However, infrastructure deficits, a dismal security situation and harsh policies have combined to deter foreign companies from venturing into Africa’s second-largest economy. The installation of a democratically elected government in 1999 paved the way for sweeping reforms calculated to reverse this trend and boost domestic and international investment in the country. However, for business experts, Nigeria is a country brimming with opportunities and business potential.
According to TradeInvest Nigeria, a non-governmental agency that provides access to business opportunities in the country, the scope of its business potential is unparalleled across the African continent. Lucrative investment opportunities exist in multiple sectors, including healthcare, tourism and leisure, agriculture and agro-processing, banking and infrastructure. The Nigerian Investment Promotion Commission Ordinance 1995 allows foreign company ownership without restrictions, except in the oil sector, where investment is limited to production sharing agreements or joint ventures.
The range of prospects that Nigeria offers to global investors is significant, especially considering the nation’s long-term goals of accelerated economic development and inclusive growth.
Health care
One of the most profitable business opportunities Nigeria has to offer is in the healthcare services industry. TradeInvest Nigeria especially highlights the potential for private sector investment in secondary and tertiary health services involving research, capacity building, health management and information technology, all of which are currently lacking. The industry offers the additional benefit of serving a social cause, which is significantly relevant in a country with deplorable human development indices. In this context, the economic capital of Nigeria, Lagos, a city of 17 million inhabitants, is a veritable gold mine of unexplored dimensions.
For business insiders, Lagos is as close to a dream investment destination as any on the continent. Home to some of Nigeria’s wealthiest and strategically located on the coast, it boasts a large seaport and international airport providing easy access to the entire West African region. The Lagos State government is well aware of the city’s business potential and offers investors attractive business incentives and tax breaks. Relative political stability over the past decade and progressive policies have resulted in a boom in private businesses in Lagos, most of which operate outside the realm of government regulation and as part of the informal economy. Coupled with the fact that Nigeria is home to 148 million people, according to revised World Bank estimates for 2009, the potential for profitable foreign investment in Lagos and elsewhere in the country is immense.
Information Technology Opportunities
One of Nigeria’s major infrastructure gaps is in the field of communications and information technology, which greatly contributes to its underutilized economic potential. While the poor telecom network is a serious obstacle to business expansion and proliferation for both local and foreign companies, it is also a high-growth sector for potential investment by global players. One such example is VOIX Networks Limited, a Nigerian provider of information and communications technology products and services that is seeking to expand with the help of foreign investors.
The company’s mission to create a more connected Nigeria has translated into a wide variety of products and services, including prepaid calling cards, wireless Internet and cellular telephony. Despite the large-scale success of its operations, VOIX has managed to achieve only a fraction of its full potential in the absence of private investment to finance its expansion plans. Considering Nigeria’s ambitious plans to generate sustainable economic growth through the development of the entire industry, including telecommunications, a potential booming sector for private investment with unknown growth potential.
Solar energy
Nigeria’s most fundamental infrastructure deficit is in the field of power generation. Earlier this year, the government announced that it seeks to attract $100 billion in investment for the electricity sector over the next five years1. Power supply is erratic and insufficient in most rural and urban areas of Nigeria, forcing businesses to run on generators and facing security issues during frequent blackouts. The Lagos state government is once at the forefront of efforts to attract foreign investment in solar power generation by announcing attractive terms of operation. Due to its tropical climate and equatorial location, Nigeria has tremendous potential to not only meet but exceed its current electricity needs through solar power generation.
For a country that has historically relied almost exclusively on non-renewable resources for income, this marks a substantial change in attitude. Nigeria’s warm climate and wide plains make it the perfect location for massive solar power generation. The additional benefit comes from the generation of employment for hundreds of skilled and unskilled workers needed for the construction and maintenance of said power plants. There is little doubt that solar power, potentially, is Nigeria’s sunshine sector.
others
From fertilizers to farm equipment leasing services, from steel production to catfish farming, from chemical supplies to waste recycling, Nigeria has within its borders a virtual cornucopia of investment opportunities for global players. The country’s tumultuous history and record of outdated policies is slowly but surely being overcome in the spirit of economic reforms and deregulation. There are still clear and present dangers preventing substantial foreign investment from reaching its shores, the most prominent arising from militancy and terrorism in the Niger Delta region and civil unrest elsewhere. Trade barriers, an investor-hostile tax regime, and large-scale political and bureaucratic corruption continue to present daunting challenges to any sustained effort at inclusive growth. Abuja’s ambitious plans for 2020, initiated by former President O Obsanjo to take the nation into the top twenty world economies by that year, depend on procuring massive investment from the private sector.
The fate of Nigeria’s economic and human development goals depends primarily on its ability to create an environment that is supportive of foreign investment in various sectors. The true intelligence test, from this point of view, applies both to the Nigerian regime and to the investors it desperately seeks to attract.