Africa is currently home to five of a dozen of the world’s fastest-growing economies; As a result of improved macroeconomic management and progressive rise in African consumers. However recent world investment friendly nations like; India, Brazil, Turkey, Indonesia, Russia and others are experiencing some setback partly due to the US Federal Reserve’s decision to dial back its economic stimulus. The economy of Africa consists of the trade, industry, agriculture, and human resources.
Recent growth has been attributed to growth in sales of commodities, services, and manufacturing. Sub Saharan Africa, in particular, is expected to reach a GDP of $29 trillion by 2050, although its income inequality will be a major deterrent in wealth distribution. As at 2014, Total African population was: 1,136,526.03, while the gross domestic product GDP in 2014 was: 2,458,789.62. Inflation in percentage as of 2014 was at 7.17, while percentage of Current account balance of GDP in 2014 was at 3.72. In terms of attractiveness to foreign investors, political risk factors, such as instability and corruption, remain the main barriers that discourage investment in Africa. However economic growth across the continent remains resilient.
Nigeria has one of the largest population of youths in the world, with vast arable land for agricultural purposes measured at 36000000 in (hectares) as at 2011 according to the World Bank. Following an April 2014 statistical “rebasing” exercise, Nigeria has emerged as Africa’s largest economy, with 2013 GDP estimated at US$ 502 billion. Oil has been a dominant source of government revenues since the 1970s.
The Nigerian Extractive Industries Transparency Initiative, NEITI, audit report of 2012; suggests that there are about 40 different kinds of solid minerals and precious metals buried in Nigeria’s soil waiting to be exploited. The commercial value of Nigeria’s solid minerals has been estimated to run into hundreds of trillions of dollars, with 70 per cent of these buried in the bowel of Northern Nigeria.
Genuine world business leaders and foreign investors who have seen the integrity and purposeful leadership direction in the person of President Muhammadu Buhari are taking the initiative to take advantage of the economic opportunities that is abound in Nigeria. With the new democratically elected President whose economic policies encourage; rapid diversification of the Nigerian economy, domestic manufacturing, protecting foreign investments by enacting laws and political will for reforms and strengthening government institutions to encourage investor’s confidence by a sustained war against economic crimes. There is perceived increased of optimism among the common masses for a purposeful leader who is poise to make Nigeria social political climate conducive for economic prosperity and development.
BY VICTOR A. IMHANGBE
Africa is currently home to five of the world’s dozen fastest-growing economies; Africa’s comparably strong performance over the past five years is about more than commodity super-cycle and the boon of debt relief. Improved macroeconomic management has played its part, and increasingly, so has the rise of the African consumer. A growing middle class concentrated in urban areas, coupled with a youth bulge across the continent bolster the case for Afro-optimism.Whereas, recent darlings of the investment world—India, Brazil, Turkey, Indonesia, Russia and others—have all stumbled, in part as a result of the US Federal Reserve’s decision to dial back its economic stimulus. Devlin (2014)
The economy of Africa consists of the trade industry, agriculture, and human resources of the continent. As of 2012, approximately 1.07 billion people were living in 54 different countries in Africa. Africa is a resource-rich continent but many African people are poor. Recent growth has been due to growth in sales of commodities, services, and manufacturing. Sub Saharan Africa, in particular, is expected to reach a GDP of $29 trillion by 2050 but its income inequality will be a major deterrent in wealth distribution – Wikipedia (2014).
As at 2014, total African population was: 1,136,526.03, while the gross domestic product GDP in 2014 was: 2,458,789.62. Inflation in percentage in the same year was at 7.17 while percentage of Current account balance of GDP in 2014 was at 3.72. Although it was cumbersome to obtain Africa gross national income (GNI) as a continent, however, effort was made to compare some individual major economy in Africa like; South Africa whose GNI the latest value for GNI per capita (constant 2005 US$) in South Africa was 5,925 as of 2013. Over the past 53 years, the value for this indicator has fluctuated between 5,925 in 2013 and 3,398 in 1960. GNI per capita; PPP (US dollar) in Nigeria was 920.0 in 1990, 1140.0 in year 2000, and 2140.0 in 2010. (Trading economic).
Gross domestic product (GDP) is the market value of all final goods and services from a nation in a given year. Countries in Africa are sorted according to data from the World Bank. The figures presented here do not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country’s currency. Such fluctuations may change a country’s ranking from one year to the next, even though they often make little or no difference to the standard of living of its populace.
In our study, we decided to identify top ten Africa economies GDP (nominal) to buttress our discussion as shown in the table below:
|2015 Rank||Country||Nominal GDP ($Billions)|
Table 1: top ten African economy
Source: World Bank
Some countries/regions may have citizens that are on average wealth. These countries/regions could appear in this list as having a small GDP. This would be because the country/region listed has a small population, and therefore small total economy; the GDP is calculated as the population times market value of the goods and services produced per person in the country. Comparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. PPP largely removes the exchange rate problem, but has its own drawbacks; it does not reflect the value of economic output in international trade, and it also requires more estimation than
According to Africa Progress Report of (2015) by Africa Progress Panel; It is opines that sustainable development, financing and climate change are swinging the spotlight not only onto Africa’s needs to accelerate development and adapt to global warming, but also onto the region’s urgent energy crisis. Two in three African countries lack access to electricity. However, this crisis is view as a great opportunity. Demand for modern energy is set to surge, fuelled by economic growth, demographic change and urbanisation. As the costs of low-carbon energy fall, Africa could leapfrog into a new era of power generation. Utility reform, new technologies and new business models could be as transformative in energy as the mobile phone has been in telecommunications; Africa Progress Panel (2015).
