free market will make it more efficient and ensure that investment is properly spent in the right areas. This is part of a wider move across the states of the Economic Community

Production momentum

Minister for national planning Dr Shamsudeen Usman is central to achieving Nigeria’s Vision 2020 goals

Aluminium production is most commonly associated with countries with plentiful hydroelectric resources, such as Russia, Canada and Norway. Nigeria’s strategy is to use cheap gas offtake from oil production to power its aluminium smelters. Any interruption in the

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The government is hoping that the planned construction of coal-fired power stations will reignite Nigeria’s coal industry

supply of electricity, though, will ruin production and, indeed, about half was lost in 2010 due to vandalism of the gas supply pipeline. More promising, perhaps, is iron ore, which is abundant in Kogi, Kaduna, Enugu, Nasarawa and Zamfara states. Until recently, the development of iron and steel-making has been hampered by the need to import coking coal. The recent discovery of suitable coal in Nigeria should speed up development of the country’s iron and steel industry.

Rare-earth minerals Among the most promising minerals that Nigeria has to offer in the current climate are niobium and tantalum – rare-earth minerals that are invaluable to the modern electronics, nuclear and aerospace industries. Niobium is also used as an alloy in steel and superalloys for the construction industry, as well as oil and gas pipelines. The worldwide market for rareearth minerals is dominated by China, which accounts for more than 95 per cent of global production. With the Chinese government restricting exports, manufacturers outside China require reliable alternative sources.

Nigeria’s mining industry is being supported by grants from the World Bank, which are intended to help the country to develop its mining sector under the government’s Sustainable Management of Mineral Resources Project (SMMRP). These grants have funded training, infrastructure development and the equipping of the relevant institutions. For example, the Nigerian Institute of Mining and Geosciences in Jos was established with help from the World Bank-funded project. It has also invested in geophysical surveys to identify promising areas. The Nigerian government has done much to open up the country and put the infrastructure in place to lay the foundations for sustained growth. However, much still needs to be done, believes Igbu. Indeed, he has a long ‘to-do list’ that he feels still needs to be completed. “Corruption is a cancer in the Nigerian economy and undermines every developmental effort. The government must muster the will to fight corruption,” he says. He adds: “It must pass the Petroleum Industry Bill and commence true deregulation of the oil industry. The government has to be more

accountable and responsible – even more so after the recent protests in Nigeria and citizens’ growing awareness and demand for accountability, prudence and competence in the governance of the country.” In addition, he believes that the government must complete the reform of the power sector and other free-market reforms. Security also needs to be tackled so that economic prosperity can be spread from south to north.

Reasons for optimism However, there is much to be positive about. Under the governorship of Charles Soludo, the Central Bank of Nigeria reformed the country’s banking system, helping to insulate it against the financial crisis and creating a banking system that is the envy of Africa. While it is clear that there is plenty of work to do, it’s also true that today is a time of opportunity in Nigeria – with such opportunities already being snapped up by the most ambitious Nigerian and multinational investors.  Graeme Burton is a business journalist, specialising in trade finance and is a former editor of Trade & Forfaiting Review Invest in NIGERIA 2012-13

oil, gas and minerals

Capitalising on Nigeria’s oil resources

Major foreign firms have dominated the extraction of Nigerian oil, but proposed legislation will seek to bring greater involvement to indigenous companies Invest in NIGERIA 2012-13

oil, gas and minerals

Nigeria’s oil industry has traditionally been dominated by large foreign oil companies, although they now mainly operate offshore fields. The challenge is for local companies to develop onshore and shallow-water sites, and to boost refining capacity. Mark Dixon assesses progress in light of the Petroleum Industry Bill currently passing through the senate

igeria’s oil industry is one of the most attractive in the world – the fact that companies are willing to suffer the unpredictable system under which it operates demonstrates how appealing it is to both foreign and domestic investors. Until a decade ago, the industry could be characterised as one in which mainly foreign companies came into the country and paid large sums of money to buy the rights to explore for oil and produce it, making enormous profits. The foreign oil companies work in joint ventures with the Nigerian National Petroleum Corp (NNPC), which holds a majority stake in these partnerships for onshore and shallow-water acreage. Theoretically, the NNPC should fund its share of any oil projects, and the returns are passed on to the government to be spent for the good of the country. However, the cash-starved company has rarely been able to pay its way and has fallen victim to red tape and poor accountability.

The Petroleum Industry Bill and offshore Reform – and, by extension, investment – is being held up by a lack of political progress in passing the all-encompassing Petroleum Industry Bill (PIB), which was first drafted four years ago. The bill changes fiscal terms for oil developments, and oil companies are unwilling to spend until they know what the tax regime is likely to be. Foreign oil companies have been fighting a rearguard action in an attempt to improve the terms of the bill in their favour, and have been warning of dire consequences if their demands are not met. Shell’s former executive vice-president for sub-Saharan Africa, Ann Pickard, said that the PIB threatens to make a bad situation worse. She described the bill as “a cumbersome document that lacks insight into the very basics of our industry” and said the fiscal provisions of the proposed legislation were the “harshest in the world”. This may be partly because the current terms for the development of oilfields in the deepwaters are particularly Invest in NIGERIA 2012-13

Standard Insurance Consultants Limited The Standard Insurance Consultants Limited, a subsidiary of Standard Group of Companies is an international insurance/reinsurance broking firm, with its headquarters in Lagos, offices at Ibadan, Abuja, Port Harcourt, and associate offices throughout Nigeria. Standard Insurance Consultants Limited is also registered in the Gambia as Standard Insurance Brokers (G) Limited. Standard Insurance Consultants Limited was incorporated in 1980 under the Company and Allied Matters Decree No 61 of 1968 and in accordance with the requirements of the Insurance Act of 1976 and the subsequent amendments. Standard Insurance Consultants Limited is a functional Member of the National Council of Registered Insurance Brokers (NCRIB) and fully licensed by the National Insurance Commission (NAICOM) to transact all classes of insurance business, including special risks such as oil & gas, aviation & space, marine, general insurance and life insurance business. We are duly licensed by the Department of Petroleum Resources (DPR) to operate as an Oil Industry Service Company (special category) as well as the Nigerian Petroleum Exchange (NIPEX), including NAPIMS. Employing over 150 professionals across the country and with international backing from our technical partners at Lloyds in London, Standard Insurance Consultants Limited offers Extensive Expertise in all classes of Insurance which may be summarised as follows: • Oil and gas • Aviation and space • Marine hull and cargo, P&I

• • • • • • • • • • • • •

LAGOS OFFICE Standard Group House 130A, Association Road Dolphin Estate, Ikoyi Lagos, Nigeria Tel: +234 1 792 9108 Mobile: +234 807 589 4000, +234 807 589 4010

IBADAN OFFICE Standard Villa, 1, Mahogany Street Forest Hill Estate, New Jericho GRA PO Box 4245, Ibadan Mobile: +234 807 589 4032, +234 8098 922 922

ABUJA OFFICE Suite G-12A, Febson Mall Herbert Macaulay Way Wuse Zone 4, Abuja Mobile: +234 807 589 4021, +234 807 589 4007

Medical malpractice/professional indemnity Personal accident insurance Life insurance generally Electronics insurance Automobile insurance Householders, fire/special perils Construction and engineering Political risks Risk managements General third-party liability Treaty reinsurance generally Computer all-risk insurance General accident insurance

Standard Insurance Consultants Limited is one of the best-known and reputable insurance brokers in the country, with well-trained personnel who provide comprehensive and elaborate insurance programmes, including risk-management, that are cost-effective and meet the insurance requirements of our clients. Our experience in the provision of riskmanagement services to assist clients to identify, transfer and minimise loss exposure, and our ability to negotiate with underwriters effectively at the most senior level from a position of strength to achieve the most competitive premium, is an added advantage. In addition, our reputation built on experience, knowledge, flexibility and performance places us in a unique position to handle your insurance requirements to your best interest. The acid test of any insurance outfit is “prompt Settlement of Claims as at when due”. Standard Insurance Clients generally benefit from prompt and efficient claims servicing. That is why at SICL we place a premium on claims servicing at the top of our service

PORT HARCOURT OFFICE 11B, Circular Road Presidential Estate Port Harcourt, Rivers State Mobile: +234 807 589 4033, +234 805 655 4455

commitments to our mutual clients. Our claims departments are staffed by highly focused personnel, all of whom respond to any event with the same degree of urgency, no matter whether the insured event is small, medium or large. Finally, at SICL we take the issue of market security seriously and we monitor this area closely so that our clients’ risks are placed with secure and solvent carriers that will meet valid claims as and when they arise. Again, this is where our organisation is different from our competitors.

Unique selling point

Timely processing of claims settlement as and when due; we are client-focused and transparent. For more information, please visit our website: www.sicl.standardinsgroup.com or contact us via: Email: info@standardinsgroup.com Hotline: +234807 589 4000, +234 807 589 4007 GAMBIA OFFICE Standard Insurance Brokers (G) Limited Sakung Sillah Building 4th Floor, 52, Kairaba Avenue Fajara KSMB, The Gambia Tel: +220 449 4663 – 4 Mobile: +220 376 3366 LONDON CORRESPONDENCE OFFICE New Providence Wharf APT E333, 1, Fairmount Avenue London E14 9PX Tel/Fax: +44 207 093 1682 Mobile: +44 7939 616 827

ABC Human Development Consultants Limited ABC Human Development Consultants Limited is a world-class management consulting, training and outsourcing organisation and a member of the Standard Group of Companies. ABC Human Development Consultants Limited is licensed as a Certified Management Organization (CMO) by the Nigerian Institute of Management (NIM) and a Corporate Member of the same regulatory body. Also, we are accredited by the Centre for Management Development (CMD) as an Accredited Management and Training Institution in Nigeria, a Member of the Nigerian Institute for Training and Development. ABCHD has carved an enviable reputation as a leading provider of corporate training in management, marketing, leadership, accounting, public relations and security management. We provide creative leadership and management solutions aimed at giving our participants and their employers a competitive edge in an increasingly dynamic business world.

Our training solutions

We are capable of deploying training programmes that include (but are not limited to) the following areas, including certification courses: general management, HR management and capacity-building, project management, information and communication technology, leadership, finance, accounting and auditing, insurance and risk management, health, safety and security, renewable energy, marketing sales, procurement/e-procurement, entrepreneurship, technical/engineering, strategic management, governance, risks and compliance, purchasing, supply, warehousing, supply chain and logistic management.

BC OMEGA INFORMATION TECHNOLOGY LIMITED

Bespoke courses

Apart from our generic courses in the areas mentioned above, we offer a fresh and innovative approach to training and development through bespoke and personalised solutions by partnering with our clients and researching their needs thoroughly, ensuring an in-depth understanding of their training and business needs. Programmes appropriate to the specific context and culture of the organisation are designed and then delivered. With the backup of our international partners at our disposal, we can also deliver various courses as at when the need arises anywhere around the globe.

Our experience to deploy training solutons globally

We are in a stronger and better position to deploy any training solutions within and outside Nigeria, particularly in locations such as Ghana, Gambia, the UK, Canada, USA and UAE (Dubai and Abu Dhabi) and in any sector of the economy. This we have done in the past with many organisations, in both the private and public sectors of the Nigerian economy.

Faculty/team

We are equipped with new-breed and seasoned facilitators who are world-class speakers in

RURAL & CITYLINK PROPERTIES LIMITED

INTERNATIONAL POWER & ENGINEERING PROJECTS LIMITED

various fields to deliver impactful training interventions. Also, we have professionals from the academia and consultants who have partnered with us to achieve excellence in the delivery of programmes.

Other services

Also, our services extend, but are not limited, to: • Learning and human capital development • Human resources solutions • HR outsourcing • Corporate re-engineering/restructuring • Recruitment • Organisational due diligence and audit • HR advisory services • Head-hunting • Business advisory services

Unique selling point

At ABCHD, we drive organisational success through learning and development by increasing efficiency and productivity in the workplace. For more information, please visit our website: www.abchdconsultants.com or contact us via: Email: info@abchdconsultants.com Hotline: +234807 589 4010, +234 807 589 4008

NIGERBEEDS INTERNATIONAL LIMITED

www.standardinsgroup.com

PIECE & PIECES LIMITED

www.ilf.com

I L F E N G I N E E R S N I G E R I A LT D

Oil and Gas Division ILF – Engineering Excellence

Our fields of competence

For decades, ILF Nigeria has been providing high-level consultancy and engineering services to major oil and gas companies in the private sector, as well as governmental institutions.

■ Onshore & Offshore Production Facilities

30 years of experience and innovation have shaped ILF Nigeria into a true partner to support your investment decision. As a member of the ILF Group and with sister companies all over the world, ILF Nigeria can provide specialist expertise and mobilise resources in short lead times. Oil and gas • Production Plants • Processing Plants • Pipelines • Piping • Tanks, Storage and Offloading Systems • Refining Plants • Petrochemical Plants • SPM & Jetties

ILF Engineers Nigeria Ltd Plot 23, Water Corporation Drive Dideolu Estate, Victoria Island Extension, Lagos Tel. +234 0 1 212 59 99 Fax +234 0 1 212 69 99 info.los@ilf.com

■ Onshore & Offshore Pipeline Systems ■ Tank Farms & Tank Storage Facilities ■ Refineries & Petrochemical Plants

Our services ■ Consultancy ■ Design and planning ■ Procurement ■ Project management ■ Construction supervision ■ Start-up ■ Special services

oil, gas and minerals

The decision of the major oil companies to focus on the deepwater has left a gap for others to look at smaller shallow-water fields and onshore fields good. It was to the deepwater that international oil companies were most attracted around the turn of the millennium, when some of the world’s biggest finds were made, because these oilfields were relatively secure and far from the potentially violent onshore environment. Analysts Wood Mackenzie found that the current terms of the bill were “favourable, compared to many other deepwater regimes, reflecting their vintage”. These terms were drawn up before the spate of successful finds, and the oil companies were favoured in return for their willingness to spend on what was then considered risky exploration. The NNPC claims that the government take stands at 42 per cent, compared to a global average of 75 per cent. It says that West African rival Angola has a take of 78 per cent, while under the PIB it would be 70 per cent in Nigeria.

Shallow-water and onshore opportunities The amnesty that has brought relative peace to the Niger Delta has seen a renewed interest in Nigerian onshore oil, although there is still lingering uncertainty until a new fiscal system is finalised.

Years of widespread unrest and violence in the region largely came to an end in 2009, when the government decided that a military solution was not working and offered an amnesty that has been taken up by around 26,000 militants. Those who handed in their weapons were pardoned and offered vocational training in Nigeria or overseas. They are paid $410 per month until they find work – a large sum in a country where gross national average income was $95 per month in 2009, according to UNICEF. While there is a constant fear that violence could resume, the major oil companies that operate most of the onshore acreage have been able to restart oil production. This has seen national output rise back to around 2.2 million barrels a day (b/d) from as low as 1.6 million b/d as militant action forced shutdowns. However, the big oil firms are still extremely cautious about the onshore business. Their decision to focus on the deepwater has left a gap for others to look at smaller shallow-water fields and onshore fields. A host of domestic and foreign companies are very willing to put up with the fiscal uncertainty and the vagaries of the system in order to try to win the rights to any available acreage. With the government saying that Nigerian independent operators should be given first consideration in the 2010 Nigerian Oil and Gas Industry Content Development Act (NOGICDA), joint ventures between indigenous companies backed by foreign investment are becoming more popular, although several large Nigerian companies – such as Oando and Conoil – are also at the forefront of the renewed vigour.

Domestic firms seek to grow

Nigeria’s minister of petroleum, Diezani Alison-Madueke, speaks at the Organisation of Petroleum Exporting Countries conference

One company that has cleverly expanded in recent years, but decided that the prices were too high, was Nigeria’s Seven Energy. In 2010, it entered into a strategic alliance with NNPC exploration and production subsidiary Nigerian Petroleum Development Company (NPDC) to provide funding and technical services for the development of three blocks. Invest in NIGERIA 2012-13

oil, gas and minerals

Workers on a Nigerian oil rig contribute to the national output of around 2.2 million barrels of oil each day

UK-listed resources company Petrofac also thought that it was worth the risk, later buying a stake in Seven. Ayman Asfari, group chief executive of Petrofac, said: “Nigeria is a high-growth market, where we have been seeking commercial opportunities for some years. Seven Energy combines a very attractive market position with considerable development upside.” The joint ventures are very different from those seen in the past, when blocks were often awarded to friends of the incumbent government with little or no industry experience. Nowadays, the domestic firms usually have very strong credentials in their own right. A mini-licensing round held last year, in which Shell Petroleum Development Company (SPDC) tried to divest its interest in four blocks, attracted a host of bidders, with several Nigerian firms going it alone. These included Vertex, a company made up of around a dozen former officials from NNPC, backed purely by African banks. Prices in the bidding rose higher and higher, with several experienced companies withdrawing as they believed the competition had become too stiff. The bidding then hit a stumbling block as NNPC decided that it wanted to use a clause in the original joint-venture agreement with SPDC, allowing it to take over day-to-day operatorship of the blocks in the event of a sale. Invest in NIGERIA 2012-13

This caused some other experienced Nigerian companies to balk. Historically, NNPC has found it almost impossible to fund its share of joint ventures in any timely fashion, and the best Nigerian engineering staff are often attracted to work for foreign companies, leaving NNPC’s exploration and production section with a poor reputation. Some deals did go ahead, including the sale of OML 26 to First Hydrocarbon Nigeria, a joint venture between UK-listed oil company Afren and a number of Nigerian investors. The firm paid $148 million for the block, which it believes has gross recoverable and contingent resources of 320 million barrels of crude oil (bbl) and another 615 million barrels of oil equivalent (boe) of unrisked prospective resources. If Nigeria remains committed to operating onshore acreage sold off by the majors this will remain a serious stumbling block, with a significant percentage of companies unwilling to risk this partnership. These deals pale into insignificance compared to an offer made back in 2009 by Chinese state-controlled oil giant CNOOC, which was scouring the continent for supplies to meet its growing energy demands. In meetings held with the office of then president Umaru Yar’Adua, it offered to buy a 49 per cent stake of 23 mostly onshore blocks for more than $30 billion.

Empowering Nigeria Seven Energy International is an independent Nigerian exploration and production company exclusively focused onshore in the resource rich Niger Delta. Our vision is to be a leading gas supplier to domestic industry and regional electricity generators and we achieve this by being dynamic and innovative across the gas supply chain from field to demand hub. We are successfully providing opportunities for our industrial partners and creating value for our shareholders and investors.

To find out more visit

www.sevenenergy.com

West African Ventures – a reliable, 100% Nigerian offshore contracting partner Vincent Okeke, Commercial Director, West African Ventures

West African Ventures (WAV), established in 2000, is a 100% Nigerian company and a leading indigenous provider of offshore engineering, procurement, fabrication, installation and vessel charter services. With corporate headquarters in Lagos, a marine support base and shipyard in Warri, dry-dock and fabrication facilities in Onne Oil & Gas free zone, WAV continues to provide excellent offshore support services to the Nigerian Oil & Gas sector. WAV maintains a new and flexible fleet of DP-3 offshore construction vessels, all of which are based on a hybrid design configuration that typically combines the following characteristics: • large, unobstructed decks; • ability to install either rigid or flexible pipe, or both; • high-capacity cranes, ranging from 270-1,800 tonnes, a number of which have deepwater capability and heave compensated systems; • large accommodation capacity of between 298 and 469 persons; • dynamic positioning Class 3. Due to the versatility of this fleet, WAV has the ability to offer the following range of services: SURF, Pipelay, Accommodation,

Jascon 34, DP3 pipelay/construction vessel

Heavy Lift and Decommissioning. Through its engineering and operational capabilities in Nigeria, WAV can offer the above services on a turnkey EPIC-contract basis. WAV also owns and operates a large and diversified fleet of marine support services vessels in West Africa that provides support to the oil and gas industry in the area. This fleet comprises 45 vessels ranging from AHT/AHTS vessels, crew/pilot boats, construction/accommodation barges and offshore cargo barges. WAV remains highly committed to the full implementation of the local content directives of the Nigerian Government by ensuring 100% compliance with the ‘Local Content Act’. As a leader in the development

of local oil and gas infrastructure in Nigeria, WAV has continued to make significant investments to develop a world-class, Nigeria-branded offshore contractor. With two well-equipped and resourced training centres in Nigeria located at the Onne Oil and Gas Free Zone and Warri, WAV continues to build sustainable indigenous capacities for skilled oil and gas industry personnel, while at the same time creating unequalled employment opportunities for the teeming population of young Nigerian engineers, technicians and craftsmen. As part of its corporate social responsibility culture, WAV is also partnering with various local communities where it operates and contributing to sustainable rural development, especially in the areas of infrastructure, healthcare, education and capacity-building.

For further information on WAV’s capabilities, including our offshore vessel fleet and specifications. Please visit our website at www.waventures.com

Jascon 39, DP1 AHTS vessel

WAV’s 90,000m2 Fabrication Yard at the Onne Free Zone, Port Harcourt

Reliable partner in NIGERIA

USAN FPSO

JASCON 30 NIGER

CHAD

Sokoto Kano

Maiduguri

Zaria Kaduna BENIN

NIGERIA

Jos

★ ABUJA

Yola

CENTRAL AFRICAN REPUBLIC

We s t A f r i c a n Ve n t u r e s

Makurdi

Ibadan Lagos Benin City Warri GULF OF GUINEA

Port Harcourt CAMEROON

EQUATORIAL GUINEA

GABON

CONGO

oil, gas and minerals

The deal would have given CNOOC reserves of six billion boe – around one-sixth of Nigeria’s total reserves. The government said an initial offer was “unacceptable”, but added: “Your interest in all the listed blocks will be considered if your revised offer is favourable.”

The Petroleum Industry Bill and onshore As mentioned above, the major disincentive to invest in Nigeria’s oil industry in recent times has been the long-delayed PIB, which includes a new tax framework for oil projects. The plans have been a particular deterrent to deepwater oil projects where the rates of return will drop sharply. It has had less effect in interest on onshore oil as the terms will be little changed and actually improved

idea. Long accustomed to windfall profits and the discretionary allocation of assets, Nigeria’s politicians have continually placed personal interests ahead of reform, resulting in deliberate delays and obstruction,” analyst Ergo cautions. Exactly how the PIB will play out is almost impossible to forecast, while the future for Nigeria’s onshore oil fields looks much more assured. What is less assured is the future of the oil refineries. Nigeria may be one of the largest crude producers and exporters in the world, but it has to import the majority of its refined products.

Boosting refineries’ output Nigeria’s four refineries have been running at an average of around 40 per cent of capacity over the past decade, compared to a global expectation of around 90 per cent. According to data from NNPC, the worst-performing year was 2007, when they ran at a meagre 12 per cent. Theoretically, plans are under way for an additional 750,000 b/d to be added to the existing refining capacity of 455,000 b/d. China State Construction Engineering Corporation has said it will build three new refineries. A Memorandum of Understanding has been signed in a deal said to be worth $23 billion. However, there have been many similar promises in the past that have failed to turn into reality. While joint ventures are important in developing Nigeria’s own abilities, they are also significant in a country in which personal connections can be crucial. As alluded to earlier, the days when many of the most sought-after contracts were awarded more because of friendship and political necessity are hopefully retreating, but the Nigerian system is most easily manoeuvred with local knowledge and support. There is likely to be a swathe of new acreage up for sale once the PIB has been passed. Major oil companies, including Exxon and Chevron, are rumoured to be waiting to offer some of their own onshore interests, and the government is promising a new licensing round. Petrofac is only one of a series of oil and gas service companies now forging links with indigenous firms to meet local content requirements that were often given little consideration in the past, but are now becoming a necessity. It remains unclear exactly how stringently the NOGICDA will be implemented, as little heed has been

Nigeria’s four refineries have been running at an average of around 40 per cent of capacity over the past decade, compared to a global expectation of around 90 per cent for smaller onshore oil projects. The government take for 100 million bbl fields is currently high and will remain very similar, but the take for a 20 million bbl onshore field will drop from around 95 per cent to 77 per cent. “Under current JV [joint venture] terms, the extremely high government share is among the highest in the world and is a significant disincentive to new investment. Under the PIB terms, the government share is progressive and generally lower from smaller fields and should enhance the economic viability of these fields,” said analysts Wood Mackenzie. However, after four years of debate, the PIB is still stalled as vested interests try to protect themselves from its changes. This has resulted in major investors being unwilling to commit money to Nigeria until a final solution is in place. “While most politicians publicly call for widespread industry reform, few have done more than pay lip service to the Invest in NIGERIA 2012-13

oil, gas and minerals

Crude oil exports by destination, 2010

Oil exports, current prices in US$ $106.14 $100.9

120

South Africa

Other Africa

Australia

United States

43%

Germany

France

Netherlands

$54.78

$35.73 $26.52

$16.98 $18.93

Predictions 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

$56.4 $48.08

$23.092

$96.58

$71.64

$65

$91.84

$84.17

Spain

Source: IMF

Other Europe

Total production, barrel/day

Other Asia

3000

India

14%

Brazil

Source: Global Trade Atlas, APEX (Lloyd’s), FACTS Global Energy, EIA)

Canada

Thousands barrels/day

$108.21

100

2,630.86 2,442.25 2500

2,352.756

2,169.135 2,261.416

2,168.552 2,211.423

2,331.696 2,278.592 2,123.323

2000

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Source: US Energy Information Administration

Invest in NIGERIA 2012-13

oil, gas and minerals

Plans are in place to boost the capacity of Nigeria’s oil refineries

paid to previous legislation. However, KPMG warned that some of its terms are so stringent that “a transitional arrangement would need to be developed, such that foreigners, who have over the years been encouraged to invest in the Nigerian economy, do not lose such investment”.

