According to the UNCTAD, Nigeria has the third largest FDI stock in Africa -- USD 86.6 billion - after South Africa (USD 145 billion) and Egypt (USD 87.8 billion). This is largely due to the fact that the country remains Africa's largest producer of oil.
Some of the country's main advantages are a partially privatised economy, an advantageous taxation system, significant natural resources and the low cost of labour. On the other hand, widespread corruption, political instability, lack of transparency and poor quality of infrastructure limit the country's FDI potential.
The primary countries investing in Nigeria are the United States, China, and the Netherlands.
In 2015, due to the fall in oil prices, FDI to Nigeria declined by 27% compared to 2014, amounting to USD 3.4 billion.
Information on the FDI influx in the region is available in the Global Investment Trends Monitor published by the UNCTAD.
Why You Should Choose to Invest in Nigeria
Strong Points
With a population of over 180 million people, Nigeria is the most populous country in Africa and therefore among its largestmarkets.The country hasabundant natural resources and an inexpensiveworkforce,and itis strategically located near many WestAfrican countries.The Nigerian Governmenttends to pursue a policy ofeconomic liberalisation,promotingpublic-privatepartnerships and strategicallianceswith foreign firms.
Weak Points
There are a number of obstacles to FDI: poorly developed transport and energy infrastructure, which resultin high operatingcosts;inefficientgovernment institutions andcorruption; an inefficientjudicial system and unreliable dispute settlement mechanisms;a hightax burden; a restrictive trade policy;and an increasing lack of security,especially in connection with the extremist group BokoHaram operating in the north-east of the country.
Government Measures to Motivate or Restrict FDI
The Nigerian Governmenthas introducedmanyprogrammesto boost FDI,notably in agriculture, exploitation and mining, oil and gas extraction, as well as in the exportsectors.Tax incentivesare granted topioneeringindustriesdeemedbeneficial for the economicdevelopment of the countryand employment of itsworkforce (such as clothing); allowances facilitating capital investmentsandthe deduction ofintereston loans for gas companiesare also planned.Outside of the oil and gas sector where investment is limited to joint ventures or production-sharing agreements, foreign companies are allowed to own 100% of businesses. Industriesconsidered crucialto national security, such asweapons,ammunition,military and paramilitaryclothing,are reserved fordomestic investors.
Bilateral Investment Conventions Signed By Nigeria
Nigeriahas signed bilateralinvestment agreementswith Algeria, Bulgaria, China,Egypt,France,Finland,Germany, Italy, Jamaica, Montenegro,Netherlands,North Korea, Romania, Serbia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Uganda and United Kingdom. Onlyfourtreaties(France, Netherlands, South Korea and United Kingdom) have been ratifiedby both parties, the ratification process has been hesitant and poorly organised. Thegovernment has expressed aninterest in negotiating abilateral investment treatywith the UnitedStates.
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