THE NIGERIAN INVESTMENT CLIMATE AND OPPORTUNITIES By

1. THE NIGERIAN INVESTMENT CLIMATE AND OPPORTUNITIES By ENGR. MUSTAFA BELLO EXECUTIVE SECRETARY/CEO NIGERIAN INVESTMENT PROMOTION COMMISSION

2. Outline • Basic Facts • Economic Performance • Economic Policy & Thrust • Investment Opportunities • Industrial Parks and Clusters • Factor Costs • Investment Incentives in Nigeria • Investment Promotion and Facilitation • What We do for Investors • Why Nigeria • Conclusion

5. BASIC FACTS • Large country – 923,768 square kilometres and population of about 140m • Potentially resource rich country and strategically located • 5 International Airports & 6 Seaports • Credit Risk Rating - BB- (Fitch, Standard & Poors) • Annual ROI - 35% - 45% (70 – 100% in some sectors) • GDP annual Growth - 7% (average)

6. ECONOMIC PERFORMANCE • Real-GDP growth averaged 7.3% during the last four years due to: • improved non-oil sector performance (average growth rate of 10.2%) • real GDP growth in the range of 7-7.5 is envisaged for 2008 • Inflation broadly at a single digit • Improved fiscal position and enhanced market confidence due to fiscal, monetary and banking reforms • More-strengthened external position: • low external debt • Foreign reserves at about US$59.16 billion (July 08)

7. ECONOMIC POLICY • Macro-economic stability. • Sustaining macroeconomic stability with emphasis on productive investment • Greater emphasis on careful planning • Ensuring consistency between annual budget and medium-term expenditure framework. • The Government’s strategy on infrastructure. • Estimated $40 billion investment is needed during the next six years to achieve the growth objectives of Vision 2020. • Government finance is inadequate. • Public Private Partnership (PPP) is essential. • The appropriate legal, regulatory and administrative frameworks are being put in place.

8. Policy Thrust of Government • Rule of Law anchored on Good Governance and driven by uncommon sense of service • Transparency and Accountability • Zero-Tolerancefor Corruption • Firm Support and Productive Partnership with Organized Private Sector/Investors • Commitment to creating enabling business environment and level playing field for all investors

9. Power/Energy Oil & Gas (extractive and non-extractive) Agriculture & Agro Allied Maritime, Shipping and Ports Solid Minerals Banking & Financial services Tourism / Hospitality Manufacturing Pharmaceuticals and Health services Information & Communication Technology (ICT) Industrial Parks and Clusters INVESTMENT OPPORTUNITIES

10. INVESTMENT OPPORTUNITIES - POWER • Privatization/Concessioning of Generation & Distribution companies • Expansion of the transmission grid by increasing wheeling capacity to 16,000mw • Expansion of Gas Transmission Infrastructure • Rehabilitation of existing plants (Thermal, Hydro etc) • Completion of NIPP Projects: Transmission, Generation, Distribution & Gas Pipelines estimated at $3billion

11. INVESTMENT OPPORTUNITIES - TRANSPORTATION ROAD: • Construction of Major Bridges on BOT • PPP of Major Highways on Design, Build, Maintain, Operate and Transfer (DBMOT) of Major economical viable routes • Total Asset Management of Some Core Network • Quarry and Asphalt Plant

12. INVESTMENT OPPORTUNITIES - TRANSPORTATION Railway: • Right of Way Concession • Passenger Coaches • Station building and operations • Branded Cargo lines (e.g. for oil companies, flour mills steel companies, cement companies etc • New Track Construction on BOT Basis • Inter-modal facilities (Road/Rail/Sea Port)

13. INVESTMENT OPPORTUNITIES - TRANSPORTATION Maritime and Ports: • Greenfield Port Development (Lagos, Port Harcourt and Warri) • Water Front Development/Inter-modal Jetties (Lagos and Calabar) • Port Infrastructure Expansion and Renewal • Dredging and Channel Maintenance • Inland Container Depots on BOOT • Development of River Ports for Inland Water Transportation • Greenfield Dockyard.

