Why Nigeria Remains Investors Choice – Investment Chief

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EXCLUSIVE INTERVIEW OF THE ACTING EXECUTIVE SECRETARY/CEO, NIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC), HAJIA LADI KATAGUM WITH FOOTPRINT TO AFRICA 

Can we meet you?

I was born in Azare, Bauchi State, Nigeria. I graduated from the Ahmadu Bello
University, Zaria Kaduna State in 1979 with B.Sc (Hons.) in Sociology. Before joining the Nigerian Investment Promotion Commission (NIPC) in May 1999, I had a brief stint at the Federal Mortgage Bank of Nigeria as a Senior Manager attached to the National Housing Fund Department. I was responsible for monitoring and supervision of the implementation of National Housing Fund mechanism by the State and Zonal Offices of the Bank. On the 23rd February, 2016, as the most senior Director in the Commission, I became the Acting Executive Secretary/CEO of the Nigerian Investment Promotion Commission (NIPC). I took over from the former Executive Secretary/CEO, Mrs. Uju Aisha Hassan Baba.

Kindly provide a brief Overview of the Nigerian Investment Promotion Commission (NIPC)

The Nigerian Investment Promotion Commission (NIPC) is the Federal Government Agency established by the NIPC Act N0. 16 of 1995 to co-ordinate promote and facilitate domestic and foreign investments in Nigeria. It provides support and necessary assistance to
investors to enable them navigate through the legal and regulatory procedures for business entry and doing business in Nigeria. It also advises government on policy matters/legislation’s affecting favorable investment climate in Nigeria and advocates for its improvement. This is in addition to highlighting the country’s investment opportunities.

As the Acting Executive Secretary/CEO of the Nigerian Investment Promotion Commission (NIPC), what area(s) do you think the NIPC needs improvement to further promote its activities, aims and objectives?

Like most government organizations, NIPC will require to improve in its training and re-training capacity of its staff to be in tune with the international best practices. We are also
working on a strategy for the purpose of improving our investment outreach programmes to enable local and foreign investors to be aware of our services. The Commission will further entrench its external relationship management with its sister Investment Promotion Agencies (IPAs), International Donor Organizations and the Multilateral
Institutions for obvious reasons.   Of course, we are making efforts to improve our synergy with relevant stakeholders like Ministries, Department and Agencies (MDAs), Organized Private Sector (OPS) with a view to eliciting their buy-in for effective investment promotion.

How would you rate the foreign direct investment into Nigeria in the past year?

Precisely, there has been a global decline in FDI inflow into various countries. Despite this, in the last ten years, Nigeria remains the major recipient of FDI inflow in Africa accounting for an annual average of 15%.

Why do you think investors should invest in Nigeria? What factors would encourage more investment?

Why Investing in Nigeria? The reasons Nigeria has become the preferred investment destination in Africa areas follows:

 Abundant Resources: Nigeria has enormous
resources, most of which are yet to be fully exploited. They include mineral, agricultural and human resources.

 Large Market: Nigeria offers the market in sub-Saharan Africa, with a population of about 170 million people. The Nigerian market potential also stretches into the growing West African sub-region, which is over 350 million people.

  Political Stability: Nigeria offers stable political environment.

 Free Market Economy: The Government has created a favourable climate for business and industrial ventures. Administrative and bureaucratic procedures have been greatly streamlined. The
Government has put in place policies and programmes that guarantee a free market economy.

 Robust Private Sector: The country has a dynamic private sector, which has assured greater responsibilities under the new economic environment.

 Free Flow of Investment: Exchange control regulations have been liberalized to ensure free flow
of international finance. There is now unrestricted movement of investment capital.

 Attractive Incentives: A comprehensive package of incentives has been put in place to attract investment.

– Fast Growing Financial Sector: There is well-developed banking and financial
sector. The investor has easy access to working capital and other
credit facilities.

  Skilled and Low Cost Labour: There is an abundance of skilled labour at an economic cost, resulting in production costs, which are among the lowest in Africa.Lastly, according to UNCTAD, Nigeria is key global region for high return on investment, ranking 4th for Inward foreign direct investment (FDI) rate of return. Nigeria’s Return on Investment (RoI) is 35% – 45% depending on the sector.

– Factors that would encourage more investment Let me start by emphasizing that despite the huge potential of the Nigerian economy, it has not been able to attract commensurate worth of investment to translate the economic potential into wealth. This was largely due to the poor business environment prevalent in the country. Various studies have shown that poor infrastructure, particularly power,unpredictability of micro-economic policies and its management, weak institutional framework, poor linkages between the MSMEs and the Transnational companies, declined national values and educational standards, as well as,national security concerns have all contributed to the poor performance in attracting and sustaining private capital in the economy.Government has however demonstrated its
commitment to reducing the incidences of these challenges on the investment climate.

