The scale of the net inflows, about 207 percent growth above what flowed in the same period last year, highlights the revival in investor confidence in Nigeria’s economic reforms.
The Central Bank of Nigeria’s (CBN) figures for Q3, 2012, showed a total of $1.4 billion was injected into the economy through Foreign Direct Investments (FDI) while $4.6 billion came in through portfolio investments, with another $4.7 billion invested in the capital market, a far cry from what flowed in this year.
The current inflows and investment commitments with different gestation periods, focus on infrastructure development, construction of power plants for the enhancement of electricity generation, mining, healthcare, agriculture and agro-allied sectors of the Nigerian economy, areas where there have been concerted efforts to turn things around.
The investments into these sectors in the month, reflected positively also in the capital market, as investors (local and foreign) saw need to key into the opportunities in the Nigerian equities, which achieved a four-year high last weekend.
The response is underscored by the International Finance Corporation (IFC) $50 million Naira-denominated bond issued in the period.
Having been endorsed by the Investment Supervision Department of the National Pension Commission (PENCOM), the IFC’s investment in the country has surged to $1.1 billion, which is the largest portfolio in Africa and eighth-largest globally.
“The rally underscores the rising confidence in the country as a project and buy-in by investors who easily smell good deals,” analysts told BusinessDay weekend.
BusinessDay Research and Intelligence Unit (BRIU) analysed the future effect on the value chain.
“New companies will emerge to service the investments and existing companies will upgrade skills. Hubs are forming as the investments are spread across the country. There will be new jobs and job requirements and there will be spill-over to local suppliers as well.”
General Electric, the leading global player in turbine technology, signed a memorandum of understanding with the Federal Government of Nigeria to invest about $1 billion (N157bn) in the next five years in manufacturing, assembly and training, in a firm located in Calabar, Cross River State. Initial investment will be $250 million and it is expected to rise to $1 billion over the duration of the agreement.
Other deals sealed by GE last month include the $500 million 450 megawatts Geometric Power Plant in Abia State, as well as with Transcorp plc, in order to increase power generation to 650 megawatts at Ughelli Power Plant in Delta State. Tony Elumelu, chairman of Trancorp Plc and Jeff Immelt, global chairman and CEO, GE graced the occasion when the deal was signed.
In another development, the African Finance Corporation (AFC) and FMO of The Netherlands (Entrepreneurial Development Bank) reached an accord to promote project development facility in the country. “The Facility will make early stage investments in projects under development, pre-financial close, in the infrastructure sector across sub-Saharan Africa.
The $15 million facility will fund early-stage equity investments in projects under development by AFC, and third party developers, including those referred to the Facility by FMO. The Facility will be managed by AFC and will typically fund technical advisory services and third party expenses”, information obtained from the official website of FMO revealed.
The month of January 2013 also witnessed the injection of $800 million (N126 bn) by the African Development Bank (AfDB) into the Nigerian economy. The breakdown shows that Eleme Fertilizer and Chemical Company got $100 million while the Bank of Industry (BoI) and Nigerian Export-Import Bank (NEXIM) received $700 million. The former loan is meant to boost fertilizer production, just as the latter will enhance the capacity of BoI and NEXIM to promote non-oil export.
Many other firms and financial institutions yet to berth, are fast queuing. One such, is the Nigeria-Canadian Bi-National Commission (NCBNC) which announced that Canadian firms are interested in the country’s mining activities, rail, road, aviation, as well as in agriculture, even as they recognised the need to encourage investment in Information and Communications. Consequently, they have promised to increase their trade with Nigeria up to $6 billion by 2015.
Samsung is looking to build a manufacturing plant in the country.
Back home, the FG has set aside $400 million for the trans-Saharan gas pipeline. With specific focus on the Calabar-Ajaokota-Kano pipeline, the speedy completion of this pipeline will enhance the operation of the Trans-Saharan Gas Pipeline Project. Also, Stanbic IBTC and Keystone Bank will provide N5.6 billion for the Agbekoya (Farmers Association) in order to boost food production and processing.
In addition, Standard Chartered Private Equity and Ashmore acquired a stake in GZI which is an aluminum manufacturing plant based in Ogun State. Similarly, Florence Nightingale Group, one of Turkey’s best healthcare providers, will invest about $100 million in healthcare service delivery before the end of Q1, 2013.