AFRICA’S MACROECONOMIC PROSPECTS
Africa’s gross domestic product (GDP) growth is expected to strengthen to 4.5% in 2015 and 5% in 2016 after subdued expansion in 2013 (3.5%) and 2014 (3.9%). The 2014 growth was about one percentage point lower than predicted in last year’s African Economic Outlook, as the global economy remained weaker and some African countries saw severe domestic problems of various natures. But the world economy is improving and if the authorized economic operator (AEO) of 2015 predictions is right. Africa will soon be closing in on the impressive growth levels seen before the 2008/09 global economic crisis. African Development Bank (ADB).
Figure 1: Africa’s economic growth, 2002-16
Note: (e) estimates; (p) projection
Source: Statistics Department, African Development Bank
West Africa achieved relatively high growth of 6% in 2014 despite its battle with the Ebola virus Nigeria’s growth of 6.3% came mainly from non-oil sectors showing that the economy is diversifying. But Southern Africa’s growth fell below 3% as the key South African economy only grew by 1.5%.
Table 1: Africa’s growth by region, 2013-16
(Real GDP growth in percent)
Note: (e) estimates: (p) projections.
Source: Statistics Department, African Development Bank.
Domestic demand has continued to boost growth in many countries while external demand has remained mostly subdued because of flagging export markets, notably in advanced countries and to a lesser extent in emerging economies. Export values of goods were also depressed by lower export prices. African exports are expected to strengthen in 2015 and 2016 as the world economy improves. In 2014, domestic demand was in most countries boosted by private consumption and public infrastructure investment with the latter also increasingly financed by issuing international sovereign bonds. On the supply side, many African countries have improved their investment climate and conditions for doing business, which enhance long-term growth prospects. Benin, Côte d’Ivoire, the Democratic Republic of the Congo (DRC), Senegal and Togo are even in the top ten countries worldwide with the most reforms making it easier to do business.
Africa’s supply side growth in 2014 was mainly driven by agriculture, extractive industries, construction and services, and to a lesser extent by manufacturing. But sectorial growth should not be seen in isolation, as there are important spillovers between sectors. Furthermore, modernisation and structural transformation, the process by which new and more productive activities arise and resources move from traditional activities to these newer ones, is also happening within some sectors. African Economic Outlook; (2015).
There are boundless opportunities begging for foreign investors in Africa, unfortunately, confidence is eroded due to lack of political instability and lack of trust by host government to keep to legal terms. Despite this negative perception, Chinese government is undaunted with the inherent and associated risk in doing business in Africa soil. According to BMI Research, China’s state-owned enterprises are not the only contributor to Chinese outward foreign direct investment (OFDI) in Africa. As China moves away from a state-heavy economic model, BMI expects increasing investments by private investors in manufacturing, which should boost African growth. However, the caricature of Chinese OFDI is that it is a pillaging of African natural resources by China’s state-owned enterprises (SOEs) and sovereign wealth funds as shown below:
A Decade of Investment Growth OFDI Flow to Africa, 2004-2012
Figure 2: China Outward Foreign Direct Investment
Official data confirm that 31% of Chinese OFDI is in mining and 16% in construction, with SOEs responsible for the bulk of this investment. More than half of China’s African OFDI stock is in South Africa, Zambia, Nigeria, Algeria and Angola. The reality is one of increasing investment by private investors in manufacturing.
PERCEPTION OF FOREIGN INVESTOR IN AFRICAN’S ECONOMY
In a study to determine the factors to attracting investment to a country. The researchers unraveled the importance of human rights as a factor in location decisions to providing a broad theoretical framework for addressing variation in the attractiveness of countries for FDI. The prospective relationship between foreign direct investment (FDI) and human rights is a prominent issue within the global political economy. However, the link between the two remains poorly understood. Conventional wisdom posits that FDI and respect for human rights are intrinsically at odds with one another. Yet scholars have begun to argue that the relationship between human rights and FDI is more complex and that good human rights conditions may be important to foreign investment. Blanton et al (2007).
The global slump of oil prices had slowed down business activities and its negative impacts has heightened business leaders and investors’ perceptions of Africa to reach its lowest level since 2011. In terms of Africa’s attractiveness in EY’s attractiveness surveys over the past year, only 53% of the respondents said it had improved, down from 60% in 2014. There was also a slight drop in confidence about the continent’s future investment attractiveness. As Africa’s perceived attractiveness declined, it ceased to be seen as the world’s second-most attractive region (after North America and joint-second place with Asia) and fell to fourth place. Political risk factors, such as instability and corruption, remain the main barriers that discourage investment in Africa.
However, recent economic realities showed that Africa has experienced stronger headwinds in the past compare to recent times. The survey opines; Economic expansion this year is likely to be at its slowest in five years, dragged down by the impact of lower oil prices on the Nigerian and Angolan economies, as well as South Africa’s sluggish growth. The survey reveals that investor sentiment has softened somewhat, and that FDI projects are down for a second consecutive year.
However economic growth across the continent remains resilient. Despite the headwinds, growth in Sub-Saharan Africa (SSA) will beat the emerging markets average, and be outstripped only by developing Asia. Ethiopia, Kenya, Tanzania, Mozambique, Zambia and Cote d’Ivoire are among 22 economies in SSA that are expected to grow by more than five percent this year.
