- Nigerians Will Start Witnessing Huge Foreign Direct Investments in 2017
Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, in this interview with journalists said that trade and investment in Nigeria is about to be revolutionised, as key stimulus packages and other investment drives embarked upon by the Federal Government, will start to yield fruits from 2017.
Can you tell us the investments that came into the country, which can be trace to the efforts of the Buhari administration in the last one-year?
Yes, people are surprised about how big investment inflows have been in the last one-year, because they came in large chunks. But let me tell you that we have gotten well over $20b. This is because of the major infrastructural projects government is embarking upon. But again, what we call an inflow is not just about the money physically, but also the commitments that have come. So, if you look at the infrastructural projects that we are doing, there is N20b or more infrastructure projects with the China EXIM bank. It has been signed and it’s now being implemented around railways and related infrastructure. There is an agreement with General Electric for which $2b has been committed in the last one year.
There are private sector investments also. For instance, Chellarams, which sold a major part of their business to Kelloggs of the United States; that deal is worth about $400million. There was a deal that was done by Chi- the fruit juice company with Coca-Cola, which is also worth hundreds of million of dollars. There is also a deal, where BUA sold something to one of the international players, which bought a part of that group. Again, it is sizable sum. However, we want to increase the steady inflow of foreign direct investment across all levels, because there are many more people waiting on the sidelines apart from the big stakeholders who are doing multi-billion naira infrastructural projects.
As you know, Nigeria Investment Promotion Council has just appointed a new head for the private sector. As a government we want to partner with the private sector, government doesn’t have all the money it needs to develop the country, therefore government is willing and committed to partnering with the private sector players. Another thing I want to say regarding investment is that the oil companies have reached an agreement that is now being finalised to bring in more money into the oil sector.
Government has talked a lot about diversifying the economy, what role is your ministry playing in this regard?
First, let me say that when I think about the Nigerian economy, I think in terms of what the economy has been traditionally, and what we want it to be with the ongoing reforms. I think in the past, what was good about the Nigerian economy is that the diversification process has started to some degree, if you look at the GDP and the composition. When the National Bureau of Statistics (NBS) rebased the economy, one of the things we found out was that the GDP was no longer what we thought it was. Services, for instance had grown, people were going into non-traditional areas and we found things like telecoms had grown, we found things like trade and other items had grown, traditional manufacturing was about 10 per cent and agriculture was about 20 plus percent. Oil, in terms of GDP was about 10 percent. However, when it comes to the revenues of government, we also found out that oil was still about 75 percent or more, even though that reform has started.
Secondly, we found out that the foreign exchange earnings of government; over 90 percent of it was also from oil. So, when we talk about the new economy that is diversified, what we want is to clearly diversify our sources of revenues in terms of foreign exchange earnings. In order to do that, we need to do a number of things.
One is that the sectors of the GDP that are significant, but don’t contribute revenue in monetary form need to be better monetized, which means we need to give them the resources they need to be more productive beyond subsistence level like agriculture. We need to empower our people to do productive agriculture that is profitable, so that they can pay taxes, they can export and do the things that people do, as opposed to just producing hand-to-mouth to eat, which is really part of GDP, but frankly doesn’t impact on the revenue in any form. It also means the government needed to be more attentive to the people.
What do I mean by that, we need to create a more formal economy not because we want to put more burden on people, but because we want to recognise them. Under a formal economy setting, it’s almost as if they are non existent, they are not registered anywhere, whereas if you look at the social intervention programme of government, one of the things we tell people is that we just want to know who you are, whether you are a trader, a market woman, or an artisan. When people talk about formal economy they think in term of the cost, the entire roadblock, the red tape and all the taxes they ask you to pay with no benefits. One of the things we have to do, is to make sure that it is really about the people. In order to diversify the economy away from oil, we also need to make the other sectors like agriculture, agro-processing, agric-business to become vibrant.
Finally, we are also working on the Nigerian industrial revolution plan as a key Programme of government that would help to diversify the economy and move it away from oil to agriculture.
There was a recent investment roadshow overseas by your ministry. What has been the impact?
It was a successful. I think what you find is that Nigeria is a country that people are genuinely interested in and I view that as an asset. There is no country we go to, no matter how big or small, the president goes along, where they don’t give us the highest treatment reserved for the most important country in the world. When we went to Germany, the president met with the Chancellor, and I had a business forum with the elite in the business sector. The president came and addressed them. And Germany is interested in working with Nigeria for several reasons. They are interested in automobiles. And the way they built their economy is that they train people beyond academic degrees, vocational training and they expressed interest to work with us.
There are a lot of benefits that will come from the Germany trip. They are also interested in investing in other areas that we are looking at, including renewable power. And we have a very strong Nigeria business association network, trade association that is working with us very actively. We have met with them even after we came back here, some of their ministers and parliamentarians have also come to meet with us.
Singapore is interested also because as you know, it is a small country that defiled the odds and became very successful, sophisticated country that became great under the very good leadership of the former Prime Minister, Lee Kuan Yu. Nigerians will get there too.
How far has the government gone with the concession loan coming from China?
China has a deliberate policy of partnering with Africa and has identified Nigeria as particularly important base because of our strategic role in Africa. Furthermore, before this government, China had offered to work with us on our key infrastructure projects. China is one country that’s not afraid to spend serious money in another country. That’s the state they’ve got to. They have the money and they want to put it to work and probably recoup over a long period of time. That’s why you’ll hear about China in rail, airport concession, including remodeling, hydropower projects and many more. A lot of our Nigerian businessmen are partnering with the Chinese. Those agreements are now being implemented at government-to-government level.