14. INVESTMENT OPPORTUNITIES - TRANSPORTATION Aviation: • Airport Terminal Concessions and Terminal Development on BOT • Runway Construction and Rehabilitation • Aircraft Maintenance Facilities • Aviation Security and Safety Infrastructure • Aviation Security and Safety Training • Integrated Airport Transportation System • In-Flight Catering Services and Infrastructure

15. INVESTMENT OPPORTUNITIES - AGRICULTURE contributes 40% to the GDP against 13 % for oil, (crop production accounts for about 85% of this total, livestock 10%, with remaining 5% made up by fisheries and forestry) Investment in dams and irrigation infrastructure development and rehabilitation to increase cropping hectarage and productivity Large scale factory driven agriculture in identified areas of crops, livestock and fisheries Investment opportunities exist in research & extension, mechanisation, input provision, agro-processing, storage & market development, biofuel Production & processing with a view to adding value to Rice, Sugar, Wheat, Cassava, Oil Palm etc

16. INVESTMENT OPPORTUNITIES – SOLID MINERALS • Mining now a Government priority • New investor friendly minerals policy • Mining Cadastre Office established • Opportunities: • Development of Bitumen in Nigeria • Exploration and Mechanized Coal/Lignite Production for various End Users in Nigeria & for Export • Reserve estimated at 15 billion barrels • Coverage 73 square kilometre • Exploration and Development of Barytes and Bentonite for the Oil Industry and Gypsum for the Cement Industry • Exploration and Development of Phosphate Resources for the Fertilizer Industry • Processing of Iron Ore

17. INVESTMENT OPPORTUNITIES – TOURISM • Nigeria’s Home Movie industry is the 3rd largest in the world • Estimated revenues from this industry in millions of US$ • Audience all over the world Opportunities: • Establishment of hotels and resorts near waterfalls, springs etc • Beach Tourism potentials in boating and sport fishing facilities • Heritage/Cultural Tourism Resources Development of slave trade relics • Wildlife Tourism Resources • Building of tourist lodges – Nigeria will host Football World Youth Championship in 2009 • Marketing/Distribution of Nigerian Films

18. INDUSTRIAL PARKS AND CLUSTERS • The Industrial Development Strategy is anchored on the Cluster Concept • Concept is an effort to create a community of businesses located together • This will enable Government to concentrate infrastructure and other facilities for smooth operation of identified businesses

19. …INDUSTRIAL PARKS AND CLUSTERS • Cluster Concept will operate at 5 different levels: FTZ, Industrial Parks, Industrial Clusters, Enterprise Zones and Incubators • More Free Trade Zones will be built across Nigeria to add to existing ones • Special Industrial Incentives in these Zones include Tax Levy, Duty Rebate, relaxed Foreign Exchange, no import/export licence, etc

20. …INDUSTRIAL PARKS AND CLUSTERS • Industrial Incentives for businesses in these parks include: - Tax rebates (0% import duty and VAT free on machinery/equipment) - Special duty on raw material (max 2%) - Low loan rate (max 4%) - No stamp duties on new capital/expansion - Training support, etc

21. FACTOR COSTS • Taxation:  - Company Income Tax 30% - Value Added Tax (VAT) 5% • Electricity: - Domestic 0.05 USD per KWhr - Industrial 0.28 USD per KWhr - Commercial 0.08 USD per KWhr • Telephone Rates: - Fixed Wireless 0.012 USD per second  - Cellular Pay As You Go 0.005 USD per second - Contract line 0.004 USD per second

22. FACTOR COSTS • Fuel & Gas: -DPK 0.7USD per litre   -AGO 0.80USD per litre -PMS 0.60USD per litre • Hotel Rates (4 & 5 Star) in Abuja and Lagos: -Presidential Suite 1000 USD per night -Double bed 500 USD per night -Single room 300 USD per night

