NIGERIA PRIORITY AREAS OF INDUSTRIAL INVESTMENT

AGRICULTURE
The main policy here is sufficiency in food production and surplus for use as industrial raw materials for export. The priority areas include: -

i) all aspects of direct agricultural production, but in particular, rehabilitation of groundnut, cotton, cocoa and oil palm production, fish production and forestry;
ii) investment in processing of agricultural produce and storage facilities;
iii) investment in processing of agricultural input supply and distribution;
iv) agricultural mechanization e.g. adoption and use of farm equipment (such as bulldozers, tractors, etc) including the provision of land clearing and land preparation services;
(v) agricultural support activities including research and funding of research activities;
vi) water resources development, especially for irrigation and flood control infrastructures along river basins;

vii) development of earth dams and construction of wash bores and tube wells;
viii) development and fabrication of appropriate small-scale and mechanised technologies for both on-farm processing (e.g. threshing) and secondary processing of agricultural produce for consumption or storage.

MANUFACTURING INDUSTRIES
The priority areas of industrial investment which are favoured in the administration of government industrial incentives are those described here-below:
(i) Industries which can either immediately or in a few years time source their raw materials locally e.g. in the agro and agro-allied sub-sectors for which there are abundant natural resources in Nigeria, including food preparations, e.g. fruit drinks, cereal milling, feed mills and vegetable oil processing;
(ii) Industries which support food production programmes through local manufacture of chemicals, equipment and light commercial vehicles in particular, and chemical as well as petrochemical based manufacturing industries in general;
(iii) Industries with multiplier effect such as flat sheet mills and machine tools industry including foundries and engineering industries for spare parts production;
(iv) Basic industries and petrochemical and liquidified natural gas projects in which the government welcomes foreign partners;
(v) Processing of local agricultural produce and minerals into industrial raw materials as manufactured intermediate goods required by existing industries in Nigeria;
(vi) Investment in research institutes particularly in the area of adaptive research and commercialization of local inventions;
(vii) There are nine (9) priority sub-systems that possess the ability to stimulate the laying of a favourable industrial base and provide a catalyst to industrialization in Nigeria. These pilot sub-systems are:-

- foundry and forges;
-    metal fabrication;
-    pharmaceutical;
-    food processing;
-    leather and leather products;
-    textiles and wearing apparels
-    non-metallic building materials - bricks, ceramics and glass.

The Government of Nigeria welcomes investors’ participation not only in these but also in the following project areas: -
- gemstone cutting and polishing;
- gold processing;
- mineral benefication plants for gypsum talc, kaolin, marble, dolomite, baryte; 
- mini-sugar production plants;
- cement production;
- lead and zinc;
- refractory bricks;
- processing of salt from sea water;
- sodium tripolphosphate production;
- small/ medium scale plant for sheet metal production;
- long fibre pulp/kraft paper production;
- bottled mineral water;
- mining of industrial minerals;
- telecommunications.

EXPORT MANUFACTURING
In recent studies by the Federal Ministry of Industry, activities identified in respect of export market potential include:
(a) Agricultural produce processing, food and beverages;
(b) Textiles: yarn /textiles, apparel, leather and products of leather (including footwear of rubber and plastics);
(c) Wood: furniture;
(d) Paper, paper products;
(e) Iron and steel, non-ferrous metals;
(f) Fabricated metal products, and
(g) Consumer durables.
It is recommended that industries in Nigeria should specialize in these sectors in which it is found that Nigeria has comparative advantage relative to the operation of such industries in other countries.

MINING AND MINERAL EXTRACTION (NON-OIL)
There are tremendous opportunities in this sector also, and government has invested heavily in the generation of vital information on minerals? Outstanding among these are coal, gypsum, barytes, kaolin and talc. Nigeria has one of the best quality coal deposits in the world with the lowest sulphur content. The names, location, quantity and possible industrial exploitation of some solid minerals are as follows:-