I think we’ve made a lot of progress. We’ve been to China on a number of times. On the business-to-business level again, it’s working. You know how it is; they’ll start from MOUs, substantive legal agreement, and then follow by investment agreement, shareholders agreements, etc. What we’ve done is that whatever we can do to help the process we’ll do. Under our ministry, we’re working on special economic zones. We as a government have been increasing our budgets, infrastructure and other things needed for the special economic zones, because they’re for industrialisation, and that’s one of our top priorities. The China Exim bank, working with African Exim bank have come to us to say they can invest a billion dollars in those economic zones. We met with them last week again on it. So, there’s a lot action and work going on. You’ll start to see the results as we go on.
Talking about exports what are the bottlenecks and what are you doing about it?
We have said we want to diversify the economy in terms of foreign exchange earnings, and also in terms of revenue generation. What this simply means is non-oil exports. To do it, it means we have to do certain things well. My view is that it goes with creating the enabling environment and ease of doing business. The process of exporting from Nigeria is very tough and not competitive and the Federal Executive Council has actually asked myself and the Minister of Finance, to come and address the council on practical steps to make it easier to export from Nigeria, ensuring that we trade across our borders and we are working on it, as we speak. The bottlenecks in terms of administrative, bureaucracy, red tapes’ and all the approvals you have to get, and all the inspections, and all the waiting at the ports, those need to be addressed. People that are serious about export make that a competitive advantage by doing it.
Afreximbank, AAAM to Drive Automotive Investment
Afreximbank, AAAM to Drive Automotive Investment
The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.
President of Afreximbank, Prof. Benedict Oramah and President of AAAM/Managing Director of Nissan Africa, Mike Whitfield, signed the MoU in early February, according to a statement yesterday.
The deal formalised the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance, and capacity building initiatives.
Oramah, said, “the strategic partnership with AAAM will facilitate the implementation of the Bank’s Automotive programme which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).”
Under the terms of the MoU, Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers, and local partners.
The two organisations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.
“To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain. The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, amongst others.
“The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional and continental automotive policies, and strategies.
“With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.
“Therefore, the collaboration between Afreximbank and AAAM will be an opportunity to empower the aspirations of African countries towards re-focusing their economies on industrialisation and export manufacturing and fostering the emergence of regional value chains,” the statement added.
“The signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa. At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game changer and a hugely positive development,” CEO of AAAM, David Coffey said.
“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure genuine progress for our industry in Africa,” Coffey added.
Other areas covered by the MoU include working with the African Union and the African Organisation for Standardisation to harmonise automotive standards across the continent and developing an automotive focused training program for both the public and private sector.
FG Warns Foreign Investors Against Enslaving Nigerians
The Federal Government on Monday warned foreign investors against subjecting Nigerians working in their companies to industrial slavery.
The government said the warning became necessary following several complaints against foreign companies maltreating some of their staff.
The Chief Commissioner, Public Complaints Commission, Chile Igbawua, issued the warning during a courtesy call on him by a delegation of Pan Africa United Youth Developments Network who came to lay complaint against some foreign companies allegedly maltreating Nigerians working under them.
The PCC said that it would not allow only its state commissioners to handle the issues due to their magnitude as there had been so many complaints about the ways some of the foreign companies were treating their staff.
At the event, the leader of the delegation, Habib Muhammed, expressed concern over alleged injustice and irregularities perpetrated by some company on Nigeria youths whom they engaged as factory workers.
He called on the Federal Government to look into the alleged slavery and injustice meted on Nigerian youths.
While calling on the foreigners to obey the labour laws of Nigeria, Igbawua said, “Our resources cannot be used to enslave us again.”
He said, “We have labour laws in Nigeria for goodness sake and we also have industrial standards; people working in various industries are entitled to good working conditions and minimum conditions of service.”
He added that the law was clear on the issue of casualisation and should be implemented.
Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline
China had the highest inflow of Foreign Direct Investments (FDI) globally in 2020, surpassing the US which took the lead in 2019.
According to the research data analyzed and published by Comprar Acciones, China’s inflow shot up by 9% to $163 billion up from $140 billion the previous year. Meanwhile, the US had a 49% drop from $251 billion in 2019 to $134 billion.
Based on data from the National Bureau of Statistics, China reported a 2.3% growth in GDP in 2020. It was the only major economy to record a positive growth rate during the year.
Chinese Stock Market Saw 18 Million New Investors in 2020
Global FDI took a hit in 2020, falling by 42% year-over-year (YoY) from $1.49 trillion in 2019 to $859 billion. The figure was 30% lower than the one reported during the 2009 financial crisis.
Developed countries saw the worst performance, sinking by a cumulative 69% YoY to $229 billion. For developing economies, there was a 12% decline of $616 billion. By the end of 2020, developing countries accounted for a 72% share of global FDI, the highest on record. India had the highest growth among top-rated economies, shooting up by 13%.
China bore the brunt of the pandemic much better than its peers, posting a 6.5% GDP growth in Q4 2020. During the year, there were 18.02 million new investors in its mainland stock market, raising the total to 177.77 million. Driving the surge in interest was the stellar performance of Chinese stocks in 2020.
The Shenzen Component grew by 38.7% in 2020, and the CSI 300 increased by 27.2%, compared to the S&P 500’s 16.26% growth. IPO activity also soared, with China and Hong Kong accounting for 40% of global IPO volume in 2020 according to Ernst & Young.
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