Investment opportunities in Nigeria

Nigeria is a mixed, middle-income, emerging market economy characterized by expanding manufacturing, agriculture, oil and gas, and solid minerals sectors. Other dynamic sectors of the state's economy include communications, information technology, tourism, services and much more.

Information and communication technologies (ICT)

The application of information and communication technologies (ICT) in various sectors of the economy is radically changing the pace of development in Nigeria. The government has focused on effective e-governance through key initiatives such as connected government, informed citizenship and open data. Through various electronic platforms, Nigeria's ICT network has revolutionized business transactions by providing a mobile-first population with seamless ability to bank, invest, buy, distribute, communicate and research anytime and anywhere with access to the Internet. . There is an opportunity for public-private partnerships to attract investment in quality infrastructure facilities and services in this sector. Indeed, the information, communications and technology (ICT) industry presents attractive investment opportunities for both local and foreign investors.

Industry

Nigeria is an excellent destination for diversified industrial activities due to the availability of natural resources, affordable labor costs and a large market. Its manufacturing sector is reviving, thanks in large part to improved performance in consumer goods and household goods. It produces most of the goods and services for the West African subcontinent.

Oil and gas industry

Oil, natural gas and other related products account for 90% of total exports and more than 80% of government revenues. The country produces an average of 2.5 million barrels of crude oil per day, making it the largest producer in Africa and the sixth largest in the world. In terms of oil export volumes, Nigeria ranks 8th in the world.

Nigeria's oil and gas sector is regulated under the Petroleum Industry Act. The country is a member of the Organization of Petroleum Exporting Countries (OPEC). The largest international oil companies (IOCs) currently operating in the country include: Total, Chevron, ExxonMobil, Elf, Shell, ConocoPhillips, Lukoil, Gazprom and Eni. They are collectively responsible for more than 45% of Nigeria's oil production and 40% of its gas sales. However, despite the profitability of their Nigerian assets, international oil companies are under increasing pressure from shareholders to accelerate energy transition strategies. They are realigning their global portfolios towards lower-emitting operations and divesting non-core assets.

Automotive industry

Being a fast-growing middle-class economy, Nigeria is definitely an excellent choice for the automotive sector. To harness its potential, the government announced a new national automobile policy — National Automotive Industry Development Plan (NAIDP), which aims to curb vehicle imports and encourage local production. The National Automotive Design and Development Council (NADDC) is committed to ensuring timely implementation of the policy provisions within its mandate. Investment incentives include pioneer status (tax holiday) granted for 3 years with the possibility of extension for a further two years, 100% repatriation of profits after taxes, unlimited capital allowance provided in full, and an Investment Promotion and Protection Agreement that helps guarantee the security of the investments of the contracting parties in the event of war, revolution, expropriation or nationalization.

Textile industry

The textile, clothing and footwear industries account for about 2% of the national GDP. The textile industry was previously ranked as the second largest in Africa after Egypt, with more than 250 factories operating at over 50% installed capacity. At its peak, the industry averaged annual growth of 67%, and the manufacturing subsector employed approximately 25% of the workforce. It is estimated that the industry is currently capable of producing about 1.4 billion different units of textile products. To this end, several initiatives have been taken to modernize the textile industry in Nigeria.

Hard minerals

The commercial value of Nigeria's solid minerals is estimated at hundreds of trillions of dollars. It has also been estimated that Nigeria loses about $40 billion annually due to unmined gold alone. The domestic mining industry is underdeveloped and currently accounts for only 0.5% of Nigeria's GDP. With the global decline in oil prices, Nigeria is seeking to diversify its economy by building a stronger revenue base, which will require a stronger performance of the solid minerals sector. Their deposits are scattered throughout the country. These include: lead-zinc ores, tin, niobium, lead, gypsum, limestone, manganese, magnesite, coal, wolframite, silver, diatomite, limonite, rutile, kyanite, clay, columbite, mica, barite, pyrite, galena, chloride sodium, sphalerite, quartz sand, granites, tantalite, sphalerite, talc, quartz, marble, heliodor, precious stones (tourmaline, aquamarine and sapphire), chalcopyrite, topaz, tantalite, emerald, amethyst, coking coal, iron ore, kaolin, calcite , copper, ore, beryl, gold, garnet and bismuth. These minerals are mined all over the country, but Nasarawa State in the north is considered the birthplace of solid minerals in Nigeria as it has a greater number of deposits.

Investment opportunities in this area include exploration and mining. As part of the sector reform strategy, the Ministry of Solid Minerals Development (MSMD) has identified seven strategic minerals namely coal, bitumen, limestone, iron ore, barites, gold and lead/zinc for priority development. Nigerian coal is recognized as suitable for use as boiler fuel, high-energy gas production, domestic heating, briquettes, molded coke and the production of a wide range of chemicals including waxes, resins, adhesives and dyes. Coal can be found in the central, middle eastern and south eastern regions of the country (Anambra, Kogi, Plateau, Benue and Enugu states). Preliminary estimates place total reserves in these regions at 396 million metric tons, while unproven reserves are estimated at approximately 1.134 million metric tons.

There are also a large number of investment opportunities in the processing of solid minerals. These include the lack of processing capacity in Nigeria. You can also invest in equipment sales and rentals, as mining in Nigeria is a growing industry and the demand for the necessary equipment will increase. There are currently very few players in this market, which opens up a lot of opportunities for investors. Regarding the sale of mineral ores, there is a ready local and international market for mineral ores. The international market is mainly controlled by China and can bring high returns to the investor.

Consulting services are also in demand in this sector. Opportunities exist for professionals with acquired experience in the mining industry. Services such as geological surveys, preparation of a feasibility study, provision of deposits and licenses, purchase of equipment, export contract for cooking processing and others can be provided here. There are also opportunities for business consulting and other consulting.