Some of the business climate reform programmes introduced and being proposed for the purpose of encouraging more investment are:

– Policy Consistency and its Management: government has continued to ensure that its policies are properly aligned in order to guarantee consistency and transparency. Efforts are also on to develop a National Investment Code; a compendium of all existing business and  investment related policies and regulations, to synergise government efforts in this direction.

– Bridging the Infrastructure Deficit: government through the Infrastructure Concession and Regulatory Commission (ICRC) has identified over 250 priority projects that must be executed to boost national productivity under the Infrastructure Road map.

– Amnesty Programme: the amnesty programme has restored peace to the Niger-Delta region of the country and thereby ensuring relative safety in the region. The impact of this was evident in the increased activities in the oil & gas sector of the economy.

– Reform of the Tax Regime: efforts are been sustained to ensure the elimination of multiplicity of taxes among the tiers of the government. The introduction of Unique Taxpayers Identification Number (UTIN) will streamline and harmonise tax system in the country thereby reducing the challenges of tax administration and management across
the tiers of government in the country.

– Reduction of Imported Items on Government Prohibition List: government had taken decisive steps to reduce the ‘long’ list of import prohibition list. This was aimed at reducing the incidences of smuggling and dumping in the economy. Competitive import duty rates
have been placed on the unbanned items. It is envisaged that this will encourage local manufacturers.

– Introduction of Competitiveness Council: in response to the various global business environments rating of the economy, government is putting in place the National Competitiveness Council (NCC) to monitor and advice government on measures necessary to ensure the continued improved global ranking of the economy.

– Strengthening of the Anti-corruption Campaigns and Agencies: government has continue to strengthen its machineries for the reduction of the incidences of corruption and economic crimes within the economy.

– The establishment of the Asset Management Corporation of Nigeria (AMCOM): The establishment of the Asset Management Corporation of Nigeria (AMCON) was to reduce the incidence of non-performing loans in the banking industry and the resultant loss of capital in some banks. Already, AMCON had acquired N1.8 trillion non-performing loans (NPLs)
from 21 banks as at the end 2010. With this, the NPL ratio at individual banks and the industry have reduced significantly; this is expected to continue to fall as AMCON intensifies its operations and the banks are made to further recapitalize.

– The establishment of the Nigerian Sovereign Investment Authority (NSIA): It has strengthened government savings and provides additional funding to finance infrastructure projects. Already government has set aside US$1 billion as seed capital for the NSWFA.

– Various Government Intervention Fund: The various initiatives through the Central Bank of Nigeria (CBN); the N200billion Commercial Agricultural Credit Scheme (CACS); the N300billion Power and Aviation Intervention Fund; the N200billion Restructuring/Refinancing to the Manufacturing Sector/SME; the N200billion Small and Medium Scale Enterprises Guarantee Scheme (SMECGS), among others are aimed at
empowering the financial system for financing the real sector.

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Acting Executive Secretary/Ceo, Nigerian Investment Promotion Commission (Nipc), Hajia Ladi Katagum

Given the current economic situation in Nigeria, in your opinion, would the percentage of FDI increase and what sectors would experience more investment?

I am very positive that despite the current economic situation of Nigeria, the percentage of FDI attraction for this year will be better. As you may have been aware, Nigeria is
blessed with abundant natural resources and it is the largest economy with highest rate of returns on investment (ROI) in Africa. Though,investor for now adopts wait and see strategy to study how the economy would respond in nearest future to government monetary and fiscal interventions. With the tenacity of the flexible exchange rate
introduced by the Central bank of Nigeria (CBN), coupled with implementation of capital components of the 2016 budget, Nigeria economy will definitely bounce back. New investments will be attracted and existing investors will expand their operations.In view of this and in accordance with the focus of the current administration to place the country on the path of inclusive growth and sustainable economic development by diversifying the economy, Agriculture/Agro-Allied, Solid Minerals, Power, Automotive Industry, Petrochemicals, Tourism/Entertainment etc. will attract more investment. NIPC has commenced action to work out the modalities to increase private investment and growth of the non–oil exports in which Nigeria has both comparative and competitive advantages.The strategic plan is aimed at attracting investments to reduce imports,
boost non-oil exports, improve competitiveness, and address growing unemployment rate and poverty in the land. In addition, NIPC has already identified some of the investing nations in the Nigerian economy, and has commenced Special Investor–Targeting Missions to those nations to discuss ways of sustaining their business interest.

 What are the challenges of NIPC in attracting foreign direct investment and what measures can be put in place to mitigate these challenges?

The challenges of attracting foreign direct investment are as follows:

(i) Corruption, (ii)  Weak Security, (iii)  Poor Infrastructure, (iv)  Inconsistency and lack of transparency in regulatory policy.

