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- Speech of Mr E O Olusanmokun, Consul General of the Federal Republic of Nigeria at Chamber Roundtable Luncheon on 3rd October.

It gives me great pleasure to address this august gathering this afternoon. I am extremely encouraged by the fact that I am among friends whose business dealings with Nigeria date back to many years. I am most grateful for your continued interest in our country which must be the reason you have extended this invitation to me.

Nigeria's first democratically elected Government in 15 years came to power about a year ago. Those previous 15 years had been characterised by widespread corruption, abuse of human rights, economic mismanagement and political repression. It was a climate in which tremendous capital flight took place while industrial production was at its lowest ebb.

For instance, all components of national infrastructure were in advanced stages of decay and neglect. Power (electric) dwindled to an absolute minimum. Ditto to potable water. Transportation generally was in a bad way. The national currency was unstable. These were the circumstances in which the current Government came to power.

In view of the above background, the administration has focused its attention on revamping the economy by creating an enabling environment for private sector - led economic development fuelled by foreign investment. Government is determined to put into place efficient infrastructures, energy supply, telecommunication, water and prudent financial services that would ensure a positive, internationally competitive environment for economic activities.

Furthermore, the administration has embarked upon measures largely designed to sanitize and create a qualitative, safe business environment. One of those measures includes the Corruption and Allied Offences Act recently passed into law by Parliament. There is no doubt that corruption blocks development, slows and impedes the consolidation of democratic institutions, weakens the rule of law, and undermines people's confidence in their government. President Obasanjo's personal crusade against corruption has so far yielded over USD1 billion recovered from erstwhile looters of government treasury. About double that figure is now frozen in several foreign bank accounts awaiting recovery and repatriation.

Another problem hitherto faced by the Nigerian business community was the perpetration of financial crimes and drug trafficking. The Government has ably improved and strengthened the existing mechanisms e.g. the Special Investigation Panel of Financial Crimes and Trade Malpractice. The enactment of the anti-corruption bill in May 2000 is a major step in sanitising the environment for foreign investors in Nigeria.

Some Facts About The Economy

Nigeria's GDP (PPP) stands at about USD99 billion. Per capita GNP is USD340. Inflation has come down to single digit (6%). National currency - Naira - has stabilized at N105 to USD. Foreign reserves stand at 4.1 billion, more than five months imports. 12 month's export 12.6 billion GDP growth for 1999 is 2.4%, 4% is projected for 2000 210% by 2003.

With the return of democratic governance, expectations are high among the people for a modernized economy and better quality of life. For these expectations to be met, domestic efforts need to be complemented by investments from abroad.

Virtually all the sectors of the economy are ripe and offer handsome profit for foreign participation.

Priority Areas of Investment

There are four Industrial Sectors which are considered priority areas of development because of their linkage effects on the other sectors and potentials catalytic role in the overall growth of the industrial sectors. These priority areas which are most favoured in the administration of government industrial incentives are:

1. Metallurgical/Engineering Industries
2. Agriculture (Forest-based and agro-allied activities)
3. Chemical/Petrochemical Sector
4. Construction Sector

Specifically the industrial projects desired from these sectors are:

1. Foundries and Forges;
2. Metal Fabrication/Machine tools
3. Pharmaceuticals;
4. Rubber and Plastic;
5. Leather and Leather products;
6. Textiles and Weaving apparels;
7. Cement;
8. Other non-metallic material building materials; bricks. ceramic glass;
9. Food Processing;
10. Sugar, Confectioneries and Beverages;
11. Cereal and Grain Milling;
12. Fruits, Vegetables, Vegetable Oils, Oil Seeds, Roots and Tubers.

In addition to the twelve identified priority areas mentioned above, investors are welcome to also participate wholly or jointly with Nigerians in the following specific projects:

1. gemstones cutting and polishing;
2. gold processing;
3. mini-sugar production plants;
4. multi-mineral plant for gypsum, talc, kaolin, marble/dolomite, baryte etc.;
5. cement production (700-1000 M.T. per day)
6. lead and zinc project
7. processing of salt from sea water
8. sodium triphosphate production
9. small medium scale plant for sheet metal production
10. mining of industrial minerals; bitumen etc.;
11. stone cutting/polishing;
12. fabrication of spare parts;
13. exploitation of coal with a known reserve of 293,140,000 tonnes in Enugu, Kogi and Adamawa States
14. timber/wood processing.

Agriculture

Nigeria's agricultural potential is huge. Highest priority is therefore given to this sector for its potential to quicken pace of poverty alleviation in the rural areas as well as the general improvement in the economy. Improved seedlings, provision of fertilizers, pesticides, new technology, better storage facilities are being provided. The private sector is being encouraged to join hands in providing these imputs. A principal goal is to achieve self-sufficiency and expanded export volumes in rice, corn, pea-nuts, cocoa, coffee, millet, soya beans, palm produce, rubber and cotton, etc.

• Finance credit
• Tax holidays
• Reduced customs charges on imported imputs
• Technical support through research institutions
• Export financing guarantees
• Investment protection guarantees
• Agricultural insurance scheme
• Extension services

Privatisation Programme

Government's privatization programme is now under way. The aim is to ensure that privatization yields the desired economic benefits and enhance the quality of life of the citizenry.

