What advantages have the past summits had on Nigeria’s economy?
We have had business summits locally and internationally; and the whole idea of some of these events is in three arms and sectors: They help to tell the Nigerian story. So it is about image building. If you compare the Nigerian business image and reputation pre-2011 and now, everything about Nigeria or whatever, the growth, the micro-economic environment, the level of investments, it is because of events like this. When these people go out they hear things like this. First of all the image of Nigeria was very bad locally and internationally. Moreover, people did not know about investment opportunities in the country until 2011. So the first thing is to educate people, make them aware and get them to become advocates of the country. That is one major reason.
The second is about attracting investments. Now there are various events that target specific investors. This for instance is more of image building. If I want to target investors, this is not where I will get them because if you have lot of money to invest you won’t be here. The investors that are here came to see me not to attend the event. They are some about power, some on refineries about eight of them. It is an opportunity to meet them and follow up on meetings we have had with them. But the enormous benefits to the country is the level of advocacy you get otherwise with the crisis of Boko Haram and other issues. Nigeria has no business talking investments but despite that we have seen increase in investments across board, it is because of events like this. The net effect is that since 2011 Nigeria became the number one investment destinations according to the United Nations Conference on Trade and Development (UNCTAD)
So for two years consecutively – 2011 and 2012, Nigeria was number one investment destination in Africa, then last year, it was among the top three.
What UNCTAD measures are net investments. So the sale of some Shell assets to Nigerian investors were taken out as investment outflow as opposed to transfer of investments. So, net Foreign Direct Investment (FDI) assessment put us among the top three. The net impact of all these is the level of investment into the country and our ranking globally. If you look at the Wall Street Journal index rating not too long ago, the publication interviewed top UK, US investors all over the world and Nigeria came as number one location they look for. It is because of meetings like this.
At the last meeting Obama had with African leaders in Washington DC, he pledged about $12 billion assistance to Africa. How would this impact on investments in Nigeria
There were a number of announcements at that event. One was by the US government, the second was by the World Bank, they announced some amount to prepare projects for investments. And then the private sector announced investments too. Most of the ones announced there are already coming to Nigeria, what I am saying is that the package is bigger than the $12 billion. The $12b you referred to is specific to some US investors that are coming to the countries targeted for assistance. For example, part of that will be the General Electric (GE) investments in Nigeria. Already GE is investing more than $2 billion in the country part of that is the petroleum and gas (P&G) that has come into the country.
But the area that the US is talking about is not general investments, but about investments in the power sector and if you look at it Nigeria has the biggest chance to have most of that investment because we have biggest opportunities.
Moreover, of all the African countries, our reform programmes are more advanced in terms of the fact that we have privatised power generation and power distribution recently more than any other country. That makes it easy. Then the fact that US government has allocated $1.5 billion for any American investor who wants to invest in Nigeria is further benefit. So there is money available to US investors who want to invest in Africa but a lot of them are looking to Nigeria. Part of what was not announced which was capitalised at that event is Aliko Dangote’s partnership with Blackstone Halal worth $5 billion into the power sector, a boost to the power value chain. So a lot of that is coming into Nigeria.
Can we have specifics on what events like this attracted to the country in the past?
Let me correct an impression; this is not a government event, but a private sector forum. Normally the African Round Table chaired by Alhaji Bamanga Tukur has been organising these events yearly but this year for the first time, the private sector is organising it so we are just invited as speakers. If we were the ones that organised this, our goals will be very clear, the organisation will be different, the people we invite will be different.
But if you look at the level of investments according to UNCTAD, the thing about investment is that it is difficult to say X or P amount has been invested because there is money, there are commitments. In the African commitment for instance you have pipeline, you have petrol. I will give you an example. Last year, we signed an MOU of $1 billion for GE to invest in the power sector. But of that $1 billion only $250 million has come in. So you get commitment of $1 billion and $250 million has come in so what number are you giving? It is important to clarify that because that is why you hear different numbers when you talk of investments. The first number that you throw out which is probably known and official is the number given by UNCTAD, based in Geneva. It was the agency that ranked Nigeria number one investments destination in 2011 and 2012. Over the last three years, the same UNCTAD said Nigeria has attracted $21 billion in net investments. That $21 billion UNCTAD quoted is not the total investments; it is net Foreign Direct Investments (FDI). So if you are a foreigner and another is a Nigerian, if he invests $5b and the Nigerian sells $3b, and another foreigner invests $10 billion, what UNCTAD will report will be $15b because yours is Local Direct investment not FDI because this is net not gross. So that net according to FDI is reported to be $21 billion.
