Nigeria is one of the fastest developing countries in the world, one of the resource-richest countries in the world, the most strategically situated country in Africa, and the largest market in Africa with a population of over 205 million people and a rapidly growing middle-class. With the Africa Continental Free Trade Agreement (AfCFTA) in the making soon to be the largest single trading block in the world and with Nigeria being one of the major players, Nigeria's economy is projected by experts to be enroute to top 10 economies of the world by 2050, and possibly clocking a GDP of over $6 trillion.
The driving forces behind this rapid growth are the vibrant industries all of which have been wholly privatised to attract and boost local and foreign investments. As a result of favourable government policies and incentives, the Ease of Doing Business in Nigeria has steadily improved, attracting Foreign Direct Investments (FDI) from countries like China, the United Kingdom, France, Canada and the United States. The following are the most attractive industries to invest in Nigeria, due to existing favourable government policies in way of tax holidays, special incentives and privilleges as well as protections for foreign investors.
This covers all related activities including Commerical Farming, Lifestock, Aquaculture, Hydroponics and others. Among numerous other advantages, Agro-industrial ventures benefit from a five-year tax holiday, an agricultural credit scheme guaranteed by the Central Bank of Nigeria (CBN), subsidised fertilisers and zero import duties on raw materials used to make livestock feed. According to the Nigeria Investment Promotion Commission (NIPC), the Agricultural sector contributes 25% of Nigeria’s Gross Domestic Product (GDP) and accounts for 48% of the labour force. The sector’s growth rate over the last 5 years averaged 4%. Crop production dominates the sector, accounting for 22.6% of GDP alongside livestock (1.7%), fisheries (0.5%) and forestry (0.3%). The Government's Agriculture Promotion Policy 2016-2020 had achieved significant progress in creating the conducive commercial environment to meet domestic food demands, generate exports, and attract foreign investment, among other merits.
Nigeria is a natural location for a variety of industrial activities due to the availability of natural resources, affordable labour cost and large market. Its manufacturing sector is reemerging due largely to the improving performance of the consumer and household goods industries and growth of the middle-class. Nigeria produces a large proportion of goods and services for the West African subcontinent. The industry sector contributes an annual average of 23% of the GDP. The major activities include oil & gas (9%), manufacturing (7%), and construction (5%). The sector is strategic to government’s objective of diversifying the economy in line with the Economic Recovery & Growth Plan.
Oil, natural gas and related products account for 90% of Nigeria's total export volume and more than 80% of the government revenues. Nigeria is Africa's largest producer of petroleum and the 6th largest in the world, with an average capacity of 2.5 million barrels of crude oil daily. As a member of OPEC, Nigeria also ranks as the world's 8th largest exporter and has the largest natural gas reserves in Africa, ranking 7th position globally. However, the local refining capacity is only 24% which creates a huge gap between the demand for refined petroleum products and local supply. Towards bridging this gap, the downstream industry has been opened to private sector participation and foreign investments and with the passing of the new PIA (Petroleum Industrial Act) in August 2021, conditions have become much more favourable to foreign investors. By various government schemes and new policies like better profit sharing, Nigeria's oil and gas remains one of the most lucrative sectors to invest in. For this reason, Oil giants like Total, Chevron, ExxonMobil, Elf, Shell, ConocoPhillips, Eni and China's CNOOC all maintain operations in Nigeria.
The Manufacturing sector in Nigeria is geared towards accelerating industrial capacity to increase the sector’s contribution to GDP. The Government's target is to generate an additional US$20 to US$30 billion in manufacturing revenues over the next 3 to 5 years and substitute imports and diversify exports, diversify the economy from petroleum, create jobs and generate wealth. Foreign investors are welcome to take part wholly or jointly in manufacturing or industrial projects like Food processing - Fruits, vegetable oils, oil seeds, roots and tubers processing, Cereal and grain milling; Sugar production, Confectionaries and beverages, ceramic and glass production, solid mineral processing and so on.