(i) Barytes : 41,000 and 70,000 tonnes of which are found in Benue and Plateau State respectively, are used as inert volume and weight filler in drilling mud, rubber, glass, paper, etc. or as extender in the plant industry, and as chemicals in the manufacture of glass, heavy printing paper and plastics;
(ii) Coal : 82.2 million tonnes, 189 million tonnes and 32 million tonnes of which are found in Enugu, Benue and Plateau States, respectively. It is used as fuel and in industrial production of tar, gas and non edible oils;
(iii) Diatomite: 200,000 tonnes of which are found in Borno State; is used in making insect control powder, bond for furnace brick walls and mineral fillers and filters;
(iv) Lignite: 71million tonnes of which are found in Delta State; is used in industrial production of tar, gas, oils and (nitrate) fertilizer;
(v) Columbite: 14,223 tonnes of which are found in Plateau State; is used in forming alloys that are useful in nuclear, aerospace and gas turbine engineering;
(vi) Iron Ore: 30.48 million tonnes, 182.5 million tonnes and 45.72 million tonnes of which are found in Agbaja in Plateau State, Okene in Kogi State and Enugu State, respectively, is used for making steel, transformer and motor cars, ferrous sulphate from waster liqueur of the steel picking process or by the direct reaction, metals for electrical shielding, electro-magnetic devices, electric bells, electric fan cage, equipment rack, instrument body, engineering works, hydrated salt, iron oxide pigments, various salts of iron and ferrites and chemicals;
(vii) Tin: 10,546 tonnes of which are found in Plateau State; is employed in plating, production of tin oxide used in paint, paper and ink industries, production of tin oxide resistors, electric lead wires.

NIGERIA EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE
The Extractive Industry Transparency Initiative (EITI) in Nigeria is the Nigerian subset of a global initiative aimed at following due process and achieving transparency in payments by Extractive Industry (EI) companies to governments and government linked entities.

President Olusegun Obasanjo launched the EITI in Nigeria in February 2004. The National Stakeholders Working Group (NSWG) comprising of 27 individuals from civil society, media, government, indigenous, national and multinational companies, steers the implementation. The EITI Nigeria Secretariat in the Presidency has day to day responsibility for implementation.

EITI Nigeria consists of an Independent Audit of Revenues and Payments in Nigeria’s Extractive Industry; and the publication of all information and data on the extractive industries through a grass-root based communication strategy and through the engagement of rural communities and regional civil society groups.

EITI Nigeria is laying the foundations for an open and transparent extractives sector that will make the needed changes irreversible. In line with the reform efforts embarked upon by the present administration, EITI Nigeria has quickly moved from rhetoric to implementation.

Audit of the Oil Sector
Already a consultant with EITI experience had been appointed through open international tender to prepare the terms of reference for a full audit of the oil sector. It will also advise on developing a communications strategy and a bill to give EITI legal backing.

EITI Bill
With the passage of the EITI bill, it is now mandatory for annual revenue/tax audits to be undertaken in the extractive industries sector. Oil companies are now legally required to disclose all payments. The recently established Oil Revenue Monitoring Unit has also been made independent of the Federal Ministry of Finance.

Engaging Civil Society
The process of preparation and consensus building is important. The Government of Nigeria has been clear that EITI in Nigeria is for the benefit of the Nigerian people not the international community. They are consequently seeking to build a wide consensus behind EITI and have co-opted a range of organisations, including the media, labour and NGOs, on to the EITI steering group. The dialogue is being extended to other civil society organisations, including some from the Publish What You Pay campaign.

ELECTRIC POWER PRODUCTION
Nigeria has 6,000MW of installed generating capacity, however, the country is presently generating about 3,000 MW because most facilities are inadequate. The country has proven gas reserves and around 8,000MW of hydro development has been planned. Nigeria has plans to increase access to electricity throughout the country to 85% by 2010. This would call for 16 new power plants, approximately 15,000km of transmission lines, as well as distribution facilities. At present only 10% of rural households and 40 % of the country’s total population have access to electricity.

The Nigerian government is in the process of privatising existing facilities. The Nigerian Electricity Power sector is being reformed to attract investment, improve efficiency, and encourage private sector participation. The National Electric Power Authority (NEPA) the national Power Holding Company has been unbundled into 18 firms. The 18 offshoots include six generation companies, one Transmission Company and 11 distribution companies to be privatized or concessioned as the case may be.  Two generation companies and three distribution companies will be privatized between February and December 2006.

A regulatory body which will among other things provide a conducive environment for long term development of the sector and supervise the sector as well as private sector participation in Transysco is scheduled to commence in December 2005.
Although there is already an element of private participation in the operations of the electricity sector, such as the independent power projects (IPP), Revenue Cycle Management (RCM), the involvement of private sector will now be driven faster with the incorporation of the holding company.

Investors are therefore invited to invest in the following areas of the power sector:
•    Generation
•    Solar Energy Development
•    Cables and Wires Manufacturing
•    Electrical Meters
•    Transformers
•    Electrical Construction, etc.

