Investment Outlook of Nigeria

With a stable democratic system established after the presidential election of 2015, resource-rich Nigeria presents itself as a great opportunity for investors from all around the world. Since the 1970s, the country’s oil production sector has been defining its economy. In 2011, Nigeria was the 10^th largest producer of oil.

It is the most populous country in Africa, and is majorly comprised of youths. The country is rich in human and natural resources. It lacks infrastructure and so presents itself as a heaven for investors interested in building any sector from scratch.

While presenting the 2015 budget, the Nigerian government emphasized that it wanted to shift its revenue generation to non-oil sectors. Many international development organizations are aiding Nigeria in this process.

The sectors that present themselves as great investment opportunities are the following:

Energy Generation

According to the Nigerian Investment Promotion Commission (NIPC), 23 million households in Nigeria have no electricity access. Thus, a large customer base can be formed. The energy sources present in abundance are gas, coal, solar, wind, and hydro. The government encourages manufacturing by providing up to three years of tax holiday to companies. Other investment opportunities also exist in the energy sector such as the manufacturing of electricity equipment and providing operational services.

Mining

Oil and gas extraction has been a focus in the Nigerian economy. The country is very resource rich and most of its natural resources remain unexploited.

Nigeria’s high-quality coal reserves are estimated to be more than 300 million tones. The coal industry still needs to be tapped in. With this, other resources such as iron ore, barytes, kaolin, talc and gypsum’s mining and export present themselves as great opportunities.

Real Estate

With the recent memorandum of understanding (MOU) signed by the Cantor Fitzgerald & Co, the housing industry in Nigeria would be experiencing growth. An investment of one billion dollars will be injected according to the MOU. President Jonathan’s dream of making affordable housing available for Nigerians is near to realization. The mortgage sector is a profitable sector yet to be explored by investors.

Transportation

The Nigeria’s transportation system is well developed. The road network is estimated to be 194,200 km long. The country handles major sea transport in West Africa through a number of seaports, which are regulated by the government authorities. The Nigerian government is currently privatizing its sea transport system. Air transport is expensive in Nigeria and needs the focus of international airlines to fully commercialize the transport. From an investment point of view, companies can invest in sea transport and invest in the transformation of the air transportation industry. The government provides a lot of investment incentives for plans which aim to further build upon the basic infrastructure.

Agriculture

Agricultural products used to be a major part of Nigeria’s export volume. In the 1960s, it exported the best groundnuts and palm oil in the world. There was a time when Nigeria’s home produce used to be in surplus, but the local farming practices have not revolutionized themselves with time. The government is working on the issue and coming up with mass schemes. If investment is injected into facilitating the agricultural industry, it is sure to reap huge profits.

Investment opportunities exist in the manufacturing of pesticides, fertilizers, and agricultural machinery. Financers can provide small loan schemes to facilitate the growth of agricultural production. The export of cocoa beans has always been a major foreign exchange earner for the country after oil, but its farming needs to be done commercially.

Although Nigerian food products are produced in huge quantities, they fail to earn foreign exchange for the country as they lack processing and packaging. Investors can build factories that can turn Nigeria’s produce into high-quality products for the foreign markets.

Services

Nigeria is considered to be the most economically established country of the African continent with a population of around 160 million. The market has huge potential for the service industry. The services sector such as the banking and financing industry, the tourism industry, and the telecommunication sector present great opportunities for entrepreneurs.

The banking industry has developed itself the most by far, but 46% of the population still doesn’t have access to banks. The Nigerian Stock Exchange (NSE) is a leading African capital market. These financial services combined with insurance services have a huge potential for growth. Investors can take advantage by making such services available to the large population.

The telecommunication industry remains untapped. The basic system of telecommunication is through fixed-line services. The population’s demand is growing, but considerable investments have not been made to make the technological advancement.

The tourism industry has a lot of potential for successful businesses. Nigeria has a lot of tourist attractions, the most famous of which are Yankari National Park, Obudu Mountain Resort, and Ikogosi Warm Spring. Most of the public that gets attracted to such places is domestic. To facilitate the tourist business, some big names of the international hospitality industry have opened up hotels in Nigeria. The tourist industry can develop further if security is enhanced and the business investors in the hospitality industry start taking the middle-class income groups as their target market.

Manufacturing

The manufacturing industries have been growing rapidly. Foreign investors have established their manufacturing factories in Lagos and the surrounding areas. Its main manufacturing industries are cement, detergents, textiles, and automotive assembly plants. The government is very appreciative regarding any manufacturing activities. Investment opportunities lie in the production of pharmaceutical products, beverages, the automotive industry, and textile weaving.

Nigeria is the strongest emerging market in Africa. The investment opportunities are infinite in the country. The government is focused on charging up the industrialization process and lessening the economy’s dependency on oil exports. Smart investors can establish themselves in the industry and gain massive ROI in the non-oil sectors.