Preference for indigenous companies The bill states that preference should be given to Nigerian indigenous service companies, with the bar for qualification set at 51 per cent Nigerian equity ownership. Some critics argue that this is moving towards nationalisation rather than the desired indigenisation, but it has not stopped foreign companies from trying to satisfy the requirement. The proposed act also asserts that, in bid evaluations, the awarding of contracts will not be based solely on the principle of lowest bidder. The emphasis will be on the capacity of an indigenous company to carry out the job – as long as the bids are within 10 per cent of one another. Service provider Subsea 7 created a joint venture with Nigerian yard-owner Jagal late last year. The new firm, Invest in NIGERIA 2012-13

NigerStar 7, will have two fabrication yards with a combined workforce of more than 3,000 people.

Joint ventures Law firm McGrigors says this may be the first in a string of joint ventures as foreign companies attempt to tie up with good-quality partners, although the firm warns that legal issues around corporate governance and anti-bribery programmes are stalling the rush to sign deals. “The key for investors is to make sure that they retain sufficient influence within the corporate structure. They need to safeguard their own investment in the long term, but also ensure that they adhere to these new Nigerian content rules. Business practices that might seem commonplace in the local market could land joint-venture partners in trouble in their home market,” says Gemma Crawford, a senior solicitor at McGrigors, who worked on the deal. ■ Mark Dixon is a journalist specialising in energy and is a former editor of Africa Oil and Gas magazine. He has chaired numerous conferences, including Oil and Gas Offshore West Africa

The leading indigenous suppliers of casing, tubulars, line pipes and fittings to all major oil companies operating in Nigeria. Damagix represents some of the world’s biggest pipe manufacturers, whose total capacities are more than 20 million tons of pipes annually.

Casing

Induction bend

Casing

Line pip es

DAMAGIX GROUP COMPANY PROFILE DAMAGIX NIGERIA LIMITED (DAMAGIX), incorporated in 1993, metamorphosed into DAMAGIX GROUP – made up of DAMAGIX NIGERIA LIMITED, now the leading Indigenous Pipes Supplier to the Nigerian Oil and Gas Industry, DAMAGIX OIL AND GAS NIGERIA LIMITED, which handles Pipeline Construction, and DAMAGIX ENGINEERING LIMITED, which handles Engineering Projects and Consultancy Services. DAMAGIX is managed by a set of core professionals who have gained a total of over 60 years’ working experience in the Nigerian Oil and Gas Industry. DAMAGIX represents dozens of Pipe Mills (in Nigeria) from all over the world, whose total Milling Capacity is over 20 million tons of pipes annually.

SUPPLIER OF 42” AND 24” LINE PIPES TO TOTAL’S (NIGERIA) OML 58, O.U.R UPGRADE AND NOPL RESPECTIVELY

DAMAGIX has executed numerous Pipes Supply Contracts for Multinational Oil Companies operating in Nigeria, such as Total, Shell, Agip, Chevron and Conoil Producing. ln addition to our proven track record, and in our determination to remain the Most Preferred Oil Services Company in the Nigerian Oil and Gas Industry, DAMAGIX has just achieved another Golden Milestone, in the biggest Pipes Supply Contact ever awarded by TOTAL to an indigenous Company in Nigeria, by the timely execution of a Major Contract for TOTAL’s OML 58 O.U.R. Pipeline Upgrade Project, for the Procurement, Fabrication, Coating and Supply of 25,000 tons, 46 km of 42” X65, 3-layer PE coated Line Pipes Induction Bends. Following this successful completion, TOTAL awarded DAMAGIX another Contract to supply 75,000m of 24” Line Pipes to its NOPL Project, which DAMAGIX again successfully executed, in time! With the Local Content Bill now signed into Law in Nigeria, and with the collaboration of our Technical Partners, DAMAGIX has strategically accelerated its plans to immediately establish an LSAW Pipe Mill and a Threading Plant, which will be commissioned in the next two years. DAMAGIX has gone far in its determination to participate in the “Trans-Nigeria” and “Trans-Sahara” Gas Pipeline Projects. In order to improve its Management System, DAMAGIX has commenced the ISO 9001:2008 Certification Processes, which will be concluded very soon.

OUR CONTACTS Nigeria LAGOS 19B, Maitama Sule Street Ikoyi, Lagos, Nigeria Tel: + 234 1 463 1395 + 234 803 307 3408 + 234 803 323 2222 Fax: + 234 1 463 1395 PORT HARCOURT 312, Port Harcourt Aba Expressway Nigeria

PRODUCTS AND SERVICES DAMAGIX stocks and supplies all sizes and grades of Casings, Tubulars (OCTG), Line Pipes and Fittings. In collaboration with our Technical Partners, we provide the following Supply Services: – 1. Line Pipes and Bends/Accessories. 3. Stainless Steel Pipes. 2. Casings Pipes and Tubulars (OCTG). 4. Piling Sheets/Piling Pipes.

Ghana 10, Pride Loop, Behind Voltic House, Dzorwulu Accra, Ghana Tel: +234 1 463 1395

INTERNATIONAL EXPANSION PROGRAM With the increased Oil and Gas exploration activities in Ghana, DAMAGIX has already opened a Branch Office in Accra.

Website: www.damagix.net Email: info@damagix.net damagix1@yahoo.com

Hobark International Limited (HIL) is the parent company of the Hobark Group operating in the Oil and Gas industry. The company was incorporated in 1998, starting as a staffing agency based in Port Harcourt. It has since diversified its activities via subsidiaries. Among its various commercial interests, the group has recently embarked on setting up a centre of excellence to provide hands-on training for Nigerians to enable them not only to gain the relevant technical and managerial experience needed to participate in the Nigerian Oil and Gas industry, but also to compete with the Oil & Gas workforce outside the country. The staffing arm of the group, Hobark Consultant Management Services (HCMS), delivers full-cycle recruitment solutions, from initial client brief to final offer to the candidate or project group for all segments of the Oil & Gas industry. Also included in its services are Mobilisation, Immigration, Payroll and Tax Administration, Medical Insurance and Evacuation, Demobilisation, Integrated Project Management and Training. HCMS is regularly retained to find Oil and Gas professionals by many leading operators, because they trust us to use our extensive database together with our global presence and alliances to locate the right candidates – with the exact sought-after background, skill set and experience. We are also able to mobilise professionals who are local to clients’ operational bases, thereby aligning with location-specific labour laws. We exhibit at most international shows to enable us to attract Nigerians in the diaspora with the expertise needed to help transform the energy sector. At the same time, we also recruit Nigerians to work outside Nigeria.

OTC Houston 2012: (above left) HCMS staff greet attendees at the Hobark stand; (above right) Group Managing Director Engr Obioha Okoroafor informs the visiting Nigerian Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, of Hobark’s activities

OE Aberdeen 2011: (above left) HCMS staff are to welcome visitors to the Hobark stand; (above right) staff attend to visitors to the event

DrillPet International Limited (DIL) is the Drilling Services arm of HOBARK group focusing on Drilling and Measurement. In technical partnership with Schlumberger Nigeria Limited and Gyrodata Inc, it provides the following services: • Definitive Borehole Survey Services/ Monocable Wireline Services • Directional Drilling Services • Measurement While Drilling (MWD) and Logging While Drilling (LWD) Services • Drilling Optimisation/Well Engineering • Project Management/Survey Data Management • Drilling Fluids, and Mud Loss Solutions • Downhole Tool Rentals

Uniterm Nigeria Limited (UNL) is the arm of HOBARK group focused on the following services: • • • •

Onshore & Offshore Catering Services Housekeeping and Laundry Services Provision of Drilling and Workover Rigs Provision of Downhole Speciality Tools Services • Supply of Oil Country Tubular Goods (OCTG) • Supply of Drilling Bits

Ultiproc Nigeria Limited (UPNL) is the arm of HOBARK group offering international procurement services to all sectors of the economy by providing one-stop-shop solutions for sourcing a vast range of products. Services include: • Sourcing manufacturers and suppliers • Shipping merchandise • Delivering merchandise to your choice of location

Contact us Lagos office: Hobark International Ltd 14/15 Bishop Kale Close Off Kasumu Ekemode Street Victoria Island Nigeria

Houston office: Hobark International Inc Suite 340 19855 Southwest Freeway Sugar Land, Houston, Texas 77479, USA

London office: Hobark International (UK) Ltd 28 Bruton Street Mayfair London W1J 6QW United Kingdom

Port Harcourt office: Hobark International Ltd Plot 46 Ordinance Road Off Trans Amadi Industrial Layout Port Harcourt, Rivers State Nigeria

Tel: + 1 832 295 9089 Fax: +1 832 476 8745

Tel: +1 832 886 0404 Fax: +1 281 207 1269

Tel: +44 207 659 5424 Fax: +44 207 659 5422

Tel: +234 844 648 23 Fax: +234 844 648 24

www.hobarkintl.com

Pan Ocean Oil Corporation Nigeria Limited was incorporated as an Exploration and Production company in 1973. In December 1975, OPL 70/71 was converted to Oil Mining Lease (OML) 98. Pan Ocean commenced crude oil production in August 1976 at the Ogharefe field of OML 98 which is situated in the northern fringe of the Niger Delta region of Nigeria. Pan Ocean has been in a Joint Venture with the Nigeria National Petroleum Company (NNPC) in respect of OML 98. As a Joint Venture (JV) partner, the NNPC has 60 percent working interest in OML 98 while Pan Ocean has 40 percent. Pan Ocean commenced crude oil production at the Ogharefe field (OML 98) in 1976. Through strategic planning, aggressive exploration and production activities and tenacity, Pan Ocean acquired the Oil Prospecting License 275 during the 2007 bid round. In 2009, Pan Ocean signed a Production Sharing Contract (PSC) with the NNPC on Oil Prospecting License (OPL) 275. In December 2009, Pan Ocean’s gas utilization policy attained the Federal Government’s mandate requiring flares-out by all exploration and production companies operating in the country. Pan Ocean’s Ovade-Ogharefe Gas Plant in the Niger Delta, became operational in July of 2010 and blazed the trail when it supplied lean gas to the NIPP Power Plant sited at Ihobbor, Edo State. The Ovade-Ogharefe gas plant stands unrivalled in its pace setting achievements as the largest Carbon Emission Reduction Project in West Africa to date.

OIL, GAS AND MINERALS

In order to distribute gas, domestically and to international markets, ambitious plans are in place to increase the number of pipelines

Step on the gas The Nigerian Gas Master Plan is an attempt to maximise the value of the country’s gas reserves. Cherry Reynard looks at the Plan and proposals to upgrade gas infrastructure in order to export more of the resource

igeria’s economic dependence on oil has long exercised policymakers. Part of the country’s drive to diversify its economy and solve its internal energy problems has been to exploit fully its abundant natural-gas resources. In this, the government has been forced to start from scratch – a position where almost all natural gas was flared (burnt off) and there was little or no infrastructure to support its distribution. The Nigerian Gas Master Plan (GMP) has been an

important plank in the government’s efforts to maximise the potential of its gas reserves. President Umaru Yar’Adua implemented the plan in February 2008 in an effort to tackle the dire gas wastage in Nigeria’s oil fields and meet international environmental standards, which required an end to all gas flaring by the end of that year. Demand for natural gas was also rising, with the price peaking at record highs in July 2008. Prior to the plan, there simply wasn’t the demand or the infrastructure to incentivise firms to exploit the associated gas from the region’s oil fields. Where it was used, it tended to be exported. There had been some improvement from 2005, with flaring reducing and some infrastructure development, but it remained piecemeal. The Nigerian GMP had three main objectives. Put in place by the Petroleum Products Pricing Regulatory Agency (PPPRA), it sought to build a domestic market for natural gas, optimise Nigeria’s market share and competitiveness in export Invest in NIGERIA 2012-13

OIL, GAS AND MINERALS

The Gas Master Plan seeks to reduce flaring and grow the domestic gas market

Gas flaring in Nigeria 35 Gas Flaring (BCM)

30 25 20 15 10 5

The diagram above details gas flaring in the country by billions of cubic metres. The map below shows flaring in Nigerian territory in 1992 (represented by blue dots), 2000 (green dots) and 2008 (red dots)

Country boundaries Offshore EEZ boundaries Vector polygons drawn on the identified gas flares source: NOAA’s National Geophysical Data Center

Invest in NIGERIA 2012-13

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markets and assure long-term gas security for the country. It set out to create a fully liberalised market within five years. It identified five constraints to the growth in supply of the Nigerian gas market: availability, the affordability of supply, deliverability, the legal and regulatory framework, and funding. It also recognised the need to establish a separate fiscal regime for gas (NAGFRA) and a downstream commercial regulatory framework (DGA). Policymakers had a hill to climb. The incumbent oil and gas companies had little interest in selling gas to an unproven domestic market and the gas market had oligopolistic features: the government-owned NNPC/NGC controlled the downstream sector and a Shell-operated joint venture the upstream. Equally, the infrastructure continued to be a challenge. Treatment facilities were poor and had no capacity for full LNG (liquefied natural gas) extraction. There was no mechanism to allow third-party participation in the development of infrastructure. But the potential was significant. There are substantial gas reserves in Nigeria, estimated to be the seventh largest in the world. The region not only has associated gas – gas that emerges as a by-product of oil exploration – but also pure gas fields. There was also significant demand in the pipeline. Countries such as Ghana were waiting on Nigerian gas to help solve their energy problems. Even domestically, the potential seemed substantial. The problems in the gas sector were a contributory factor in Nigeria’s acute electricity shortage. Almost two-thirds of its electricity capacity was in gas-fired plants. These suffered frequent supply disruptions, which had a knock-on effect on other parts of the economy. The domestic market remains, potentially, huge – with a population of 150 million, Nigeria is the second largest economy in Africa after South Africa. What has been the impact of the GMP? Flaring does seem to have reduced. This has been both carrot and stick. The Nigerian Senate passed a bill stating that from January 2011 oil companies operating in the country will have to pay market prices for any gas flared. Firms already had to pay around $3.50 per 1,000 cubic feet (mcf) of gas flared, but this could double under the new regulations. The Nigerian government estimates that flaring is around half the level it was four years ago. This is supported by research from Global Insight, which suggests that the amount of gas flared has fallen from 70 per cent in 2000 to around 30-35 per cent today. Companies have been playing their part. For example, in May 2010, Royal Dutch Shell said it planned to spend $2 billion upgrading and replacing its gas-gathering facilities across Nigeria with the aim of reducing gas wastage. It had

OIL, GAS AND MINERALS

The original GMP proposed a gas infrastructure blueprint, covering pipelines, central processing facilities, LPG storage and supply infrastructure already spent more than $3 billion in building associated gas-gathering infrastructure across the country. Chevron is investing $2 billion in a plant in the Niger Delta, which will convert gas from its Escravos field into diesel fuels. Reducing wastage is one difficulty, but distributing the gas is a more entrenched problem. The original GMP proposed a gas infrastructure blueprint, covering pipelines, central processing facilities, LPG storage and supply infrastructure. Progress has been made, but the plan is far from fully realised. Martijn Proos, senior investment adviser, Frontier Markets Fund Managers, says: “At the moment, it is only the Delta region. There is a pipeline going to the Lagos area. There is also the West African gas pipeline, which runs from Nigeria to Ghana and beyond.” He adds that there is now good legislation in place to enable private-sector investment in infrastructure: “It used to be the government that created this, but they have handed some of this over to the private sector.” At the moment, private companies put gas in bottles so it can be distributed. There are a lot of logistical bottlenecks – from the poor quality of the Nigerian roads to problems with sabotage of pipelines – but it is an improvement. There has also been an improvement in the infrastructure for exports. There are plans to expand the LNG facilities at Bonny Island in 2012, to increase the volume of exports to the North American market. There are new projects in Olokola and Bayelsa. The ambitious trans-Saharan pipeline to Algeria – which would export gas to Europe – is currently on hold.

Getting the price right The government is also trying to address the issue of pricing – a major sticking point. International companies saw little reason to build infrastructure to sell natural gas to domestic investors at a fraction of the cost that could be achieved in international markets. Diezani Alison-Madueke, the minister of petroleum resources, introduced a phased rise in gas prices in 2010 to $2 per mcf to boost supply, and said the price would reach $3 per mcf by the end of 2013. This was designed to divert power to the country’s struggling manufacturers.

There are substantial gas reserves in Nigeria, estimated to be the seventh largest in the world

Subsidies had bridged the gap for the country’s poorest citizens. However, this contribution is now consuming up to 25 per cent of government outlays. Incumbent president Goodluck Jonathan tried to remove the subsidies, more than doubling the cost of gas to domestic users. This caused widespread social unrest in January 2012 and they have now been partially reinstalled. The removal of the subsidy had been intended to free up money to fund investment in the downstream sector of the petroleum industry and make it more competitive. It may still go ahead, at least in a modified form. Proos concludes: “Nigeria has good resources and so the policies are up to standard. It has a long history in oil and gas and its regulations are almost up to international standards.” The Nigerian Gas Master Plan was ambitious and was never likely to yield instant results. It is some way from a fully liberalised market and pricing may continue to be a sticking point for policymakers, but there is progress on capturing and distributing Nigeria’s abundant gas reserves. ■ Cherry Reynard is a freelance financial journalist and author of Investing in Emerging Markets (The BRIC Economies and Beyond) for the Securities Institute Invest in NIGERIA 2012-13

Supporting Investment in Nigeria for over 20 Years Executive Chairman/CEO Alhaji Dr. Muhammadu Indimi

Under the leadership of our Executive Chairman/CEO Alhaji Dr. Muhammadu Indimi, Oriental is a privately held Nigerian oil and gas exploration and production company focused on Nigeria. Leveraging strategic alliances, Oriental has embarked on the largest offshore development program for an independent Nigerian E&P company to-date.

Our three key assets are located offshore in southeast Nigeria. The Ebok Field is currently producing at 40,000 bopd, while the Okwok Field and OML 115 are in various stages of appraisal and development. Our production infrastructure means we are perfectly placed for future developments in this highly prospective area.

Oriental is a staunch supporter of the Nigerian domestic oil industry, adheres to strong ethical EHSS policies, and is a considerable contributor to the empowerment of our local host communities. Oriental will continue with the development of its current holdings and will move forward as it looks for opportunities to increase its investment in Nigeria.

Find out more at www.oriental-er.com

OIL, GAS AND MINERALS

Local players

The Nigerian Content Act aims to create jobs for local workers in the oil and gas industry

Invest in NIGERIA 2012-13

OIL, GAS AND MINERALS

To encourage the participation of local companies in Nigerian oil and gas the government has set up a minimum local content target of 75 per cent for all contracts undertaken in the industry. Cherry Reynard assesses the progress that has been made in terms of meeting this target

il has brought wealth to Nigeria, but to date relatively little of this has filtered down to the wider population. Income inequality is still significant and the presence of international oil companies has not produced a commensurate rise in local skills and employment. However, the government is now taking steps to address this imbalance, in particular with its ambitious new legislation on local content. Historically, the oil and gas industry in Nigeria has been dominated by international companies operating under joint venture agreements. For example, a joint venture operated by Shell accounts for around half of Nigeria’s total oil production. These global companies have generally relied on international rather than domestic workers and there have been accusations of discrimination against local labour. This has been both cause and effect. There has been a skills shortage in Nigeria and studies suggest that the country’s educational standards have been falling for some time. A recent research paper from the Department of Educational Administration and Policy Studies, Delta State University, Abraka, Nigeria found that: “Standards in education are falling at all levels as a result of inadequate acquisition of skills due mainly to poor implementation of school curricula.” However, many people have laid some responsibility at the door of the oil and gas companies operating in Nigeria who have been unwilling to train local people and transfer their skills. Importing labour is more expensive and a number of business people in Nigeria have been vocal, according to Chukwuma Henry Okolo, vice-chairman and chief executive of oil servicing company Dorman Long Engineering. He says that the current situation puts the country 10 years behind in the development of technical skills and increases the human resource costs of any project by as much as 100 per cent. The first attempt by the government to tackle the problem came in 2009 as part of the far-reaching Petroleum Industry Bill. One of its five main tenets was encouraging local participation in the oil and gas sector. It required increased ‘local content’ as a condition for the award of oil licences. It

stated that the federal government should at all times promote the use of domestic companies, workers and services. There were specific as well as general clauses. For example, the bill sought to encourage the development of small fields by local entrepreneurs with low tax rates. It addressed some of the favourable tax deductions that had existed for international companies. It also, controversially, renegotiated some contracts that it said had been awarded improperly, which dented Nigeria’s standing among some international investors. However, perhaps most importantly, it also deregulated the downstream sector, which opened it up to competition and therefore local participation.

Legislating for local content The reforms were generally effective, reversing years of declining output in the oil and gas sector and shoring up GDP growth in Nigeria. However, the provisions of the bill were extended by the Nigerian Oil and Gas Industry Content Development Bill, which became the Nigerian Content Act, in April 2010. Unlike previous incarnations of the bill, the 2010 version defined ‘local content’ not by the shareholders owning a company. This was important because this definition had made previous regulations relatively easy to bypass. Instead, local content is defined as “the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilisation of Nigerian human, material resources and services in the Nigerian oil and gas industry”. In other words, the Act aims to give those companies with high ‘Nigerian content’ preference over those with lower content. The Act also created the Nigerian Content Development and Monitoring Board (the Board) to execute its provisions, plus the Nigerian Content Consultative Forum, which is intended to be a platform for information-sharing. The Act set out some ambitious targets for the next four years, including 17 individual milestones. It aims to redeploy $20 billion into the Nigerian economy and create 30,000 jobs, largely by encouraging international companies to use domestic ancillary services and employ local labour.

The bidding process Criticisms of the Act have tended to focus on the introduction of more administrative hurdles in an already onerous contract award process, and certainly the rules do place additional burdens on companies operating in Nigeria. Specifically, companies must submit a Nigerian Content Plan as part of the bidding process for any licence, permit or interest in the oil Invest in NIGERIA 2012-13

OIL, GAS AND MINERALS

Groups such as PETAN have been formed for mutual support and skills-sharing, and to promote Nigerian technology in the oil and gas industry firm KPMG says these targets may be unrealistic: “In our view, the infrastructural base (such as regular electricity supply) necessary for the development of the manufacturing and fabrication industry is still largely undeveloped. It is unlikely that the country would be ready in three years for all items required for use in the oil and gas industry to be produced locally.”

Success stories

Nigeria’s minister of petroleum, Diezani Alison-Madueke

and gas industry. It should demonstrate how ‘first consideration’ has been given to Nigerian independent operators or the employment of Nigerian staff. They then need to provide periodic updates to the Board. It requires that bids are not decided solely on the basis of cost, with preference generally given to the bid with the highest Nigerian content. The bidder is required to pay one per cent of the contract value to the Board and hold 10 per cent of revenues in a Nigeria-domiciled bank account. The latter holding is designed to provide a pool of funds that can be loaned by the banks to local operators in the oil and gas sector.

Transferring skills In order to facilitate the transfer of skills, the Act also requires that a programme of initiatives, aimed at promoting the transfer of intellectual property from oil and gas operators to Nigerian individuals, needs to be submitted as part of the contract process. The Act also provides for the creation of a skills database – the Joint Qualification System. If there is inadequate Nigerian provision in a certain area, companies have three years in which to comply with the Act. Consulting Invest in NIGERIA 2012-13

However, the Act has seen some early successes. The Nigerian Content Development and Monitoring Board reports that Shell awarded $947 million of contracts to Nigerian local companies in 2010 alone – 96 per cent of all contracts awarded. Chevron’s senior management has given strong commitment to building its local contact. Equally, oil services companies such as Nigeria’s Nigerdock and SCC are taking on larger projects as a result of the Act. SCC made history in March 2011 as it laid the first ever Nigerian-made steel pipes in ExxonMobil’s Edop-Idoho offshore field. Groups such as PETAN have been formed for mutual support and skills-sharing, and to promote Nigerian technology in the oil and gas industry. Similar successes are being seen in the gas sector, with local firms increasingly participating in the bottling and distribution of liquefied natural gas since the market opened up to competition. The Nigerian Content Development and Monitoring Board is keen that Nigerian content should become embedded in the philosophy of companies, rather than simply being a tick-box exercise. KPMG concludes: “The Act has the potential to facilitate the participation of Nigerians in the oil and gas sector, and stimulate the development of other sectors of the economy, especially the manufacturing sector. However, a transitional arrangement would need to be developed, such that foreigners, who have over the years been encouraged to invest in the Nigerian economy, do not lose such investment.” The Nigerian Content Act has the potential to transform the Nigerian economy, but policymakers will have to ensure that they do not alienate those foreign companies that have supported the country in its growth. ■

OIL, GAS AND MINERALS

NEITI: the Nigerian Extractive Industries Transparency Initiative NEITI was set up to overcome governance abuses in the resources industry. Ben Poole observes how the initiative is now providing mutual benefit to extractive companies operating in Nigeria and the local population

igeria is rich in natural resources, particularly in terms of oil reserves. The country is the largest oil producer in Africa and globally it ranks in the top 10. Nigeria’s oilfields can produce 900 million barrels a year, while estimates put its recoverable oil reserves at around 34 billion barrels. With such resources, it should come as no surprise that the oil industry is a major player in the national economy, and this is backed up by statistics – the sector has come to make up more than 40 per cent of national GDP and a huge 95 per cent of export receipts. The industry also dominates government revenue, providing more than 80 per cent of the total income. Six of the world’s top oil companies operate in Nigeria: Agip, Chevron, Elf, Mobil, Shell and Texaco. In partnership with the Nigerian government, these companies participate in the operations that provide some of the staggering statistics above. But with such large sums, how can the government demonstrate that the industry is providing benefit to Nigerian society, as well as profit to the companies involved, for mutually beneficial growth? This is where the Nigerian Extractive Industries Transparency Initiative (NEITI) comes in.