COMPARATIVE ANALYSIS OF AFRICA’S FDI IN 2014
Geopolitical tensions and weak economic growth led to a 3.1% decline in Greenfield FDI projects worldwide in 2014. FDI projects in Africa fell 8.4%, but remained well above pre-2008 levels. However, capital investment into the continent surged to US$128b, up 136%. And FDI created 188,400 new African jobs, a 68% increase. Spurred by a handful of mega deals, the average investment increased to US$174.5m per project, from US$67.8m in 2013. Africa’s share of global capital investment and job creation hit an all-time high in 2014. Only Asia-Pacific attracted more FDI funds than Africa last year. Africa attracted more FDI funding than North America, Latin America and the Caribbean, and Western Europe, which historically draw significantly higher FDI flows than Africa.
After a dip in 2013, the flow of FDI funding into Africa recovered sharply. During 2014, FDI inflows to the continent more than doubled to US$127.9b (from US$54.2b) driven by several large deals. Investment per project averaged US$174.5m, against US$67.8m in 2013 and US$169.9m in 2008, the previous peak. The upsurge was driven by large, capital-intensive energy extraction and real estate schemes, including:
Source: EY’s attractiveness survey Africa
NIGERIA ECONOMY IN PERSPECTIVE
Nigeria is a federal constitutional republic in West Africa, bordering Benin in the west, Chad and Cameroon in the east, and Niger in the north. Its coast in the south lies on the Gulf of Guinea in the Atlantic Ocean. It comprises 36 states and the Federal Capital Territory, where the capital, Abuja is located. Nigeria is often referred to as the “Giant of Africa”, owing to its large population and economy. With approximately 174 million inhabitants, Nigeria is the most populous country in Africa and the seventh most populous country in the world. Nigeria has one of the largest populations of youth in the world. Nigeria has vast arable land for agriculture purpose measured at 36000000 in (hectares) as at 2011, according to the World Bank.
As of 2015, Nigeria is the world’s 20th largest economy, worth more than $500 billion and $1 trillion in terms of nominal GDP and purchasing power parity respectively. It overtook South Africa to become Africa’s largest economy in 2014. Also, the debt-to-GDP ratio is only 11 percent, which is 8 percent below the 2012 ratio. Nigeria is considered to be an emerging market by the World Bank; it has been identified as a regional power on the African continent, a middle power in international affairs, and has also been identified as an emerging global power. Nigeria is a member of the MINT group of countries, which are widely seen as the globe’s next “BRIC-like” economies. It is also listed among the “Next Eleven” economies set to become among the biggest in the world. (Wikipedia)
NIGERIA ECONOMY AT A GLANCE
Following an April 2014 statistical “rebasing” exercise, Nigeria has emerged as Africa’s largest economy, with 2013 GDP estimated at US$ 502 billion. Oil has been a dominant source of government revenues since the 1970s. Regulatory constraints and security risks have limited new investment in oil and natural gas, and Nigeria’s oil production contrasted in 2012 and 2013. Nevertheless, the Nigerian economy has continued to grow at a rapid 6-8% per annum (pre-rebasing), driven by growth in agriculture, telecommunications, and services, and the medium-term outlook for Nigeria is good, assuming oil output stabilizes and oil prices remain strong. Fiscal authorities pursued countercyclical policies in 2011-2013, significantly reducing the budget deficit. Monetary policy has also been responsive and effective. Following the 2008-9 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. Despite its strong fundamentals, oil-rich Nigeria has been hobbled by inadequate power supply, lack of infrastructure, delays in the passage of legislative reforms, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute resolution mechanisms, insecurity, and pervasive corruption.
Economic diversification and strong growth have not translated into a significant decline in poverty levels – over 62% of Nigeria’s 174 million people live in extreme poverty. Unfortunately former President Mr. Goodluck Jonathan lackluster economic team that includes experienced and reputable members was unable to increase transparency, and eliminate official embezzlement of the treasury due to absence of political will to stem the tide to improve fiscal management. The government is working to develop stronger public-private partnerships for roads, agriculture, and power. (Forbes).
REVIEW OF THE NIGERIAN ECONOMY IN 2014
Gross Domestic Product showed real year on year growth of 6.21% in the opening quarter of 2014, a rate that was 0.56% points lower than that of the preceding quarter, yet 1.76% points greater than that recorded in the corresponding quarter of 2013. At 6.54 %, second quarter growth was 0.33% points higher than that of the first and was also over a percentage point greater than the rate of 5.40% recorded in the corresponding quarter of the previous year. The third quarter, relative to the second quarter, saw a slight slowdown in growth, of 0.32% points to 6.23%. Nonetheless, this remained 1.06% points greater than the year on year rate of 5.17% recorded in 2013.
Figure 3: Real Growth Rate (Year on Year)
Quarter – on-Quarter, real GDP stood at N15,438,679.50 million in Quarter One of 2014, a quarter on quarter rise of 9.88% from the N17,132,164.77 million recorded in the Fourth Quarter of 2013. The Nigerian economy gained momentum in the Second and Third Quarters, growing by 4.18% and 8.67% respectively.
Our purpose in this study is to delve into none oil sector of the economy in line with the new Government quest to diversify the economy and to enhance potential investors with necessary data in decision making process.
