BUSINESS SCENARIO

Nigeria has witnessed impressive growth in the past few years. In fact it was the
fourth fastest growing economy in 2000-2010 with an average annual growth of
8.9% and continues to be one of the fastest growing for the foreseeable future. GDP
rose strongly in 2007-11 because of growth in non-oil sectors and robust global
crude oil prices. The main drivers of growth were in the non-oil sector namely,
telecommunications, general commerce, manufacturing, agriculture and services.
Considerable progress has been made in introducing market-oriented reforms in
Nigeria especially since 2008. These include modernizing the banking system,
removing subsidies, and resolving regional disputes over the distribution of earnings
from the oil industry. The government is also working toward developing stronger
public-private partnerships for roads, agriculture, and power. Nigeria had a total
investment inflow of US$ 6,099 million in 2010, attracting 53.8% of the total FDI in
Western Africa.
Manufacturing and processing have traditionally attracted the maximum share of
Nigerian FDI inflows, followed by miscellaneous services and mining and quarrying,
with almost equal shares. While USA has been the largest investor in Nigeria since
2008, companies from Asian economies, especially China and India are also
expanding their foothold in Nigeria.
With over 100 companies in Nigeria, the Indian investment portfolio is strong and
well diversified. Between July 2007 and May 2011, a total FDI of US$28 million was
routed from Reserve Bank of India into Nigeria. Indian investments cover areas such
as manufacturing, pharmaceuticals, plastics, engineering, information technology
and communication.
Nigeria has actively encouraged Indian companies to invest and expand Nigerias
mining and development of coal, gold, iron, ore, chrome, lead and other mineral
resources. Nigerias overall rank is 131 out of 183 economies across the globe in the
Ease of Doing Business 2012. Although its rank is :

13th among the sub-Saharan countries.

It ranks 4th among them in Getting credit.
8th in Protecting investors.

Nigeria is the second best investment destination in African according to a survey

conducted by the Africa Business Panel in 2011. The primary reason for this outright
preference by investors is summarized as follows: the country is the most populous
and among the largest consumer markets in Africa, with a fast-growing economy
and an emerging middle class that is demonstrating an increasing level of
confidence.

Key industries: Crude oil, coal, tin, columbine, rubber products, wood, hides and
skins, textiles, cement and other construction. Nigeria 2 materials, food products,
footwear, chemicals, fertilizer, printing, ceramics, steel Exports: $ 97.46 billion
(2012 est.).
Key export commodities: petroleum and petroleum products 95%, cocoa, rubber
Key export destinations: US (29.1%), India (11.6%), Brazil (7.8%), Spain (7.1%),
France (5%), Netherlands (4.3%) Imports: $70.58 billion (2012 est.)
Key import commodities: machinery, chemicals, transport equipment,
manufactured goods, food and live animals Key import partners: China (17.3%), US
(9.1%), India (5%), Netherlands (4.9%), South Korea (4.7%)

Initiatives to Foster Investment & Trade

The Government of Nigeria aims for power generation capacity of 10,000 MW by the
end of 2011. To achieve this objective:

It is rehabilitating existing power infrastructure and intends to invest in new

power projects. Nigeria Vision 2020 has been prepared by the Government of
Nigeria aiming at catapulting Nigeria to among the worlds top 20 economies
by 2020.
The Government of Nigeria has signed bilateral investment promotion and
protection agreements (IPPAs) with several countries to ensure the safety of
investments in the country. Nigeria has bilaterally investment agreement with
the UK, Germany, Belgium, South Africa, Italy, China, Jamaica, Sweden,
Turkey, France, Netherlands, Romania to name a few.
Nigeria allows 100% foreign ownership of firms outside the petroleum sector,
where investment is limited to existing joint ventures or production- sharing
agreements.

Tax structure overview

Petroleum and gas-producing companies are subject to 85% petroleum profit

tax and a concessionary rate of 65.75% during the first 5 years.
Nigeria provides a tax holiday of five to seven years to selected
companieslocated in economically disadvantaged areas.
There are similar concessions for companies providing infrastructural facilities
in areas where there is a lack, companies with high labor/capital ratio and
companies engaged in greater value addition.