The history of NEITI NEITI is the Nigerian version of a global initiative that promotes transparency in payments by companies in the extractive industries to government bodies, with the aim of removing governance abuses from the resources industry. Globally, the

President Obasanjo and finance minister Ngozi Okonjo-Iweala in conversation with Dr Peter Eigen, chairman of the board of EITI

EITI standard requires companies to disclose taxes and other payments they have made to governments and, in turn, governments must disclose what they received from companies. An independent administrator compares the two sets of figures, which are then published in an EITI report. The process, on a national level, is overseen by representatives from the companies active in the extractive industry, government and civil society in a multi-stakeholder group. Nigeria played a key role in the establishment of the EITI standard. When EITI was originally being discussed, some countries were uneasy with the step towards transparency, with many threatening legal action to prevent the disclosure of what they saw as confidential information. But the chairman of the board of EITI, Dr Peter Eigen, cites the Nigerian president of the time, Olusegun Obasanjo, as being the first leader to stand up and say that he would make it mandatory for companies working in Nigeria to publish their payment information, while he also promised to make public what he received from these companies. This was the big breakthrough that the process needed, and EITI was born. Invest in NIGERIA 2012-13

OIL, GAS AND MINERALS

In Nigeria, NEITI was inaugurated in February 2004 when President Obasanjo launched the National Stakeholders Working Group (NSWG) under the leadership of government minister Obiageli Ezekwesili. The NSWG oversees the activities of NEITI and works with stakeholders to build consensus on the need for extractive revenue transparency in Nigeria.

Leading the way The NEITI Bill was passed by the National Assembly and signed into law by President Obasanjo in 2007, and with this legal backing, Nigeria became the first EITI-implementing country. The EITI Board designated Nigeria as EITI compliant last year, the final part of the process. NEITI requires companies in the extractive industries to regularly publish accounts of all major payments made to the government, while also requiring the government to publish accounts of all revenues it has received from the sector. Both sets of accounts need to be available and easily accessible to the public, and provide a comprehensive description of the payments and revenues. Many companies will already carry out such checks, but in cases where they do not, an independent audit of payments and revenues takes place. The international standards that are applied ensure that the opinion of the auditor is published following the reconciliation of payments and revenues, with any differences noted. This is the case for state-owned companies, as well as private corporations. It is important that civil society is also a key player in all stages of the NEITI process, and public debate is one way to achieve this. With that in mind, the inaugural NEITI National Conference took place in Abuja in February 2012. The conference was attended by representatives of the Nigerian government, civil society, business leaders and the oil industry, and reaffirmed the values of NEITI to partner with all stakeholders in the extractive sector to achieve true transparency. Speaking at the closing ceremony, NEITI’s executive secretary, Zainab Ahmed, announced that NEITI will soon start to sanction any body, on either the government or commercial side of the extractive industry, which is not publishing the information required of them under the NEITI Act. This, together with the rewards that NEITI can provide, will deliver the benefit of fairness to all in the industry.

When looking at NEITI from a corporate perspective, the advantages of such transparency may not be clear immediately, and in some cases can appear different to long-established ways of doing business. However, NEITI is good for companies that are looking to invest in the extractive industries in Nigeria. The initiative allows for a consensus-building system of development, which helps to create a stable and coherent environment for the future. Transparency builds trust, which creates good governance and thus boosts the stability of a country. This allows companies to plan and operate efficiently, which, in turn, drives profits. This is good news for the company and its stakeholders, but also for the country in which the company is operating. Stability is reliant on good governance, and this is what NEITI provides. Today, corporate and social responsibility (CSR) plays a major part, both politically and in the business world. In this context, transparency makes sense for all sides. Companies want to enter a country that is committed to ethical business practices and transparency. This is what NEITI gives firms in the extractive industry that are operating in Nigeria or are interested in doing so. By enshrining in law the accountable and transparent use of resources, NEITI demonstrates how Nigeria’s assets are benefiting the people, in a way in which the companies in the extractive industry are committed. The money that NEITI saves provides the government with additional resources that can be spent across areas of social development. Nigeria took a lead in bringing transparency to the extractive industry and, today, 35 resource-rich countries have also implemented the EITI standard. This is not limited to certain countries or areas in the world, rather the ultimate standard for global best practice. In September 2011, US president Barack Obama announced his country’s commitment to implementing EITI. As other countries begin to implement the standard, Nigeria has a head start in many ways. New initiatives, such as the NEITI National Conference, stand the country in good stead ahead of its revalidation from the EITI Board in 2016. ■

Stability is reliant on good governance, and this is what NEITI provides

Invest in NIGERIA 2012-13

Ben Poole is a writer and editor, specialising in corporate treasury and finance, and transaction banking. He is also former editor of World Coal magazine

Cakasa (Nigeria) Company Limited

State-of-the-art white products, storage and truck-loading depot (left), LPG Terminal, Apapa, Lagos – Gas Master Plan

About our business

Incorporated in 1974 to provide Engineering, Procurement and Construction (EPC) services to Nigerian oil, gas and industrial infrastructural clients, Cakasa has become a company of reference in its sector. Cakasa’s vision is to be a world-class engineering solutions company of choice. Cakasa’s mission statement is to passionately provide engineering solutions that exceed customers’ expectations. Wholly indigenous, Cakasa is one of the first companies in its industry to be ISO 9001:2000 certified and has currently introduced ISO 1400 requirements into all of its processes. Using a flexible approach in driving values and meeting the diverse needs of each client, Cakasa is well known for providing a disciplined, client-focused framework that encourages and empowers both management and workforce to come up with innovative solutions. Cakasa’s vast knowledge base is built on over 38 years of expertise in: • Engineering design • Procurement • Fabrication and construction services • Civil & infrastructure development • Maintenance, certification and commissioning services • Projects management

Foreign companies have in Cakasa a strong partner with local content that can offer the best service in the business The company’s approach is aimed at promoting collaboration and providing a systematic way to capture, share and reuse information to provide cost-effective, intelligent solutions in a timely manner. Cakasa owns a state-of-the-art engineering facility in Ikoyi, which is considered first class amongst equals with awards from the likes of Mobil Producing Nigeria and Chevron in the delivery of quality Engineering Design works. Perhaps one of the best examples of the positivity coming out of the Local Content Act, Cakasa is actively involved in the development of local engineers with over 230 engineers across all sectors of its business. This fact alone makes a very bold statement about the health of the companies operating under the Local Content Act principle and the Act itself. Our involvement in the downstream sector of the oil and gas industry in Nigeria cannot be

overemphasised. Cakasa has constructed over 80 per cent of all tank farm (white products and LPG terminals) in Nigeria over the years and is also playing a key role in the Gas Master Plan of the federal government of Nigeria. While praise is heaped on Cakasa, the company’s Ahmadu Bello University-educated CEO, Yaro P Balami, heaps praise on the Act and for his leadership of the firm, which is now a leading indigenous company in its industry. Now looking to diversify its business model, Cakasa is keen to get its message across that in Nigeria foreign companies have in them a strong partner with local content that can offer the best service in the business. “I am inviting international investors to come and join us in Nigeria. We have good companies like Cakasa that can work with them,” says the CEO.

Cakasa (Nigeria) Company Limited For more information, visit our website: www.cakasa.com Head Office: 96, Palm Avenue, Mushin, Lagos Tel: (+234) 8052496806, 8033442444 Email: yaro@cakasa.com

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oil, gas and minerals

The government has ambitious plans to develop the petrochemicals sector following years of underinvestment

A petrochemicals industry emerges

For a country with such vast natural resources, it is a surprise to many how underdeveloped the Nigerian petrochemicals industry has been. But an influx of major investors prepared to back the development of large plants could have a transformational effect, says Alex Hawkes

igeria has the largest proven oil and gas reserves in Africa; yet it has a relatively small downstream petrochemicals industry. Despite its vast oil wealth, the country remains a major importer of refined petrochemicals. President Goodluck Jonathan has made clear his ambitions for growth in the area and, with a string of foreign investors lining up with ambitious plans for plants in Nigeria,

it has the potential for huge expansion over the next decade as the industry emerges and develops. Nigeria’s oil wealth is plain. According to the BP Statistical Review of World Energy in June 2011, it has proven oil reserves of 37.2 billion barrels. The country possesses the 11th largest oil reserves in the world, 99 per cent of West Africa’s proven oil reserves and the seventh largest natural gas reserves in the world.

Underinvestment in refining Despite its oil wealth, Nigeria imports 85 per cent of its refined petroleum needs. Analysis group Business Monitor International (BMI) says Nigeria is only the world’s 39th largest producer of ethylene. “The petrochemicals industry in Nigeria has been significantly underinvested for a number of years,” says Andy Gibbins of petrochemicals consultancy GLAS. Invest in NIGERIA 2012-13

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Eleme Petrochemicals, bought in 2006 from the state-controlled Nigerian National Petroleum Corporation (NNPC) by Indonesian group Indorama, runs the only major petrochemicals plant in Nigeria, in Port Harcourt. That plant produces 300,000 tonnes per annum (tpa) of ethylene, 125,000 tpa of propylene, 80,000 tpa of polypropylene and 240,000 tpa of linear low-density polyethylene. Nigeria’s total ethylene capacity of 550,000 tpa represents just 0.4 per cent of global ethylene capacity, according to figures from GLAS. As well as those core petrochemical products, the country has a similarly small position in the global urea market, a key fertiliser ingredient. Nigeria has one million tpa of urea capacity, half of which is provided by a relatively new plant set up in 2009 by Notore Chemicals in its complex at Onne in Rivers State. That, again, makes up a relatively small portion of global demand, estimated at 185 million tpa.

Political support In his speech on the 51st anniversary of Nigerian independence in October 2011, President Jonathan highlighted that growth in the area of petrochemicals would be a key aim of his administration, saying that he wanted the

problems including mismanagement, sabotage, fire and lack of regular maintenance contribute to a low current throughput of less than 300,000 b/d.” International oil giants such as ExxonMobil, Chevron and Shell have all expressed an interest in setting up petrochemical ventures, and likewise there is no shortage of investment plans. President Goodluck Jonathan has talked of realising $25 billion worth of investments in gas processing, transmission and downstream gas utilisation projects. Eleme is working to revamp its Port Harcourt ethylene plant to enhance its reliability (despite its capacity of 550,00 tpa, it only turns out just over half of that). Viva Methanol, owned by Eurochem Technologies, is planning to build a 2.5 million tpa methanol plant at the Lekki industrial site on the Nigerian coast, which will cost $2.5 billion. Sister company Axinova Polyolefins plans to build a cracker complex alongside, to produce 400,000 tpa of ethylene and propylene from the ethanol produced on the site. If completed, it would be the world’s largest single-line methanol facility. There are also plans to use the country’s gas for fertiliser production. “Nigeria has significant potential to use associated gas, much of which is currently flared, to produce petrochemicals,” says Gibbins. Government rules require oil companies to make a percentage of gas production available for use in the manufacture of fertilisers. Parent company Indorama has announced plans to establish a $2.5 billion fertiliser complex at Eleme, which it is anticipated will produce three million tpa of urea, making it also one of the largest fertiliser complexes in the world. Indian group Nagarjuna Fertilizers and Chemicals, alongside Saudi group Xenel, is also planning a fertiliser complex with capacity of 730,000 tpa, as well as 1.25 million tpa of urea. Nigerian group Dangote, meanwhile, wants to build a fertiliser plant with combined urea capacity of 2.8 million tpa and ammonia capacity of 800,000 tpa. As a result of those initiatives, BMI predicts that Nigeria could become a net exporter of fertiliser within four years: “By 2016, [we] forecast total urea capacity of 6.05 million tpa, more than six times the level in 2011. It will make Nigeria self-sufficient in fertiliser and a net exporter.” Despite plenty of plans for investment, petrochemicals analysts remain sceptical about whether those ambitions will be realised over the next five years.

“There’s huge potential in Nigeria – it could be the petrochemicals producer for the whole of Africa” country to become a “regional hub” for value-added petroleum and petrochemical products. The plans as outlined were ambitious, with the president talking of becoming a regional hub as early as 2014. Part of that push comes from a political initiative to deregulate the Nigerian petroleum sector - under the auspices of the Petroleum Industry Bill, which President Jonathan is piloting. The delayed bill aims to reduce the power of the Nigerian National Petroleum Corporation, the state-owned oil company that owns the country’s four oil refineries, the providers of feedstock to Eleme. BMI describes the Nigerian downstream environment as “chaotic”: “Despite having four refineries with a combined nameplate capacity of 450,000 barrels per day (b/d), Invest in NIGERIA 2012-13

oil, gas and minerals

Despite plenty of plans for investment, petrochemicals analysts remain sceptical about whether those ambitions will be realised over the next five years

Potential for growth The Nigerian government has been trying to attract investors into petrochemicals since 1977, when it launched a master plan for the industry. The more attractive political climate may mean that more recent efforts have greater success. Gibbins suggests that Nigeria’s potential is significant, but says it would need some deregulation, investment worth several billion dollars, an attractive climate for foreign investors and “three to five years minimum”. “There’s huge potential in Nigeria – it could be the petrochemicals producer for the whole of Africa. But it needs to get its act together first,” he says. BMI analysts admit that they are sceptical, too, about some of the promised projects. Eleme’s plan to build one of the world’s largest fertiliser complexes has seen its timescale slip by two years already. “The fertiliser complex planned by India’s Nagarjuna is

scheduled to come onstream in 2014-15, but [we] believe that project delays are inevitable, and do not envisage completion until 2016 at the earliest,” the analysis group says.

Economic benefits Nigerian companies spend around $1 billion a year importing petrochemicals products such as solvents, polymer granules and so on, according to BMI, so there would be a key economic benefit in Nigeria developing and sustaining a stronger petrochemicals sector. BMI also suggests, nevertheless, that there is an important role for foreign investors: “Nigeria’s petrochemicals industry cannot be resurrected by governmental efforts alone. Strong private sector participation is required in addition to long-term commitment and planning for developing the industry.” ■ Invest in NIGERIA 2012-13

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OIL, GAS AND MINERALS

Oil and the Niger Delta

Government reforms are a vital step in ensuring Nigeria’s oil sector remains internationally competitive

Nigeria’s oil sector endured an exigent start to 2012 with rows over fuel subsidies and protracted regulations. But the controversial reforms are central to the government’s goal of securing the long-term economic future of the country, says Antony Collins

hen you have a situation where 85 per cent of a country’s export revenues come from oil, it is fair to say that the sector is an essential aspect of the economy. This statistic relates to Nigeria, one of the world’s largest oil export markets shifting over two million gallons of oil per day. Such a high percentage also denotes an over-reliance on oil. This was made starkly obvious to Nigerian citizens on

1 January 2012, when the government made the tough decision to remove its generous oil subsidy, which had kept petroleum prices artificially low for years. This move divided opinion. Supporters claimed the savings would provide billions of dollars of investment for ailing infrastructure, while opponents were angered at being unable to afford to buy petrol after prices more than doubled overnight. The nature of the removal – a sudden, single slash rather than a phased reduction – has been hard for many to accept and absorb, but experts such as Patrick Mgbenwelu, director and head of project and structured finance at FBN Capital, the asset management business of the First Bank Group, believe that the benefits will become apparent in the long term. “The eventual removal of fuel subsidies will open up major investments in the Nigerian oil and gas sector – in particular the refineries and petrochemical sectors Invest in NIGERIA 2012-13

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The government has made eradicating political problems a priority, aiming to implement new regulations to make the oil sector much more transparent, stable and attractive – because investors will have clear sight of the price, which will be market driven and at which their end products will be sold,” says Mgbenwelu. The subsidy row is a pertinent example of the divisive nature of the Nigerian oil market: complex, controversial yet crucial. The Niger Delta – the region responsible for three quarters of Nigeria’s oil supply during the last three decades – has attracted investment from players like Royal Dutch Shell, Total and Eni, as well as anger from militants, who believe that not enough of the profits are going back into the local economy. The Movement for the Emancipation of the Niger Delta (MEND) is perhaps the most notorious organisation. It has conducted a spate of violent attacks on oil projects and, following an ‘amnesty’ in 2009, recently claimed to have targeted a pipeline owned by Eni.

Government reform Oil companies have continued to develop in Nigeria despite the disruptions, disputes and violence – such action tends to occur once a project is operational, so the risk can be factored into a deal. While attacks can cause delays and logistical problems, the biggest hurdle in Nigeria remains obtaining approval in the first place because of political inability and instability. Corrupt officials and a non-transparent process have dissuaded some investors from local deals. The government has made eradicating political problems a priority, aiming to implement new regulations to make the oil sector much more transparent, stable and attractive. It has been attempting to introduce sweeping reforms under the long-running Petroleum Industry Bill (PIB), which was first floated in 2008 but has yet to be enshrined in law. PIB will consolidate Nigeria’s various petroleum rules under a single structure by establishing official guidelines for the operation of oil production, and will confirm Nigeria has sovereign ownership of all petroleum within its territories. Any organisation would be allowed to apply for a licence for exploration and production, although Nigeria would Invest in NIGERIA 2012-13

receive a bigger portion of revenues. PIB also aspires to improve the market by honouring international health and safety and environmental obligations, encouraging social development and promoting the employment of Nigerian workers. The legislation is viewed as vital in developing the country’s oil sector. “We have to have complete deregulation in which government gets out of the business of product importation,” says Oluseyi Bickersteth, national senior partner at KPMG. “The market should be open and left to private operators with prices determined by supply and demand. The government role will then become an oversight role focused on consumer protection. It is only when this is done that we will determine the real oil and gas market in Nigeria.” The feeling is that the legislation will have a positive effect once the reforms are presented to the National Assembly, which is expected to happen by the middle of 2012. If the package is implemented properly, observers claim, the bill will revamp the oil industry and enhance Nigeria’s international competitiveness. “Our position will certainly only reduce if no major investments take place, and this is certainly not what the government wants or plans to do,” says Mgbenwelu. “The passing of the PIB will also open up additional avenues for local and international investor participation in the Nigerian market.”

Forthcoming projects International competitiveness is one of Nigeria’s biggest strengths and potential challenges. Neighbouring countries such as Angola, Equatorial Guinea and the Republic of Congo, plus ambitious emerging markets like Mozambique - are focusing on developing their oil industry, so it is imperative that Nigeria remains competitive. The abundance of existing investments in the Niger Delta and the pipeline of deals will bolster confidence. Royal Dutch Shell, for example, has been selling a number of its onshore and offshore assets, worth millions of dollars, to peers like Nestoil, Kulczyk Oil Ventures, Elcrest and NNPC.

OIL, GAS AND MINERALS

Nigeria’s Liquefied Natural Gas Company has purchased six new LNG carrier ships

Shell estimates it has an additional $40 billion of deepwater schemes lined up in Nigeria. Other deals include Nigeria Liquefied Natural Gas Company’s $1 billion-plus purchase of six LNG carrier ships, while Total and Afren both announced new oil discoveries in the latter part of 2011. Perhaps the biggest test, however, is NNPC’s mammoth $8 billion Brass LNG project. The NNPC-led scheme enjoys strong international backing from ConocoPhillips, Eni, Total, LNG Japan, Bayelsa State Government, ITOCHU and Sempra Sahara LNG and has a draft financing structure in place. Japanese agencies JBIC and NEXI are reported to be involved in the project, which boosts the likelihood of attracting further international investment.

Landmark deals A second landmark deal is the proposed $20 billion trans-Saharan pipeline, led by NNPC and Sonatrach. The project – which is in assessment phase – is for a 4,127-kilometre pipeline running from Nigeria potentially

to Spain, for which Nigerian president Goodluck Jonathan has already proposed private investment. Even so, the government is keen to diversify its revenue stream and extend beyond the reliance on oil. For example, there is the Nigeria Gas Master Plan reform package, intended to encourage investment in gas, as well as programmes to revive other historic exports, such as agricultural products, rubber, palm oil and coal. The key point is that this will not come at the expense of oil. “Oil remains a very important sector in Nigeria and will continue to be given attention, however the oil sector will only reduce in importance once other sectors reach relatively advanced stages in terms of their contributions towards employment, GDP and economic growth,” says Mgbenwelu. Although the Nigerian oil industry may be going through a tempestuous period, once the subsidy issue has abated and new regulations are in place the sector will enhance and sustain its importance to the long-term prosperity of the country. ■ Invest in NIGERIA 2012-13

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Energizing Nigeria AES is a power company with 30 years of experience providing safe, reliable, and sustainable energy while promoting community development in 27 countries on 5 continents. Through our distribution businesses and a diverse portfolio of thermal and renewable fuel sources we have the capacity to serve 100 million people. Our workforce of 27,000 people is committed to meet the world's changing power needs. Combining deep local insights, regional perspective, and a relentless commitment to operational excellence and values, we help communities and countries grow through reliable and responsible electric power. At AES we understand that access to affordable and reliable power is necessary for societies to advance and for economies to grow. From running factories to improving transportation, to heating a home or powering hospitals and medical clinics, reliable power is critical to economic growth, social inclusion, and community development. Since 2001 we have invested in the energy sector in Nigeria, contributing to the development of the country. AES Ebute is a 294MW natural gas-fired power plant of nine power barges located near Ijede, a fishing village 60 kilometers from Lagos. The plant was the first Independent Power Producer (IPP) to start power generation operations in order to support the economic development of the country and is currently the third largest IPP in Nigeria. AES Ebute generates approximately eight percent of Nigeria’s electricity, is one of the most reliable power plants in the country and currently has OSHA18001 and ISO14001 certifications. Managed by local people, AES Ebute is one of the largest employers in the community. AES Ebute invests in the development of the local people and provides internship and skill building programs to develop technical expertise, and creates direct and indirect jobs for a local employee workforce. Also, AES Ebute has contributed to the surrounding communities renovating and building of schools classrooms, providing hospital equipments for the local clinic, providing bore holes and water tanks as well as fishing equipments, among others.

High Voltage transmission sending station on the Alsthom barges

One of 3 desalination vessels in the Water Treatment Plant

Jetty walkway adjacent to the power barges

Improving lives by providing safe, reliable and sustainable energy solutions in every market we serve

AES Ebute Power Plant

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OIL, GAS AND MINERALS

Non-oil and solid minerals

Nigeria’s government aims to boost mining from one per cent of GDP to 20 per cent

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OIL, GAS AND MINERALS

Despite being rich in natural resources, Nigeria has been slow to recognise the full value of these assets. Michael Dynes assesses the efforts that are now being made to exploit the country’s mining and mineral industry, alongside other non-oil sectors

igeria stands on the cusp of attracting a wave of foreign investment in its long-neglected non-oil sector as President Goodluck Jonathan focuses attention on turning the page on decades of lost opportunities in the mining, agriculture and manufacturing sectors, unlocking the West African giant’s real hidden wealth. Decades of over-reliance on oil exports have gone hand in hand with the relentless decline of more traditional sources of economic activity, leading to the creation of a mono-economy that has not served Nigerians well. Few remember it now, but prior to the onset of the 1970s oil boom, Nigeria was the world’s sixth largest tin exporter, it accounted for 60 per cent of the global supply of palm oil, and was host to a vibrant and expanding manufacturing sector.

Growth in the non-oil sector Yet despite decades of official neglect, the non-oil economy has stubbornly refused to die. For much of the past 10 years, the non-oil sector – driven largely by agriculture – has been growing at a steady seven per cent a year. That phenomenon has forced government ministers and private-sector investors to look again at the underlying motors of Nigeria’s economic development, and redraft their economic policies and investment strategies accordingly. Goodluck Jonathan’s ‘Transformation Agenda’ encapsulates that new strategy. The president’s plan sets itself the ambitious target of turning Nigeria’s economic decline around. At its heart lies the attempt to reboot the mining or solid minerals sector, attain food self-sufficiency by reviving agriculture, and harness the country’s immense natural gas reserves to kick-start the birth of a new petrochemical and fertiliser industry. According to Roberts Orya, chief executive of the Nigerian Export-Import Bank, foreign investor interest in the country as a ‘next frontier market’ has been greatly boosted by the success of the 2011 presidential and legislative elections, together with the Jonathan administration’s single-minded determination to tackle

Nigeria’s accumulated infrastructure deficit – especially electricity generation. Mining, agriculture and manufacturing “are all areas that excite potential investors,” Orya says, “and a lot of people are now interested in coming in.” Nigeria’s mineral endowment remains vast and largely untapped. The country has more than 30 categories of solid minerals of high value and available in commercial quantities, including estimated reserves of 2.7 billion tonnes of coal, three billion tonnes of iron ore, and some 27 billion barrels of bitumen deposits. Ironically, mining currently accounts for less than one per cent of gross domestic product – but ministers believe that it has the potential to contribute up to 20 per cent. Since the return to civilian rule in 1999, a series of reforms has seen the federal government of Nigeria retreat from its former status as mining sector owner-operator to that of administrator-regulator, in an effort to attract a new wave of private-sector investment. It is still early days, but the new policy is already beginning to show results. Investments are now beginning to flow into the gold, coal and iron ore sub-sectors. Britain’s Savannah Gold is one of the new miners seeking to tap the potential for the precious metal in Nigeria – a country bordering on several West African neighbours with well-established gold sectors. Savannah passed up the opportunity to mine for gold in Ghana, Mali and Burkina Faso, in favour of new exploration opportunities in Nigeria. “Finding first-mover advantage, finding greenfield exploration in these countries is extremely difficult,” said the company, adding, “That is why Nigeria is such an attractive venue.” Miners from Canada, Australia, the US and China are now following suit.

Reviving sectors The president’s pledge to revive agriculture rests at the centre of the government’s efforts to diversify the economy away from oil. The goal is to generate large-scale job creation in the labour-intensive agricultural production and processing industries, while at the same time reducing growing food insecurity in a new era of high food prices. Agriculture currently accounts for around 40 per cent of gross domestic product – down from 70 per cent before the oil export boom. It is the source of 60 per cent of all employment, but only one per cent of total exports. According to the Central Bank of Nigeria (CBN), more than 90 per cent of agricultural output comes from subsistence farmers, few of whom have access to finance or fertiliser, and most of whom survive on an income of little more than naira (N) 150-300 ($1-2) a day. Invest in NIGERIA 2012-13

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The new Lekki Free Trade Zone has already attracted more than a hundred foreign and domestic investors The CBN estimates that Nigeria is host to more than 40 million hectares of arable land, but less than 60 per cent of it is cultivated. Moreover, fertiliser use per hectare stands at around 10 kilogrammes, compared to a global average of 150 kilogrammes. Despite such vast agricultural potential, Nigeria’s food import bill stood at N25 trillion ($154 billion) in 2010 – N356 billion ($2 billion) of which was spent on importing rice. Decades of neglect has condemned the country to the status of a net food importer, when it should be Africa’s biggest net food exporter.