After experiencing a 7.5% decline in 2020 due to the economic effects of Covid-19, Nigeria’s construction is expected to make a 4% recovery growth in 2021. With the steady expansion of the real estate market and state support in the infrastructure and energy sector, Nigeria’s construction market is due to increase 3.2% annually between 2022 and 2025. Favourable Government policies and programs like the $2.7bn Infra-Co fund backed by the Central Bank of Nigeria (CBN), the Nigerian Sovereign Investment Authority (NSIA) and the Africa Finance Corporation Companies (AFCC); has attracted a investors into the sub-sector and boosted the confidence of existing players like Julius Berger, China Civil Engineering Construction Company (CCECC), Reynolds and Arab Contractors. The 2021 Appropriation Bill for Covid-19 economic impact recovery is also a step in the right direction for investors.
Mining is a growing and thriving sector accounting for 0.3% of national employment, 0.02% of exports and about $1.4 billion to Nigeria's GDP, according to a 2017 report by the Federal Ministry of Mines and Steel Development. With untapped minerals like Baryte, Limestone, Gypsum, Lead/Zinc, Gold and more, Nigeria is literally a goldmine waiting to be explored. Despite its comparatively low production and output, the Mining sector thrives within a well defined regulatory structure supported by active professional bodies and agencies that are increasing shaping policies, creating programs and incentives favourable to investors in order to unleash this huge economic potential of this sector.
The Energy sector is one of the most exciting due to the room it leaves for a variety of possible innovations and creativity in the entire energy value chain ranging from power generation to conversion to storage to distribution to meter reading to billing etc. Currently, Nigeria's largest power source is the post-colonial Kainji hydroelectric power dam with a compromised capacity of 740MW out of Nigeria's total supply of almost 5,000MW attained as of 2016. With a fast growing population and rapid industralisation of the country, the current power capacity is said to be only 12% of what the country needs. In order to bridge the huge gap between demand and supply of energy in the country, the Federal Government had liberalised, diversified and commercialized the energy sector and also put in place tax holidays, investment incentives and other protections for foreign direct investors in this sector.
The Nigerian services sector has remained resilient amidst hard-hitting economic circumstances. The strength of the sector has hinged on its consumer-facing nature which have seen it grow into a significant economic force. Over the last decade, the sector has met pent-up consumer demand and served a fast-growing middle class. Buoyed by government policies and increased private investments, growth in the sector has driven the diversification of the economy.
Due to a growing generation of Nigerian consumers, wholesale and retail sales (trade services) has become the second largest sectoral contributor to Nigeria’s GDP, 16.4% in 2018 with an estimated market size of US$109 billion. With such huge market size, Nigeria one of the most attractive investment market for retailers in Sub-Saharan Africa, largely attributed to a growing middle class. A wide range of foreign investors, including South Africa’s retail giants - Shoprite and Pick n Pay, the Dutch retailer SPAR, and many more operate in Nigeria. These foreign investments are complemented by a host of domestic private investors who are building a chain of retail stores all across the country.
The information and communication sub-sector contributed 12% in 2018 and has grown at about 4% over the last 5 years making it the fastest growing and largest telecommunications industry in Africa. With a population size of about 206 million, less than 60% of whom are active internet users, the information, communications and technology (ICT) industry presents attractive investment opportunities. Through various electronic platforms, Nigeria’s ICT network has revolutionized business transactions by providing the highly mobile-technology-driven population seamless ability to bank, invest, purchase, distribute, communicate, and explore anytime and anywhere access to the internet is available. This trend has opened doors to investment in many aspects of ICT including hardware, software, network, apps and related services.
Following wide and far-reaching reforms, the Nigerian financial and insurance industry has steadily evolved into a more diversified, stronger and more reliable industry equipped to stimulate and support economic growth and sustainable industrial development of the country. According to the NIPC, the industry contributes about 3% to Nigeria’s GDP. With the launching of the new e-Naira digital currency in October 2021, Nigeria has enhanced the integration of electronic payments into our financial system, a step that has reduced the flow of physical cash in the economy and is gradually transforming the country into a cashless environment.
