On April 11, 2018 Belgium-Luxembourg Nigeria Chamber of Commerce (BLNCC) delegates visited Nigeria to meet with various senior stakeholders to discuss matters of mutual benefits to businesses in the triad countries. The objectives of the trip were twofold Firstly, to present trade & investment opportunities of both Luxembourg and Belgium and the willingness of organisations to do business in Nigeria.
Secondly, it was important to get a better understanding of the economic and political landscape in Nigeria. Understanding these key objectives is vital for investor members across Europe.
The CEO/ED of Nigeria Export Promotion Council (“NEPC”) Mr. Olusegun Awolowo gave a glimpse of what Nigeria had to offer the world. NEPC is a government agency established for the sole purpose of developing and promoting non-oil export from Nigeria.
The delegation focused on the importance of export trade in creating employment, increase national income, foreign exchange earnings, increase government revenue and promotes international cooperation. During the conversation, it was noted that their was the emphasis on the Nigeria government determination to shift focus on export trade to non-oil sectors. Mr. Awolowo also affirmed his commitment to ensuring that Nigeria remain focused and to deliver on non-oil sectors promise.
It is estimated that Oil & Gas contributed 14% of Nigeria GDP while Agriculture and Real Estate contributed the remaining 86%. Clearly, these statistics demonstrate the reasons why the government is deploying more resources, budget and firm policies to support non-oil sectors.
With a population of over 170 million people and direct access to Economic Community of West Africa States (ECOWAS), Investors establishing in Nigeria will be able to market to over 300 million people across West Africa. There are investment opportunities in manufacturing, processing, packaging, and marketing of non-oil products and services. Listening to the account of Mr Adeniyi, there were clear government policies and programmes supporting this diversification. Doing business in Nigeria requires the right level of commitment, resilience, local knowledge and strong governance structure. Export business span across micro, small medium and large enterprises hence Nigeria is open to all.
The current administration strategy on export trade is quite simple and one that will have a huge impact on the economy of the country with the largest GDP per capital in Africa. As Nigeria broadens and grows its export basket, this will trigger a positive chain reaction of events. The real economy will grow; production capacity increases forcing down prices of goods. Exporting more than importation of goods will contribute to potential increase in foreign reserves drives the value of the Naira and provide a foundation for a resilient economy.
BLNCC sits between businesses in Nigeria and BELUX region (Belgium and Luxembourg), and are determined to ensure its members are provided with reliable information to enable them to make the right investment decisions. Nigeria has many exportable products, from agricultural commodities, horticultural products, semi-processed products, processed, manufactured goods, solid minerals, non-metallic ores, and precious stones.
Nigeria has opened its doors to foreign investors and businesses to set up production plant, process and manufacture final products for both local consumptions and export. Incentives include tax holidays of up to five years. There are capital allowance to be enjoyed and it ranges between initial allowance of 5% to 30% depending on the sector.
For example, if you invest in Ranching and Plantation Expenditure attracts initial allowance of 25% and annual allowance of 15%.
Housing Estate Expenditure initial allowance of 25% and annual 10%. The amount of capital allowance to be enjoyed in any year of assessment is restricted in Nigeria to 75% of assessable profit in case of manufacturing companies and 66% in case of others, except such companies in agro-allied industries that are not affected by this restriction.
If leased assets are used in agro-allied ventures, the full (100%) capital allowance claimed will be granted. Moreover, where the leased assets are agricultural plants and equipment, there will be an additional investment allowance of 10% on such expenditure.
There is also a government policy supporting repatriation of capital to investors home country.
To compete in export markets, it is not enough for developing countries to increase the volume and range of products they sell; they also have to compete in global trading system where increasingly stringent requirements apply with regard to product quality, safety, health and environmental impact (“UNIDO”). UNIDO has developed a comprehensive programme to help Nigeria to overcome these shortcomings in quality standard and conformity with international requirements.
Photo Credit: Gradient Consulting Africa