FINANCIAL SECTOR
The Nigerian financial system has undergone some remarkable changes in recent times. Some of these developments include the promulgation of the Failed Banks (Recovery of Debt) and Financial Malpractice in Banks Decree No. 18 of 1994. This is to facilitate the prosecution of those who contributed to the failure of banks and to recover the debt owed to the failed banks. Another major development was the inauguration of a Financial Services Regulatory Coordinating Committee (FSRCC) by the CBN in 1994. The aim is to coordinate and standardize the regulatory policies of all financial institutions in the system with a view to evolving coherence and comprehensiveness. The CBN also granted forbearance to finance companies operating in Nigeria whereby they were given a maximum of four years to amortize their classified assets portfolio against their current profits.

The Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree established an autonomous foreign exchange market. The Decree empowers the Central Bank of Nigeria, with the approval of the Finance Minister, to issue guidelines to regulate the procedures for transactions in the market as well as other matters, which may enhance the effective operation of the market. The decree provides for any convertible foreign currency to be traded in the market. It also allows an individual, resident in or outside Nigeria, to invest in any security in Nigeria.

Investment Opportunities in the Financial Sector exist in the following areas:

•    Commercial banking
•    Merchant Banking
•    Discount House
•    Development Banking
•    Finance House
•    Insurance
•    Bureau de Change
•    Primary Mortgage Institutions
•    Micro-Finance Institutions, etc

PRIVATISATION & PRIVATISATION POLICY
The Federal and State governments had in the past endeavoured to play an active catalytic role in the economy by initiating and acting as sizeable stakeholders in a number of core industries.

The 1997 Budget announced that all laws that inhibit competition in certain sectors of the Nigerian economy would be repealed. Accordingly, with effect from 1998, private sector investors are now free to join or compete with government-owned utility corporations.

The Public Enterprises Promotion and Commercialisation Act, authorises the partial privatisation of government enterprises in the following sectors:

- Telecommunications;
- Electricity (generation and distribution);
- Petroleum refining;
- Coal and bitumen production (mining, processing and export);
- Tourism generation (tour and travels and hospitality).

Within the context of the liberalization policy, both foreigners and nationals are free to participate and invest in the privatization of the public enterprises. In this regard, the Federal Government contstituted the National Council on Privatsation under the chairmanship of the Vice President of the Federal Republic of Nigeria to oversee the privatization programme being implemented by the Bureau of Public Enterprises (BPE). The exercise is expected to accomplish in three phases as follows:

Phase I: This phase, which has already been concluded, had on its bill, Commercial and Merchant Banks and Cement plants that are already quoted on the Nigerian Stock Exchange.

Phase II: Enterprises billed on this stage are Hotels and Motor Vehicle plants.

Phase III: Included in phase three are NEPA, NITEL, NAFCON, Nigerian Airways, Petroleum Refineries.

The privatization of the Public Enterprises is one of the important elements of Nigeria’s economic reforms through which the hitherto commanding heights of the economy are being transferred to the private sector. The key strategies of the privatization programme include:

- Market the right public enterprises to the right strategic investors with the appropriate financial resources and technical-cum-managerial competence at the right prices
- Utilize the best global practices
- Apply a wide range of sales methods e.g. core investor, public offer, concession etc as considered relevant to each enterprise
- Assure transparency in the application of the established procedures for privatising each enterprise
In this respect, the government of Nigeria has continued to improve the enabling environment for the success of the Privatization programme to the delight of the investors. Some of these efforts include:

    Crimes Commission Act
     Economic and Financial Crimes Commission Act
     Money Laundering (prohibition) Act
     Competition and Anti-Trust Bill
     Energy/Electricity Reform Bill
     Labour Reform Bill
     Extractive Industries Transparency Initiative
     Independent regulatory commission for each sector
      Port reforms
     Generous tax holidays
  Highly skilled local manpower
  Improved capacity building in the Bureau of Public Enterprises (BPE) for the effective management of the privatization processes
 Open, fair and just engagement of all relevant stakeholders for all enterprises, including labour and environmental issues, with the support of the World Bank and other agencies
  Guarantees from the World Bank, Multi-lateral Investment Guarantee Agency and Overseas Private Investment Corporation, and
   Political will and commitment at the highest level of government
In the past five years, over 25 public enterprises have been privatized in Banks, Insurance, Cement and Sugar manufacturing, Oil & Gas, Hospitality, Shipping, Vehicle assembly and media sectors of the economy. The following Table shows the Stock Market performance of some of these privatized enterprises: