Last year has been one of economic progress for Nigeria, with Africa’s largest economy managing to crawl back into growth territory in the second quarter of 2017.
The Nigerian government has been working hard to brand the country as an attractive and lucrative destination for offshore investors to bring their capital, skills and business trade.
For example, as a result of the steps taken by the Nigerian Government, Nigeria moved up 24 positions from 169th to 145th in the World Bank’s Ease of Doing Business Ranking. Also, the Nigerian Government has made provision under the Industrial Development Act for so-called “pioneer companies” to enjoy income tax relief if they are actively engaged in the production of export goods, establishment of new industries, or expanding production in vital sectors of the economy. These pioneers are entitled to an income “tax holiday” for a period of up to five years. In addition, pioneer companies are awarded other benefits such as the exemption from withholding tax on dividends paid out of pioneer profits.
According to Standard Bank, Nigeria’s manufacturing sector is bolstered by the country’s massive potential workforce and consumer base. The Nigerian Government has started offering incentives for manufacturers that are able to locally source for raw materials. It has also opted to favour investment in the sector’s research institutes, particularly those that focus on adaptive research and commercialisation of local inventions.
The ICT sector is another area that could be lucrative for foreign direct investment. According to ‘Statista’ — an organisation that focuses on market data and research — Nigeria has one of the fastest growing internet users in the world. In 2017, there were approximately 76.2 million Nigerian internet users, an increase of nearly 50 percent since 2013. Online training is just one aspect where offshore investment is a possibility. This is the case of the software trainer Andela, a company which offers two-year learning programmes for young adults who are interested in becoming computer programmers and interact with companies around the world to assist graduates to enter the global programming, website development, and mobile apps market. By tapping into the under developed skills of the Nigerian youth, there are countless opportunities for new economy companies to develop technology leaders of the future in Nigeria and in the rest of Africa.
On the agricultural front, the sector is supported by nearly a third of all employed Nigerians. It is one of the country’s main foreign exchange earners. As such, the Nigerian government has incentivised the areas that will help modernise and mechanise the industry. Not only will locally grown foodstuffs be promoted on behalf of the investor, businesses and companies may receive the pioneer company status to qualify for tax incentives.
Grants for research and development in the area of raw materials, zero import duties on the raw materials needed to manufacture livestock feed, and subsidies on fertiliser are also offered in the incentives package.
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