Electricity

With a population of over 200 million and a population growth rate of 2.7% per year, the demand for electricity in Nigeria can only be expected to grow. An estimated 55% of the Nigerian population does not have access to grid-connected electricity. Nigeria currently has an installed power generation capacity of 12,522 megawatts, of which 10,592 megawatts are gas-fired and 1,930 megawatts — at hydroelectric power plants. However, the maximum peak generation so far has been around 5,074 megawatts. Nigerians produce a significant portion of their own electricity, which costs twice as much as electricity from the grid. Nigeria's power sector continues to require significant investment as its utility-scale power generation capacity continues to fall short of domestic demand. In an attempt to address this problem, back in 2005, the Nigerian government privatized the generation and distribution stages of the electricity value chain, retaining only a minority stake. Today, the authorities are  very interested in reforming the energy sector, with the Minister of Energy indicating that the government is seeking partnerships with private parties to facilitate investment in the energy sector.

There are also opportunities to invest in off-grid or 'mini-grid' solutions, which typically supply rural areas, industrial clusters and residential developments. It is estimated that about 42% of Nigerian businesses generate their own electricity to augment the national grid. In terms of electricity distribution, given the fact that electricity consumption is expected to be four to five times greater than today, Nigeria also has a number of opportunities at the distribution stage of the electricity value chain. The Federal Government has no direct involvement in Nigeria's distribution companies, popularly known as “distribution companies” — there is a ready market for Nigerians who are willing to connect to the grid and pay for their electricity consumption. There are also opportunities in the production of tools and equipment for the energy sector. Most of the equipment is imported, which opens up opportunities for import substitution. Given Nigeria's large population combined with the savannah climate, large-scale investments in solar and renewable energy will provide lucrative dividends for investors.

Production

In a bid to diversify the economy, utilize the vast quantities of available raw materials and meet the needs of a huge and rapidly growing consumer population, the Federal Government of Nigeria has initiated a series of measures aimed at boosting the manufacturing sector. Nigeria's growing $150 billion consumer market and abundance of raw materials means the manufacturing sector has enormous potential for growth and could well become the next global manufacturing hub. It is clear that there are huge investment opportunities for investment in the manufacturing sector given Nigeria's strategic location surrounded by ECOWAS and ECCAS member states. Relatively cheap labor significantly reduces production costs, and a booming population provides a large customer base for industrial products.

Medicine

There is a huge market of Nigerians seeking high-quality healthcare with the necessary purchasing power. Although there are over 130 pharmaceutical companies operating in Nigeria, only 9 are listed on the stock exchange. Of the total drug consumption in Nigeria, local pharmaceutical companies are only able to meet about 45% of the drug demand. This opens up opportunities for import substitution. Investment opportunities include:

• specialized hospitals
• diagnostic and trauma centers
• ambulance services
• mobile clinics

Investment in this area is facilitated by competitive labor costs and abundant human capital. Nigeria has a young and dynamic population of over 70 million people aged between 15 and 35 years. Some of the incentives provided by the government in the healthcare sector also include:

• Pioneer status
• Tax incentives for research and development
• On-the-job training
• Minimal use of local raw materials
• Investment Promotion and Protection Agreement (IPPA)
• Capital allowance
• Local value added

The country's healthcare industry is attracting foreign investors who are improving the prospects for the healthcare industry. In addition, there is the possibility of entering into franchising agreements with certain global healthcare providers, under which a local company will become the sole local manufacturer of some world-renowned drugs and healthcare products.

Services

Nigeria is one of the most open services markets in Africa with an overall rating of 27.1 in the Services Trade Restrictions Index (STRI) published by the World Bank. In recent times, this sector has been satisfying pent-up consumer demand and serving a rapidly growing middle class. The growth of this sector, supported by government policies and increased private investment, has led to economic diversification. Services currently account for 53% of Nigeria's gross domestic product (GDP). The largest contribution to the service sector includes trade (16%), information and communications (12%), real estate (6%); professional, scientific and technical services (4%), and financial and insurance (3%). Foreign investors have ample opportunities to invest capital and increase their value.

Tourism

Nigeria — It is an undiscovered African paradise with long stretches of exotic beaches, towering mountains, well-preserved traditions and culture, and spectacular sights. The country is becoming a favorite destination for foreign tourists. There are several reasons for this, the most important of which are the hospitable people of the country, as well as the government's recent success in providing infrastructure.

One of the main aspects of the Nigerian heritage is that it offers an amazing spectacle of the traditional Nigerian way of life and its various aspects, well preserved through monuments. It is a multicultural society, speaking more than 250 languages.

The country also hosts a huge number of different festivals. From Argungu Fishing Festival to Osun Osogbo Festival, Abuja Carnival, Calabar Christmas Carnival, Cross Rivers State Carnival, Eyo Festival, Ige Festival, Ojude Oba Festival, Badagry Festival, Durba Festival — Almost every state in the country hosts some kind of cultural event.

Protected areas such as Cross River National Park and Yankari Wildlife Sanctuary offer rare primate habitat and unparalleled scenic beauty. One of the most striking sites is Zuma Rock, a 725-meter-tall monolith near the capital Abuja, which features images of the national currency.

Tourists can also visit Nigeria's largest wildlife reserve — Yankari in Bauchi State in northeastern Nigeria. The country also has the Lekki Conservation Center — one of the best reserves located in the former capital of the country, Lagos. The conservation center is administered and managed by the Nigerian Conservation Foundation (NCF). It is a flagship project for the conservation of the unique biodiversity, scenic, natural and scientific recreational values of the coastal areas of western Nigeria.