Nigeria's Business and Economy

Business And Economy

GENERAL INVESTMENT CLIMATE IN NIGERIA

Nigeria is a country endowed with arable land and abundant natural resources. Government policy has been directed towards ensuring that what nature has provided is harnessed and utilized to the fullest, for the benefit of the citizenry.

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INVESTMENT OPPORTUNITIES IN NIGERIA

There are over 2000 industrial establishments in the country presently. Among these are a giant oil industry, iron and steel complexes, steel rolling mills, pharmaceutical industries, food processing, car assemblies and the up-coming Export Processing Zone (EPZ). Government economic policy favours and places priority on greater investment in agricultural production and agro-processing industries, manufacturing and export production. The economy offers low costs of production, abundantly skilled and versatile human resources and access to a vast local market of over 100 million people and beyond in the sub-region.

Priority Areas:
There are four Industrial Sectors which are considered priority areas of development because of their linkage effects on the other sectors and potential catalytic role in the overall growth of the industrial sectors. These priority areas are which are favored in the administration of government industrial incentives are :

a. Metallurgical / Engineering Industries
b. Agriculture (Forest-based and agro-allied activities)
c. Chemical / Petrochemical Sector
d. Construction Sector

From the above mention priority areas, specific industrial projects desired are:
i. Foundries and Forges
ii. Metal Fabrication / Machine tools
iii. Pharmaceuticals
iv. Rubber and Plastic
v. Leather and Leather products
vi. Textiles and Weaving apparels
vii. Cement
viii. Non-metallic building materials, bricks, ceramic, glass
ix. Food processing
x. Sugar, Confectionaries and Beverages
xi. Cereal and Grain Milling
xii. Fruits, Vegetables, Vegetable Oils, Oil seed, Roots and Tubers.

Other Specific Areas:
In addition to the areas mentioned above, investors are welcome to participate wholly or jointly with Nigerians in the following specific projects :

i.   Gemstones cutting and polishing
ii. Gold processing
iii. Mini-sugar production plants
iv. Multi-mineral plant for gypsum, talc, kaolin, marble / dolomite, baryte etc.
v.   Cement production
vi. Lead and Zinc projects
vii. Processing of salt from sea water
viii. Sodium triphosphate production
ix. Small/ medium scale plant for sheet metal production
x.   Mining of industrial minerals; bitumen etc.
xi. Stone-cutting / polishing
xii. Fabrication of spare parts
xiii. Exploitation of coal with a known reserve of 293,140,000 tonnes in Enugu, Kogi and Adamawa      States.
xiv. Timber / wood processing

Detailed Look At Investment Opportunities In Several Sectors Namely:
( Click on a topic to jump to the details )
a. Agriculture
b. Oil and Gas
c. Solid Minerals
d. Power, Steel and Aluminium

AGRICULTURE
The agricultural potential of Nigeria is barely being tapped and this explains the inability of the country to meet the ever increasing demand for agricultural produce. Although the agricultural sector is a dominant employer of labour, serious investment is needed across the board to enhance production and increase the contribution of the sector to GDP. Investment is required in the following priority activities:

a. Priority Areas in Crop Production

    Potentials exist for the following crops:
    Cereals : Maize, rice, sorghum, corn, millet, wheat
    Root Crops: Cassava, yam, ginger, potato, cocoyam
    Legumes: Soya beans, groundnuts (peanuts), cowpeas
    Fruits : Mango, banana, oranges, guava, pawpaw (papaya), pineapple
    Vegetables : Cabbage, green pepper, carrots, lettuce, spice, onions, mellons
    Tree Crops : Oil palm, cocoa, rubber, coconut, kolanut, coffee, sheanuts, beniseed, cotton, cashew nuts, sugar cane

b. Other Areas
   Commercial growing of flowers and ornamentals and experimental orchards for more temperate fruits like apples, grape vines and pears have been successfully established in the high plateau regions.

The others are :

1. Food Processing and Preservation

2. Livestock and Fisheries: Grazing lands are abundant and facilities for animal feed production are plentiful. The in-land rivers, lakes and coastal creeks are sufficient to augment ocean fishery resources.