Investments in agriculture Nigeria’s food self-sufficiency drive, which began under former president Olusegun Obasanjo, has accelerated markedly under Jonathan, and is now witnessing substantial new investments in agricultural extension, increased fertiliser production, a significant expansion in rice-milling facilities, and the development of new agro-processing industries.

The development of free trade zones will benefit manufacturing output

Invest in NIGERIA 2012-13

In addition, the CBN has also earmarked $500 million in new lending to the agricultural sector, aimed at helping to unlock more than $3 billion in new private-sector lending to agriculture over the next decade. Lending to agriculture currently accounts for two per cent of total lending – compared to six per cent in Kenya. The CBN wants that figure to more than triple to seven per cent by 2020. At present, Nigeria boasts a mere 30,000 tractors to work more than 40 million hectares of land. No other statistic captures the scale of the sector’s past neglect – or the opportunity that now exists to radically transform the country’s agricultural potential. Like most other emerging markets, Nigeria has attempted to augment its manufacturing output through the development of free trade zones – of which there are some 24 currently in operation, admittedly with mixed success. More recently, however, it has succeeded in attracting the attention of China, Saudi Arabia and India, who are spearheading substantial investment into two new free trade zones designed to boost Nigeria’s manufacturing output. Nigeria and China are currently developing the new Lekki Free Trade Zone on the eastern edge of Nigeria’s commercial capital, Lagos. The $5 billion, 3,000-hectare, first phase of the development – which seeks to reduce the country’s dependence on imported products – has already attracted more than 100 foreign and domestic investors, including Chinese electronics, pharmaceutical and heavy machinery firms, which are eager to build production and assembly facilities in the zone. The proposed new Koko Free Trade Zone in Delta State, which is backed by a joint venture between the Nigerian National Petroleum Corporation and Saudi Arabia’s Xenel to build a new petrochemical plant, along with plans by India’s Nagarjuna Chemicals to build three new fertiliser plants, represents a significant break with the past. The Lekki and Koko projects are major investments that seek to reverse decades of decline in manufacturing. They are indeed ambitious. But they also represent a mark of confidence in Nigeria’s long-term future by industry leaders who have a proven track record in developing effective free trade zones. ■

POWER GENERATION TRANSMISSION AND DISTRIBUTION WATER TREATMENT BUILDING SERVICES (MEP) INDUSTRIAL KNOW-HOW BUILDINGS CONSTRUCTION HEAD OFFICE Abuja Plot 699, Aminu Kano Crescent, Wuse II, FCT Abuja, Nigeria Tel.: +234 (0)9 461 1362 Fax: +234 (0)9 461 1364 Lagos 269B Kofo Abayomi Street, Victoria Island, Lagos, Nigeria Tel.: +234 (0)1 271 4167 Fax: +234 (0)1 271 4168

energo@hyperia.com www.energonigeria.com

EnErgy boost for nigEria: PHCn and naPtin PavE tHE way As a young country with a fast-growing population, Nigeria has two urgent priorities, namely educational provision and a reliable energy supply. To meet both demands, the government took the decision in 2009 to set up the National Power Training Institute of Nigeria (NAPTIN) within the structure of the Power Holding Company of Nigeria (PHCN). The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and Lucas-Nülle, the world’s leading manufacturer of technical training systems, were involved from day one.

Nigeria is working to further develop a sustainable power supply. In order to achieve this, the government has decided to privatise the state power company, PHCN. The target that has been set for the future private energy provider is to increase output tenfold by 2020 to at least 40,000 megawatts. “A road map for this high aim was launched in 2010 and the government follows it rigorously. Training of the workforce is a critical mass in realising this government’s vision. The power industry of Nigeria is affected by skills shortage, which causes a huge gap in efficient operation of the power system. The government is poised to address this by establishing NAPTIN to be a centre for capacity building and to coordinate all training activities of the sector,” says NAPTIN director Reuben Okeke. Dr. Dere Awosika, Permanent Secretary, Ministry of Power, His Royal Highness Alh. Haliru Dantoro Kitoro III (con), Emir of Borgu Kingdom, Niger State, Engr. Reuben Okeke, director general of NAPTIN

In order to bring a professional approach to the establishment of this prestigious institute, long experience in the planning and implementation of educational technical labs was required. By late 2009, Okeke and Stefan Welp, Sales Director responsible for Nigeria at Lucas-Nülle, were developing their initial ideas for the new educational institution, and they continued to fine-tune them in the months that followed. They worked closely together to analyse what the facility would have to provide in the future in order to offer high-quality training. They drew up plans for laboratories in which teaching timetables would be so organised as to make optimum use of all the rooms. Consultants from Lucas-Nülle and Reuben Okeke’s project team jointly developed the curriculum, always in compliance with current industry standards. When this was in place, appropriate training systems were identified for procurement. In 2010, a delegation from NAPTIN visited Lucas-Nuelle’s headquarters in Germany and after a thorough examination of the training systems on offer, opted for the electrical and energy engineering package in its entirety. For NAPTIN, the focus has always been on practical experience, Original Equipment Manufacturer (OEM) components and their integration into educational experiments based on real practice. The ‘blended learning’ approach that underlies all training systems from Lucas-Nülle was also an important criterion in the decision. Another criterion was the comprehensive service offered by Lucas-Nülle – before, during and after delivery of the systems. So that the training systems could be used immediately, employees of Lucas-Nülle not only travelled to Africa to oversee the installation but also trained teachers in their use. Lucas-Nülle consulted university professors and teachers with many years’ experience of working abroad in devising the specialised preparatory seminars. Five of the future instructors at NAPTIN came to Germany for initial training by Professor Hans Laufer in the classrooms of Lucas-Nülle. In the course of this seminar, the

former university academic addressed not only the issue of how to convey technical knowledge but also the teaching methods to be employed. Professor Laufer’s field of expertise while he was at the University of Magdeburg included the training of vocational teachers. In the German education system, vocational teachers play a crucial role in ensuring that skilled workers and engineers attain the requisite standard before entering the jobs market. Lucas-Nülle is responsible for exporting this quality standard to the whole world through the sustainable training it provides as part of the projects it manages.

“A well-trained and productive workforce is the only way to address the power-sector challenges in our country.” (Reuben Okeke, commissioning RTC Kainji, on the 17 of May 2012) At the end of the seminar, Professor Laufer flew out with the engineers to Nigeria to take receipt of the teaching systems, install them and continue the training on site. After installation was complete and the official handover of the project had taken place, Professor Laufer and other experts have carried on supporting the local staff, answering any technology and methodology queries that arise from their teaching activities. “For the first time in the Nigerian Power Sector a total of about a thousand fresh graduates in Electrical Electronics and Mechanical Engineering will commence the skills acquisition program. NAPTIN had the impetus to embark upon this because of the training equipment and courses acquired from the company Lucas-Nülle,” explains Reuben Okeke. Stefan Welp, who has supervised the project, made several journeys to Kainji in Nigeria to oversee the installation of the teaching systems. He explains why this service is so important: “Our systems are state of the art; they challenge learners not only

to observe processes but to understand and even control them. Consequently, teachers have to be very good in their specialist area as well as in the use of laboratory equipment. That’s why we give them thorough ongoing training. The concept has successfully proven itself over the past thirty years, during which time we have equipped educational institutes in all five continents with technical training systems ranging from electrical engineering to communication and process management technology. And that is also the case here in Nigeria, where they have set up the largest training centre for energy technology and renewable energy supplies in the whole of Africa.” Following the two-year planning and implementation phase of the project and a five-week service period with Lucas-Nülle staff on site, NAPTIN held the official opening ceremony for RTC Kainji on 17 May 2012. Among the guests of honour were the Emir of Borgu, the Deputy Minister for Energy, the Secretary of State for Energy, the Director of NAPTIN and a host of local dignitaries plus an employee of GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) representing the Embassy of the Federal Republic of Germany. The Secretary of State for Energy spoke in glowing terms of the offer by Lucas-Nülle to collaborate on meeting future challenges in the construction of a modern energy supply network.

Lucas-Nülle GmbH Mr Stefan Welp Tel.: +49 (0) 2273 567-48 stefan.welp@lucas-nuelle.com www.lucas-nuelle.com

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ENERGY

Powering up

Boosting electricity supply will cut the public’s reliance on generators

Invest in NIGERIA 2012-13

ENERGY

Although efforts to bring electricity to the whole of Nigeria have been slow to materialise so far, the sheer force of development looks set to change things. As Robin Pagnamenta finds out, the benefits of successfully creating a national grid could be enormous

igeria’s plentiful supplies of oil and gas have made it Africa’s energy superpower, with an economy set to outpace India and Brazil this year with growth of more than eight per cent. But dreams of a brighter future for the country, which has the world’s seventh largest gas reserves and is one of the biggest emerging markets globally, remain hobbled by a striking irony. Nigeria’s chronic lack of electricity is an obstacle to more balanced growth and an understandable source of concern among investors. “Almost nobody gets continuous supply from the grid,” says Chris Pooley, an energy consultant at engineering group Ramboll, who is advising Nigeria’s government on how to improve the situation. Decades of underinvestment have left more than 60 per cent of the nation’s 167 million people without a grid connection. During the last 20 years of the 20th century, the country’s nationalised power company built no new power stations at all, while maintaining what is left – a mixture of rusting gas and hydroelectric power stations, many of which were built 40 or more years ago – has become a daily struggle. In 2010, the Nigerian system collapsed almost weekly, each time taking one to two days to restore full supply.

Issues and opportunities But even for those households and businesses lucky enough to have a connection, power supplies are at best erratic, with shortages 60 per cent of the time. In total, Africa’s most populous nation currently produces 4,000 megawatts of electricity – ten times less than South Africa, a country with one third as many people, and roughly equivalent to the amount of energy used by the area around Tokyo’s Narita airport. This lack of reliable power has become the source of a variety of problems, sharply pushing up the cost of doing business in the country and acting as a drag on inward investment. About 60 million Nigerians are forced to rely on generators and fork out $13 billion a year refuelling them with costly diesel. “It’s bad for business and bad for the country.

Every hotel, every significant business has a generator – it’s essential,” says Liz Donnelly, who runs the Nigeria programme at London-based foreign-affairs think tank Chatham House. She points to Nigeria’s tiny manufacturing sector – just four per cent of GDP – as one consequence of the situation. “Bigger companies can afford it, but for small business it makes life very difficult.” Donnelly believes that overhauling the power industry is one of the biggest national priorities, but also thinks it represents an opportunity to catapult Nigeria’s economy into a different league. “Power-sector reform is absolutely crucial,” she says. “Reliable power would enable small businesses to develop and increase economic activity... It really could be transformational for Nigeria’s economy.” But it’s not just businesses that are suffering. In a country where the majority of citizens live on less than $2 a day, the shortages also prevent many of Nigeria’s poorest people from improving their own lives – by using electric light to read or study at night. Access to water pumps, mobile phones and the internet is also restricted. “In terms of security, energy is very important, too. There is a huge youth bulge in Nigeria and a need to create jobs,” adds Donnelly. So it comes as no surprise that President Goodluck Jonathan’s government has made tackling Nigeria’s energy problems a major national priority.

Ambitious plans This year, the administration will try to breathe new life into the industry by completing the break-up of Nigeria’s state electricity company – Power Holding Company of Nigeria (PHCN). In an ambitious programme that is hoped to pump cash into the industry on an unprecedented scale, six power stations and 11 electricity distribution firms will be spun off to private companies in the next few months. They will operate them independently under the oversight of a transmission company and a bulk trader, which will remain in state control. Under the plans, first unveiled in 2010 and which are being supported by the World Bank, the government hopes to boost Nigeria’s generating capacity to 5,000 megawatts by the end of this year and 6,000 megawatts by 2013. To truly meet the needs of its 150 million people, the nation’s generating capacity will ultimately have to increase tenfold – to 40,000 megawatts – a level that will require massive investment of an estimated $100 billion over the next decade. Invest in NIGERIA 2012-13

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President Jonathan’s government has made tackling Nigeria’s energy problems a major national priority “The network has been starved of adequate investment for many years,” says Chris Pooley. He says the money, which promises to deliver a big boost to the economy on its own, will be spent on a total overhaul of the network – repairing existing equipment and building new gas, oil and hydroelectric power stations, high-voltage transmission lines and substations.

Improving infrastructure In many areas, brand-new infrastructure will also be required, especially to feed electricity to Nigeria’s northern provinces, which have always been underserved in terms of power. “There is a very large need for capital investment,” says Pooley. “Nigeria needs large-scale replacement of existing infrastructure and a major extension of the current networks. It’s pretty essential for Nigeria to realise its wider economic aspirations.” The fact that the assets have already attracted intense interest from around the world demonstrates a vote of confidence in the process. Among over 200 shortlisted bidders are companies like Canada’s Manitoba Hydro, India’s Tata and Jindal Power and megawatts to meet America’s Honeywell, as well as the needs of 150 Powertek Berhad of Malaysia, million people POSCO of South Korea, China Southern Power Grid and Israel Electric Corporation. There is a lot at stake, says Kole Shettima, Africa director of the John D and Catherine T MacArthur Foundation in Abuja. If the government gets it right, a successful power privatisation programme could boost Nigeria’s megawatts by 2013 GDP to as high as 10-12 per cent per year and put the country megawatts by 2012 on a sturdy road to development. For decades, Nigeria’s economy has been heavily reliant on oil and gas – an industry

40,000

6,000 5,000

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which has tended to build and develop its own power supplies and which has left other areas of the economy neglected. “There is enormous commercial potential within Nigeria but to date a lot of that has been concentrated in just one area,” says Pooley. “Other sectors of the economy have been neglected.” With more reliable power supplies, Nigeria could develop its other rich deposits of mineral wealth, such as coal and metals. Its once vibrant textile industry in the north-west, which has been devastated by power shortages, could also be reborn. “The lack of power has certainly undermined economic activity by adding to the cost of production… It would help to reduce costs and improve the business environment,” claims Pooley. Success would also serve as a model for other African countries, many of which are facing similar challenges and which have historically struggled to attract inward investment. Of course, nobody expects privatisation to be easy. Popular mistrust of the drive has been fuelled by concern at the higher prices consumers fear they may have to pay for electricity and by the threat of corruption. Employees of the national power company are also concerned about lay-offs and changes to their welfare benefits. But the potential rewards for the wider economy are undeniable, says Liz Donnelly. “It’s a huge and very complex reform but it really could be a very big win.” ■ Robin Pagnamenta is a business journalist working on The Times (London) who has specialised in the energy sector and was previously deputy business editor of the Sunday Express

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I L F E N G I N E E R S N I G E R I A LT D

Power Division ILF – Engineering Excellence

Our fields of competence

No matter the energy portfolio: whether it is conventional power generation or clean, renewable and sustainable power generation, ILF Nigeria can fit into the mix.

■ Thermal Power Plants

30 years of experience and innovation have shaped ILF Nigeria into a true partner to support your investment decision. As a member of the ILF Group and with sister companies all over the world, ILF Nigeria can provide specialist expertise and mobilise resources in short lead times. Power & Electricity Generation • Gas Plants • Solar Plants • Wind Farms • Biomass Plants • Combined Heat and Power Plants • Power Lines • Local, State, Regional and National Grids • Distribution

ILF Engineers Nigeria Ltd Plot 23, Water Corporation Drive Dideolu Estate, Victoria Island Extension, Lagos Tel. +234 0 1 212 59 99 Fax +234 0 1 212 69 99 info.los@ilf.com

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Renewable energy resources, such as solar power, have the potential to provide electricity to areas the grid does not currently reach

Alternative and renewable energy

Renewables not only form a key part of Nigeria’s energy strategy, but they will also spearhead the electrification of the country’s rural interior. Graeme Burton examines the various sources of sustainable energy, which include hydropower, wind farms and solar-powered resources

hen protests against the withdrawal of fuel subsidies across Nigeria erupted at the beginning of the year, it crystallised a dilemma that many fast-developing, oil-producing nations face. On the one hand, many people feel that the subsidies are the only tangible benefit they receive from their country’s oil wealth. On the other, as a country develops, the cost of those subsidies can soar. In Nigeria, the issue is more acute in view of its underdeveloped power sector. Sixty per cent of the country is not even connected to the power grid. For the parts that are, Invest in NIGERIA 2012-13

the supply can be unreliable. As a result, it is one of the biggest markets in the world for diesel power generators, which help keep homes, offices and factories running. Furthermore, Nigerians without access to electric power – predominantly in rural areas – depend on ‘fuelwood’ for both cooking and heating. However, with more than 50 million tonnes burned annually, that resource is being depleted faster than it can be replenished, causing deforestation and desertification. It was in response to such challenges that Nigeria’s Renewable Energy Masterplan was devised in 2006, supported by the United Nations Development Programme (UNDP). “The absence of a reliable energy supply has not only left the rural populace socially backward, but has left their economic potential untapped. Fortunately, Nigeria is blessed with abundant renewable energy resources, such as solar, wind, biomass and small hydropower potential,” says Professor Abubakar S Sambo, director general of the Energy Commission of Nigeria. Nigeria’s federal government already plans to build a number of conventional power plants, including a trio

ENERGY

of one gigawatt coal-fired power plants in the states of Enugu in the south-east, Kogi in the central region, and Gombe in the north of the country. But it is renewable energy sources that have the potential to provide electricity to regions and communities where the grid either does not stretch, or remains underdeveloped.

Water world Nigeria’s Renewable Energy Masterplan puts hydroelectric power at its centre. It aims to produce 5,930 megawatts (MW) from large hydro schemes in the medium term – by approximately 2015 – and 48,000 MW by about 2030, when 19,000 MW will also be generated from small hydroelectric schemes to take electricity to smaller communities. By then, the total power output target is 192,000 MW, according to the Energy Commission’s targets, with renewables contributing more than one third of that total. However, in order to deliver more than just one twentieth of that output, the country will need to invest heavily in its power transmission and distribution network. When power output was increased to 3,800 MW in August last year, the network struggled to handle even that modest load. The system also suffers from high energy losses, says Sambo, due to physical deterioration of transmission and distribution facilities, an inadequate metering system, and the loss of electricity – and revenues – as a result of power theft via illegal connections. That is partly why Nigeria is deregulating and privatising its electricity industry: in order to attract and facilitate private-sector and foreign expertise and investment across its whole power-generation industry. At the same time, organisations such as the Council for Renewable Energy in Nigeria (CREN) are encouraging the adoption of small-scale schemes, such as solar thermal and photovoltaic (PV) systems, for offices and homes. CREN has led by example by installing PV solar in its Cross River State chapter offices to demonstrate how solar can provide power off-grid, and demand for microgeneration has encouraged the establishment of a plethora of solar-power installation companies across Nigeria.

finance whole projects, not just the hardware, such as turbines. The Export-Import Bank of the United States (US Ex-Im Bank), for example, has pledged backing for $1.5 billion of US goods and services across the whole Nigerian energy sector in a memorandum of understanding signed in October 2011. “$1.5 billion is just the start. We want to deploy this financing as quickly as possible to help meet President Goodluck Jonathan’s goals for growing the Nigerian economy by greatly expanding the availability of power in the country,” said US Ex-Im Bank chairman and president Fred P Hochberg. He added: “We are also interested in financing US exports in support of Nigeria’s other infrastructure needs, which we understand may total over $220 billion between 2012 and 2016.”

Renewable energy Nigeria is not just attracting US support. Canadian construction companies have also expressed an interest in partnering on the proposed Mambilla and Gurara hydroelectric power projects, a move welcomed by Professor Bart Nnaji, the minister of power. Those two schemes are expected to jointly produce some 3,300 MW of electricity. In addition to support from ECAs, investors can also secure funding from the United Nations’ Clean

One of the major advantages of investment across the whole power sector is the financing available

Financing options One of the major advantages of investment across the whole power sector – not just renewables – is the financing available. National export credit agencies (ECAs) are especially keen to

Development Mechanism (CDM). This channels finance from developed countries’ carbon-emitting industries into clean energy and development programmes across the emerging markets. That is partly how entrepreneur Obasiohia Benneth Obinna hopes to finance ambitious plans for an energy-from-waste business. The aim is to help deal with some of the estimated 9,000 tonnes of waste generated every day in Nigeria by burning it to produce power for Nigerian city neighbourhoods. A waste-management expert trained in the UK, Obinna is currently seeking investors to back the business, which will be the first in Nigeria. Invest in NIGERIA 2012-13

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Targets for electricity generation (MW) – medium and long term Hydro (large)

Solar PV

47.3%

99%

increase 5,930MW

11,250MW

increase 120MW

36,750MW

60% Biomass

increase

1,300MW

increase

M W

92.3%

Wind 20

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120MW Source: Energy Commission of Nigeria

Investment in renewables – including waste-to-energy – was given a further push in December 2011 when Nigeria’s national ECA, The Nigerian Export–Import Bank (NEXIM), united with the Bank of Industry and the UNDP to pledge investment finance of N 108 billion ($665 million) for forthcoming renewable energy projects. Many of these are focused on biofuels. They include a $510 million project with commodities company Confluence Sugar, which will promote the cultivation of sugar cane for producing sugar, while ‘bagasse’, a by-product produced from sugar-cane processing, will be used to produce biofuel for energy cogeneration. Threshold Biofuel Energy, meanwhile, is leading a $12 million project to produce biodiesel from Jatropha curcas, a semi-evergreen shrub that can be processed to produce high-quality biofuel.

IPP model Global Biofuel is investing $56 million in a refinery to produce 90,000 litres per day of fuel-grade ethanol from sorghum feedstock, a 100,000 litres per day biodiesel refinery and a 7.5 MW power plant utilising farm waste. “The project is already approved by the Nigerian National Petroleum Corporation (NNPC) under the new National Biofuel Policy and has been endorsed by the country’s Clean Development Mechanism, Designated National Authority (DNA), a unit of the federal ministry of environment, for Invest in NIGERIA 2012-13

execution as a CDM project that would earn Certified Emission Reduction (CER),” says Dr Emmanuel Moore Abolo, chief risk officer of NEXIM. Bank of Industry, UNDP and NEXIM have also pledged to invest $4.8 million to finance renewable energy projects in the micro, small and medium-sized business sectors.

Investing in Nigeria’s power grid However, many of these projects will come to nothing unless Nigeria invests heavily in its power grid, says Norman B Ndaba, director for power and utilities in Africa at consultants Ernst & Young. Indeed, the independent power producer (IPP) model by which private-sector investments in power production are facilitated across the world requires a well-functioning power grid. “The factors and conditions that make IPPs feasible are not present in Nigeria yet,” says Ndaba. The opportunities, though, remain immense. South Africa, for example, has a capacity of 40,000 MW for a population of about 47 million. Nigeria, in contrast, has a much larger population of more than 150 million, but a power grid that can take no more than 3,800 MW. However, the country’s government has ambitious plans to make Nigeria one of the world’s top-20 economies by 2020, which can only be achieved with a modern and diversified power network as a prerequisite. “But when Nigeria ‘breaks through’, it will be the biggest thing since sliced bread,” says Ndaba. ■

© 2012 Caterpillar All Rights Reserved CAT, CATERPILLAR, their respective logos, “Caterpillar Yellow” and the POWER EDGE trade dress, as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

Bringing energy to the people

0031 (0) 76 54 38 500 @ info.int@energyst.com Temporary power solutions for under-resourced communities In many parts of the world the availability of electrical power is taken for granted. Not so in Southern and Sub-Saharan Africa. Here, urban areas often need temporary power facilities connected to the existing grid – to provide extra power when demand is high or to provide backup power. And in rural areas the need can be even greater, where gas or diesel generated power is the only source of electricity for locations outside the reach of a power grid. At Energyst Cat Rental Power our aim is to ensure sufficient power for everyone, at any time, anywhere.

RENTAL SOLUTIONS FOR POWER GENERATION & TEMPERATURE CONTROL

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Travel and transport improvements

Improved services on the country’s railway systems are needed to boost passenger and freight numbers

Invest in NIGERIA 2012-13

INDUSTRIAL INFRASTRUCTURE

The National Economic Development Policy is an ambitious plan to update the country’s road network while the government is also privatising the Nigerian Railway Corporation. Malcolm Wheatley assesses these issues, as well as partial port privatisation and developments in the aviation sector

rom an inward investment perspective, the appeal of Nigeria isn’t difficult to discern. The seventh most populous country in the world, its economy – the second largest in sub-Saharan Africa – has quadrupled in size since 2000. Powering that growth has been an increasingly affluent middle class, a burgeoning agricultural sector and – of course – a healthy demand for Nigeria’s oil exports. Not for nothing is Nigeria increasingly numbered among the ‘Next 11’: a group of rapidly industrialising countries reckoned to become the next BRIC economies. Yet it’s undeniable that this economic growth would have been even greater had the nation’s transport infrastructure been better, as a glance at the country’s congested ports and overcrowded roads quickly confirms. As a report from Nigeria’s government-backed Transport National Technical Working Group put it: “It is government’s social responsibility to ensure that there is an efficient and effective transport system serving its citizenry. An efficient transport network will allow manufacturers or producers to obtain raw materials or supply national or international markets at minimum cost and with minimum delay, and allow them to access the widest possible number of suppliers or workers.” And, until recently, ‘efficient’ was rarely the word that came to mind when describing Nigeria’s transport network, as the report readily concedes: lengthy delays at ports, a dilapidated railway system and a significant proportion of Nigerian consumers in northern cities, such as Kano, dependent on goods arriving on roads that it can take trucks several days to traverse. The good news: change is afoot – and has been for some years. Under the aegis of Nigeria’s National Planning Commission (NNPC), sweeping reforms have started to alter the country’s transport landscape. Deregulation, foreign inward investment, partial privatisation: combined with reinvested oil revenues and a rejuvenated private sector, improvements are genuinely visible.