23. FACTOR COSTS • Houses (Rent/Lease): -Residential Apartment 3,500USD - 5,000 per annum -Semi-Bungalow 6,600USD – 8,500USD per annum -Detached Bungalow 8,000USD and above per annum -Semi-detached Duplex 12,000USD and above per annum -Detached Duplex 12,500USD and above per annum

24. FACTOR COSTS • Business Premises: - Factory Size 80 – 100 USD per sqm - Office Space  40 – 80 USD per sqm - Warehouse  80 – 100 USD per sqm - Shop  40 – 80 USD per sqm • All Basic Costs/Factors Costs could be slightly higher or lower depending on location

25. Investment Incentives in Nigeria Statutory Incentives • Up to 5 years tax holiday – Pioneer Status * Capital Allowances: • Research & Development – use of local inputs – 140% • Investment in infrastructure 20% of costs • Minimum local raw materials utilization – 20% for 5 years • Very low VAT regime of 5%

26. Investment Promotion and Facilitation NIPC is the Government agency charged with responsibility to promote, co-ordinate and facilitate both foreign and domestic investments into Nigeria Core Functions: • Investment Generation • Investment Facilitation • Policy Advocacy Mission: ‘‘To Proactively Position and Promote Nigeria as the Preferred Investment Haven’’ Vision: ‘‘To be the Pre-eminent Investment Promotion Agency in the Emerging Markets’’

27. …Investment Promotion and Facilitation • Enabling Act No. 16 1995 • Major Features • Liberalization of the economy • 100% ownership of investment in any sector (except ones listed in the ‘negative list’) irrespective of nationality • Guarantee against nationalization or expropriation by any government of the Federation • Guarantee of unconditional transferability/repatriation of funds through an authorized dealer, in freely convertible currency • Supporting Act • Foreign Exchange (Monitoring and Miscellaneous Provision, Act No. 17, 1995) which liberalizes funds transfer

28. NIPC Mandates • NIPC provides Pre & Post -investment and after-care services to existing and prospective investors • Advises government on measures that ensure conducive business environment. We champion reforms aimed at creating an enabling business environment and support profitable business in Nigeria • Provides information on and focus its promotional campaign on sectors in which Nigeria possess comparative advantage • Granting of Business Permit and Registration of Foreign Investments and facilitating other business authorizations.

29. What we do for Investors • Arrange and facilitate meetings with relevant Government Agencies / State Governments in Nigeria • Arrange and coordinate site visits as part of pre- investment activities and post investment services • Provide prompt assistance to investors where they encounter problems • Advise / advocate for policy changes that favorably affects and support investments

30. Why Nigeria • The economic reforms have succeeded in reshaping the investment climate with tremendous inflow of FDI especially in telecoms, banking, manufacturing and agricultural sectors. • To clearly show that Nigeria is open for business • The One Stop Investment Centre(OSIC) established in the NIPC on the 20th of March, 2006 is reducing the bureaucratic bottlenecks faced by investors in terms of Business Entry and running business in Nigeria

31. …Why Nigeria • 24 hour business entry time line in place in the OSS. • 13 Government Agencies at the Centre to help investors to navigate through legal and regulatory framework of doing business. (Additional 22 agencies will join the centre before the end of 2008) • This is just the beginning because the reforms are on-going and machinery is being put in place to ensure that all the initiatives are sustained within the framework of Good Governance and strict adherence to the Rule of Law by current Administration

32. Conclusion • Current Administration has taken bold steps to do the right thing -fix power; provide infrastructure, security etc • Adequate resource deployment in making Nigeria join the club of the 20 largest economy by the year 2020 • Given the investment friendly disposition of the current Administration, there is no better time than now to invest in Africa’s most profitable economy • Visit the Nigerian Investment Promotion Commission website: www.nipc.gov.ng