Investment Opportunities in Nigeria.pptx 07Jan12 1204hrs_MB

7/31/2019 Investment Opportunities in Nigeria.pptx 07Jan12 1204hrs_MB

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Investment Opportunities in Nigeria

December 2011


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Outline Country Overview

Sectoral Investment Opportunities

Mining

Construction

Agriculture

Conclusion


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COUNTRY OVERVIEW

Nigeria, Africa's most populous country, is composed of more than 250ethnic groups

BENCHMARK POSITION

INDEPENDENCE OCT 1ST 1960

GOVERNMENT Presidential Federal republic

TOTAL AREA 923,768 sq km. slightly more than twice the size

of California

POPULATION 155,215,573 (July 2011 est.)

LABOUR FORCE 50.48 million (2010 est.)

GDP COMPOSITION BYSECTOR

Agriculture: 40%, Industry: 32%, Services: 38%(2010 est.)

LABOUR FORCE BYCOMPOSITION

Agriculture: 70%, Industry: 10%, Services: 20%(1999 est.


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COUNTRY OVERVIEW../2The country is located in West Africa and shares land borders with theRepublic of Benin in the west, Chad and Cameroon in the east, and Nigerin the north

BENCHMARK POSITION

EXPORTS $73.7 billion (2010 est.)

IMPORTS $53.46 billion (2010 est.

EXPORT PARTNERS US 37.4%, India 10.5%, Brazil 7.8%, Spain 6.9%(2010)

IMPORT PARTNERS China 15.4%, Netherlands 9.7%, US 9.3%, France4.8%, UK 4.2% (2010)

EXPORT COMMODITIES Petroleum and petroleum products 95%, cocoa,rubber (2010)

IMPORT COMMODITIES Chemicals, Machinery, Transport Equipment,Manufactured Goods, Food and live animals


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Macroeconomic Indicators Snapshot

Source: Central Bank of Nigeria, Debt Management

Office Fitch World Bank Tradin economicsChart 5

Parameter Position Period

Inflation (%) 10.50 Nov - 2011

External Debt ($bn) 5.6 Nov - 2011

Domestic Debt (Ntrn) 6.8 Oct - 2011

Monetary Policy Rate (%) 12.00 Nov - 2011

Sovereign RatingFitch BB- (Stable) Oct - 2011

S&P B+ Nov - 2010

Unemployment Rate (%) 23.90 Oct - 2011

External Reserves (US$bn) 33.06 Nov - 2011

Current Account Balance ($bn) 13.20 Sep - 2011

GDP Growth Rate (%) 7.40 Oct - 2011

Ease of Doing Business Rank 120 of 187 Aug - 2011


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Government The key battle for the Federal Government will be the fuel subsidy removal debate Security and Terrorism issues will continue to be high on the 2012 agenda Wait and see attitude on corruption drive

The focus of the Jonathan administration is on economic development, investment and reform

Oil Sector 2012 Daily production target set at 2.4Million barrels daily US$75 per barrel price originally set, reduced to US$70 by Minister of Finance Private oil refinery (Orient Petroleum) to begin production

GDP 2012 GDP growth target is between 7 & 8% Gap between growth of potential GDP of 21.6% and real GDP growth of 6.3% to remain constant Non-oil exports such as agriculture likely to contribute positively to GDP

Inflation Nigeria needs fiscal discipline to help keep the inflation rate below 10 percent. Public sector wage increments and rising fiscal spending are likely drivers of inflation in 2012. IMF and World Bank projects higher inflation rates for the country World Bank projections for 2012 inflation is 9%

Currency Likely devaluation of Naira to pile pressure on neighboring CFA Franc, Ghanaian Cedi and alterregional trade dynamics

Equities

Market

Renewed interest in the market, driven by cheap valuations of and investors seeking investments

in alternative markets Increased pressure on telecoms companies to list may boost market activity Banks stocks likely to surge as they are currently undervalued based on current PE ratios

Source: Businessday, Reuters, African outlook online, Bloomberg

COUNTRY - 2012 OUTLOOK


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SECTORAL INVESTMENT OPPORTUNITIES