Measures being taken to address them:

(i) On corruption, as stated above, the present Administration of His Excellency,President Muhammadu Buhari, GCFR, is tackling it headlong, and putting in place stringent anti-bribery and corruption initiatives.

(ii) On security concerns, you will agree with me that insecurity is a global challenge. Meanwhile, Nigeria has strengthened her security agencies to provide adequate
protection to life and properties. The success recorded in the fight against Boko-Haram and the on-going dialogue with the Niger Delta militant speak volume of the government efforts at mitigating this scourge.

(iii) On Infrastructure, it is one of the areas of focus by Government. Government intends to set up an Infrastructure Fund, which shall be a combination of seed money from it
as well as concessional funding and private sector funds, which would be committed to certain projects which are strategic to the economy.

(iv) On Inconsistency and lack of transparency in regulatory policy: The present Administration of His Excellency, President Muhammadu Buhari, GCFR, is putting in place measures to improve the quality of government policies, enhance the efficiency of institutions, encourage respect for the rule of law and citizens’ political rights,
and promote rules to foster accountability and transparency.

What is your response to the assertion that the investment climate has been darkened by the cloud of red tape, corruption, poor access to electricity, unavailability of skilled and highly trained workforce, unreliable and expensive internet/telephone connectivity?

I am in total agreement with that, because Nigeria has the potential/capacity to attract and sustain highest foreign direct investment in Africa. However, it had been unable to attract
commensurate worth of investment to translate the economic potential into wealth. This has been largely due to the poor business environment prevalent in the country.Various studies have shown that poor infrastructure, particularly power,unpredictability of micro-economic policies and its management, red tape and corruption, weak institutional framework, poor linkages between the MSMEs and the Transnational companies, declined national values and educational standards, and national security concerns have all contributed to the poor performance in attracting and sustaining private capital.

With the present administration’s focus on developing the non-oil related sectors, what are the roles of NIPC in achieving the objectives of the government?

As the statutory investment promotion agency in Nigeria, the Commission had been
actively involved in facilitating regulatory and procedural reforms in the Nigerian business environment through both the Doing Business and Competitiveness and the Investor After-Care Committees currently domiciled with NIPC. This and its routine engagements with most of the identified government agencies and the organised private sector have appropriately positioned the Commission to effectively coordinate the implementation of the reform programmes of government. Similarly, the Commission has made significant impact in sustaining the economy as a leading foreign direct investment destination in Africa. In the last five years, UNCTAD recorded that Nigeria had been among the top three investment destinations in Africa.The Commission has undertaken the responsibility to promote the country with utmost diligence and had
organised Business Investment Forums (BIFs) both within and outside the country,showcasing the potential of the economy, highlighting government’s efforts at improving national competitiveness and creating a platform for interactions between domestic entrepreneurs and their international counterparts. Furtherance to its mandate, the Commission is tracking investments worth over US$30 billion across sectors
from around the world. We expect most of these investments to come into fruition in the next couple of years. Most of these Investment contacts were established through the Investment Forums staged in and outside the country; specifically from China, India, Switzerland, Indonesia, South Korea, United Kingdom,Ukraine, Thailand, and Japan. Inline with the national economic policy of diversifying the economic base and increasing the contribution of the non-oil activities to the GDP, the Commission had focused its promotional activities on the non-oil sectors of the economy. For instance, NIPC is deeply involved in creating opportunities for Micro Small Medium Enterprises (MSMEs) to
form linkages with Transnational corporations (TNCs) thereby deepening the capacity of the economy and local capacity utilisation. All these has been largely due to the extensive engagement of the Commission with investors across the world promoting the investment opportunities, highlighting government’s policies and encouraging foreign capital inflow into the critical sectors of the economy, such as, Manufacturing, Infrastructure, Agriculture,Solid Minerals, Information and Communication Technology, Tourism and Hospitality, and Oil & Gas. These have positioned Nigeria as afavourable destination for
investment on the continent in spite of the security challenges in recent years. It is therefore not surprising that the economy is on the watch list of major transnational corporations across the world. The Wall Street Journal Frontiers/FSG Frontier Market Sentiment Index stated that 3 out of 10 American and European companies have Nigeria on its watch list. Some of these companies include Coca-Cola, General Electric, Novartis,Dell and Akzo Nobel.Nigeria has topped this list since inception in June 2014.It is expected that the impact of all the above efforts and a lot more being undertaken by Government would reflect on the ratings of the economy within a reasonable period.
The target is to improve the nation’s competitiveness by a minimum of 75 positions and move up the Doing Business ranking by a minimum of 100 positions over the next couple of years.

In one sentence, what will you say toforeign investors out there about Nigeria?

Despite its business climate challenges, Nigeria remains the most profitable economy in Africa!

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