Take, for instance, Tin Can Island Port, which serves western Nigeria and Lagos – itself the fastest-growing city in Africa, and the seventh fastest-growing city in the world. As well as being one of Nigeria’s premier container traffic ports, Tin Can Island’s ‘roll on, roll off’ (ro-ro) facility not only handles imported motor cars, but also – via ships docked at Berth Number Nine, which has special ro-ro ramps to accommodate them – incoming construction equipment, such as cranes, excavators, dumper trucks and backhoes. By volume, though, cars comprise the greatest throughput of ro-ro traffic, and the port includes five vehicle parks for international car-shipping services, each able to accommodate 6,000 cars at a time. “As a vehicle market, the country is moving away from the cheapest second-hand cars, and towards vehicles where – from a logistics perspective – security, safety and damage matter far more,” notes Paul Donaldson, an expert on international vehicle shipping. It should be noted that Tin Can Island has its own electricity supply power station with seven substations throughout the port, five transit sheds and three warehouses offering a combined covered storage area of 54,000sqm, and an open storage area of 125,000sqm. Underpinning such investments has been a recognition by the Nigerian government that Public Private Partnerships – part-privatisations, in effect – are the way forward, overseen by Nigeria’s Infrastructure Concession Regulatory Commission. These took place in early 2006, leading to significant new investment, as well as improvements in management. In the case of Tin Can Island, for instance, it’s a consortium of investors including France’s Bolloré Africa Logistics and China’s China Merchants that is responsible for the gleaming new ro-ro terminal. The adjacent port of Apapa, meanwhile – Nigeria’s busiest container port – has benefited from a $200 million investment by APM Terminals, part of Denmark’s AP Møller Maersk shipping and port management group. According to a report in the Financial Times, Maersk Line – the world’s biggest container-shipping line – believes that trade with China now accounts for half of the freight it carries to Nigeria. Since the inception of the Public Private Partnerships in 2006, much has been done to improve Nigeria’s port infrastructure, free its maritime waterways of wrecks, dredge its channels and put in place regimes of maritime regulation and oversight that meet international standards. At the port of Onne, for instance, a new 376-metre quay wall has been completed, as well as the construction Invest in NIGERIA 2012-13

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Aero leads the aviation market in innovative products and services, making flying easier Aerocontractors has been leading the aviation market with product innovation and excellent services since it commenced scheduled flight services. Product and service innovation is one of Aero’s core values. Several online products – such as aero ticket vouchers, excess baggage vouchers, online check-in, book-on-hold payment channels (ATM machines, banks, and mobile phones), mobile booking and payments via Aero-webmobile – are some of the initiatives that underscore Aero’s commitment to service delivery. The ticket voucher is an innovative product that enables customers to book and pay online for flights. The voucher is a 16-digit code generated alongside a four-digit PIN number. With the code, Aero’s customers can pay for their bookings online. Customers can buy the aero ticket vouchers online from Aero’s website and pay with any of the existing electronic payment cards currently accepted. Vouchers are also available for sale at all of Aero’s sales desks on cash payment. Another online offer is the Excess baggage voucher. This is an electronic voucher generated online via Aero’s website www.flyaero.com, enabling passengers to make a prepayment for their excess baggage. It is a highly rewarding way to purchase and pay for excess baggage weight (kg), as this medium offers a 65 per cent discount on airport baggage charges. Excess baggage vouchers can only be purchased by passengers with a confirmed booking. Aero’s Online check-in makes life easy for passengers on the day of travel as they will no longer have to queue for boarding passes at the airport. This is available to Aero passengers with confirmed flight bookings. They will be able to select their preferred seats, check in and print their boarding pass themselves days ahead of their scheduled travel date. Online Advertising is another product from the leading regional carrier where advert spaces are available for other businesses to advertise their products on Aero’s website. The website is among the busiest in Nigeria with an average of 50,000 visitors daily. Book-on-Hold is a facility that enables bookings made online to be held for a period of 24-72 hours. Payments are made at any

Aero is leading the way with an impressive range of product and service innovations

approved bank branch nationwide using cash and ATM channels. With Aero’s Book-on-hold on ATM machines, flight bookings are made and put on hold through www.flyaero.com or Aero’s call centre. The booking reference code generated usually has a six-character reference code and a 12-digit number. Payment for these bookings can be made in a few easy steps on ATM machines. This is another first in West Africa. Aero-webmobile is a mobile application for making bookings on smartphones. Within Nigeria, flight searches, bookings and payments can be made by sending an SMS to a short code (32122). These innovations help customers save time and take control of their travel plans. Aero has progressively made travel a lot easier and accessible for Nigerians, especially in the wake of the CashLite policy of the Central Bank of Nigeria (CBN).

The new products and services have been well received by customers; this is because all that is required for booking, seat reservation, check-in and boarding has been available on the website and mobile phone. This has effectively cut the need for human intervention from ticket purchase to boarding. It doesn’t get any easier or quicker.

Aero call centre: corporate@acn.aero +234 (0) 1-6284140 Aero phone number: +234 (0) 1-7901349 www.flyaero.com

INDUSTRIAL INFRASTRUCTURE

Vehicle imports

23% increase (231,000 units)

General cargo

46.8% increase (13 million tonnes)

of a new berth. Also at Onne, the Federal Ocean Terminal has been extended with a new 570-metre jetty, contributing to a total quay length of 750 metres. Construction work has commenced on the remaining three berths to bring the total quay length to 1,500 metres. The establishment of the Onne Free Port Zone makes Nigeria the focal point for the oil and gas industry in West Africa. It provides incentives such as easy registration in the Nigerian oil and gas market – drilling, construction, pipe coating, ship repair etc – minimum bureaucracy, free corporate tax, import and export duties exemption for goods within the zone, 100 per cent foreign repatriation of capital and profit, 100 per cent foreign ownership, free pre-shipment inspection for imported goods, free expatriate quota and the possibility to sell products and services in the West African subregion. It also offers excellent business opportunities to investors wishing to participate in both planned and existing projects that require huge investment – the Bonny Terminal, Eleme Petrochemical complex (NNPC), fertiliser plant (NAFCON), aluminium smelter plant (ALSCON) and the West African Gas Pipeline (Escravos – Ghana). The main investment opportunities are: 1. Bulk cargo terminal – major bulk commodities, such as coal, sugar, petroleum, grain, ore and bauxite, can be handled here; 2. Onne self-run transit terminal – this will accommodate a container terminal, a ro-ro terminal and a centre with trans-shipment facilities for the West African subregion and neighbouring landlocked countries; 3. Lagos specialised trans-shipment terminal – this will provide a breakaway from the usually congested Apapa and Tin Can Island ports, serving both the manufacturing and trading sectors. Taken together, the Nigerian Ports Authority now has 13 major ports under eight separate port managements, 11 oil terminals, 128 private jetties, 102 hard-quay berths and 62 buoys – collectively contributing to a total cargo-handling

Container traffic

22.2% increase (817,246 TEUs)

capacity of some 35 million tonnes. In addition, notes MK Ajayi, general manager for public affairs at the Nigerian Ports Authority, two further deep-sea ports are scheduled to come on stream soon – one at Lekki in Lagos state and one at Ibaka in Akwa Ibom state in Nigeria’s extreme southeast. And trade volumes are undeniably growing. Figures released in February by the Nigerian Ports Authority highlighted a 23.0 per cent increase in vehicle imports during 2011, taking traffic to 231,000 units; a 46.8 per cent increase in general cargo to 13 million tonnes; and a 22.2 per cent increase in container traffic to 817,246 twenty-foot equivalent units (TEUs). “With the wreck removal campaign nearing completion, and with capital and maintenance dredging ongoing, Nigeria’s ports will witness a further increase in freight volumes in 2012,” predicts Ajayi. For inland waterways, the following opportunities are available to investors: 1. Dredging of the River Niger; 2. Rehabilitation of Warri and Lokoja dockyards, operational vessels, pollution control, etc; 3. Study and development of River Benue system for all-year-round navigation; 4. Dredging of Oguta Lake for effective navigation with larger vessels. Elsewhere in Nigeria’s transport infrastructure, though, the hard work that is being put in to improve the country’s ports serves to highlight the scale of the task remaining. Nigeria’s 3,505-kilometre rail network, for instance, has seen declining volumes of passenger numbers and freight, and is estimated by the country’s government-backed Transport National Technical Working Group to account for no more than one per cent of Nigeria’s land transport. Worse, complains the working group, none of Nigeria’s ports are connected to it. Yet change is afoot, with the government of Nigerian president Goodluck Jonathan pressurising the Nigeria Railway Invest in NIGERIA 2012-13

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“Investment opportunities in our airports for both local and foreign investors are nearly inexhaustible” Corporation with talk of privatisation and demands for improved services. 2001, for instance, saw the purchase of 25 new railway locomotives from America’s General Electric, together with the launch of new and revived routes. In late October, for example, a newly launched weekly Iddo Ibadan Ilorin express service was expected to haul 600 tonnes of goods as well as six coaches of passengers, prompting railway district manager Rasheed Gbadamosi to describe the journey as “another milestone in the revival of the rail system in the country”. “The Nigeria Railway Corporation will not rest on its oars until a full resumption of freight and passenger services are restored on all our routes throughout the length and breadth of the country,” he insisted. Main investment opportunities in the railway sector are: 1. Conversion of wagon bearings to roller bearings; 2. Conversion of train-braking system from vacuum to air; 3. Conversion of AB coupler to a more effective system; 4. Modernisation of track maintenance; 5. Improvement of ticketing system; 6. Manpower development and training. As with the Nigeria Railway Corporation, the Federal Airports Authority of Nigeria (FAAN) – which runs the country’s nationally owned 21 international and domestic airports – is under pressure to raise standards. Nigeria’s airports are not considered to be facilities befitting a fast-growing economy. With that in mind Princess Stella Oduah, Minister of Aviation, has embarked on a radical programme to improve the country’s airports, starting with the four international terminals at Abuja, Lagos, Port Harcourt and Kano. FAAN’s mission statement is to develop and profitably manage customer-centric airport facilities for the safe, secure and efficient carriage of passengers and goods at world-class standards. FAAN recently said: “The development of our airport infrastructure is not just an economic necessity but is central to our strategic objectives. Achieving these goals will not only help our domestic airlines but also foreign carriers to develop and enhance our image and economic interests.” Invest in NIGERIA 2012-13

So far N19 billion ($118 million) has been set aside for remodelling 12 airports, which is viewed in many quarters as inadequate. There is, therefore, a pressing need for foreign investment to develop these airports. George Uriesi, managing director of FAAN, says: “Investment opportunities in our airports for both local and foreign investors are nearly inexhaustible. Investors can build and manage terminal buildings, construct and manage helipads, hangars, avio-bridges, duty-free shops, holiday inns and resort centres.” Other investment opportunities include maintaining an aircraft-engine workshop for Nigeria Airways, provision of catering equipment and infrastructure to meet the needs of the airline industry and establishment of a modern aircraft-training facility; For the road network, the following opportunities are available for foreign investors: 1. Modern buses fitted with good communications systems; 2. Trams to facilitate passenger movement in both rural and urban areas; 3. Suitable haulage trucks for goods and services; 4. Service facilities at the terminals on both the highways and destinations; 5. Collection of tolls for the use of the service facilities provided, to help sustain the system; 6. Computerisation of services to enhance efficiency and control of operations; 7. Commercialisation of terminal facilities; 8. Central terminals in various urban and rural locations in the country with service facilities. For foreign investors, the message is clear. Nigeria is, in short, open for business. The country has a logistics infrastructure that is steadily improving and a government equal to the challenges ahead. ■ Malcolm Wheatley is a freelance business journalist who has written for the Financial Times and Management Today, and has held management positions in the manufacturing industry and within consulting firms

Engineering & Construction STEMCO, operating in Nigeria since 1991, is an engineering and construction company providing various services in civil works. STEMCO, with its wealth of experience, has been and continues to be a major force in building projects throughout Nigeria. It works for both the public and private sectors on all types of infrastructure and roads projects. It has achieved a reputation for timely delivery and innovative management. In pursuance of our corporate objective, aimed at delivering high-quality services to our esteemed clients, our operations are executed in such a manner as to: • Ensure and safeguard the health and safety of all our employers, contractors and third parties. • Minimize the impact of our activities on our work environment. • Have a mutually beneficial and sustainable relationship with our host communities.

The experience and reputation that STEMCO has rightfully earned stretches back to its establishment on 4 July 1991. During its years of operation in Nigeria, STEMCO has successfully completed various projects. Moreover, its work in civil and construction projects has continued to expand. STEMCO has developed the experience and technology to be able to mobilize technical staff, management personnel and labour within a short period of time. With that, it is able to organize them into fully integrated project teams and to deploy them to execute a variety of small or large projects.

STEMCO has a pool of transitional human, material and technological resources with which it is capable of assuming total project responsibility and of providing a comprehensive project delivery program that includes design, engineering, construction management, procurement, materials management, logistics and site support services. The company is committed to the development of the individual in order to maximize the benefit of employment. As such, STEMCO actively seeks to develop itself as a corporation to cater to its customer with the highest standards of labour relations and policies.

STEMCO, 16 Woji Road, Gra Phase II, Port Harcourt, Rivers State, Nigeria Tel: +234 84 462416 | Fax: +234 84 463618 E-Mail: info@stemco-nig.com | Website: www.stemco-nig.com

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Supporting the IT sector

The increasing use of ICT across the country has prompted the government to develop strategies to boost the struggling IT industry

Invest in NIGERIA 2012-13

INDUSTRIAL INFRASTRUCTURE

The information and communications technology industry has been hailed as the next big growth area in Nigeria. But as Martyn Cornell discovers, much could depend on the level of foreign investment in the sector, and whether this would encourage native-born IT talent to come back home

“T

he youth of Nigeria are dynamic, hard-working, entrepreneurial in nature and hungry for technology. If given the chance and the enabling environment to develop their inherent skills, they will not only thrive but will make Nigerians and Africans proud.” With these words, the Minister of Communication Technology, Mrs Omobola Johnson, announced at the end of January 2012 plans to build an initial four software-incubation centres in Nigeria to help the country’s software developers, part of a booming Information Communication Technology (ICT) sector, tap into the multibillion dollar worldwide applications-development market. The Youth Empowerment and ICT Foundation programme, sponsored by the Jim Ovia Foundation, includes as its strategic partners some of the biggest names in global IT – Google, IBM and Microsoft – as well as local companies, including the Nigerian telecoms firm Visafone and the Lagos-based website designer TLC Solutions. A committee has been set up with figures from both the private and public sectors to develop a framework for the establishment of more technology incubation centres across the country, Johnson said at the time. The initial effort includes a “world-class” software training programme being run by the Jim Ovia Foundation for 350 youths in Lagos and pilot technology business incubation centres in Abuja, Lagos, Calabar, Kano and Port Harcourt. It is part of a strategy to boost the Nigerian IT sector, using local talent partnered with overseas expertise and support. It also includes the founding of a professionally managed IT innovation venture-capital fund with initial seed capital provided by the Nigerian government, together with contributions from the private sector; support for start-up concerns in the form of business services; a strong mentoring framework involving successful business entrepreneurs offering

advice, guidance and support; and a “transparent and credible” process to select the initial start-up “incubates”. Johnson admitted that in the past, Nigeria’s software developers had complained that the government had failed to give the IT industry enough support, either by providing the proper infrastructure for innovation to blossom, or through policies such as tax breaks, tariffs and levies designed to boost and protect Nigerian IT companies. Nigerian software companies also complained that local venture capitalists shied away from funding start-ups in technology sectors that seem “complicated”, and in the past there has been a lack of funding bodies focused on information technology. The result has been that Nigeria has lost an estimated N18.9 billion ($117 million) in the past five years in money that has gone abroad because of the purchase of foreign software that could have been developed at home, said Johnson. “We in the Ministry understand these issues well, and there is clarity about the role that government can and should play,” Johnson said. The new IT framework has been designed to tackle the problems software developers in Nigeria have been facing, and build a thriving software industry, she added. “Everything is being done in strong partnership and

Encouraging private operators to rollout a nationwide high-speed internet infrastructure is a priority collaboration with the private sector and industry stakeholders. We hope that business entrepreneurs, state governments, unilateral bodies and even like-minded groups of youths will adopt this framework.” The announcement of the training and incubation initiative, called ‘Developing Nigeria’s Next Generation of ICT Entrepreneurs’, came just weeks after the unveiling of a new ICT policy by the Ministry of Communication Technology that is designed to be the overarching guide and platform for the development of Nigeria’s ICT industry, with the aim of creating a digital, knowledge-based economy in the country. The ambition is to push the contribution of ICT to Nigeria’s GDP up from its current figure of four per cent to six per cent by 2015. One of the priorities of Nigeria’s new IT strategy is to encourage private operators to roll-out a nationwide high-speed Invest in NIGERIA 2012-13

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One of NIgeria’s priorities is to encourage private operators to roll out a nationwide high-speed internet infrastructure

internet infrastructure, using fibre-optic networks, along with microwave wireless and satellite broadband services, to reach otherwise hard-to-serve rural areas. Existing government buildings, including post offices, schools and libraries, would be used as platforms for extending ICT to rural communities. The aim, the Ministry of Communication Technology says, is to increase the number of internet users in the country from 33 million to 70 million. At the unveiling of the new policy, Johnson said that for Nigeria to participate properly in the information age the numerous challenges plaguing the country’s ICT development – including inadequate infrastructure, an inadequate legal and regulatory framework, a lack of universal access to ICT, and insufficient local content – “must be effectively addressed”. Addressing those challenges, of course, will be made much easier with the help of foreign investors, which is exactly why the Youth Empowerment and ICT Foundation programme includes companies such as Google, Microsoft and IBM among its sponsors. Back in September 2011, Nigeria announced as one of the strands of its ICT policy the creation of frameworks for establishing collaboration and partnerships between Nigeria and countries with developed IT industries. The Nigerian government also wants to see multinationals increase the priority of the Nigerian market within their organisations, and deepen the experience of their Nigerian subsidiaries. One pioneer in this area is Samsung Electronics, the Korean IT giant, whose Nigerian subsidiary is in talks with the Invest in NIGERIA 2012-13

government of Osun state in the southwest of the country for a partnership that will see, among other initiatives, nine of Samsung’s Life Academies in the state, and training schemes for young people to learn how to repair high-tech devices. Nigeria has a number of strengths as a target for foreign direct investment (FDI), as proclaimed by a conference on attracting more FDI into the country, organised by the Ministry of Communication Technology in November 2011. These include the existence of a large and attractive domestic market with high unmet demand for basic goods and services; an increasingly sophisticated and growing middle class; good labour market efficiency, with a high degree of flexibility; increasing business sophistication and plenty of local suppliers engaged in a range of activities along value chains. The problems, however, include the continuing existence of trade barriers such as high tariffs and burdensome customs procedures; a sometimes inefficient use of labour and a need not only for improvements in the quality of goods and services from local suppliers, but also in the basics of the quality of education and the quality of entrants into the workforce. Other difficulties that officials and politicians admit to include problems in enforcing property rights and intellectual property; the need for more efficient government spending, improved accountability and auditing and reporting standards; and the need to arrest a declining security situation. Significant improvements in the availability and quality of physical infrastructure are also required, not just in the ICT area but also in basics such as transportation, power and ports. If it wants to attract more FDI, the ministry said, Nigeria also needs big improvements in its healthcare set-up; the impact of health issues on businesses is “significant”, it revealed. There is no doubt that Nigeria has the talent to become a power in the world of ICT: sadly, at the moment, much of that talent is going abroad. According to the United States census, in the US alone there are 174,000 IT specialists of Nigerian descent, working in telecommunications, programming, software project management and application development. One hope of the Nigerian government is that by making Nigeria’s own IT industry more vibrant and attractive, with the help of FDI, at least some of that “brain drain” can be reversed, and the native-born IT talent can be encouraged to come back home. ■ Martyn Cornell is a business journalist whose work has featured in The Times, Sunday Times, Guardian, Observer and Daily Telegraph, The National in the UAE and the South China Morning Post in Hong Kong

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Easy access to mobile phone technology is transforming Nigerian society

Andrew Esiebo

Ringing the changes in the mobile market Mobile phone usage in Nigeria has seen a massive increase in the last decade, but it’s not the only area of enormous change in the country’s wireless market. Wendy Atkins sees huge developments in internet usage and a major roll-out of biometric technology

he wireless revolution is well under way in Nigeria, with explosive growth in mobile use and rapid penetration of internet technologies. But this isn’t simply about the success of various technologies, it’s about how a simple mobile phone – or an internet connection – can have an impact at every level of society, transforming the country’s economy and the way its people live. President Goodluck Jonathan is banking on the latest technologies to drive development. In a speech in Kebbi state last April, he said: “For the next four years we will

emphasise science and technology because we have no choice; without that we are just dreaming.”

Statistically speaking The country’s statistics make positive reading. According to the International Telecommunications Union (ITU), the number of people using the internet in Nigeria soared from 200,000 (0.1 per cent of the population) in 2000 to 23,982,200 (16.1 per cent) in 2009. There’s also been rapid growth in the use of mobile phones, driven in part by the shortcomings in Nigeria’s fixed-line system. According to figures from mobile technology association GSMA in 2011, it had more than 93 million mobile phone subscriptions, the highest number in Africa and 16 per cent of the continent’s total. While internet usage is expanding in general, one area with extra potential is the mobile broadband market. According to GSMA, if the Nigerian government supports the roll-out of the technology across the country, it could unlock a potential GDP growth of N 862 billion ($5.55 billion) by 2015. Invest in NIGERIA 2012-13

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Mobile phone market penetration

Population with access to broadband technology

104.2%

10.79%

12.16% 83.33%

88.55%

93.86%

2017

2018

99.27%

78.18%

2016

73.09%

2015

2014

2.46%

2013

4.63%

68.09%

by 2012

2012

3.53% 1.45%

6.96%

63.17%

5.78%

9.47%

57.75%

8.19%

by 2012

53.62%

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0.59% 2020

2019

2011

2010

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

Frederick S Pardee Center for International Futures

Speaking in 2011, Ross Bateson, GSMA special government advisor, said: “It is essential that the Nigerian government acts quickly to support mobile broadband expansion, as failure to do so could hinder the country’s social and economic growth. Not only could the country realise as much as N862 billion ($5.55 billion) of incremental GDP, but people of all ages and livelihoods would benefit from the vast amount of information and opportunities it can unlock.”

One example of the opportunities for people wanting to start up their own business is the flourishing Ikeja Computer Village in Lagos. Now used by small firms and end users, the Village’s growth has reflected the increasing popularity of both internet and GSM-based technologies in the country over the past decade. Described as the largest IT market in West Africa, it is home to the major mobile phone, computer and accessories dealers, giving customers the opportunity to purchase good-quality products at affordable prices.

Opportunities for entrepreneurs? As the whole of Nigeria gets online, the challenge now is to create wealth and generate high-salary jobs from home-grown software and hardware. This has the potential to create real opportunities for entrepreneurs. “The proliferation of internet and mobile technologies has provided huge opportunities for computer, smartphone and accessories suppliers,” says Alim Abubakre, founding director of social responsibility think tank These Young Minds. “Also, internet service providers have taken the opportunity to provide access via mobile modems, while bloggers’ websites such as nairaland.com and bellanaija.com, which are owned by young entrepreneurs, have taken advantage of people’s access to the internet by attracting advertisers to their free, well-subscribed, open-source websites.” But there is still some way to go in the country, as Abubakre points out: “The challenge for entrepreneurs harnessing the huge opportunities of the internet is that the population has limited access to credit and debit cards. Furthermore, the unreliability of online financial transactions in Nigeria has limited their ability to maximise this huge business opportunity.” Invest in NIGERIA 2012-13

Banking and payments Wireless technologies are making a significant impact on many industries. In particular, the growth in mobile phone and internet use is transforming the banking and payments sectors, opening up new opportunities for the unbanked. “Mobile networks extend to even the most remote areas, and almost every Nigerian now has access to a handset,” says Aletha Ling, chief operating officer of mobile financial services platform provider Fundamo, a subsidiary of card giant Visa. “Mobile provides the opportunity to leapfrog traditional approaches to financial-service delivery, without compromising any of the security and reliability principles of traditional financial services.” One of the most recent advances in this sector is the Mobile Money service, a joint venture between Guaranty Trust Bank and MTN Group. Launched at the end of 2011 it enables subscribers with or without bank accounts to use their mobile handsets to send and receive money, pay bills and buy airtime. The venture was one of 11 to be awarded a mobile money licence in 2012 by the Central Bank of Nigeria. However, although Nigeria is making rapid progress in rolling out both technological and banking/payments initiatives, critics argue that it is behind the curve when

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User age distribution on Facebook 18-24 25-34 35-44 65+ 16-17 45-54 13-15 55-64

5% 7%

4%2% 1%

Male/female user ratio on Facebook

37% 18-24

32% female

5,051,440 Facebook users

10%

68% male 34% Socialbakers

compared with its African neighbours. “Nigeria has only recently provided the regulatory environment required for these services to be launched,” says Ling. “It has, however, taken a different approach by releasing a number of mobile money licences with the aim of stimulating competition and driving rapid growth. For Nigeria, the primary aim now is to accelerate service delivery to the Nigerian consumer. This can be best achieved by enabling major market players to use their significant resources.”