3. Agricultural Supplies and machinery for water resources development , flood control and irrigation

4. Commodity trading and transportation

5. Development and fabrication of small-scale mechanised Technologies for on-farm processing and secondary processing of agricultural produce.

6. Exploitation of timber and wood processing activities. A wide range of wood resources abound.
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OIL AND GAS

Foreign and domestic investors are being encouraged through improved fiscal incentives in the Nigerian oil and gas sector. In the Upstream and Downstream sectors, the following are some of the areas where there are pressing need for investors.

(A) UPSTREAM ACTIVITIES
     i. Petroleum Exploration and Exploitation
     ii. Search for development of local substitute for items like pressure valves, drilling equipment, etc.
     iii. Manufacture of consumables in exploration such as explosives, detonators, steel castings etc.
     iv. Construction and Installation
     v. Maintenance
     vi. Pipelining
     vii. Well Services
     viii. Transportation Support Services

(B) DOWNSTREAM ACTIVITIES
     i. Domestic Production and marketing of Liquefied Petroleum Gas (LPG)
     ii. Manufacturing of LPG cylinders, valves and regulators, installation of filling plants, Retail distribution and development of simple, flexible and much less expensive gas burner to encourage the use of gas instead of wood and other fuels.
    iii. Establishment of processing plants and industries for:

The production of refined mineral oil, petroleum jelly and grease
The manufacture of bituminous based water / damp-proof building materials such as roofing sheets, floor tiles, rubber products, tarpaulin, building of asphalt storage, packaging and blending plants to handle the product for export.
Establishment of chemical industries for distillation units for the production of naphtha and other special boiling point solvents used in plant and food processing industries.
Establishment of industries for processing Linear Alkyl Benzene, Carbon Black and Polypropylene.
Development of Phase II ( Phase III to join later) of Nigeria's Petrochemical Programme.
Participation in all phases of the Nigerian Gas Industry Development programme from exploration, gathering, production and processing to transmission.
Establishment of small scale industries to produce chemicals and solvents, for example Chlorinated methane, Formaldehyde, Acetylene, etc. from natural gas.
Refining:
One condition for purchasing Nigerian Crude Oil is the ownership of an efficient refinery. The shelter which the domestic petroleum products market enjoys, almost completely seals the prospects and viability of privately financed refinery for locally consumed petroleum products. However, opportunities exists for the construction of a refinery in bonded premises with adequate export facilities for dedication to the export market. Companies with the technological know-how can undertake turn-around maintenance of refineries. Refineries consumes a lot of chemicals and utilize a broad range of spare parts. There is tremendous scope for small scale joint venture manufacturing concerns with foreign technical partners. Such ventures can start warehousing arrangements that will ensure continuity of supply at competitive prices. Other investment opportunities contingent upon refining are the manufacture of special products such as :

      ▪ Industrial and food grade solvents
      ▪ Insecticides
      ▪ Cosmetics
      ▪ Mineral Oil, petroleum jelly, grease
      ▪ Building materials like floor tiles, rubber products, tarpaulin, etc.
      ▪ Asphalt storage, packaging and blending plants.
Products Marketing:
Petroleum Product Marketing would seam sealed with hardly any opportunity except by way of establishing an independent marketing outfit or aspiring to establish dealership with the marketers. Far more challenging opportunities may be explored in the areas of product transportation, by road and coastal tankers. Associated with products distribution and marketing is a chain of manufacturing and maintenance businesses such as lubricating oil reprocessing, LPG bottles and accessories, oil cans reconditioning, etc. The nation's pipeline and depot network consists of 3,001 km of pipeline of varying sizes as well as sixteen (16) storage depots. These pipelines and networks traverse the length and breath of the country. The system therefore must be maintained in a healthy state for effective and efficient distribution of products.
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SOLID MINERALS

Nigeria is endowed with numerous mineral recourses. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors' participation in this sector.
Profile Of Mineral Deposits in Nigeria
(Click any topic below to jump to the details)

