#1Nigeria: Opportunities, Challenges, and Business Environment Olumide (Olu) Ijose, PhD Associate Professor of Management (International Business and Strategic Management) College of Business Governors State University#2Investment Into Top Sectors (2007-2013) By Most Capital Invested (Total = $55bn) Most of the FDI Inflows are into Oil and Gas FDI Inflows: 2007-2013 Nigeria Break-up of Inward FDI Stock by Sector 3% 4% $55bn 8% 7% 52% 25% Crude oil & natural gas Technology, media & telecoms Real estate, hospitality & construction Retail & consumer products Chemicals Other sectors The United States, South Africa & United Kingdom are the top 3 investors into Nigeria Chinese investment stock totaled $2.1 billion between 2005 and 2013 There is a strong bias towards the oil sector Investors from South Africa, United Kingdom and India are leading the way in investing in other sectors especially telecoms, consumer products, retail and automotive Source: fDi Markets#3Opportunity Indicators GDP (Current) 2014 Country Overview Opportunity and Risk Indicators Risk Indicators $510bn Ease of doing business overall rank out of 184 countries (17th in Africa) 131 Real GDP growth (compound average growth rate): 5.38% 5-year forecast (2018) Transparency International Corruption Perceptions Index (0-highly corrupt, 100=very clean; ranked 38th in Africa) 27 Real GDP growth (2016 forecast) 6.0 Strength of investor protection (0 = unfavorable, 10 = favorable; ranked 12th in Africa) 5.7 GDP per capita (US$): 5-year forecast (2018) $2,652 Logistics Performance Index: overall rank out of 155 countries (25th in Africa) 121 Household consumption 45% of $360bn in SSA Democracy score (0 = lowest, 10 = highest) 4 Population growth (annual) 2.56 Mo Ibrahim Index of African Governance (rank out of 52 countries) 43 Population 171.3m Perception of governance - rule of law: percentile rank (0 = lowest, 100 = highest) 25.82 Source: The World Bank; OECD National Accounts, United Nations Population Division World Urbanization Prospects; Oxford Economics; ITU International, Transparency International; Polity IV Project; Mo Ibrahim Index of African Governance; Worldwide Governance Indicators; WEF Global Competitive Report; Worldwide Corporate Tax Guide; Nigeria Bureau of Statistics; Standard Bank#4Country Overview Opportunity and Risk Indicators Opportunity Indicators Risk Indicators GDP (Current) 2014 $510bn Ease of doing business overall rank out of 184 countries (17th in Africa) 131 Urban population (% of total) 49.62% Perception of governance – regulatory quality: percentile rank (0 = lowest, 100= highest) 20 Literacy Rate (total population %) 61.3% Quality of overall infrastructure (1 = extremely underdeveloped, 7 = extensive & efficient by international standards) 3.2 Middle class (2014) Multiplied 6 fold Corporate maximum tax rate 30% (2000- 2014) Internet use per 100 inhabitants (2014) 42.68% Corruption Perception out of 168 136 countries (35th in Africa) Mobile penetration (subscription per 100 inhabitants, 2014 access 77.84% Institutional profile Source: The World Bank; OECD National Accounts, United Nations Population Division & World Urbanization Prospects; Oxford Economics; ITU International, Transparency International; Polity IV Project; Mo Ibrahim Index of African Governance; Worldwide Governance Indicators; WEF Global Competitive Report; Worldwide Corporate Tax Guide; Nigeria Bureau of Statistics; Standard Bank#5Infrastructure Spending Plans - Next 30 Years Infrastructure gaps to drive FDI inflows and PPP opportunities Energy 5% 11% 33% ■Transport 11% Agriculture, water and 13% mining 25% ■Housing ICT Energy $1 trillion Transport (road & rail) $775 billion Agriculture, water & mining $400 billion Housing & urban development $350 billion ICT $325 billion Social Infrastructure $150 billion Vital Registration $50 billion Source: National Integrated Infrastructure Masterplan#6Upcoming and Ongoing Energy and Water Gas Fired Projects Renewables Coal Fired Hydro Electric Kogi Power Station Azura-Edo Power Project Zungeru Hydro Electric Project Enugu Coal Power Plant Abia Power Plant Mambilla Hydro Power Plant $2.13bn Egbin Power Project Kainji and Jebba Hydro Power Plant Lafarge-Wartsila $8.75bn Power Project Alaoiji Power Plant (Phase 1 & 2) Delta Solar Power Plant NGP-Motir Seaspire Solar Power Plant Kogi Solar Power Plant Abiba Solar Power Project Water Projects Kashimbilla Multipurpose Dam Multipurpose Gurara Water Transfer Project Nigeria Erosion & Watershed Management Project Iro Multipurpose Dam Project Ogwashi-Uku Dam Project $2.25bn Katsina Wind Project Omotosho Power $7.02bn Project Papalanto Power Project $2.13bn Other Projects: Oil & Gas Projects, Transmission Lines & Substations: $47.09bn#7Some Active Projects Project Name Capacity & Time Frame Lagos Rail Mass Transit PPP) . Phase one: 27.5km Blue Line • Completion expected by end of 2016 Abuja-Kaduna Rail Modernization Project (PPP) 186km rail modernization In progress Azura Edo (Greenfield Project) Eko Atlantic Project 450 MW 10 million square meters of reclaimed land protected by an 8.5km long sea wall Contractor(s) and Sponsor Financing Notes The China Civil Engineering Construction Corp. • Lagos State . Government China Exim Bank Federal Government of Nigeria • Siemens Niger Delta Power Holding Company • China Exim Bank ($500m) Total cost $874m Federal Government of Nigeria ($374m DFIs debt $262.5m • DFI mezzanine $30m • Commercial debt $390m • Development bank debt $60m Total cost $890m . Lagos State Government#8Key Takeaways A detailed understanding of Nigeria is critical Tariffs incentives have been implemented to increase for local assembly of vehicles Energy is an attractive area for investors Attractive opportunities are available in agriculture and agro-processing I 1 ELECTRICITY Logistics services and heavy truck demand to increase Significant investment opportunities in oil and gas, especially refining and petrochemicals#9Key Takeaways A detailed understanding of Nigeria is critical Nigeria is the gateway to the ECOWAS region North Africa West Africa East Africa Central and Southern Africa Significant opportunities in ecommerce and last mile broad band Retail is emerging as a growth area 1 23 With a growing population, housing is a key investment area. The Nigeria government is emphasizing rail transportation UNDER CONSTRUCTION