Social media The technology revolution is also having a major impact on Nigerian society, resulting in the ‘electronification’ of millions of its population. Social media such as Facebook and Twitter have taken off, with President Jonathan one of the most enthusiastic supporters of both networks. Nicknamed the Facebook President, he even announced his candidacy on the popular social networking site, and he has more than 5,000 followers on Twitter. “Facebook and social media have revolutionised the way people communicate in Nigeria. Many people log onto Facebook via their mobile phone and find it more cost effective and easier to communicate. It means they can carry out business transactions without having to travel or make more expensive calls,” says Abubakre. Like many emerging economies, Nigeria is taking a technological leap straight to some of the most high-tech solutions on the market. It has given the thumbs up to biometric technologies, showing an appetite for devices targeted at both the public and private sectors. Its Joint Admissions and Matriculation Board (JAMB) deployed fingerprint technology in a bid to tackle fraud during last year’s Unified Tertiary Matriculation Examinations (UTMEs). The

fingerprint devices it uses are designed to ensure proper identification and prevent examination malpractice. First Bank of Nigeria, one of the country’s leading financial institutions, has rolled out biometric-based cash machines. These use fingerprint technology for ID, giving cardholders an alternative to PINs as part of the transaction approval process. This is a vital facility in a country where a fair proportion of customers may have difficulties reading or writing. The technology is also being extended into other areas including, for example, how citizens interact with the government, providing real opportunities for both economic and societal development. Like many of its African counterparts, Nigeria is implementing biometric and smart-card technologies for its national ID card. Swedish firm Precise Biometrics and its Nigerian partner, Interswitch, are among the firms delivering the card technology. The cards can be used as both national ID and for banking; they can also be used to access public services such as healthcare, pensions and other social services. “The coming Nigerian ID card is intended to remove and reduce comprehensive fraud and ID theft,” says Thomas Marschall, president and CEO of Precise Biometrics. “The inclusion of fingerprint biometrics is central to this ambition as this functionality will prevent people from using other people’s ID cards for fraudulent activities. As such, it is hoped that significant amounts of money will be saved every year, and that the threshold for fraud has been set higher.” ■ Wendy Atkins is a journalist and commentator in the global business sector. She is contributing editor of This is Africa, fDi Magazine and The Banker, specialising in emerging markets, technologies and investment Invest in NIGERIA 2012-13

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Tackling education and vocational training

The Nigerian Government is placing emphasis on boosting education and skills in ICT to drive further economic development

Invest in NIGERIA 2012-13

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Education is critical and highly valued in Nigeria. Wendy Atkins looks at plans to develop the educational system and improve equality in schools and universities. She also considers attempts to raise the level of vocational skills in the country

igeria has taken great strides in recent years as its government has sought to move the country’s economy away from its reliance on oil by beefing up the service and agricultural sectors. But while diversification is key, what underpins economic development and the alleviation of poverty in any country is a robust and forward-looking educational system. This is something that is vital to building the skills needed to capitalise on opportunities in the new economy. So how is Nigeria matching up to this challenge? Education and learning are highly valued in the country. Many Nigerians cite as a true source of inspiration President Goodluck Jonathan’s rise to power from humble beginnings. In a much-quoted speech he declared: “In my early days in school I had no shoes, no school bags. I carried my books in my hands but never despaired, no car to take me to school, but I never despaired. There were days I had only one meal, but I never despaired. I walked miles and crossed rivers to school every day, but I never despaired… In spite of these, I finished secondary school, attended the University of Port Harcourt and now hold a doctorate degree. Fellow Nigerians, if I could make it, you too can make it!” When democratic government was restored in 1999, one of its first acts was to introduce a policy of nine years of basic education for all children. This spurred a push at federal and state levels to improve the nation’s schools network. Today, the Federal Ministry of Education (FME) is responsible for defining and shaping the structure of Nigeria’s education system. Primary education focuses on a range of key subjects, which include mathematics, English language, indigenous languages, Nigerian history, geography and science. Pupils attending private schools may also study computing, French and art. To move up to the secondary federal and state schools, they have to pass a Common Entrance Exam. Once they have overcome this hurdle, pupils spend three years at Junior Secondary School (JSS) and then three years at Senior Secondary School (SSS) with Invest in NIGERIA 2012-13

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the chance to take GCE ‘O’ Levels. Students who progress to higher education can study at traditional universities as well as the federal and state-owned polytechnics and colleges, which were established to train technical, middle-level students.

Government efforts It is a system that sounds familiar to citizens of many countries. In spite of all the groundwork done by the Nigerian authorities, however, critics argue that the nation lags behind its competitors when it comes to education and skills development. According to figures from UNESCO’s Institute of Statistics, Nigeria’s adult literacy rate was 61 per cent in 2009. For females aged 15-24, it was 65 per cent, while among males in the same age group it was 78 per cent. These figures compared favourably with its West African neighbour, Benin, which had an adult literacy rate of 42 per cent. But it did not fare so well alongside Cameroon’s 71 per cent adult literacy rate and Ghana’s 67 per cent. Despite all of the government’s efforts, Nigeria’s educational system still has some way to go. “At the moment we do not see any improvement in the skills and education being provided within the Nigerian education system,” says Phil Wharton, deputy chairman, Costain, West Africa. “In fact, we see it declining, with constant disruption to education by tutor strikes and corrupt exam results.” According to Mr Wharton, most talent is found in Nigerians schooled overseas. He says: “The big benefit we see is from the increasing number of Nigerians who are

educated or trained abroad who are bringing their skills back here; they see opportunities within Nigeria and pay levels that are increasingly on a par with other countries. As a business, we have gradually replaced nearly all our expatriate staff with repatriated Nigerians who understand the culture better, enabling us to save on employee costs.” Soni Daniel, deputy editor of Nigerian daily newspaper Leadership, agrees: “Although skills centres have sprung up in many places, the products are still not good enough to support a virile economy. What most serious going concerns have done to bridge the skills gap is to recruit and train in the relevant areas the people they need for their operations.” The race is now on to improve education and skills training, to ensure the country can meet growing demands for a high-quality workforce able to drive further economic development. Particular emphasis is being put on boosting skills in areas such as oil and gas, ICT, agriculture, construction, film and multimedia. The World Bank is involved in a range of educational and related projects in Nigeria. These include a number of state schemes managed by the organisation’s education team. For example, the $65 million State Education Sector Project (SESP) aims to improve basic education, while the target of the $95 million Lagos Secondary Education Project is to upgrade all public schools in the state. There are also federal schemes, such as the $180 million Science and Technology Education Post-Basic (STEP-B) project, which aims to produce more and better-qualified science and technology graduates. Dr Olatunde Adekola, senior education specialist, World Bank Country Office, Abuja, says: “Another project being prepared is the $150 million State Education Programmatic Investment Project in the states of Ekiti, Bauchi and Anambra. Edo may also be included.” He adds: “Efforts are being intensified to reform examination system policies and to boost the incentives for school-based activities to improve the quality of education.”

Education is vital in the alleviation of poverty

Literacy rates in Nigeria Females aged 15-24

65%

Invest in NIGERIA 2012-13

Males aged 15-24

78%

Improving quality in higher education In higher education there are efforts to improve quality. The government, through the National Universities Commission, aims to improve regulation of the university education system. At the heart of these efforts is a push for proper accreditation of courses in various universities, especially private ones.

SOCIAL INFRASTRUCTURE

Efforts to redress the balance between the number of male and female teachers have seen a large increase in women entering the profession

Programmes are also in place to improve equality in education. The federal government says it recognises that greater access to higher education will enable citizens to gain high-level skills. Better access will also boost the country’s economic, scientific and technical development. The government says it has set up the Federal Government Scholarship Policy to make higher education more accessible to qualified Nigerian students and help home students, including those who are disabled, to further their studies.

Addressing the gender imbalance Projects backed by the World Bank also aim to address the gender imbalance. “All projects put more emphasis on inclusion, especially for girls, in terms of operations and management,” says Dr Adekola. “This is illustrated by projects such as the STEP-B scheme, which focuses on increasing the number of female science and technology graduates. The SESP Conditional Cash Transfer (CCT) Programs Pilot in Kano State targeted about 12,000 girls to persuade them to go to school and keep attending. Preliminary findings show that CCT has already had a big impact and boosted the enrolment and attendance of girls in orthern Nigeria.” Efforts have also been made to close the gap between the number of male and female teachers. According to the

2008 Teachers Registration Council of Nigeria (TRCN) figures, the country’s secondary schools had 110,923 male teachers to 94,365 female ones. By 2009, the ranks of female teachers had grown to 125,801, surpassing the male total of 121,750. With greater opportunities for technology investment in the economy, it’s no surprise that technical training is becoming an important factor in the education system. In particular, many organisations are focusing on eLearning as a way of driving skills development. “Schemes such as the New Economy Skills for Africa Program (NESAP) ICT and ongoing World Bank-assisted projects are helping to improve the quality of teaching and learning and, of course, research output,” says Dr Adekola. Commitment to future skills development remains strong. But how the country delivers it remains open to question. “The education system needs to de-emphasise certificates for white-collar jobs and emphasise practical work for industry,” says Daniel. “We believe a national training scheme for skills acquisition needs to be set up, but it should exist through using external providers, otherwise use of funds will be suspect,” says Wharton. “National education needs to be tackled at all levels to achieve a credible system that is accepted internationally.” ■ Invest in NIGERIA 2012-13

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Healthcare: a growing market

Patients receive treatment in a maternity hospital renovated by oil company Royal Dutch Shell plc

Invest in NIGERIA 2012-13

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With improved national health as a key plank in reform, opportunities are opening up for private-sector involvement. Peter Guest talks to two investors confident about the future of healthcare in Nigeria

s Nigeria’s professional class expands in step with the country’s economic growth, the demand for a higher standard of healthcare could create significant opportunities for investors. A 2008 McKinsey study for the International Finance Corporation found that, despite the widespread perception that healthcare across the continent is delivered by the international public sector, the reality is that for-profit businesses are already responsible for providing 50 per cent of healthcare services. Across the region, the total healthcare market is expected to rise to $35 billion by 2016, the study predicted. With sub-Saharan Africa’s second largest economy and largest population, Nigeria is poised to see a significant proportion of that growth. The rise of a large middle class in the country, driven by Nigeria’s economic growth and the presence of large corporate entities – both domestic and international – has created investment opportunities in consumer goods, telecoms and financial services. Those sectors have seen much wealth created, and investors have achieved significant returns as companies are expanding across the entire continent. However, the healthcare sector remains fragmented and dominated by small, independently owned operators. This situation leaves the sector ripe for investment, analysts said, with the increasingly wealthy middle class demanding a higher quality of care. More businesses are now offering health insurance as part of their employment packages, which is creating a ready-made market for investors.

Peter Botha, chief executive of African Medical Investments (AMI), took over the company last summer and is looking to expand the business out of its core markets in Southern and East Africa by taking a stake in a private hospital in Lagos. AMI currently runs hospitals in Tanzania, Mozambique and Zimbabwe, and is on the verge of a deal in Angola. Botha believes that the model – providing access to high-quality service for a narrow range of common problems – can be transplanted to Nigeria. “There are private hospitals in Lagos. They are all doing well. What we have found is that they are all doctor-owned, and the doctors have reached the limits in terms of capitalising on the growth,” Botha said. “I think there’s an opportunity to go in, get a good brand in a good location, invest capital and then to refurbish and put in equipment.” The key to making Botha’s model work is an active health insurance industry. Botha himself ran two health insurance businesses in Nigeria’s commercial capital. While still in its early stages, the market is strong enough and growing fast enough to warrant an investment, he says. “It’s early stages, but it’s growing. If you take the relativity of the size of the population and its economy, it’s quite a big insurance market. Over the past few years that insurance market has grown dramatically, and it will support a private hospital.” Rather than seeking to develop capability to handle the most complex cases – such as cardiovascular illnesses – AMI’s model works by focusing on treating the most common requirements of company employees and their families. These include obstetrics and gynaecology, paediatric medicine, trauma care and basic surgery. “In general, people who are working for a local company in a place like Lagos are demanding private hospital care for delivering their babies, looking after their children, treating their trauma and their casualties and their accidents first,” Botha says. Invest in NIGERIA 2012-13

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Obstetrics, paediatric medicine and trauma care are the services most often sought by patients

The Nigerian healthcare sector remains fragmented, leaving it ripe for investment with an increasingly wealthy middle class demanding a higher quality of care “If you set up the hospital to focus on making it a centre of excellence for those types of cases, you scale up quite quickly. If you get clever and start investing in technology like MRI scans or CAT scans or endoscopic type procedures, I think that initially you would struggle to get a return on that and get to scale. It’s quite a fine balance. You need to start where you service the demand from the community, which in general is just emergencies.” While there remain constraints on the number of doctors and other medical professionals on the continent, the presence of international staff – from Eastern Europe, Latin America and India, coupled with a growing cohort of returnees from the diaspora – means that there is talent available, Botha said. “We find that in countries like Nigeria and Ghana you tend to come across more educated medical staff, Invest in NIGERIA 2012-13

and people who have been working abroad want to return from the US or the UK,” he explained. “The quality is much better in West Africa.” The return on investment, he said, should be firmly in double figures: “The important thing is not to go and establish a 200-bed hospital there, because you’re going to struggle. But if you’re smart and if you build a 50-bed hospital and you invest only in what the market is demanding at the present time, then you can put the process in place to get the productivity and efficiency, you can get a 20 per cent margin. I’m pretty confident of that.” Zain Latif, managing director of Duet Private Equity and principal at TLG Capital, has invested in the continent’s healthcare sector for several years, and recently helped to close an investment in Nigeria’s medical insurance industry.

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Testing blood samples at an HIV conference - Nigeria has the third highest number of AIDS sufferers

Latif said that it will be difficult to match the commoditised healthcare industry that has built up in India, which has come to dominate a global medical tourism market by offering “first world care at third world prices”. For more complicated cardiovascular problems, as well as cancer and other serious illnesses, it is likely that the current model, of individuals seeking care overseas, will persist, he says. In Nigeria, as well as in other sub-Saharan markets, the key challenge for insurers and for service providers is building trust, emphasises Latif. A lack of experience with insurance services means that people often do not believe that they will be properly covered in the event of an accident or emergency. That will change and trust will be gained – so long as insurers build their presence alongside a reliable reputation, and do not focus on finding reasons not to pay out, he adds. The lack of consistency in service provision is also a concern – people’s experience of dealing with individual doctors or companies varies significantly. Word of mouth is an important consideration, and putting in place new standards would speed up the sector’s growth. That, Latif says, has to be driven from within the industry. When those issues are resolved, the market will be in place.

“There is that middle class,” Latif said. “That’s one of the reasons why we’re in this game. We like to think we’re near a tipping point in Africa.” Once a few companies start to see the upside, he added, there could be a demonstration effect. The huge returns generated from investments in telecoms and financial services saw others crowd in to those sectors. “My view is that the reason you don’t see much investment in healthcare in Africa… is that nobody has been seen to make money in healthcare. You’ve got those people who have made money in oil and gas, and you’ve got the people who’ve made money in financial institutions and telecoms, obviously. Those are the big plays that people read about in the Economist,” Latif says. “There is a rising middle class that is going to demand better healthcare, and I think with telecoms, financial services, oil and gas having been played, I think people are looking to see what they can do that’s defensive but also high growth. I think if you get the model right, healthcare is an ideal space.” ■ Peter Guest is an editor and journalist focusing on emerging and frontier markets and has written for Africa Report, Forbes Africa, Financial Times, The Wall Street Journal. In 2008, he was the launch editor of the Financial Times’s This is Africa magazine Invest in NIGERIA 2012-13

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agriculture and water

Growing the agriculture sector

The government intends agriculture to become as important a driver in the economy as the oil industry is currently Invest in NIGERIA 2012-13

AGRICULTURE AND WATER

Despite decades of neglect that have left it lagging behind the energy sector, things are about to change for agriculture. Peter Guest notes a determination by the Nigerian government to increase investment in farming, exploiting an ideal environment and a wider market across West Africa

or the past half-decade, Nigeria’s runaway growth rates have seen it enter more frequently into international investors’ discussions. As a major oil exporter with an expanding, youthful population of around 170 million, the country has seen investors flocking to its financial services, telecoms and hydrocarbon sectors. However, those are only part of the country’s economic story. While Nigeria’s foreign exchange earnings mainly come from the oil industry, a large proportion of its domestic economy is rural. Agriculture has not kept up with the country’s development or demographic trends, leaving it heavily reliant on imports. However, with a new political drive and renewed private-sector interest, the sector could be on the verge of a resurgence. Until the early 1960s, Nigeria was a net food exporter. However, as the oil industry began to dominate the domestic and international agenda, the sector fell into relative decline. Public- and private-sector capital for investment dried up, and infrastructure targeting agricultural areas was neglected. Since then, Nigeria has become reliant on expensive imported grain, and now ships in more than 3.5 million tonnes per year, mostly from the US. Volatility in global prices for food – caused by unusual weather conditions – have also left the country, like many others, exposed to the vagaries of international markets. High and rising

prices, too, have contributed to inflationary pressures, reducing the positive impacts of economic growth in Nigeria. It has long been accepted that Nigeria needs to diversify its economy in order to unlock itself from its current dependency on international oil markets whose fluctuations in the past few years of global uncertainty have caused difficulties across exporting nations. The combination of this imperative to find new sources of revenue and employment, as well as the demographic necessity – and opportunity – is driving a new focus on agriculture in the country. Nigeria’s population is urbanising and becoming more wealthy. The country’s economy has been growing uninterrupted for a decade, driven in large part by the oil industry, although financial services, telecoms and technology, and construction have all begun to develop.

Richer societies The commercial capital of Lagos is fast becoming one of the continent’s mega-cities, growing in size and population. Richer urban societies consume more, and their diets typically change to include more protein, in turn requiring far greater production of agricultural commodities as feed for livestock. Jacques Taylor, director of agricultural banking at Standard Bank, recently relocated to Nigeria from South Africa in order to spearhead the bank’s drive into West African agribusiness. In pure output terms, Nigeria is already the largest agricultural producer in sub-Saharan Africa, Taylor notes. While there are serious gaps in the country’s infrastructure, and the fragmented nature of the industry makes the challenges acute, the decline is not terminal. “It is important to acknowledge that Nigeria has pockets of well-structured and viable businesses in the agricultural sector – where entrepreneurs and corporates manage to establish and grow their businesses despite infrastructure challenges and inefficient value chains,” Taylor says. Invest in NIGERIA 2012-13

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AGRICULTURE AND WATER

Increasing the individual outputs of farmers even by a marginal amount would have transformative effects Standard Bank expects sector growth in the short- to medium-term, as underdeveloped parts of the agricultural value chain attract investment and gain in efficiency. The financial constraints for agribusiness should also be easing. The Central Bank of Nigeria (CBN) has taken steps to unblock the flow of capital to the sector, offering incentives for domestic commercial banks to lend to the agricultural system. Working on the basis that increasing incentives for domestic production would help to trim inflation, the bank introduced a series of measures under the N200 billion ($1.2 billion) Commercial Agriculture Credit Scheme, which included a credit facility allowing large-scale producers to borrow at interest rates of nine per cent or below. As Taylor says, the prerequisites for attracting investment into the agricultural sector are a stable macroeconomic environment, public infrastructure, access to land and water and a supportive government. That latter point is becoming increasingly central. The appointment of Akinwumi Adesina, the former vice president of the Gates Foundation-funded Alliance for a Green Revolution in Africa (AGRA), as minister for agriculture and rural affairs has put a development heavyweight and experienced agricultural economist in the driving seat. Adesina will be hoping for more top-level support from the newly returned finance minister, Ngozi Okongo-Iweala, until recently a

Sub-Saharan Africa is expected to be hardest hit by global warming, as its agriculture is almost entirely rain-fed

vice president at the World Bank and responsible for a renewed focus on agriculture and food security at that institution. Speaking at a conference in Geneva in February, Adesina told delegates that he wanted agriculture to supersede oil as the country’s biggest industry and driver of growth. “The potential is there, but you can’t eat it,” Adesina told the conference. “Agriculture is not a social sector. Agriculture is a business, and we must begin to take agriculture in Africa as a business. “We are thinking of agriculture in Nigeria today as a replacement of oil. Think of agriculture as an investment. We see this as government enabled. The private sector is going to have to lead it. We want Nigeria to be an agricultural and industrialised economy.”

Increasing output While this may seem to be an ambitious target, the sector already accounts for around 35 per cent of Nigeria’s gross domestic product (GDP). Perhaps more compellingly, the sector also accounts for 70 per cent of the total employment in the country. From a development perspective, this shows the reach of a broad-based lifting of the sector. From an investment perspective, however, it shows that there is a massive amount of upside in the sector. Increasing the individual outputs of farmers even by a marginal amount would have transformative effects both financially and developmentally, meaning that there are incentives for both the private and public sectors to work together. Currently the Nigerian government allocates only three per cent of its annual budget to the sector, but that is now expected to rise to above 10 per cent, in line with the levels agreed in 2003 by the African Union in its Comprehensive Africa Agriculture Development Plan. Mukul Mathur, country head at Olam Nigeria, presides over an expanding agribusiness company with investments across the region. Earlier this year the company agreed on a further expansion to its activities in the country. “We started out in Nigeria 22 years ago sourcing cashew, but today Olam is a leading importer and distributor of rice into Nigeria. It is also the leading exporter of cocoa, cotton, Invest in NIGERIA 2012-13

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sesame and cashew,” Mathur said. “We are closely aligned with the Nigerian government’s efforts to develop local content and capacity in rice production and milling, and in particular to address the growing level of imports to help tackle issues of food security.” The relative underdevelopment of the country’s agricultural resources and the fragmentation of its producers meant that the company, listed in Singapore, saw that investment in the right areas would reap returns. “Nigeria is endowed with natural resources like fertile soil, perennial water supply through various rivers and climatic conditions that are suitable for a range of tropical crops, yet the yield of most crops is significantly below global averages and could be doubled in output before they even reach the average global productivity levels – so there is high potential for improvement,” Mathur says. “Olam’s business is built on sustainable supply chains, one crucial aspect of which is developing close relationships with farmers. These relationships enable us to identify areas where we can contribute towards improving yields, while making the farming more sustainable. Therefore, investing in Nigeria is a good strategic fit.”

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

150

source: World Bank

The company is working with research institutes, including the International Institute of Tropical Agriculture (IITA) and with international development agencies, including the United States Agency for International Development (USAID) and the UK’s Department for International Development (DFID), in order to offer smaller farmers extension services, training and seeds at concessionary rates to help to increase their outputs. Nigeria’s physical size means that it straddles a number of climatic zones, and has the potential to develop cash crops currently dominated by its regional neighbours. Cote d’Ivoire remains one of the world’s largest producers of cocoa for the international market and, along with Guinea, exports significant volumes of cashew nuts, while Ghana has a thriving fruit sector. The river deltas, synonymous with the oil industry, are fertile ground for rice production. Rice consumption is growing in the region, and with investments in milling facilities creating processing hubs, the potential to supply West Africa with grain is huge. The country produces around 3.5-4.5 million tonnes of rice per year in its current unstructured state, importing as much as 500,000 tonnes annually to meet the

1,171.4

Nigeria’s cereal yield (kg per hectare)

1,233.5 1,255.2 1,308.8 1,372.8 1,421.6 1,507.4 1,399.8 1,598.4

910,768 sq km Total land

1,528 1,413 33.02% Arable land

3.14%

Permanent crops land

63.84% Other

As of 2005, source: CIA Factbook

Invest in NIGERIA 2012-13

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Agriculture With focus on the need to transform the Agriculture Sector, and address the challenges of food security and production for one of the world’s fastest growing populations, Dizengoﬀ has increased its clientcentric capacity to provide the most eﬀective solutions in irrigation, mechanized farming, crop protection and quality seeds. Much recent success has derived from our strategy of integrating all elements in the agricultural value chain including crop production, post-harvest storage and processing combined with training, all with the primary goal of contributing to higher crop yields and quality, enabling an increase in sustainable incomes for all farmers.

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Public Health For Africa in general, and Nigeria in particular, the scourge of malaria is a life-or-death issue that touches the life and well-being of everyone. Combating malaria is nothing less than a war that must be won. Fully registered nationwide and utilizing only safe, proven and cost-effective WHO-approved products from reputable world-class manufacturers, Dizengoff is employed by major private enterprises, institutions, embassies and NGOs to contribute to the reduction in mosquito populations and other threats to public health. Our team of experts provides comprehensive consultation and all-round services with a singular vision to significantly improve sanitary conditions in extremely challenging environments. Dizengoff W. A. (Nigeria) Ltd., 11b, Karimu Kotun Street, V.I., Lagos, Nigeria tel: +234 1 279 30 60 email: dizengoff@dizengoff.com website: www.dizengoff.com

Member of Balton Group of Companies

Siat Group Investment Company in Tropical Agriculture Siat Group specialises in the establishment and management of industrial plantations, allied processing and downstream industries. The main focus of the tree crops rests on oil palm and rubber, and the group recently diversiﬁed its activities into cattle ranching. The Group currently owns 50,000 hectares (ha) of oil palm plantations, 16,000 ha of rubber trees and a cattle ranch with 6,000 animals. At Siat Group, we know that success is a consequence of hard work, respect for the land and the people, best-in-class techniques, cutting-edge technologies, team spirit and, most importantly, vision. Our vision is long term. The Group carries out its corporate responsibility by taking a long-term approach to strategic decision-making that recognises the interests of its staff, shareholders, business partners, consumers and the worldwide economies in which it operates. Spread over its subsidiaries in Nigeria, Ghana, Gabon and Ivory Coast, Siat Group employs over 10,000 people, with the head ofﬁce located in Brussels. The Group strongly believes in environmentally responsible management and cares deeply about its social responsibilities. The use of green, renewable energy is at the top of our list of priorities. The company also assists communities with education and social infrastructure development, such as schools, roads, potable water, electricity and dispensaries. These actions aim to create stability in our catchment area. Siat Group is constantly looking for new opportunities and for dynamic, motivated people to join its team.

For more information and to view our current vacancies, please visit our website – www.siat.be – or contact us via email: jobs@siat.be

AGRICULTURE AND WATER

Andrew Esiebo

As Nigeria’s population becomes increasingly urbanised, demand for food is on the rise

West Africa as a whole is experiencing a resurgence in demand. The country is one of the world’s largest importers, palm-oil development, with emerging market players, and spends millions on the crop. especially from East Asia, growing out of their home regions As the population grows and their diets change, the to take advantage of the massive demographic opportunity consumption of rice is expected to rise strongly, by as much in the region. Wheat production is very small by comparison, as seven per cent per year, according to government estimated at less than 100,000 tonnes per year. forecasts. The Nigerian Government wants to meet this increase with domestic production, and it also wants to substitute existing imports, meaning that the industry may Developing food security need to grow at close to double-digit rates to keep up in The development of other staple foods, while potentially a the short term. As a disincentive to import, high tariffs are harder sell for international investors who are used to looking set to be put in place. for crops with global export potential, could also be a source “For the past six years, Olam has been involved in of both food security and economic upside. Traditional staples, rice milling and running a farmer outgrower program that such as cassava, are widely grown across the continent but, reaches 10,000 farmers across three states,” Mathur again, typically at smaller scales. says. “The learning and experience from these Cassava can be milled into bread, used activities has led Olam to embark on a as feedstock for animals and can replace greenfield integrated rice farming and maize and wheat in a variety of products. milling project in Nasarawa state, which Currently, wheat imports cost the country will need an investment of $50 million over nearly $4 billion each year, and substituting a three-year period. this for cassava could have the combined “Covering an area of about 10,000 effect of reducing imported inflation and hectares, it would be Africa’s largest rice stimulating a resurgence in the domestic farm, providing employment to thousands of industry. Wheat, like rice, will soon attract a workers. Olam believes there is an opportunity 100 per cent import duty, while imports of to transform growth in local production of rice cassava will be banned. Bakers who use a if private-sector investment is supported with mix made up of 40 per cent of the crop will Nigeria’s minister of agriculture, an enlightened policy framework.” also be given tax rebates. Dr Akinwunmi Ayo Adesina Invest in NIGERIA 2012-13

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The development of staple foods could be a source of food security and economic upside

The president himself, Goodluck Jonathan, broke cassava bread and served it to his cabinet earlier this year in an attempt to highlight the potential of the crop – although it must be noted that previous efforts to legislate to force local producers to use the grain have not yielded great results. Beyond import duties and tax measures, there are clearly still major investments needed in other areas – notably infrastructure – to jump-start the industry. Nigeria’s perennial infrastructure gap is gradually being addressed. Trunk and rural roads, as well as railways, are important pieces of the puzzle. Beyond this, storage facilities, silos and other parts of the value chain will also be needed. For investors, these present various challenges and opportunities. However, the prize is more than just success in Nigeria. On top of Nigeria’s 160 million people, the regional grouping – the Economic Community of West African States (ECOWAS) – holds a further 90 million. While there is some way to go before the grouping has a fully functioning common market completely connected by efficient infrastructure, that is the direction of travel.

Cultivating a range of crops Over 60 per cent of Nigeria’s land mass is within the Niger River Basin, and population density along the river is higher than elsewhere in the country. Flowing from the edge of the Sahara in the north, the river is the lifeblood of agricultural growth in the country, allowing the cultivation of a range of crops, from cassava and yam further north, to rice in the south. Agriculture, which accounts for the majority of employment in the region, is mainly rain-fed, leaving its Invest in NIGERIA 2012-13

economy vulnerable to climatic variations. As a recent research paper led by Andrew Ogilvie from the Institut de Recherche pour le Développement in Montpellier, France, notes, dramatic shifts in rainfall caused devastating drought across West Africa during the 1970s and 1980s. It is extreme variations, rather than a lack of water, that principally cause problems for farmers in the region, he says. Only around 85,000 hectares are under irrigation in Nigeria, according to the Niger Basin Authority, although further investment in larger scale farming, as well as in a multitude of smaller projects around the country, are set to increase this total. However, with population growth adding to the local burden, as well as to the country’s wider need to increase its agricultural productivity, the strain on water resources is likely to increase. There are, Ogilvie notes, ways to reduce the risks in existing rain-fed systems, including encouraging mixed-use systems, developing infrastructure, adapting the timing and positioning of crops to the changes in the water supply, and introducing drought-resistant varieties.

Necessities of agricultural development “Farmers need to be linked to input and output markets and ﬁnancial services, with access to training and storage, but also with secure access to land and water, possibly through communal land tenure arrangements. Mitigation strategies such as early-warning systems and storage options are required to help reduce the impact of extreme events,” he says. “Transparent, participatory governance is required to ensure water resources are developed in an equitable, participatory and sustainable way.” The fact that the majority of the farmers in the Niger Basin are subsistence-level smallholders complicates the issue, but Adesina, who focused on smallholders as part of his work at AGRA and at the Rockefeller Foundation in Nairobi, has made giving better land tenure, inputs and information to this group a cornerstone of his plans for a nationwide revival. Getting water management right has knock-on effects for development and the wider economy – provided a balance can be found. Less than 25 per cent of the hydroelectric resources of the Niger are in use, meaning that a huge potential clean-energy source is there to be exploited – although to do so could have implications again for agriculture. Improved water infrastructure, coupled with rising economic growth and incomes are also correlated with improvements in basic healthcare. They also have a correlation with reductions in mortality and morbidity from waterborne diseases. ■

AGCO invests in African agriculture Thinking of investing in African agriculture? Then you need to speak to AGCO, which has the widest experience in all sectors - from emerging small-scale farmers right through to the largest projects. As a world-leading farm-machinery manufacturer, AGCO has unrivalled expertise in African agriculture, with Massey Ferguson, the region’s leader, now complemented by Challenger-tracked tractors and equipment, Valtra tractors for specialist applications as well as GSI post-harvest technology for grain handling and storage. Together these top brands offer a diverse range of equipment developed and built specifically for African conditions. AGCO’s unparalleled expertise and local knowledge, which has been amassed over many generations, puts it in prime position to develop every area of African agriculture. It always pays to pick a strong partner and with an $8.8 billion turnover in 2011, AGCO is the largest specialist, full-line agricultural manufacturer, which sells machinery in 140 countries. A truly global corporation, AGCO has the power, equipment and support structure to make an immediate impact.

AGCO delivers on its commitment

AGCO is investing more than $100 million to boost African agriculture and is currently developing a wide range of new facilities across the continent to provide the highest quality farm mechanisation and training as well as technical and spare-parts support. In Zambia AGCO has just launched a new 150 ha (371 acre) model farm and learning centre near Lusaka. “The AGCO Global Learning Centre will empower farmers in Africa to improve food production levels,” said Nuradin Osman, AGCO’s Director Africa & Middle East. “Small to medium scale

farmers with limited access to modern farming will benefit from training courses ranging from basic agronomy through to general mechanisation.” At the Centre large-scale commercial farming businesses will also be offered training on high-specification tractors and harvesting equipment, including precision farming techniques. Recognising the importance of minimising post-harvest losses, the Centre will also provide specific advice on the latest grain handling and storage technology from AGCO’s GSI product range.

New developments for the market

In South Africa, AGCO has also recently celebrated a ‘ground breaking’ ceremony for its African Master Parts Distribution Centre, together with its South African Distribution Partner, Barloworld in Johannesburg. At this event Martin Richenhagen, Chairman, President and CEO of AGCO, said: “AGCO is committed to growing its presence within Africa by investing in distribution infrastructure and new training sites. Our new warehouse will allow us to better serve our customers in Sub-Saharan Africa.” At the same time new regional offices are being set up to bring AGCO even closer to the market. Planned local assembly plants will not only provide machines made in Africa, but also create a wide range of new jobs.

AGCO, through its Massey Ferguson, Challenger and Valtra brands, offers an unrivalled array of equipment designed, developed and proven to excel in the most arduous conditions. AGCO and its staff understand African agriculture. For more than 60 years Massey Ferguson has been at the forefront of mechanising African farming. Now, with the addition of Challengertracked tractors along with Valtra’s expertise in the region, AGCO provides the widest, full-line of the most appropriate machinery. Through its wholly-owned company GSI, it is also able to offer crop storage buildings and equipment to build a better agricultural infrastructure in the region. Improving storage and the ability to condition crops not only prevents losses, but also allows farmers to hold crops and respond to market demands and improve returns. As a world-leading farm-machinery manufacturer, AGCO is not only strengthening its position in Africa, but also delivering on its mission: ‘To provide high-tech solutions to farmers feeding the world.’

www.agcocorp.com/

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media, tourism AND culture

A rich cultural diversity

The annual Abuja Carnival, showcasing Nigeria’s diverse cultures, is now a major event

Invest in NIGERIA 2012-13

MEDIA, TOURISM AND CULTURE

From a rich tradition of storytelling that has produced some of the world’s most famous writers to a fast-growing broadcast industry, Nigeria’s vast cultural mix is coming to the fore. Beth Holmes looks at how the country is showcasing its cultural strengths to growing numbers of tourists

ourism can have a profound impact on the society, economy and environment of a country. It creates employment and, when developed in a sustainable way, can help protect natural environments and preserve historical and archaeological monuments, while bringing to life and safeguarding the practice of local cultures, traditions, arts and crafts, and cuisine. Economically, tourism helps to generate foreign revenue that can be pumped back into the economy for the benefit of the wider population. As far as Nigeria is concerned, its poor record in tourism is just one of the reasons its development lags behind many other African nations. But with a new government in place comes a new commitment to make Nigeria the destination of choice for global travellers who want to experience Nigeria’s rich culture for themselves – and what a culture it boasts. It is shaped by the nation’s many ethnic groups. More than 250 ethnic tribes call present-day Nigeria home. The three largest and most dominant groups are the Hausa, who are predominant in the north, the Yoruba, who are predominant in the southwest and the Igbo, who are predominant in the southeast. The Niger and Benue Rivers come together in the centre of the country, creating a ‘Y’ that splits Nigeria into these three separate sections and marks the boundaries of the three major ethnic groups. Other smaller groups include the Ijaw, Kanuri, Ibibio, Tiv and Edo. From an environmental point of view, Nigeria has three main regions: savannah, tropical forests, and coastal wetlands. The conditions of each region have a direct correlation with the cultures of those living in them. The dry, open grasslands of the savannah make cereal farming and herding a natural lifestyle choice for the Hausa. The wet tropical forests to the south provide perfect conditions for growing fruits and vegetables, hence these are the main income producers for the Yoruba and the Igbo. Meanwhile, small ethnic groups living along the coast, such as the Ijaw, rely on fishing and the salt trade.

It is impossible to write about Nigeria’s cultural history as a single, identifiable entity because with each ethnic group comes a separate and distinct cultural past. Furthermore, a succession of leaders from different ethnicities have taken control of the country since its independence from British colonial rule in 1960 and it has suffered from civil war and severe internal ethnic conflicts. This, too, has had a major impact on present-day efforts to build a credible tourist industry. The Nigerian culture, therefore, is a melting pot of different traditions, beliefs, art, music, food, languages and social etiquette. In a country with over 250 tribal languages, English is the only one common to almost all and is the official language of Nigeria. Pidgin, a mix of African languages and English, is also a lingua franca common throughout Nigeria. Its origins lie in the need for British sailors to communicate with local people but it is widely used in the present day.

Religious practices The most widely practised religions in Nigeria are Christianity and Islam. The northern region is mostly Muslim, while the south-eastern and southern states are almost entirely Christian. The south-western and middle-belt regions are broadly divided between the two religions, while across the country there are also many people who practise other traditional religious beliefs. Nigerian food varies from region to region, though there are a few staples that permeate cuisine across the country. In the south, crops such as corn, yams and sweet potatoes form the base of the diet. In the north, grains such as millet, sorghum and corn are boiled into a porridge-like dish that forms the basis of the diet. Fruits such as papaya, pineapples, coconuts, oranges, mangoes and bananas are prevalent in the tropical south. Alcohol is consumed in the south, but less so in the predominantly Islamic north. Historically, art served a social or religious purpose in Nigeria, but it is now seen as an important cultural influence in its own right and the country has launched the careers of some internationally renowned artists, such as Igbo painter and sculptor Ben Enwonwu. The country also has a long and incredibly rich literary history. Nigerians are traditionally storytellers, handing down tales from generation to generation. With colonisation, storytelling evolved into more sophisticated literary media and Nigeria has given the world some of its most famous writers. Invest in NIGERIA 2012-13

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The traditional architectural style of ancient Kano is just one of many tourist attractions Nigeria has to offer

These include the most widely translated African writer of all time, Chinua Achebe, whose 1958 book Things Fall Apart has been translated into more than 50 languages; 1986 Nobel Laureate Wole Soyinka; 1991 Booker Prize winner Ben Okri; and 2007 Orange Prize winner Chimamanda Adichie. Also, in art, Ben Enwonwu, world-renowned sculptor and artist has a crater on planet Mercury named in his honour.

source of information. According to the broadcasting regulator, there are 100 radio stations and 147 terrestrial TV stations in the country, as well as cable and direct-to-home satellite offerings. Television is popular in urban areas although there are limits placed on the amount of foreign programming that stations can show, and outlets cannot air foreign news, according to the BBC’s African service. At the end of 2011, 44 million Nigerians were online – around 28 per cent of the population – and 4.5 million Nigerians were on Facebook, highlighting the increasing influence of technology on the culture.

The country’s media industry is a vibrant and growing example of its cultural development Since the 1990s the Nigerian movie industry, known as Nollywood, has emerged as a fast-growing cultural force. Last year, during a meeting with stakeholders in the industry, President Jonathan announced a donation of $200 million to the entertainment sector. He described this as a direct intervention lifeline for the exclusive purpose of supporting artists and developing the entertainment business. The country’s media industry is a vibrant and growing example of its cultural development. Radio is the most popular Invest in NIGERIA 2012-13

Strategic development

This, then, is the land to which the Nigerian government wants to attract visitors and, against a backdrop of severe global economic challenges, it is not the only country embarking on strengthening its tourism potential to attract investment. The strategic development of Nigeria’s tourism industry is overseen by The Federal Ministry of Tourism, Culture and National Orientation. The overriding hope of President Jonathan’s administration is that the tourism industry will become a credible alternative to the oil industry as far as bringing revenue into the country is concerned. Due in no small part to security issues and continuing civil unrest,

MEDIA, TOURISM AND CULTURE

One of the aims of the National Tourism Master Plan is to encourage local participation in the burgeoning industry

Nigeria remains some distance behind a number of its African counterparts in this respect. However, several initiatives have been introduced under a more coherent tourism strategy that has been evolving since the turn of the century. For instance, the launch of the Abuja Carnival in 2005 gave organisers the chance “to showcase Abuja as a meeting place of cultures and crystallisation of the creative spirit and cultural diversity of the Nigerian people”. Now entering its seventh year, the carnival has established itself as a major international calendar event. In 2009, the Ministry initiated and developed six Cultural Industry Centres in Taraba, Enugu, Benue, Ogun, Ondo and Sokoto, with a view to harnessing local talents and generating employment. In 2009, the Ministry also established the Nigerian Cultural House in Salvador, Brazil, to boost Nigeria’s image internationally. The announcement in 2005 of a National Tourism Master Plan was seen as a step in the right direction, although critics have bemoaned the time that implementation is taking. The objective of the project is to promote the sustainable development of the tourism industry as well as development at the community level by encouraging local participation in, and ownership and management of, the tourism sector. The plan also provides strategic recommendations in the areas of tourism policy, governance, development of tourism products, marketing, international and domestic transportation,

hospitality, education and training, and legislation. In particular, it earmarks the nation’s tourist attractions for development, such as Tinapa Business, Leisure and Conference Resort in Cross River State, the Farin Ruwa Waterfalls in Nasarawa State and the Olokola Cultural Resort in Ondo State. Edem Duke, minister of tourism, culture and national orientation, admitted at the end of 2011 that the master plan had stalled in recent years but said: “I think the greatest challenge is to find leadership that has courage and commitment in order to move that initiative forward.” Duke also said the federal government is engaged in simplifying the visa process to encourage more investors into the country, stressing that many had complained about bottlenecks associated with issuance of Nigerian visas abroad. The Ministry has also overseen a radical improvement in the physical infrastructure, with the refurbishment of museums and theatres and the construction of craft centres and tourist resorts. With continued funding from both the private and public sectors, an aggressive marketing strategy and coordinated implementation of the master plan, there is every chance that the country will be better equipped to develop, manage and sustain its tourism industry. This would spread the benefits of tourism to all parts of the country and all layers of society, thereby greatly contributing to the eradication of poverty and the economic regeneration of Nigeria. ■ Invest in NIGERIA 2012-13

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A cinematic experience

Filming gets under way on movie Covenant of the Ancestors, about the politics of oil in the Niger Delta

Invest in NIGERIA 2012-13

MEDIA, TOURISM AND CULTURE

The dramatic growth of the Nigerian film industry to become the second largest in the world has had a profound effect on the country. Martyn Cornell considers the wider impact of the phenomenon that is ‘Nollywood’

he single most visible mark of success for the Nigerian film industry, according to John Ugbe, managing director of digital satellite television operator Multichoice Nigeria, is “when you land in Kenya or any other African country, and the first guy you see says, ‘Oga’” – the Nigerian slang word meaning ‘boss’. The fact that much of Africa now knows what ‘oga’ means is a tribute to what has inevitably been dubbed ‘Nollywood’ – and to Nigeria’s incredible output, currently running at around 900 films a year. Nigeria was hailed by UNESCO, the United Nations Educational, Scientific and Cultural Organisation, in 2009 as the home of the second-biggest film industry on the planet in terms of sheer output, just behind India’s ‘Bollywood’ and far ahead of Hollywood itself, at around 480 films a year. A report by UNESCO on the world film industry found that while some 56 per cent of Nollywood films are made in local languages, the rest are in English. This is an important factor in Nigeria’s success in exporting its films to the rest of Africa, and its potential for further growth as a supplier of films not just to Africa but to the world. The rise of Nollywood has been explosive, from a standing start in the early 1990s to an industry worth upwards of N25 billion ($157 million) a year and reckoned, depending on which source you

read, to be Nigeria’s second-largest employer after either the federal government or the oil industry. As the British-Nigerian actor Maynard Eziashi told Nigeria’s Vanguard magazine in January 2012, “If we compare the first 10 to 20 years of Hollywood with that of Nollywood you would realise Nollywood is doing fabulously well.” There is even a Centre for Nollywood Studies, part of the School of Media and Communication at the Pan-African University in Lagos, which opened in July 2011. Paradoxically, this success has come in a country with virtually no formal cinemas – 99 per cent of screenings take place in informal settings, such as home cinemas. Far from being a threat to the Nigerian film industry, the lack of a formal network of mass cinema outlets has been an opportunity: Nigeria’s film-makers have been able to film straight to video, massively reducing their costs. A single film might be shot in as little

A film might be shot in as little as two weeks or a month, using cheap digital cameras and locals as extras as two weeks or a month, much of it out on the streets, using cheap digital cameras and locals as extras (their ‘pay’ a promise of a copy of the finished DVD) and for a total cost of no more than N5 million ($31,506). Hundreds of thousands of DVD copies are then sold back on those same streets at around N250 ($1.58) a time. Although the history of film-making in Nigeria goes back at least as far as 1935, when parts of the Zoltan Korda film, Sanders of the River, were shot on location in the country, the first major Nollywood film is reckoned, by common consent, to be Invest in NIGERIA 2012-13

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Living in Bondage, made in 1992 (supposedly by a trader who had a huge number of blank video tapes imported from Taiwan that he could not sell, who decided they might sell better if he put a film on them). It covered many of the common Nollywood themes: the search for wealth, voodoo, betrayal, remorse and redemption. The subsequent success of Living in Bondage inspired an industry.

Top five countries with major film production in 2009

India

17.8%

Huge audience potential

Nigeria

13.6%

United States*

10.1%

China

6.5%

Japan

World production

7,233

Languages of film production Although data on language are missing for key countries, including Brazil and China, information was collected for 4,856 feature films in 2009

11%

1,201

of films were made in the language of Nigerian productions

540 235 Hindu

Russian

French

Spanish

Yoruba

367 300 253 English

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* Break in data series due to a change in methodology; not comparable with previous data series. Source: UNESCO Institute for Statistics, January 2012

Invest in NIGERIA 2012-13

With 150 million Nigerians eager for Nollywood’s tales of love, honour, adventure, witchcraft, the tensions between tradition and modernity, and the triumph of good over evil – and another 650 million in sub-Saharan Africa also increasingly hooked on films coming out of Nigeria – the potential is huge. Nigerian film director Zeb Ejiro told The Times in 2010: “Western productions, slick as they are, do not gel with people – their everyday experiences are too different. For Africans, those films are fantasies. What is unique is that we tell our African story our own way: we are telling our own story and they, the audience, can see themselves in it and relate. People see it and say, ‘Yeah, that’s how my grandfather said it’.” That, Ejiro said, “is true across the continent. The differences between African states are nothing like as big as they are with the United States or Western Europe.” Nollywood films are, inevitably, popular with the large Nigerian diaspora. Just as the spread of that diaspora has meant, for example, Nigerian-brewed Guinness being available on the shelves of British supermarkets, so Nigerian-made films are now for sale in the United States, Germany, Britain and other countries where Nigerians have settled. The UK even has its own dedicated Nollywood satellite channel, and there is a globally available advertising-funded YouTube service, Nollywood Love, for Nigerians everywhere. But Nigerian film-makers’ international ambitions lie beyond the expat market: they want to see a Nollywood film win an Oscar. The country has yet to make its own District 9, the low-budget South African science-fiction film from 2009 that shot the country’s film industry into the international spotlight, taking more than $200 million at the box office and achieving four Academy Awards nominations. (Ironically, District 9 was banned in Nigeria for its extremely unflattering portrayal of Nigerians as the film’s main villains.) But it really must be only a matter of time before a Nollywood film does as well or better. That is not to say that Nollywood does not have its problems. Piracy is one of the biggest. Digital technology may have made producing and distributing films vastly easier

MEDIA, TOURISM AND CULTURE

Broadcaster and media consultant DJ Abass with a poster for Last Flight to Abuja, an action movie directed by Obi Emelonye

and cheaper, but it has, of course, made illegal copying of films much easier as well. A report in The Economist in 2010 estimated that it took the pirates just two weeks to copy a new film and have their pirated DVDs distributed across Africa. The Nigerian industry has been clamouring for the federal government to get much tougher on piracy.

Making an impact in the world’s cinemas Another problem that needs to ber tackled is funding: Nollywood’s cheap-and-cheerful production values may not be important to an African audience that is more thrilled by how well the films’ plots speak to their own lives and aspirations, but to make a real impact in the world’s cinemas, the industry needs to be able to raise its game, and that requires money. Film-makers have been concerned since at least 2008 that neither the banks nor the federal government are putting enough into the industry to help it with its ambitions to succeed globally. Despite efforts by the Commonwealth Business Council to encourage investment in the industry, and a promise just before the 2011 presidential election from President Goodluck Jonathan of a $150 million loan fund for the use of people in the ‘creative industry’, which is to be managed by the Bank of Industry, Nollywood is still short of cash.

One answer might be ‘crowdsourcing’: film-makers have been pitching their ideas via the internet and asking for a contribution from investors of as little as $1 to get the film made. But as the French film journalist Sylvain Beletre remarked, “sending off money to someone you’ve never heard of to finance a film sounds like the perfect Nigerian 419 scam”. A third problem is rooted in the very popularity that makes Nollywood such a potential international success. Elites in some other African nations fear Nigeria’s rising power and the growth of Nollywood abroad has seen, for example, attempts in the Democratic Republic of the Congo to ban Nigerian films completely. Ghana, which is trying to build up its own indigenous film industry to rival Nollywood, now imposes stiff fees on Nigerian film-makers working within its borders. All the same, with a strong base at home and an enthusiastic audience outside of Nigeria’s borders, the future is looking bright for Nollywood. As the then director-general of UNESCO, Koichiro Matsuura, said in 2009: “Film and video production are shining examples of how cultural industries, as vehicles of identity, values and meanings, can open the door to dialogue and understanding between peoples, but also to economic growth and development.” ■ Invest in NIGERIA 2012-13

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Government ministries Public administration departments in Nigeria

Federal Ministry of Finance and Economic Development Plots 745 & 746 Ahmadu Bello Way Central Area, PMB 14 Garki, Abuja Tel: +2349 234 0946 Fax: +2349 234 0512 Website: www.fmf.gov.ng Email: enquiries@fmf.gov.ng

Federal Ministry of Power and Steel New Federal Secretariat Complex Shehu Shagari Way 3rd/4th Floors, Annex B Tel: +2349 523 7064 Fax: +2349 234 3563

Federal Ministry of Petroleum Resources Federal Secretariat Shehu Shagari Way, Abuja Tel: +2349 523 3536-8 Website: www.dprnigeria.com

Federal Ministry of Justice

Federal Ministry of Foreign Affairs

Federal Ministry of Defence

Federal Ministry of Aviation

Federal Secretariat Abuja, Nigeria Tel: +2349 523 0186 Email: info@mfa.gov.ng

Defence Headquarters Opposite Agura Hotels PMB 196, Area 7, Garki, Abuja, Tel: +2349 234 0532, +2349 234 0533

Federal Secretariat Shehu Shagari Way, Abuja Tel: +2349 523 2132 Website: www.aviation.gov.ng Email: info@www.aviation.gov.ng

Federal Ministry of Solid Minerals Development

Federal Ministry of Federal Capital Territory

Federal Ministry of Commerce and Tourism Old Secretariat, Area 1, Block G & H PMB 88, Garki, Abuja Tel: +2349 234 1689 Fax: +2349 234 1541

Federal Ministry of Transport 2nd Floor, Annex 3 New Federal Secretariat Complex Shehu Shagari Way, Central Area PMB 1136, Abuja, FCT Tel: +2349 523 7054

Federal Ministry of Communications 2nd & 3rd Floors, Federal Secretariat, Abuja Tel: +2349 523 7183 Website: www.commtech.gov.ng Email: roundtable@commtech.gov.ng

New Federal Secretariat Complex 10th Floor, Federal Secretariat Wing 1B (1001-1099) Block 1, Shehu Shagari Way, Abuja Tel: +2349 523 5194

Federal Ministry of Industries

Federal Ministry of Science and Technology

Federal Ministry of Water Resources and Rural Development

9th Floor, New Federal Government Secretariat (opposite New Parade Ground), Shehu Shagari Way, Abuja Tel: +2349 523 3397 Fax: +2349 523 4390, 523 3903 Website: www.fmst.gov.ng Invest in NIGERIA 2012-13

PMB 85, Garki Post Office Old Federal Secretariat Area 1, Garki, Block C, Abuja Tel: +2349 234 1387

PMB 159, Block A Old Secretariat Area 1, Garki, Abuja Tel: +2349 234 0206; +2349 234 2684 Website: www.stoveco.com/afriweb

5th Floor, Annex 3 New Federal Secretariat Complex Shehu Shagari Way Central Area, Abuja, FCT Tel: +2349 523 3536, +2349 523 6452 Website: www.mmsd.gov.ng Email: info@mmsd.gov.ng

National Planning Commission 4th Floor, New Federal Secretariat Shehu Shagari Way, Abuja Tel: +2349 523 6626 Fax: +2349 523 6625 Website: www.npc.gov.ng

Federal Ministry of Agriculture and Natural Resources Federal Capital Territory Office, Complex Block A, Area 11 PMB 135, Garki, Abuja, FCT Tel: +2349 234 1931

Federal Ministry of Works and Housing Radio House, Herbert Macaulay Way (South) PMB 111, Garki, Abuja (Opposite the International Conference Centre) Tel: +2349 234 1932; +2349 234 6073

Area 11, Garki, Abuja PMB 25 Garki, Abuja Tel: +2349 234 1195; +2349 234 1525; +2349 234 1019; +2349 234 1549 Website: www.fct.gov.ng Email: info@fct.gov.ng

Nigerian National Petroleum Corporation Corporate Headquarters NNPC Towers, Central Business District, Herbert Macaulay Way, PMB. 190, Garki, Abuja Website: www.nnpcgroup.com Email: contactus@nnpcgroup.com International office NNPC London Office 159 Hammersmith Road, London W6 8BS Tel: 020 8735 9600 Purchase of Nigerian Crude Oil All enquiries to be directed to: Group General Manager (GGM) Crude Oil Marketing Division (COMD), Nigerian National Petroleum Corporation (NNPC) NNPC Towers Central Area Abuja, Nigeria. Tel: +2349 460 82500

Federal Ministry of Education and Youth Development Federal Secretariat, Phase 2 (3rd Floor), Shehu Shagari Way, Abuja Tel: +2349 523 2800

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Federal Ministry of Environment Federal Secretariat Complex, 9th Floor, Shehu Shagari Way PMB 468, Garki, Abuja Tel: +2349 523 4014; +2349 413 6309; +2349 523 6309

Federal Ministry of Health and Social Services Block 4A (301-309), 3rd Floor, New Fed. Secretariat Complex, Shehu Shagari Way, PMB 83 (Garki Post Office), Abuja Tel: +2349 523 4590

Federal Ministry of Information and Culture Radio House, PMB 247, 2nd/3rd/6th Floors, Herbert Macaulay Road, Garki (opp. Int’l Conference Centre), Abuja Tel: +2349 234 4107; +2349 234 4106

Federal Ministry of Internal Affairs Block ‘F’ Old Secretariat, Area 1, Garki, Abuja, PMB 0016, Garki Post Office Tel: +2349 234 1602; +2349 234 1525; +2349 234 1935; +2349 234 1936

Federal Ministry of Labour and Productivity 2nd Floor (257-237), Block 4A, New Federal Secretariat Complex, Shehu Shagari Way, Central Area, Abuja Tel: +2349 523 1694

Federal Ministry of Special Duties First Floor, Phase II, New Federal Secretariat, Shehu Shagari Way, Abuja Tel: +2349 523 3397 Fax: +2349 523 5853

Federal Ministry of Women Affairs and Social Development 2nd Floor (201-224), Annex 3, New Federal Secretariat Complex,

Shehu Shagari Way, PMB 229, Central Area, Abuja, FCT Tel: +2349 523 7115

Federal Ministry of Works and Housing Radio House, Herbert Macaulay Way (South), PMB 111, Garki, Abuja, (opp. Int’l Conference Centre) Tel: +2349 234 1932; +2349 234 6073

Federal Ministry of Youth and Sport New Federal Secretariat Complex, Maitama, Sule, Garki, Abuja Tel: +2349 523 5902-7

Embassies and High Commissions Offices of Nigerian embassies and High Commissions around the world Algeria (Algiers)

Australia (Canberra)

Benin (Cotonou)

Embassy of Nigeria B.P. 629, Alger-Gare, Algiers 1600 ALGERIA Tel: 69 32 78, 69 37 26

Nigerian High Commission 27, State Circle, Deakin, ACT 2600 P.O. Box 241 Civic Square, Canberra, AUSTRALIA Tel: 062-2866426, 2861322, 2861966, 2861044 Fax: 2865332

Embassy of the Fed. Rep. of Nigeria Avenue De France, Marina, B.P. 2019, Cotonou, REPUBLIC OF BENIN Tel: 301503, 301142, 304487

Angola (Luanda) Embassy of the Fed. Rep. of Nigeria Houan Boumedienne, No. 120, Caixa Postal 479, Luanda REPUBLIC OF ANGOLA Tel: 345985; 340084-5

Argentina (Buenos Aires) Embassy of the Fed. Rep. of Nigeria 11, De Septiembre 839, 1426 Buenos Aires, ARGENTINA Tel: 7716541, 7729447

Austria (Vienna) Embassy of the Fed. Rep. of Nigeria Rennweg 25, 103 Vienna P.O. Box 262, Vienna AUSTRIA Tel: 43 1712 6685

Botswana (Gaborone) Nigerian High Commission P.O. Box 274, Gaborone, BOTSWANA Tel: 313561, 313838

Brazil (Brasilia De) Embassy of the Fed. Rep. of Nigeria Sen-Avenida das Nacoes, Lote 5, CEP: 70: 473, Brasilia De, BRAZIL

Belgium (Brussels)

Tel: 226-5616, 226-1717, 226-2572

Embassy of the Fed. Rep. of Nigeria Avenue De Tervuren 228, 1150 Brussels, BELGIUM Tel: 7625260, 7629831, 7629832, 7629847

Burkina Faso (Ouagadougou) Embassy of the Fed. Rep. of Nigeria 36 Hospital Rd.

B.P. 132, Ouagadougou, BURKINA FASO Tel: 30 66 67, 30 66 68, 31 52 01

Cameroon (Buea) Consulate-General of Nigeria, Bokwango, PMB. 30, Buea, CAMEROON Tel: 32 25 28, 32 35 37

Cameroon (Yaounde) Embassy of the Fed. Rep. of Nigeria (Opposite Renault Automobile), P.O. Box 448, Yaounde, CAMEROON Tel: 22 34 55, 23 19 04

Canada (Ontario) Nigerian High Commission, 295 Met Caife Str, Ottawa Ontario, K2P 1R9, CANADA Invest in NIGERIA 2012-13

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Tel: 236 0521, 236 0522, 236 0523, 236 0527, 236 0529 Email: chancery@nigeriahcottawa.com

Cairo, U.A.R., EGYPT Tel: 3420389, 3417894

Central African Republic (Bangui)

Equatorial Guinea (Malabo)

Embassy of Nigeria B.P. 1010, Bangui CENTRAL AFRICAN REPUBLIC Tel: 610744, 611800

Embassy of the Rep. of Nigeria 4 Passo De Los Cocoteros, Malabo, EQUATORIAL GUINEA Tel: 2386 3520

Chad (N’Djamena) Embassy of Nigeria B.P. 752, Ave. Charles De Gaulle N’Djamena, CHAD. Tel: 512498, 512647

China (Beijing) Embassy of the Fed. Rep. of Nigeria 2 Tung wu Jie, San Li Tun, Beijing, CHINA Tel: 532363, 5322108

Ethiopia (Addis Ababa) Embassy of Nigeria P.O. Box 1019, Addis Ababa, ETHIOPIA Tel: 550644 PBX: 552308

France (Paris) Embassy of the Fed. Rep. of Nigeria 173 Ave. Victor Hugo, Paris 16E, FRANCE Tel: 47046165, 47048497, 47046865 (Ext. 224)

The Gambia (Banjul) Cote d’Ivoire (Abidjan) Embassy of the Fed. Rep. of Nigeria 35 Boulevard De La Republique, O.I.B.P. 1906, Abidjan, COTE D’VOIRE Tel: 21 19 82, 21 23 28, 22 30 82

Nigerian High Commission Garba Jahumpa Avenue, New Town Road, Bukau, P.O. Box 630, Banjul, THE GAMBIA Tel: 95217, 95804

REPUBLIC OF GUINEA Tel: 461314, 469400, 461409

Guinea Bissau (Bissau) Embassy of the Fed. Rep. of Nigeria B.P. 199, Bissau, GUINEA BISSAU Tel: 211876-7, 211022

Hong Kong Commission of the Fed. Rep. of Nigeria, 25th Floor, Tung Wai Commercial Building 109/111 Gloucester Rd., G.P.O. Box 5670, HONG KONG Tel: 852-8278860, 852-8278813

India (New Delhi) Nigerian High Commission 21, Olof Paime Marg. Vasant Vihar, New Delhi INDIA Tel: 6876228, 6876558

Embassy of the Fed. Rep. of Nigeria 5th Ave. No. 1401, P.O. Box 6232, Havana, CUBA Tel: 332091, 332898

Czech/Slovak States (Prague)

Embassy of the Fed. Rep. of Nigeria Plantanenstrasse 1100, Berlin, 98A GERMANY Tel: 4828322, 4772300-1

Ghana (Accra)

Embassy of the Fed. Rep. of Nigeria Pred Baturiemi 18, 16201 Prague 616, CZECH/SLOVAK STATES Tel: 24312065, 24312104, 24312108

Nigerian High Commission Joseph Broz Tito Avenue, Behind Police Headquarters, P.O. Box 154, Accra, GHANA Tel: 776158-9

Egypt (Cairo)

Guinea (Conakry)

Embassy of the Fed. Rep. of Nigeria 13 Sharia Gabalaye Zamaiek,

Embassy of the Fed. Rep. of Nigeria B.P. 54, Conakry,

Invest in NIGERIA 2012-13

Embassy of the Fed. Rep. of Nigeria 56 Leesen Park, Dublin 6, IRELAND Tel: 682652, 604366, 604051, 604605

Italy (Rome) Embassy of the Fed. Rep. of Nigeria Via Orazio, 16/18 00193-Rome, ITALY Tel: 6878450, 6876720, 6897048

Japan (Tokyo) Embassy of the Fed. Rep. of Nigeria 19-7, Vchora 2-Chome, Shibuya-Ku, Tokyo, JAPAN Tel: 468-5531-3

Kenya (Nairobi) Nigerian High Commission Lenana Road, P.O. Box 30516 Nairobi, KENYA Tel: 565743, 564116/8

Indonesia (Jakarta) Embassy of the Fed. Rep. of Nigeria 34 Jalan Aipon Coro, P.O. Box 3649, Jakarta INDONESIA Tel: 62-2 1326686, 3404903

Germany (Berlin) Cuba (Havana)

Ireland (Dublin)

Iran (Tehran) Embassy of the Fed. Rep. of Nigeria 31st Street, 9, Khaled IstAmbul Avenue, P.O. Box 2736, Tehran, IRAN Tel: 684935, 684936, 684921

Iraq (Baghdad) Embassy of the Fed. Rep. of Nigeria Area 603, Lane 3, House 2, AI-Mutanabi District, Mansour, P.O. Box 5933, Baghdad, IRAQ Tel: 5421750

Kuwait (Hawally) Embassy of the Fed. Rep. of Nigeria Area No. 1 St. 14, Plot 166, Surra. P.O. Box 6432, 32039 Hawally, KUWAIT Tel: 5320794, 5320795, 5320831

Liberia (Monrovia) Embassy of the Fed. Rep. of Nigeria Tubman Boulevard, Sinkor, P.O. Box 366, Monrovia, LIBERIA Tel: 261148, 261020, 224478

Libya (Tripoli) Embassy of the Fed. Rep. of Nigeria Sharra Basir El-lbrahim Garden City, P.O. Box 4417, Tripoli, LIBYA Tel: 00210-21-43033, 80-43035, 43036, 44-43035-6, 44-43038

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Mali (Bamako) Embassy of the Fed. Rep. of Nigeria Badlabougou East, P.O. Box 57, Bamako, REPUBLIC OF MALI Tel: 225771, 227368

Mauritania (Nouakchott) Embassy of the Fed. Rep. of Nigeria B.P. 367, Nouakchott, MAURITANIA Tel: 52314, 52304, 52346

Morocco (Agdat Rabat) Embassy of the Fed. Rep. of Nigeria 70 Ave. Omar. lbn EI. Khattab Agdat Rabat, MOROCCO Tel: 71856/71857

Mozambique (Maputo) Embassy of the Fed. Rep. of Nigeria 22 Ave. Kenneth Kaunda P.O. Box 4693, Maputo, MOZAMBIQUE Tel: 490574, 492457

Namibia (Windhoek) Nigerian High Commission P.O. Box 23547, Windhoek, NAMIBIA Tel: 232103/5

Netherlands (The Hague) Embassy of the Fed. Rep. of Nigeria Wage Neaareg 5, The Hague, NETHERLANDS Tel: 07-3501703, 3548579 Email: nigembassy@nigerianembassy.nl

Niger (Niamey) Embassy of the Fed. Rep. of Nigeria Quarter Niamey Bas, B.P. 11-130, Niamey, NIGER REPUBLIC Tel: 732207, 732410, 732795

North Korea (Pyongyang) Embassy of the Fed. Rep. of Nigeria P.O. Box 535, Pyongyang, NORTH KOREA Tel: 747748, 817286, 817558

Pakistan (Islamabad) High Commission of Nigeria House 6, St. 22 Sector F.6/2 P.O. Box 1075, Islamabad PAKISTAN Tel: 822466, 212465-6

Philippines (Manila) Embassy of the Fed. Rep. of Nigeria 211 Paraico Street, Dasmarinas Village, MCC, P.O. Box 2170, Makati, Metro Manila, PHILIPPINES Tel: 8173851/2, 8173837 Email: embassy@nigeriamanila.org

Poland (Warsaw) Embassy of the Fed. Rep. of Nigeria Ul Chocimska 18, 00791 Warsaw POLAND Tel: 0048.22-486944, 485308, 485309

Portugal (Lisbon) Embassy of the Fed. Rep. of Nigeria Rua Femao Mendes Pinto 50, Restelo, 1400, Lisbon PORTUGAL Tel: 3016191, 3016189, 3016439

Qatar (Doha) Embassy of the Fed. Rep. of Nigeria Doha, QATAR Tel: 732479

Democratic Republic of the Congo (Brazzaville) Embassy of the Fed. Rep. of Nigeria 11 Avenue lyavcey B.P. 790, Brazzaville DEMOCRATIC REPUBLIC OF THE CONGO Tel: 833846, 831316, 832749

Romania (Bucharest) Embassy of the Fed. Rep. of Nigeria Strada Orlando MR 9, P.O. Box 37, Bucharest, ROMANIA Tel: 504180-8, 502465

Russia (Moscow) Embassy of the Rep. of Nigeria Ul Kachalova 13, Moscow, RUSSIA Tel: 2903785-7, 2001246 Email: nigeriamosco@glaw.apc.org

Saudi Arabia (Jeddah) Consulate-General of Nigeria 19 AI-Oroubah Street, 46, Mushrefan District 6, P.O. Box 655, Jeddah, SAUDI ARABIA Tel: 9662-6727662, 6716865, 6702886

Saudi Arabia (Riyadh) Embassy of the Fed. Rep. of Nigeria Riyadh 11893, Sulaimagjyah District Riyadh, SAUDI ARABIA Tel: 4823024, 4823982, 4655411

Senegal (Dakar) Embassy of the Fed. Rep. of Nigeria Point FC. Rue 1 & F9 B.P. 3129, Dakar, SENEGAL Tel: 24.69.22, 21.43.97

Sierra Leone (Freetown) Nigerian High Commission 37 Siaka Stevens Street, PMB. 291, Freetown, SIERRA LEONE Tel: 24202, 24219, 22474, 22074, 22234

Somalia (Mogadishu) Embassy of the Fed. Rep. of Nigeria Kilometre 5, P.O. Box 980, Mogadishu, SOMALIA Tel: (252) 2489, 3621

Spain (Madrid) Embassy of the Fed. Rep. of Nigeria Cale Seare 23,

Madrid 28002, SPAIN Tel: 5633144, 5630911, 5630971

Sweden (Stockholm) Embassy of the Fed. Rep. of Nigeria Tyrgatan 8, P.O. Box 628, 11427, Stockholm, SWEDEN Tel: 08-246390, 204575

Switzerland (Geneva) Embassy of the Fed. Rep. of Nigeria, 1 Rue Richard Wagner, 1211 Geneva 2, SWITZERLAND Tel: 022-7342140, 7342149

Tanzania (Dar-es-Salaam) Nigerian High Commission Liberation Office, 3 Bagamayo Road, P.O. Box 9214, B.P. 1767, Dar-es-Salaam, TANZANIA Tel: 34493, 34440, 34923, 66600/1

Togo (Lome) Embassy of the Fed. Rep. of Nigeria 311 Boulevard Coreculaire, B.P. 1189, Lome, TOGO Tel: 21 34 55, 21 60 25

Trinidad & Tobago (Port of Spain) Nigerian High Commission 3 Maxwell-Philip Str., St. Clair, PMB. 140, Newtown, Port of Spain TRINIDAD & TOBAGO Tel: 6282806, 6224002, 6226834

United Kingdom (London) Nigerian High Commission 9 Northumberland Avenue London WC2N 5BX, UNITED KINGDOM Tel: 020 7839 1244, 7839 2037, 7839 6190 Email: hc@nigeriahc.org.uk Invest in NIGERIA 2012-13

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United States of America (New York)

United States of America (Washington DC)

Permanent Mission of Nigeria to the United Nations, 828 Second Ave., New York, NY 10017, UNITED STATES OF AMERICA Tel: 212-9539130, 5577465

Embassy of the Fed. Rep. of Nigeria 2201 M. Street,

Venezuela (Caracas)

Zambia (Lusaka)

Embassy of the Fed. Rep. of Nigeria Av Chivacoa, Qta Blanca Luz, San Roman, Caracas, VENEZUELA Tel: 2684936, 2634816

Nigerian High Commission, 17 Broads Road, Fairview, P.O. Box 32598, Lusaka, ZAMBIA Tel: 229860-2, 253177 Fax: 223791

Serbia (Belgrade)

Zimbabwe (Harare)

Embassy of the Fed. Rep. of Nigeria Gersi CEVA 14A, P.O. Box 1021, 1100, Belgrade, SERBIA Tel: 413-329, 413-411

Nigerian High Commission, 36 Samora Machel Avenue, Harare, ZIMBABWE Tel: 790761, 790763, 790765-9

NW Washington DC 20037, UNITED STATES OF AMERICA Tel: 202-8221500, 8221513, 7751385/6 Website: www.nigeriaembassyusa.org Email: info@nigeriaembassyusa.org

Trade organisations Official trade organisations and industry groups operating in Nigeria Nigerian British Chamber of Commerce Olubunmi Owa Street, Off Admiralty Way, Lekki Phase 1, Lagos Tel: +234 1 8209173-4 Website:www.nbccng.net E-mail: nbcofc@yahoo.com

Nigeria-USA Chamber of Commerce 4 Ikot-Ekpene Close, Area II Off Emeka Anyoku Street, Gariki, Abuja, Nigeria

Tel: +234 80 33138471 Website: www.nusacc.us Email: info@nusacc.us

Tel:: +234 1 2701548, +234 1 2701549 Website: www.ngba-africa.org Email: info@ngba-africa.org

The Nigerian-German Business Association and the Delegation of German Industry and Commerce in Nigeria

International Chamber of Commerce Nigeria

National airline

NECA House, 1st Floor, A2 Hakeem Balogun Way Central Business District Alausa, Ikeja, Lagos, Nigeria Tel: +234 1 7742734, 7746352 Website: www.iccng.org Email: bunmi@iccng.org

Air Nigeria Tel: +234 1 271 1111 Website: www.myairnigeria.com Domestic destinations: Abuja Kano Sokoto Enugu Owerri Port-Harcourt

148 Younis Bashorun Street (Off Ajose Adeogun St), Victoria Island Extension Lagos, Nigeria

Chair: Babatunde Abayomi Savage Vice Chairs: Raymond Ihyembe, Martin Woolnough Secretary General: Olubunmi Osuntuyi

Tourist attractions and cultural festivals Awe-inspiring beaches, gushing springs and an array of impressive wildlife makes Nigeria an essential place to visit for nature enthusiasts and relaxation-seekers alike Obudu Mountain Resort Address: Obudu Mountain Resort, Obanliku Local Government Area, Cross River State, Nigeria Tel: +234 708 923 1815 The Obudu Mountain Resort in Cross River State is 5,200 feet above sea level, nestled in the Oshie Ridge of the Invest in NIGERIA 2012-13

Sankwala Mountains, and boasts Africa’s longest cable car. Situated in an area brimming with natural beauty, the resort offers unique accomodation in the form of African round huts and mountain chalets, and comprises canopy forest walks, a water park and a golf course. It is located near Agbokim waterfalls and Kwa rapids, and Nollywood Studios are also close by.

Yankari Game Reserve Address: Wikki Camp, Yankari, Bauchi, Bauchi, Nigeria Tel: +234 7743 674 The Yankari Game Reserve in Bauchi State covers an area of 2,244 sq km and is home to an impressive array of wildlife. As well as more than 50 species of animals, the Wikki Warm Springs are

found here – a collection of four natural warm-water springs heated by underground geothermal activity. There is also a “Wikki Camp” where tourists can stay in chalets located near to the springs. The Game Reserve boasts the largest elephant population in West Africa, although catching a glimpse can be a challenge due to the dense vegetation. With almost 60 caves and

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Kalban Hill – where from the top visitors can observe the whole park – the reserve is a popular destination for explorers and wildlife enthusiasts.

are available. Open December until June, the park boasts a wealth of wildlife and birdlife, with many tourists coming with the hope of spotting the elusive ‘Big Five’.

Cross River National Park

Ikogosi Warm Springs

Address: PO Box 149, Calabar, Cross River, Nigeria Tel: +234 8722 1694

Address: Ikogosi Ekiti, Ado Ekiti, Bkiti, Nigeria Tel: +234 0132 1563-4

The Cross River National Park is 4,000 sq km of sprawling tropical rainforest and mangrove swamps. Containing the last remaining rainforest in Nigeria, which is being preserved with the help of the Nigerian Conservation Foundation, the park is a biodiversity hotspot that is home to several rare species of primate and, among other animal species, elephants, lowland gorillas, buffalo and leopards.

Ikogosi Warm Springs in Ekiti State are said to be a geological wonder. From the same rock formation flow two springs – one warm and one cold. This spring is one of just eight of its kind in the world, and the surrounding area has been left untouched, allowing it to retain its natural beauty and aiding the mythical stories around the spring’s formation.

Coconut Beach, Tarkwa Bay and Calabar Beach

Lake Kainji National Park Address: PMB. 1372, New Bussa, Niger, Nigeria Tel: +234 3167 0036 The Lake Kainji National Park is the largest in West Africa, incorporating the Borgu Game Reserve and the Zugurma Game Reserve. Lake Kainji itself is 136km long, and tours of the Kainji dam

These waterside locations in Lagos State are places of astounding tranquillity and beauty, encouraging relaxation in tropical surroundings. Nigeria has more than 700km of sandy beaches, meaning that many offer privacy and peace. Coconut Beach gets its name from the coconut trees that encircle the sand, while Tarkwa Bay offers a livlier atmosphere with a younger crowd. Calabar Beach in Cross

River State is virtually uninhabited, and this isolation in an awe-inspiring setting allows visitors luxury and privacy at the mouth of the Calabar River.

Durbar festival The annual Durbar festival in Kano State is celebrated during the religious periods of Eid al-Mubarak and Eid al-Fitr Salah. Prayers are followed by an impressive parade of the Emir Alhaji Ado Bayero and his horses – a tradition that dates back more than 150 years. The five-day festival fills the air with a cacophony of beating drums, wailing pipes and the rhythmic footsteps of hundreds of dancers in a cultural celebration of religion and an homage to the Emir.

Argungu Fishing Festival The Argungu Fishing Festival in Kebbi State draws visitors from far and wide who flock to watch the four-day cultural event in the north-west of Nigeria – one that is truly unique and that many testify needs to be witnessed at first hand. On the final day of the festival, and at the sound of a gun, thousands of fisherman leap into the Matan Fada river in an hourlong competition to catch the biggest fish. The winner often walks away with a substantial cash prize, having caught the

winning fish using traditional fishing tools, although many of the competitors prefer to catch the fish by hand to showcase their hunting capabilities. The festival marks the state of peace between the former Sokoto Caliphate and the Kebbi Kingdom, who fought for centuries prior to the arrival of the British.

Eyo Festival The Eyo Festival in Lagos State is only held once every four to eight years, yet it is widely believed that the atmosphere rivals that of Rio Carnival. On Eyo day, the people pay homage to the Oba of Lagos whenever the occasion demands, although the festival is usually held as the final burial rites. Dancers and musicians depict the history and culture of Lagos State’s indigenous people in a celebration that has come to be internationally acclaimed.

New Yam Festival The New Yam Festival, which takes place at the end of the rainy season across the entire Eastern Region, is an annual harvest festival. Symbolic of the abundance of yams, on the day of the festival only dishes of yam are served. Folk dances, parades and masquerades are some of the festivities used to celebrate the season of cultivation.

Facts and figures Useful information about Nigeria Major public holidays in Nigeria On special occasions, the federal government may declare public holidays:

Capital: Abuja Largest city: Lagos Official language: English Recognised national languages: Hausa, Igbo, Yoruba Currency: Naira (₦) (NGN) Time zone: WAT (UTC+1); summer (DST) (UTC+1) Drives on the right Calling code: +234

New Year’s Day Eid al-Fitr Eid al-Kabir Hajire (New Year) Good Friday Easter Monday

Workers’ Day Children’s Day Id-El-Maulud National Day (1 October) Christmas Day Boxing Day

Population 2012 estimate: 170,123,740 GDP (2011 estimate):

Total: $413,402 billion Per capita: $2,578 Invest in NIGERIA 2012-13

169

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Invest in NIGERIA 2012-13

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