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Goldman Sachs in 2005 classified Nigeria as one of the Next 11 (N-11)emerging countries with potential of becoming the largest economiesafter the BRIC nations

In its bid to become one of the largest economies, the FederalGovernment of Nigeria is actively searching for strategic investors all overthe world

The Presidency has established a Ministry of Trade & Investments (T & I)to strategically coordinate economic affairs of the country

T&I Ministry targets a N34Tr investment in growth areas over 4 years asfollows:

Private sector : N15tr FGN: N10tr State Governments: N9tr

Seven target growth sectors are agriculture, water resources, solidminerals, manufacturing, oil and gas, trade and commerce as well asculture and tourism

ECONOMY GROWTH OPPORTUNITIES

Source: www.panafricancapital.com; IMF Regional Economic Outlook, October 2010www.gs.com, Chart 8


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Sectoral highlights

Source: National Bureau of Statistics Nigeria 2010, Renaissance

Capital Report, May 2011 Report Chart 9

0

2

4

6

8

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Sectoral Contribution to GDP

Agriculture accounts

for approximately 40%

of Nigerias economy

whilst oil & gas, and

wholesale & retail

trade sectors account

for 20% respectively The agriculture sector

is seen as an area of

potential growth


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Comments:

Federal Government is activelypromoting the Agriculture

Transformation Strategy to create

new markets for farmers

Ban on rice importation will boost

domestic production

Nigeria imports US$3bn worth of

rice annually Federal Government emphasised

food security and self-sufficiency

Policy is targeted at reducingSource: USAID, Businessday

2012 SECTOR OVERVIEW: AGRICULTURE


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2012 AGRICULTURE OPPORTUNITIES

Possible Opportunities: Partner with existing players to

redirect capital to local production

in anticipation of ban

implementation

Target players in fruit sub-sector,

local producers and their

distributors

Identify and target the majorplayers in cattle distribution

Target Quick Service Restaurants

suppliers

Target farming cooperatives and


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Nigeria possesses more than 34 mineral types distributed at more than

450 locations across the country Significant opportunities exist to exploit the known reserves of gold,tantalite, lead, zinc and bitumen plus a range of industrial minerals

MINING


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MINING REQUIREMENTS

Nigeria possesses more than 34 mineral types distributed at more than450 locations across the country

Significant opportunities exist to exploit the known reserves of gold,tantalite, lead, zinc and bitumen plus a range of industrial minerals


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For mining investors willing to become development partners

with the Government, some available incentives already in theform of rebates on infrastructure spending in rural areas are:

INCENTIVES

INFRASTRUCTURE INCENTIVE

1 No electricity 10%

2 No water 30%

3 No tarred roads 15%

4 No telephone 5%5 No electricity, water and

tarred roads100%


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For mining investors willing to become development partnerswith the Government, some available incentives already in the

form of rebates on infrastructure spending in rural areas are:

FISCAL REGIME FOR MINING

TAX METHOD INDUSTRYSTANDARD

ROYALTY/TAX SYSTEM

Level of royalty 1-3% Compared with industry standard of 0-5%, the royalty is relatively low andattractive

Availability of tax

holidays

No Loss carried forward

Accelerateddepreciation

Yes 100% on capital investment in yearincurred


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FISCAL REGIME FOR MINING../2

TAX METHOD INDUSTRYSTANDARD

ROYALTY/TAX SYSTEM

Deduction ofexploration/othercosts

Yes 100% on recovery allowed in yearincurred

Remittance of profitsand dividends

Yes 100% allowed

Corporate tax Low at 20-30%of net profit

Industry standard is 15-35% oftaxable income

Currency conversion Yes On total profit

Exemption fromcustom duties

Yes On agreed list of miningequipment

Capital gain tax Yes, at 10% Industry standard is 5-15%


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INVESTORS KEY INTERFACE DEPARTMENTS


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INVESTORS KEY INTERFACE DEPARTMENTS../2


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Under the provisions of the law, the right to search for orexploit mineral resources in Nigeria is obtained through one of

the following mineral titles

MINERAL TITLE


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INDUSTRY

Investment Opportunities in Nigeria.pptx 07Jan12 1204hrs_MB

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