The banking industry is regulated and supervised by the Central Bank of Nigeria (CBN) under the Banks and Other Financial Institutions Act (BOFIA), CAP.B3, LFN, 2004. The industry has developed robustly driven by technology, with service offerings across various electronic platforms. As at December 2018, the industry’s customer deposits were in excess of N33 trillion (US$100 billion). By the end of the same period, the industry recorded over 200 million electronic transactions with a total value of over N9.5 trillion (US$31 billion) and has the potential for more, as about 40% of the population is still largely unbanked. This latent potential provides a huge opportunity for investors. For more information, please visit www.cbn.gov.ng
Nigeria’s insurance industry is one of the biggest in Africa, although its penetration is very low compared to its potential market size due largely to cultural and religious beliefs. Despite this, the industry remains resilient with total investment income in excess of N50 billion (US$160 million). With the implementation of the Pension Reform Act 2014 and the sustained implementation of tight monetary regime by the Central Bank of Nigeria, the insurance industry is expected to continue in the path of growth which is estimated to be at an annual average of 10% .The industry is regulated by National Insurance Commission (NAICOM) which is charged with the effective administration, supervision, regulation and control of the business of insurance in Nigeria. For more information, please visit www.naicom.gov.ng
Tourism is one of the most important growing sectors of the Nigerian economy due to its inter-relativity to other sectors like Transportation, Infrastructure, Construction, Real Estate, ICT and the food industry. The government gave priority status to the Tourism Industry as far back as 1990 when the National Tourism Policy was launched, with the main policy thrust being to generate foreign exchange earnings, create employment opportunities, promote rural enterprises and national integration, among other things.
Nigeria’s Vision 2010 had set year 2005 as the nation’s year of tourism though not much was actualized due to crumbled infrastructure and the government's poor implementation. However, today the tourism policies and programmes will now be aimed at making Nigeria the “Ultimate Tourism Destination in Africa” with a particular focus on boosting private sector involvement with investment incentives. Nigeria is blessed with a vibrant culture and multiple festivals with international marketing potentials, historical sites and naturally stunning sites ranging from tropical forests, magnificent waterfalls, beaches and climatic conditions with resort potentials conducive for holidaying.
The Transportation, logistics and supply chain sub-sector is one of the fastest growing industries in Nigeria due to its depenancy on other fast growing sectors like infrastructure construction, trade and eCommerce. With an estimated growth of $160 million annually, the sector is promising in every sense of the word. This is why the federal government has embarked on an agressive campaign to transport and distributioin network, workforce, road infrastructure, road congestion, road conditions, interstate highway access, vehicle taxes and fees, railroad access, water port access air cargo access, etc. to ensure innovation within the infrastructure development cycle of logistics and supply chain a well as attract local and foreign investments.
The rapid industrialisation of Nigeria has seen a sharp increase in demand for skilled labour education. An estimated 80,000 Nigerians go abroad each year to obtain an education or some type of short-term training. That number, added to an existing 180 million people in the country within the learning age. There is an increasing demand for affordable education and training in specialized fields like ICT courses, Business, sciences and Foreign Languages.
Due to the global pandemic curbing young people's ability to travel and study abroad, the market for quality education within the country is reaching an all-time high. With the exemption of profit taxes for education providers, as well as other incentives in place, the Government hopes to achieve home-trainned labour-force for the growing industry and service sectors.
For thousands of years, Nigerians have traditionally believed in preventional heathcare through naturally healthy food and cleansing herbs. With this tradition carried into the modern era plus a plethora of other challenges, Nigeria has neither put allocated a significant portion of her budget nor dedicated as many programs to healthcare as she does for other sectors. However, the pandemic has seen Nigeria's healthcare budget to over $1 billion in 2020 which is the highest in five years but still less than 5% of the total government budget for the year, falling short of the 15% United Nations requirement. Consequently, Nigeria's health sector has an estimated deficit of $80 billion in health infrastructure gap and the annual budget for health sector in not sufficient to cater for the growing infrastructural needs of the health sector. As a result,, the government encourages private sector involvement and foreign investments.