The non-oil sector continued to drive growth in the Nigerian economy throughout 2014. The opening quarter of 2014 saw the peak of non-oil growth, at 8.21% year on year. Despite being 0.57% points lower than that of the preceding quarter, it was 0.76% points greater than that of the opening quarter of 2013. The second quarter saw a decline in the growth rate of 1.49% points from the opening quarter of the year, to 6.71%, which was an even greater 2.17% points below that of Q2 of 2013. By the third quarter there was a slight acceleration in real growth, of 0.79% points to 7.51%, yet this was still 0.95% points lower than the 8.46% growth rate of Q3 of 2013, as well as being lower than the 2014 peak of 8.21%.The slower non-oil growth vis-à-vis the corresponding quarters in the Second and Third Quarters of 2014 reflected a slowdown in the growth of the Services sector.
Table 2: Drivers of Growth within the Non-Oil Sector
Nonetheless , within the non-oil sector, the Services Sector remains the key driver of year on year non-oil growth, with 53.20%, 58.13% and 55.59% of growth in quarters one, two and three respectively attributable to this sector. The industrial sector followed, with 31.39% of growth in quarter one, 28.66% in quarter two and 28.18% in quarter three. The remainder was driven by agriculture, which peaked in Q3, driving 18.23% of growth.
OVERVIEW OF NIGERIA ECONOMIC PROJECTION
The economy has enjoyed sustained economic growth for a decade, with annual real GDP increasing by around 7%; it was 6.3% in 2014. The non-oil sector has been the main driver of growth, with services contributing about 57%, while manufacturing and agriculture, respectively contributed about 9% and 21%. The economy is thus diversifying and is becoming more services-oriented, in particular through retail and wholesale trade, real estate, information and communication. The 2015 outlook is for moderate growth of 5%, due to vulnerability to slow global economic recovery, oil-price volatility and global financial developments. The low oil price will lead to a sharp decline in fiscal revenues. However, the overall impact on non-oil sector GDP will be relatively muted. The sector is, thus, expected to remain the main driver of growth over the medium term and, in the light of the recent macroeconomic challenges, the government has adopted an adjustment strategy that hinges on tightening government spending and shoring up non-oil revenues to compensate for dwindling oil revenues.
Solving security concerns is a key challenge. Insurgency in the north-east and other parts of the country has negative implications for investment; it also may hamper the fight against poverty as well as increase crime. An increased number of both internally displaced persons and refugees in neighbouring Cameroon and Niger have created a grave humanitarian crisis. Conversely, the current regional coalition force against Boko Haram appears to be making headway in reducing the insurgency. Overcoming geographical and socio-economic barriers is fundamental to achieving all-encompassing growth and viable improvement. Addressing rural-urban differences to ensure more balanced development through job creation and societal transformation will be critical for Nigeria’s future. This will need to be done within all the six geopolitical zones, in addition to addressing inequalities across these zones. However there have been several policy initiatives aimed at territorial development in Nigeria, limited success has been achieved in addressing the fundamental causes of inequalities. The problem often lies with a structure of governance that gives room for developmental policy implementation at the federal, state and local levels of governance but not at the regional level.
Figure 4. Real GDP growth
Source: AfDB, Statistics Department AEO. Estimates (e); projections
Table 3: Macroeconomic development
Source: Data from domestic authorities; estimates (e) and projections (p) based on calculation
RECENT DEVELOPMENTS AND PROSPECTS
Real GDP growth for 2014 is estimated to be 6.3% up from 5.4% in 2013. Growth was driven by the non-oil sector, particularly services, manufacturing, trade and agriculture. Non-oil sector real growth stood at over 7% in 2014, compared to 8.4% in 2013 while oil-sector growth fell by 1.2%. Agriculture’s real growth rate increased to around 4.6% in 2014, up from 2.9% in 2013.
Nigeria, comparable to other oil-exporting countries, is facing a sharp reduction in oil revenues because of the fall in global oil prices that saw the price of Bonny Light drop from USD 118 per barrel (pb) in June 2014 to about USD 50 pb in January 2015. Sluggish global demand, increased production in shale oil and gas, and OPEC’s decision to sustain production levels contributed to the price decrease. Moreover, oil production fell below the target of 2.38 million barrels per day (mbpd) resulting in lower external reserves.
The Nigerian authorities have been very quick to respond to the exogenous shock through a home-grown adjustment strategy: the “2015 FGN Budget: Transition Budget”. The overall objective is to enhance non-oil revenue collection while ensuring efficient expenditure that will result in significant savings. The Federal Government is focusing on measures to increase non-oil revenues primarily through improved tax administration and policy, and deepening structural reforms for economic diversification. In addition to the fiscal adjustments made by the Federal Ministry of Finance, the Central Bank of Nigeria (CBN) has tightened monetary policies.
The World Bank’s report on: Doing Business in 2015 showed that Nigeria’s overall performance had increased from a rank of 175th out of 189 a year previously to 170th out of 189. The overall performance was as a result of improved performance in two of the ten indicators (starting a business and getting credit). There was a marginal slide in six criteria (dealing with construction permits, getting electricity, protecting investors, paying taxes, enforcing contracts, and resolving insolvency), while level of registering property and trading across borders remain unchanged. Nigeria also moved closer to the average with a distance-to-frontier (DTF) score of 47.33% from 43.72%. This suggests that Nigeria’s business environment and legal institutions have moved towards the average in efficiency.