TALC
IRON ORE
GOLD
BITUMEN
ROCK SALT
GYPSUM
LEAD/ ZINC
BENTONITE AND BARYTE
COAL
GEMSTONES
KAOLIN
TANTALITE

TALC
An estimated reserve of over 100 million tonnes of talc has been obtained in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States. There are only two medium size talc processing plants currently operating in Nigeria and both are located in Niger state. The colour of the Nigerian talc varies from white through milky-white to grey. The talc industry represents one of the most versatile sectors of the industrial minerals of the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only local demands but also that of the international market as well.
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IRON ORE
There are over 3 billion tonnes of iron ore found in Kogi, Enugu, Niger, Zamfara and Kaduna States. Iron is currently being mined at Itakpe (Kogi State) which is more or less at the center of the region of crystalline iron deposits. The large deposit of iron ore deposit of Kogi and Enugu States are yet to be fully explored. Itakpe iron ore is being beneficiated to 67%Fe. To feed Aladja and Ajaokuta Steel Complexes. There are three in-land rolling mills at Oshogbo, Jos and Katsina in addition to some privately owed rolling mills in Lagos and Kano.
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GOLD
There are proven reserves of both alluvial and primary deposits of gold with proven reserves in the schist belt covering the western half of Nigeria. At present exploitation of alluvial deposits is being carried out mostly by artisan miners in a few places in the country. A number of primary deposits, which are sufficiently big for large scale mechanised mining, have been identified in the northwest and southwest parts of the country. Private investors are invited to stake concessions on these primary deposits. It is interesting to note that the primary deposits are of relatively high grade and at shallow depth. Production costs will easily be as low as about $50 per ounce.
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BITUMEN
The occurance of Bitumen deposits in Nigeria is indicated at about 42 billion tonnes almost as twice as the amount of existing reserves of crude petroleum. When fully developed, the industry will no doubt meet local requirements for road construction and also become a foreign exchange earner for the country.
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ROCK SALT
The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hypochloric acid and hydrogen peroxide exceeds one million tonnes. A colossal amount of money is extended annually to import these chemicals by various companies including tanneries, food beverages, paper and pulp, bottling and other industries including the oil companies. There are salt springs at Awe (Plateau State), Abakiliki (Enugu State) and Uburu (Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tonnes has been indicated, and further investigations are now being carried out by government to ascertain the quantity of reserves.
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GYPSUM
Gypsum is an important input for the production of cement It is also used for the production f Plaster pf Paris (P.O.P.) and classroom chalk, etc. A strategy for large-scale mining of gypsum used in the cement industries is urgently required to sustain existing plants and meet future expansion. Current cement production is put at 8 million tonnes per annum while the national requirement is 9.6 million tonnes. About one billion tonnes of gypsum deposits are spread over many states in Nigeria.
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LEAD/ ZINC
An estimated 10 million tonnes of lead / zinc veins are spread over eight States of Nigeria. Joint venture partners are encouraged to develope to develop and exploit the various lead/zinc deposits all over the country.
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BENTONITE AND BARYTE
These are the main constituents of the mud in the drilling of all types of oil wells. The Nigerian baryte had specific gravity of about 4.3. Over 7.5 million tonnes of baryte have been identified in Taraba and Bauchi States Large bentonite reserves of 700 million tonnes are available in many states of the Federation ready for massive development and exploration.
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COAL
Nigerian Coal is one of the most bituminous in the world owing to its low sulphur and ash content and therefore the most environment friendly. There are nearly 3 billion tonnes of indicated reserves in 17 identified coal fields and over 600million tonnes of proven reserves.
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GEMSTONES
Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aquamarine, Emerald, Tourmaline, Topaz, Garnet, Amethyst, Zircon and Flourspar which are among the world's best. Good prospects exist in this area for viable investments.
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KAOLIN
An estimated reserve of 3 Billion tonnes of good kaolinitic clays has been identified.
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TANTALITE
Large deposits of Tantalite are known to occur in Nasarawa, Gombe and Kogi States as well as the Federal Capital Territory. The deposits are both alluvial and primary in the numerous pegmatite bodies that infest these areas. Private investors are invited to stake concessions for the development and exploitation of tantalite in these areas.
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