To ensure transparency, the programme will involve:

• International Privatisation advisers to enhance credibility and guarantee access to special skills and knowledge required for handling privatization of utilities.
• Company Group Investors with the capabilities for adding value to an enterprise and making it operate efficiently in the face of international competition. Such Company Investors will possess the technical know-how and financial capacity to pay competitive price for the enterprise and increase the capital base.

Further details about the programme and companies involved can be obtained from the Consulate General.

Investment Opportunities in the Oil and Gas Sector

Foreign and domestic investors are being encouraged through improved fiscal incentives in the Nigerian oil and gas sector. In the Upstream and Downstream sectors, the following are some of the areas where there are pressing needs for investors.

1. Petroleum Exploring and Exploitation

2. Search for development of local substitute for such items as Medium pressure valve, pumps, shallow drilling equipment, drilling mud, bits fitting, drilling cements etc.

3. Manufacturing of consumable materials in exploration such as explosives, detonators, steel castings, magnetic tapes etc.

4. Other areas in the services sector of the upstream

1. Construction and Installation
2. Maintenance
3. Pipelining
4. Well Services and
5. Transportation Support Services

1. Domestic Production and marketing of Liquefied Petroleum Gas (LPG)

2. Manufacturing of LPG cylinders, valves and regulators, installation of filing plants, Retail distribution and development of simple, flexible and much less expensive gas burner to encourage the use of gas instead of wood and other fuels.

• The production of refined mineral oil, petroleum jelly and grease
• The manufacture of bituminous based water/damp-proof building materials such as roofing sheets, floor tiles, rubber products, tarpaulin.
• Building of ashphalt storage, packaging and blending plants to handle the product for export.

4. Establishment of chemical industries such as distillation units for the production of naphtha and other special boiling point solvents used in plant and food processing industries.

5. Establishment of industries for processing Linear Alkyl Benzene, Carbon Black and Polypropylene.

6. Development of Phase II (Phase III to join later) of Nigeria's Petrochemical Programme.

7. Participation in all phases of the Nigerian Gas Industry development programme from exploration, gathering, production and processing to transmission.

8. Establishment of small scale industries to produce chemicals and Solvents, for example Chlorinated methane, Formaldehyde, Acetylene, etc., from natural gas.

9. Refining: One condition for purchasing Nigerian Crude Oil is the ownership of an efficient refinery. The shelter which the domestic petroleum products market enjoys, almost completely seals the prospects and viability of privately financed refinery for locally consumed petroleum products. However, opportunities exist for the construction of a refinery in bonded premises with adequate export facilities for dedication to the export market. Companies with the technological know-how can undertake turn-around maintenance of refineries. Refineries consume a lot of chemicals and utilize a broad range of spare parts. There is tremendous scope for small scale joint venture manufacturing concerns with foreign technical partners. Such ventures can start warehousing arrangements that will ensure continuity of supply at competitive prices. Other investment opportunities contingent upon refining and Ancillary activities are the manufacture of special products such as:

• Industrial and food grade solvents
• Insecticides
• Cosmetics
• Mineral Oil, petroleum jelly grease
• Bituminous-based water/damp-proof building materials such as floor tiles, rubber products tarpaulin, etc., and
• Asphalt storage, packaging and blending plants to handle products for export and local use. Export of refined products surplus also exists as an opportunity in refining.

10. Products Marketing: Petroleum Product Marketing would seem sealed with hardly any opportunity except by way of establishing an independent marketing outfit or aspiring to establish dealership with the marketers.

While indeed those opportunities remain viable, far more challenging opportunities may be explored in the areas of product transportation, by road and coastal tankers.

Associated with products distribution and marketing is a chain of manufacturing and maintenance businesses such as lubricating oil reprocessing, LPG bottles and accessories, oil cans reconditioning, etc.

The nations pipeline and depot network consists of 3,001 km of pipeline of varying sizes as well ass sixteen (16) storage depots. These pipelines and networks traverse the length and breadth of the country. The system therefore must be maintained in a healthy state for effective and efficient distribution of products.

Opportunities for Investment in the Solid Minerals

Nigeria is endowed with numerous mineral resources. Report policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors' participation in this sector.

Profile of Solid Minerals Deposits in Nigeria

The occurrence of Bitumen deposits in Nigeria is indicated at about 42 billion tonnes almost as twice the amount of existing reserves of crude petroleum. When fully developed, the industry will no doubt meet local requirements for road construction and also become a foreign exchange earner for the country.

Nigerian Coal is one of the most bituminous in the world owing to its low sulphur and ash content and therefore the most environment friendly. There are nearly 3.00 billion tonnes of indicated reserves in 17 identified coalfields and over 600 million tonnes of proven reserves.

Kaolin

Large deposits of Tantalite are known to occur in Nasarawa, Gombe and Kogi States as well as the Federal Capital Territory. The deposits are both alluvial and primary in the numerous pegmatite bodies that infest these areas. Grades of well over 50% Ta O are found. Private investors are invited to stake concessions for the development and exploitation of tantalite in these areas.

Mr. Chairman, I would like to seize this opportunity to state that in order to enhance economic recovery, the government has called for a private sector-led economy, with unhindered participation. Apart from privatization and other investment opportunities, Nigeria is targeting solid minerals, banking and insurance services. Looking at the potentials in Nigeria, solid minerals could challenge oil and gas in the next 10 years. Nigeria is therefore showcasing its other underground wealth by disseminating mineralogy inventories while highlighting tax incentives to awaken investment interest.

I thank you.
  

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