However, the ranking in the 2014-15 Global Competitiveness Index (GCI) showed that Nigeria has slipped in the last two successive assessments. The country fell from 115th out of 144 countries to 120th out of 148 countries between the 2012-13 and 2013-14GCI; and further dipped to 127th out of 144 countries in the 2014-15 GCI. Nigeria continues to face challenges that tend to complicate and increase the cost of regulatory processes of which physical infrastructure and regulation are foremost. More recent actions aimed at easing these constraints have focused on longer-term judicial reforms to strengthen the legal institutions for contract enforcement. Other issues that are significant constraints on the business environment and are being addressed by the Federal Government include corruption, security and waning investor confidence.
Financial reforms have produced a financial landscape characterised by large and strong banks, an efficient payments system and improved financial infrastructure. Bank credit to the economy continued to increase at about 10% between the end of 2013 and December 2014. Bank credit to the Federal government fell from NGN 226 billion at the end of 2013 to NGN 166 billion at the end of 2014 or about a 27% decrease. However, the structure of bank credits indicated that short-term maturities remained in the majority. Furthermore, the banking industry remained dominated by a few major banks. The banking sector has improved in stability. A decrease in non-performing loans (NPLs) was the result of the cautious steps by the Asset Management Corporation of Nigeria (AMCON) in buying up such assets from the banks, especially NPLs in the power sector.
The continued regulation of banks by the CBN, together with increased contributions by banks to the AMCON sinking fund, has ensured the reduction of the share of non-performing loans. Nigeria has one of the most liquid capital markets in the region, second only to South Africa. There were almost 200 listed companies on the Nigerian Stock Exchange (NSE) as of December 2014 and the management of the NSE intends to attract more companies to list in the coming years. Overall, investors in the stock market recorded a total loss worth NGN 3.23 trillion or 24.4%by December 2014. According to CBN data, the bond market continued to be dominated by FGN bonds, accounting for almost 70% of the total bonds outstanding as at the end of 2014. The period saw increased demand for FGN bonds, given the high average yield of 11.53%.
Total market capitalisation for listed securities was also on a downward trend. The All Share Index dropped by 26.6% at the end of December 2014. As a result of the bearish conditions in the capital market, market capitalisation declined from NGN 13.23 trillion (USD 82.8 billion) at the end of December 2013 to NGN 11.5 trillion (USD 68.3 billion) at end-December 2014. The decline in equities market performance was largely due to increased capital outflows, as some foreign investors sold off their assets amidst concerns over currency depreciation in the face of steady declines in external reserves and global oil prices.
Nigeria, Africa’s most populous nation and largest economy, held peaceful and transparent elections on 28 March 2015, that have been widely commended across the world. The elections were deemed largely free and fair by international and regional observers including the EU, the African Union (AU) and ECOWAS. General Muhammadu Buhari of the main opposition party, the All Progressives Congress (APC) is the new President of Nigeria. The APC also won the majority number of seats for the Senate for which elections were conducted at the same time.
While the military has stepped up operations, the insurgency being carried out by the militant group Boko Haram still poses a serious security threat, especially in the North East. The more than 200 girls abducted on 15 April 2014, from the Government Girls College in Chibok, Borno State, have still not been found. There is also a humanitarian crisis in the region, which is an additional cause for concern. The National Emergency Management Agency (NEMA) estimates that it involves some 1.5 million Internally Displaced Persons (IDPs). There is also a continued rise in the number of refugees in the neighbouring countries of Cameroon, Chad and Niger. The development partners are doing their best to support the government in addressing this dire situation.
WHY NIGERIA IS A GOLDMINE TO FOREIGN INVESTORS
The Nigeria Extractive Industries Transparency Initiative NEITI has released its independent audit report on governance and revenue management of the Nigeria solid minerals sector for the year 2012. The Solid Minerals Audit report revealed that Nigeria earned a total of 31.449 billion Naira in 2012 as against 26.925 Billion Naira in 2011, showing an increase of 17%. According to the Audit report, the Solid Minerals sector is still a “minor productive sector with low contributions to the main macro-economic areas of the economy”. For instance, the sector accounted for a meager 0.02% of total exports earnings and 0.14% of new employments in the country by the end of 2012.
The Nigeria Extractive Industries Transparency Initiative, NEITI, audit report of 2012 suggests that there are about 40 different kinds of solid minerals and precious metals buried in Nigeria’s soil waiting to be exploited. The commercial value of Nigeria’s solid minerals has been estimated to run into hundreds of trillions of dollars, with 70 per cent of these buried in the bowel of Northern Nigeria. President of Miners’ Empowerment Association of Nigeria, Sunny Ekosin, revealed that Nigeria loses a whopping N8 trillion annually in unexploited gold alone.
ECONOMIC BLUE PRINT
Nigeria economic blue print was released to the public by the Vice President, Professor Yemi Osinbajo at the 45th Annual Accountants Conference and 50th Anniversary celebration of the Institute of Chartered Accountants of Nigeria. Investing more in the people, education, and job creation top government priority on the economic agenda.
While a more details of government economic agenda were still at the pipeline due to the fact the government is still consulting with stake holders, others have been implemented like; bailout package for the workers in the country. It also include “One of the most important interventions required in the education sector which is capacity building to improve teacher quality, to enhance a better educated population and increase economic potential for productivity.”
In addition, there is strengthening of value chain in top-down economic model so that government high revenues generation will reflects on the people living condition. One of the major priorities is for the government to improve on the power sector; and having one-stop office for approvals of foreign investments. This is a remarkable policy in order to encourage hitch free process in area of business registration, especially to foreign direct investors. Other areas of focus include innovation and fighting piracy; diversification of the economy in the areas of agriculture – self-sufficiency in rice and wheat (staples) production; manufacturing; entertainment and technology.
