News / Africa

    Nigeria Attractive to Investors Despite Challenges, Says Official

    Peter Clottey

    Nigeria’s Industry, Trade and Investment Minister says there is a strong appetite for both local and international businesses to invest in the West African nation’s economy, despite the security challenges the country faces.

    Olusegun Olutoyin Aganga said recent measures, including subsidies and incentives, have created a business-friendly environment that is attracting investors. He said the move is part of the administration’s bid to create jobs for the country’s youth.                                                           

    Aganga outlined some of the opportunities and the country’s potential, which he says attract global businesses to invest in Africa’s biggest economy.

    “The investment appetite is huge and that is driven by many opportunities in the country [and] it’s also driven by the level of return on investment…with an average return of 35.5 percent that concurs with global average of 6%” said Aganga.

    “The second major driver is the strong macro-economic environment. We are talking about a country that has consistently averaged growth [rate of] about seven percent over the last 10 years. A country when you look at the debt to GDP ratio is only about 12 percent,” said Aganga. “When you look at the exchange rate, it has been stable over a long period of time. When you look at inflation, it’s roughly about eight percent now.”

    Nigeria has been able to deliver about 35 percent to the country’s capital market in 2012, and 45 percent in 2013, according to Aganga. 

    He said President Goodluck Jonathan’s administration is addressing some of the challenges businesses face, which he says boosts both local and international investment in the country.

    “This particular government has a number of transformational policies that are actually encouraging investors to come into different sectors of the economy,” said Aganga.

    He said the West African nation has in abundance the ingredients that attract investors’ needs, including capital, technical know-how, raw materials and a market to sell their products.

    “When all four come together, you definitely make huge returns for your shareholders. Capital and technical know-how, you can move anywhere in the world,” said Aganga.

    Some analysts say the country’s well documented erratic electrical power challenges will undermine the administration’s efforts to attract private investors. They also said the lack of power makes the cost of producing goods and services expensive.

    Aganga admits the electrical power generation difficulties but adds that the administration has taken steps, including privatizing power generation and distribution, to improve nationwide electricity power supply.

    “Yes, it curtails investments, but when you look at the history [businesses] have been operating in this country for decades and the return on investment remains as high as 35 percent. So what that tells you is that there are ways around that which the bigger companies have gone around that,” said Aganga.

    “Yes, the lack of power makes the cost of production higher, but that is made up for by government incentives, which [are] very generous to investors, because of the cost of labor, and raw material which is quite low and the market so that offsets that,” said Aganga.

    Some critics say the privatization of the power sector is ill advised, arguing that the selling of government assets is unlikely to improve power supply. Aganga disagreed.

    “Yes, we have sold our assets, realized over $3 billion, but that is not the story. The story is that it has opened the door for the private sector to drive that and today we have aggregate pipeline investment of more than a $100 billion coming to that sector,” said Aganga.

    “So we will see a gradual increase in power production…Over the next three to five years you will see a significant increase because of the level of investment going to power,” said Aganga. “Again we are not just relying on gas supply we are looking at alternative sources of power. This government has made this bold decision, which is paying off and it will not be the same country in four to five years.”

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    Comments
         
    by: Joe from: Outside Nigeria
    August 02, 2014 11:35 AM
    Well present interview with excellent response by the minister of trade and planning Mr Segun Aganga. The present administration had proved to the country and the world the country can be transform to become investment / economic hotspot of the continent. How we wish 30plus military rule achieved half of what the present administration so far achieved in less than7years of office. Therefore Nigerians should stand by the administration to actualize the full plan the administration has for the country. Lastly, GEJ lead administration not wary, fail nor faulter ,and should continues the good work for the country and making sure no political,ethnicity,selfish interest is superior to national interest.Nigeria ispoised to rewrite her history.

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