TAX
Corporate tax

RATE (%)
30

Capital Gains tax

Withholding tax (Dividends)
Personal tax

10
10
25

Nigeria-India: Partners In Progress

1. Bilateral agreements and LOCs
Relations between Nigeria and India have always been warm and friendly: In
January 2010, the

Government of India stated that it will conclude 3 bilateral trade agreements

with Nigeria, targeting trade worth US$20 billion and investments of US$10
billion by 2015 .
The PAN African e-Network has been inaugurated, where Nigeria would be a
beneficiary . The 130 seat ITEC (Indian Technical and Economic Cooperation)
quota for Nigeria for the year 2010-11 was fully utilized.
In 2011-12 it has been further increased to 190. During first eight months of
2012-13, 188 slots have been utilized.

Indian Companies Doing Business In Nigeria

State Bank of India

Ashok Leyland
Bajaj Auto
Tech Mahindra
Bank of India
Bharti Airtel
ONGC- Mittal Energy
Birla Group
Bhushan Steel
Kirloskar Group
New India Assurance
Emcure Pharmaceuticals
Indorama Olam International
NIIT New India Assurance
KEC Skipper Nigeria
Dabur
Godrej
Primus Super-specialty Hospital

Major exports to Nigeria

Machinery and mechanical appliances
Vehicles, other than railway or tramway
Electrical and electronic equipments
Pharmaceutical products
Aluminum and articles thereof
Iron and steel and articles thereof
Plastic and articles thereof
Organic chemicals
Paper and paperboard articles of paper pulp
Cereals
Major imports from Nigeria
Mineral fuels mineral oils and products of their distillation
Aluminum and articles thereof
Copper and articles thereof
Plastics and articles thereof
Edible fruits and nuts
Ships, boats and other floating structures
Lead and articles thereof
Lac, gums, resins, vegetable saps and extracts
Coffee, tea, mate and spices
Raw hides and skins (other than fur skins) and leather

Potential Sectors For Investments

1. Agriculture
Significant opportunities exist in all verticals of this sector. These include:

Direct production especially rehabilitation of groundnut, cotton, cocoa

and palm oil, fish and forestry Irrigation and flood control infrastructure.
Development of earth dams and construction of wash bores and tube
wells.
Processing of agricultural produce and storage facilities.
Processing of agricultural input supply and distribution.
Agricultural mechanization R&D and development of small scale
technologies for on-farm as well as secondary processing .
Agricultural products with great potential include groundnuts, palm oil,
cocoa, coconut, citrus fruits, maize, millet, cassava, yams and sugar cane.
2. Manufacturing
The government has identified certain priority sectors which will lay down a
broad base of industrialization in Nigeria. Key sectors in manufacturing that hold
potential are as follows.

Agricultural produce processing, food and beverages.

Textiles: yarn /textiles, apparel, leather and products of leather (including
footwear of rubber and plastics)
Wood: furniture making as well as opening of Paper making factory for
making paper products.
Iron and steel, non-ferrous metals Fabricated metal products.
Consumer durables. With rising disposable incomes and construction
boom opportunities also exist in non-metallic building materials like bricks,
ceramics and glass.
Pharmaceuticals is another sectors that holds a lot of potential for
investments. Not only is spending on health on the rise in Nigeria, it has
potential to become one of the hubs of medical tourism.
3. Oil and gas
Downstream activities such as domestic production and marketing of LPG
offer growth avenues.
Upstream activities such as petroleum exploration and exploitation hold
significant potential.
4. Banking and financial services
Opportunity exists in fields of microfinance, agricultural credit and financing of
small and medium enterprises (SMEs).
5. Metals and mining
Much of the rich endowments of minerals in Nigeria are yet to be fully exploited.
Orderly development of these resources remains a priority of the government.

Mineral resources that are present in Nigeria but not yet fully exploited are
coal and tin. Nigeria has one of the best quality coal deposits in the world
with the lowest sulphur content.
Opportunities exist for the exploitation and export of natural gas, bitumen,
limestone, coal, tin, columbite, gold, silver, lead-zinc, gypsum, glass
sands, clays, asbestos, graphite, and iron ore, among others.
6. Telecommunications
The Nigerian Communication Commission (NCC) has approved more than 1,863
operating licenses, leading to increased demand. The Association of
Telecommunications Companies of Nigeria (ATCON) estimates investments to
reach US$ 6 billion over the next 5 years i.e. till 2020.
7. Computers, software and peripherals
Computer peripherals and power- support systems hold great potential for
investment. Online- based certificate courses providers offer tremendous growth
opportunities. Other thrust areas include handheld devices such as Personal
Digital Assistants (PDA).

Source:
The Nigerian Investment Promotion Commission
Source: The 2012 worldwide corporate tax guide