Nigeria Summit: Transforming potential into profit Event Summary

This year’s summit in Abuja focused on what is needed to transform Nigeria’s extensive potential into actual profit. The need for implementation of policies – rather than policy changes – was a recurrent theme in all the sessions, as was the major constraint of inadequate power supply. The World in 2012 Central Bank Governor Sanusi Lamido Sanusi stressed the need to spread the wealth from Nigeria’s oil revenues in order to overcome the economic disenfranchisement that underlies sporadic – but increasingly violent – unrest. Mr Sanusi highlighted the importance of mobile banking, which is not yet established in Nigeria, as a way to improve the lot of those engaged in agriculture. Government also needs to trim excessive spending on salaries so as to free up more resources for investment in infrastructure. Restructuring the nation’s finances Nigeria’s new Minister of Finance, Ngozi Okonjo-Iweala, focussed on the government’s determination to make change happen, citing specific examples of concrete plans that are underway, such as a new programme to support young entrepreneurs that has been launched in partnership with Lagos Business School and the publication of state and federal revenues in local newspapers to develop transparency. Emphasising Nigeria’s strengths – the stable macro-economic environment, vast potential natural resources outside of the oil and gas sector, and President Jonathan’s strong leadership team – she also drew attention to areas where the government acknowledges its need for help: structuring public-private partnerships to raise investment in infrastructure and improve service delivery; reforming the education system; and – beyond Nigeria’s borders – cooperation from the international community to ensure that hiding places for illicit funds are flushed out. Ms Iweala, who recently resigned as Managing Director at the World Bank in order to take up her new post, was adamant that the political will to fight corruption is strong, despite the significant challenge of vested interests that have enjoyed the status quo for decades at the expense of ordinary people. As she put it, “Nigerians are tired of vision. They want action.” Reforming Nigeria’s business landscape Olusegun Olutoyin Aganga, Minister of Trade and Investment, was bullish in his appraisal of Nigeria’s potential, reminding delegates of the country’s 80m hectares of land, a resource base of 33 solid minerals in commercially viable quantities and the very size of the population, which is the largest in Africa and counts a relatively large middle-class by African standards. The government, said Mr Aganga, aims to provide the enabling environment that is needed to drive the economy forward. From revolutionising physical access to the country by facilitating the visa process and installing trade and investment desks at international airports to launching a crusade for governance – targeting government and businesses alike – Mr Aganga made it clear that the new administration intends to make changes that will outlive this term of office and break the cycle that has for so long paralysed Nigeria’s progress. “Implementation,” he said, “is key. And the quality of implementation. There are no new things to do. Everything is in place – it’s about execution.”

Spotlight on Nigeria’s film industry Two key issues that dominated the discussion of Nollywood by leading industry stakeholders were distribution and piracy. Nigeria’s film industry has really emerged against the odds, and government support is new. This might help the transition to the big screen, but improved distribution networks and action against counterfeit products are desperately needed if Nollywood is to take its place as the voice of Africa on the global entertainment stage. Reforming Nigeria’s oil, gas and electricity sectors The undersupply of electricity was a topic that emerged in every session. After decades of virtually no investment in the sector, Nigeria now faces acute power shortages. The privatisation process is painfully slow and a key issue that needs to be addressed separately is the low tariff – set by regulators below cost. Nigerian consumers – like consumers elsewhere – will face stiff price hikes once the true cost of producing and delivering electricity is factored in. However, with businesses claiming that power failures can make up 50% of operating costs, it is more likely to be households that would be hit hardest by better – if more expensive – supply. Other issues raised during the discussion included the need to leverage the country’s gas resources to fuel power stations, introduce pre-paid meters and ensure that renewable energy sources are part of the solution. Chinese investment in Nigeria: where does it go from here? The free trade zone that is currently under construction in Lekki dominated much of the discussion, with delegates expressing concern as to whether the policy would work this time given lacklustre results in Cross River State. Chen Hao Xing and Sola Owuru reassured attendees that the political will – from China, the Federal Government and the State of Lagos – will drive the success of the project. Predictably, delegates raised questions about the quality of construction as well as the extent to which Chinese investment is creating jobs for Africans, not just for Chinese workers. Both panellists maintained that Chinese investment creates a win-win situation for investors and recipients alike. China has an interest in producing close to markets and is facing serious wage inflation, enhancing the attractiveness of hiring local workers.