It is pathetic to note that major manufacturing establishment operating in Nigeria has relocated to neighbouring Ghana due to epileptic power supply. In a news title: “Nigeria can generate 45,000 MW from coal” in October 11, 2015 by Premium Times. A member of the National Assembly, Ibrahim Gobir (APC Sokoto East), opines that Nigeria could generate 45,000 megawatts of electricity if it utilized its coal reserves and this is another investment opportunities that has been forgotten. He told the News Agency of Nigeria that if the coal resource in Enugu, Benue and Kogi states were harnessed, power problems in the country would be a thing of the past. For emphasis purpose, we shall highlight list of mineral resources from each state of Nigeria Federation including federal capital territory, Abuja on the table below:
|1||ABUJA (FCT)||Marble Clay , Tantalite|
|2||ABIA||Gold, Salt, Limestone, Lead/Zinc, Oil and Gas|
|3||ADAMAWA||Kaolin, Bentonite, Gypsum, Magnesite, Barytes, Bauxite|
|4||AKWA IBOM||Clay, Limestone, Lead/Zinc, Uranium, Salt, Lignite, Oil and Gas|
|5||ANAMBRA||Lead/zinc, Clay, Limestone, Iron-ore, Lignite, Salt, B Glass-sand, Phosphate, Gypsum|
|6||BAUCHI||Amethyst(Violent), Gypsum, Lead/zinc, Uranium,|
|7||BAYELSA||Clay, Gypsum, Limestone, Uranium, Manganese, Lignite, Lead/Zinc, Oil and Gas|
|8||BENUE||Lead/Zinc, Limestone, Iron-ore, Coal Clay, marble, Bauxite, Salt, Barutes, Germstone Gypsum, Oil and Gas|
|9||BORNO||Diatomite, Clay, Limestone, Kaolin, Bentonite, Oil and gas|
|10||CROSS RIVER||Limestone, uranium, Manganese, Lignite, Lead/Zinc, Salt, Oil and gas|
|11||DELTA||marble, Glass-sand, Clay, Gypsum,, Lignite, iron-ore, Kaolin, Oil and Gas|
|12||EBONYI||Lead/Zinc, Gold, Salt|
|13||EDO||Marble, Clay, Limestone, Iron-ore, Gypsum, Glass-sand, Gold, Dolomite, Phosphate, bitumen, Oil and gas|
|14||EKITI||Kaolin, Feldspar, Tatium, Granite, Syenites|
|15||ENUGU||coal, Limestone, Lead/zinc|
|17||IMO||lead/Zinc, Limestone, Lignite, Phosphate, Marcasite, Gypsum, Salt, Oil and Gas|
|19||KADUNA||Sapphire, Kaolin, Gold, Clay, Serpentinite, Asbestos, Amethyst, Kyanite, Graphite, Mica, Aquamatine, Ruby, Rock, Crystal, Topaz, Flouspar, Tourmaline, Gemstone, tantalite|
|20||KANO||Pyrochlore, Cassiterite, Copper, Glass-sand, Gemstone, Lead/Zinc, Tantalite|
|21||KATSINA||kaolin, Marble, Salt|
|23||KOGI||Iron-ore, Kaolin, Gypsum, Feldspar Coal, Marble, Dolomite, Talc, tantalite, Kaolin, Limestone, gemstone, Bitumen|
|24||KWARA||Gold, Marble, Iron-ore, Cassiterine, Columbite, Tantalite, feldspar, Mica|
|25||LAGOS||Glass-sand, Clay, Bitumen, Sand, Tar, Oil and Gas|
|26||NASARAWA||Beryl( Emerald, Acquamarine and Hellodor), Dolomite/marble, sapphire, Tourmaline, Quartz, amethyst (garnet, Topaz), Zircon, tantalite, Cassiterite, Columbite, Ilmenite, galena, Iron-ore, barites, Feldspar, Limestone, Mica, Cooking coal, Talc, Clay, Salt, chalcopyrite|
|27||NIGER||Gold, Lead/Zinc, Iron-ore|
|28||OGUN||Phosphate, Clay, feldspar|
|29||ONDO||Bitumen, Kaolin, Gemstone, Gypsum, Feldspar, Granite, Clay, Glass-sand, Dimension stones, Coal, Bauxite, Oil and Gas|
|30||OSUN||gold Talc, tantalite, Tourmaline, Columbite, Granite|
|31||OYO||Kaolin, Marble, Clay, Sillimanite, talc, Gold, Cassiterine, Acquamarine, dolomite, Gemstone, tantalite|
|32||PLATEAU||Emerald, Tin, Marble, Granite, Tantalite/Columbite, Lead/Zinc, Barytes, Iron-ore, Kaolin, Cassiterite, Gold, Lead/Zinc, Dolomite, Bentonite, Cassiterite, Phsochlore, Clay, Coal, Wolram, Salt, Bismuth, Fluoride, Molybdenite, Gemstone, Bauxite|
|33||RIVERS||Glass-sand, Clay, Marble, Lignite, Oil and Gas|
|34||SOKOTO||Kaolin, Gold, Limestone, Phosphate, Gypsum, Silica-sand, Clay, Laterite, Potash, Flakes, Granite, Gold, Salt|
|36||YOBE||Diatomite, Soda, Ash|
|37||ZAMFARA||Coal, Cotton, Gold|
NIGERIA GOVERNMENT AND ITS ECONOMIC POLICY
President Muhammadu Buhari in December 2014 emerged as the presidential candidate of the All Progressives Congress for the March 2015 general elections. Buhari won the election, defeating the incumbent President Goodluck Jonathan. This marked the first time in the history of Nigeria that an incumbent president lost to an opposition candidate in a general election. He was sworn in on 29 May 2015.