If we look at investments in sectors, for example in rice we have $2b, $1b of that is coming from Dangote Group which is announced. You have $3 billion investment in sugarcane to sugar. Out of that $3b, $2b is from Dangote. Dangote plans to invest $16b in the next five years. Like I said these are the people waiting to see me, they seized the opportunity of this event to meet me.
Of that $3b it means that the Dangote Group imports tons of sugar, refine and sell. They employ about 2000 people. Now because of that $2b of the $3b investments he is going to have sugarcane plantation in six or seven states of the federation – Adamawa, Kogi and others. As a result of that he will create about 187,000 jobs. You know with the $2 billion, you have to buy the land, design it, cultivate it. He has brought in one of the biggest sugar companies in the world and has brought in all the equipment they would need. About $16 billion is coming into petrochemical sector. So these are things that have been announced and settled.
That $16b includes Endorama $1.2 billion for fertiliser and ethanol plants. It also includes Metori $9b petrochemical plants, which means by 2018 we will not be importing petroleum products. It includes $1.4b that Jim Ovia is putting down in Akwa Ibom, and two other Italian and one Nigerian company coming to invest in the petrochemical sector.
In the automobile industry, Hyundai, Peugeot, Nissan are already assembling in the countries, and I am told two other automobile giants are coming to start assembling here. Once their board approves the decision, they will announce commencement of business. There are also two other companies coming in.
In power alone, GE has 10,000 megawatts commitment over the next five years, each 1,000 megawatts of power is $1 billion. I think they have done 3,000 or 4,000 already. Siemens has a commitment of 10,000 megawatts; China has commitment of 50,000 megawatts. This is in addition to other small ones like solar companies, coal and others. So for power, we are discussing and expecting more than $60 billion commitments. So 15 years ago there were no policies to support all these investments.
We encountered some Nigerians who bring food stuffs to America but complain their goods are most times discarded because of poor packaging. They said all the African foods here are from Ghana. Are you aware of that?
These things are being discussed with senior American officials because we meet every six months to talk about issues like this. So, there is a forum for resolving issues like this and so we raised it. Their explanation is a pointer to where mentality comes in. You know there is something calls African Growth and Opportunity Act (AGOA) It is an instrument in which America has certain agreements with some African countries that allow them to import up to 6,000 items duty free into the country.
The countries benefiting from it are South Africa which accounts for 75 per cent of non-oil imports, Kenya, Mauritius and Lesotho. Ghana is not among the top four. In oil, Nigeria is number one but we sell our oil anywhere regardless of AGOA. If you look at all those things that they are exporting, South Africa is exporting mainly cars and auto parts, Kenya is exporting corn flour and garments. Most of the clothes you see in McDowall’s are sown in Kenya. Lesotho is leather and leather products. You will see that all these items are manufactured products. This is where Nigeria needs to start thinking about value addition. When you rely on agricultural products, food to eat, you have two problems. One is that if this is an item sold for N50 and the parts you are going to use to produce it is N1. How many N1 are you going to sell to make N50? So the value will always not be big that is why Ghana has not featured in the top four because West African countries focus too much on exporting raw materials and just food.
Secondly, because of the strict sanitary and phyto-sanitary requirements called SPS measures, any food imported into the country especially from say Nigeria is subjected to laboratory tests to determine whether it is fit for consumption by their people and if it is not they reject it. That is the problem.
There are two ways to get out this trouble: Develop our own laboratories that are internationally accredited, so that before we export food, we would have tested them. And if there are already tested and accredited in Nigeria, then they will not need to test them in America any more. That is part of the new standard we are trying to introduce in the country.
That is why most of them have failed. With Ghana it comes with reputation, most of the food imported from Nigeria failed that test whereas those from Ghana pass the test. The problem is about the perception, the packaging and all of that. But there are not big items just small items. It doesn’t mean we shouldn’t look at the issues raised because it is providing jobs for certain people but that is what you need to understand about the issue. It is always harder to defend foods export into another man’s country. When you go to the market to buy food items for your family you buy what is good enough for you not what will make them fall ill. So you can’t go against countries doing this but we can take steps to meet their standards, which is what we are doing.
What is your experience driving made in Nigeria car?
I had used Innoson made in Nigeria SUV. Later, I drove Nissan SUV also made in Nigeria. They remain s the best SUVs I have used in the country. They were assembled in Nigeria. Anyone that has driven or taken a ride in Innoson SUV asked me how they can get it. It is roomy, big, well assembled and by our technicians in the country. So we have to encourage them. You see people complain, but if we don’t have a policy like that, no investors will come into your country to do this. We cannot be spending $6b annually importing cars which means that your economy is going down because you are using your foreign exchange for the wrong things, interest rate cannot come down the way you want it, so we want to reduce that.
If you don’t have that policy investors cannot come in, and you cannot start your local content. Meaning that if you want to start producing tyres in the country, who will buy your tyres? You cannot produce break pads, windscreens because who will buy them? So one has to start before the others. People say why not wait until everything is ready before you do this or that, those ones will never happen until you have these policies in place. That is why this is always the first step, always painful initially but today it is the second highest employer of labour in South Africa, it accounts for about 12 per cent of their exports that is why they are able to benefit from AGOA. It accounts for more than 60 per cent of their GDP just cars. That is where the potential is, we want to develop but we must be willing to pay the short, medium term sacrifice that will get us there.
Looking back at the auto policy, what do you have to say to reactions earlier by Nigerians that the government was hasty in the implementation?
Why would anyone say it is hasty? We had auto strategy 30 years ago when Peugeot came into the country. We killed it and we are resuscitating it now. Now do you still say or agree that we are in a hurry when nothing happened in 30 years?
Probably because of the shock it had on salary earners that were used to buying used cars for less than a N1 million but now you are talking close to N2 million for a new car?
The way to look at it is watching what will happen in the near future whether it is today or five years time.
The issue is, what is government doing and how are we trying to solve the problem. Is government aware? The answer is yes. That is why in every country where they have introduced auto policy, they banned importation of used cars immediately because if you don’t ban used cars most people will not buy new cars therefore there is no market for investors to come in. In every country they banned it but in Nigeria we have not banned it. Secondly, the duty should be 35 per cent. Levy 35 per cent but we said for used cars we keep it at 35 per cent, we have not introduced the levy until we feel the condition is right. We had waived it until December, and then we might still defer for another six months. That is the second thing we are doing.
The third thing that is important that we are also doing is the fact that we said for this to work, government must do two things – encourage those coming to assemble affordable cars. That is why today you heard Nissan say they have cars for N1.5m or N1.6m. Fourthly, we will encourage banks to set up credit finance schemes. The reason you are spending, N800,000 to an old buy car is not because you want to buy a used car that you may spend a lot of money maintaining because you are required to pay cash. Nobody anywhere in the world pays cash for this sort of thing. In England if you enter a house, you see beautiful furniture and all that most of it is on credit. So we are saying we want to come up with credit purchase scheme whereby rather than buy that N800,000 used car, you buy a new N1.5m car, you pay over four years at interest rate that you can afford. That is what National Automotive Council (NAC) is using that levy for, to work with banks so that you can be assisted to buy a new car. We hope to launch that very soon. So when you come with any new policy you have to think through, what do I need to do to make it work and ensure that there are things already in place to make it work.
So you can assure of its safety and durability?
Absolutely. The Nissan SUV is what I drive now. It is safe, comfortable, smooth to drive, and has every comfort you need in a luxury car.
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Driving made in Nigeria car excites me –Aganga |
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