The President in his address to President of the Movement of the Enterprises of France (MEDEF), Mr. Gattaz and the French trade mission, which includes over 50 companies, highlighted key economic policies that will be reflected by the 2016 National Budget being prepared by his administration. These include fresh policies and measures to encourage the rapid diversification of the Nigerian economy away from its current over-dependence on the oil and gas sector. The policy includes the following:
- Encourage the rapid diversification of the Nigerian economy away from its current over-dependence on the oil and gas sector.
- To boost domestic manufacturing and attract greater investments to Nigeria’s agricultural and mining sectors would be given full effect under the 2016 budget.
- Protection of foreign investments and the repatriation of returns on such investments.
- The president said that Nigeria would also welcome more French investment and other interested foreign business leaders in its power sector because availability of steady power supply would lead to the reopening of closed factories and the creation of more jobs.
- Sustained war on corruption. The President also reassured the delegation that his administration was tackling corruption with vigour to ensure greater probity in the management of national resources.
In a nutshell, genuine foreign investors have been assured of government readiness to protect their investments; and some foreign business leaders are making concerted effort to join the bandwagon having seen the integrity and purposeful leadership direction in the person of President Muhammadu Buhari. Investor confidence is on the increase and most are taking the initiative to take advantage of the economic opportunities that is abound in Nigeria. The recent visit to Nigeria by the President of the Movement of the Enterprises of France (MEDEF), Mr. Pierre Gattaz and a delegation of French investors, including over 50 companies with interest in manufacturing, agriculture, infrastructure development is a case in point.
Unfortunately, previous government had wasted public funds in the past in a bid to attracting foreign investors to Nigeria economy without significance result, due to varieties of economic malaise like; insecurity, policy instability, political trust, corruption, and Government inability to providing enabling environment for private investments to thrive. President Buhari’s made his first official visit to the US; President Obama congratulated his counterpart on his “historic” election victory over his predecessor Goodluck Jonathan, and praised his “reputation of integrity.” The President antecedent for having zero tolerance for economic crimes and well equipped with political will to fight endemic corruption and insecurity. He also promised to strengthen all the laws to enhance transparency, accountability and economic reforms that will raise investors’ confidence. The following achievements were recorded by President Buhari new government in its first 100 days in office.
- Waging a “Non-Negotiable” War against Corruption.
- Appreciable Improvement in Power Supply in Various Parts of the Country
- Cleanup of the Messy Nigeria National Petroleum Corporation (NNPC)
- Mending of Nigeria’s Fractured Relationship with the World Powers
- Prioritizing Regional Cooperation in war against insurgency
- Returning Discipline to the Polity
- Reducing the Size and Cost of Governance
- Ensuring petroleum products is made available to the public
GOVERNMENT POLICY/INITIATIVE AGAINST CORRUPTION AND FOSTER SOCIAL POLITICAL & ECONOMIC DEVELOPMENT
For Nigeria as a nation to take her rightful place in world economies, there should be sustained effort by the government to create conducive environment that will attract foreign investors to be part of power stability. Reputable multinationals power companies should be selected in a methodical approach to enhance quality competition in energy project. This is the bedrock to eradicate poverty, create jobs and sustain growth that will stimulate the manufacturing sector to make Nigeria an industrialize nation.
The new government has sworn to start on a clean sheet which is by restructuring the civil service that has been bastardized. His policy direction is to make the ministry and all government parastatals to be efficient and empower the permanent secretaries to be at the driver’s seat in dictating government policies to the minister who will be on political appointment. This is contrary to the past where the minister who is a political appointee usually takes decisions which have been found to be inimical to the growth of the ministry and the polity at large. This meticulous planning and effort to instill discipline and ethical standard especially in the civil service has caused some delay that has adversely affected the economy, thereby eroding investor’s confidence. Fortunately, the waiting is almost over now as the President has forwarded name of ministerial candidates to the senate for screening and in a matter of weeks all government activities will be kick started.
President Muhammadu Buhari has also directed Federal Government Ministries, Departments and Agencies (MDAs) to open and start paying into a Treasury Single Account (TSA) for all government revenues, incomes and other receipts. The measure is specifically to promote transparency and facilitate compliance with sections 80 and 162 of the 1999 Constitution. Government warned that such accounts should be maintained and operated in the Central Bank of Nigeria (CBN), except otherwise expressly approved. A TSA is a unified structure of government bank accounts enabling consolidation and optimal utilization of government cash resources. This is contrary to previous system with several fragmented accounts for government revenues, incomes and receipts, which is prone to manipulation, loss or leakages of legitimate income meant for the Federation Account and susceptible to fraud.
President Muhammadu Buhari led government has also constituted Anti-Corruption Committee; a seven-member committee chaired by a world-acclaimed professor of law and civil rights activist, Professor Itse Sagay; to advise the government on plans to tackle corruption. According to the chairman of the anti-corruption committee as reported: “And anyone who knows that his hands are dirty should come out and confess. I am sure, certain lenient terms can be obtained by him, but let them not hide under the cloak of selectivity ignoring that their hands are deep red with guilt.”
One of the point of reference is in area of quick dispensation of court cases, especially graft related cases. Nigeria judiciary is known as one of the slowest in area of dispensation of justice and public confidence has drastically eroded because of the slow pace. Another reference point is to review criminal justice system and make sentencing to be effective and magnitude of crime to be commensurate with punishment given, so as to serve as deterrent. The committee is also working to stop the habit of frivolous court injunction which most dubious lawyers and judges relied on to sabotage ongoing official embezzlement cases.
The above measures are some of the numerous policies being put in place by the new government led by President Muhammad Buhari to stimulate and galvanize Nigeria economy to take her rightful place as the true “Giant of Africa” and a nation to be respected among the comity of nation where investors’ confidence will be restored.
Conclusively, Africa is currently home to five of the world’s dozen fastest-growing economies; As a result of improved macroeconomic management which has played its part, and increasingly, with the rise of African consumer. Whereas recent world investment friendly nation like; India, Brazil, Turkey, Indonesia, Russia and others are experiencing setback partly as a result of US Federal Reserve’s decision to dial back its economic stimulus. The economy of Africa consists of the trade, industry, agriculture, and human resources of the continent.
Recent growth has been due to growth in sales of commodities, services, and manufacturing. Sub Saharan Africa, in particular, is expected to reach a GDP of $29 trillion by 2050 but its income inequality will be a major deterrent in wealth distribution. As at 2014, Total African population was: 1,136,526.03, while the gross domestic product GDP in 2014 was: 2,458,789.62. Inflation in percentage in 2014 was at 7.17 while percentage of Current account balance of GDP in 2014 was at 3.72.
In terms of attractiveness to foreign investors, political risk factors, such as instability and corruption, remain the main barriers that discourage investment in Africa. However economic growth across the continent remains resilient. Nigeria has one of the largest populations of youth in the world. Nigeria has vast arable land for agriculture purpose measured at 36000000 in (hectares) as at 2011, according to the World Bank. Following an April 2014 statistical “rebasing” exercise, Nigeria has emerged as Africa’s largest economy, with 2013 GDP estimated at US$ 502 billion. Oil has been a dominant source of government revenues since the 1970s.
The Nigeria Extractive Industries Transparency Initiative, NEITI, audit report of 2012 suggests that there are about 40 different kinds of solid minerals and precious metals buried in Nigeria’s soil waiting to be exploited. The commercial value of Nigeria’s solid minerals has been estimated to run into hundreds of trillions of dollars, with 70 per cent of these buried in the bowel of Northern Nigeria.
Genuine foreign investors who have seen the integrity and purposeful leadership direction in the person of President Muhammadu Buhari are taking the initiative to take advantage of the economic opportunities that is abound in Nigeria. With economic policy that encourage the rapid diversification of the Nigerian economy, domestic manufacturing, protecting foreign investments by enacting laws and strengthening government institutions to encourage investor’s confidence by a sustain war on economic crime such as corruption. This will have a positive impact in economic prosperity of the people.
Please send your comment to:
Email: [email protected] Follow us on Twitter: @veepointblog
Like us on Facebook: https://www.facebook.com/veepoints
By Jean Devlin; (March 10th 2014), Africa’s Emerging Market Boom. Retrieved from: http://www.forbes.com
POWER PEOPLE PLANET; (2015).Seizing Africa’s energy and climate opportunities. AFRICA PROGRESS PANEL. Retrieved from: http://www.africaprogresspanel.org
EY’s attractiveness survey; (2015). Making choices. EY Building a better working world. Africa 2015.EYG no. AU3208. Retrieved from: http://www.ey.com
National Bureau of Statistics. (28th January, 2015). Nigeria in 2014: Economic Review and 2015 – 2017 outlook. Retrieved from: http://www.nigerianstat.gov.ng/
African Economic Outlook (2015 edition). SPECIAL THEME: Regional Development and Spatial Inclusion. OECD Publishing. ISBN 978-92-64-23330-0.
- L. Blanton & R. G.(January 2007) Blanton; What Attracts Foreign Investors? An Examination of Human Rights and Foreign Direct Investment. The Journal of Politics.
- BARUNGI,E. OGUNLEYE & C. ZAMBA (2015) African Economic Outlook. Nigeria 2015. © AfDB, OECD, UNDP 2015.Retrieved from: www.africaneconomicoutlook.org
Ifeanyi Izeze; (Aug 27, 2015). Buhari’s Anti-Corruption Committee: The Road Ahead Retrieved from: http://saharareporters.com
The News Agency of Nigeria (NAN) 10th August 2015). Pres. Buhari Instructs Federal Ministries & Agencies to Open Treasury Single Account and Remit all Revenues Into It. Retrieved from: http://www.bellanaija.com
Trust Matsilele; 12 October 2015|06:10 GMT. Nigeria President Buhari’s economic blueprint. Retrieved from: http://www.cnbcafrica.com
Ibrahim Gobir; News Agency of Nigeria (NAN) (11th October, 2015) Nigeria can generate 45,000 MW from coal–Senator. Retrieved from: http://www.premiumtimesng.com
NIGERIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (NEITI) http://neiti.org.ng
African Development Bank (AfDB) http://www.afdb.org/en/
Central Bank of Nigeria.http://www.cbn.gov.ng/
Federal Ministry of Fiance. http://finance.gov.ng/