Abuja — The Nigeria Investment Promotion Commission (NIPC) has said the country is fast becoming the preferred destination for investors, with the total foreign direct investments (FDIs) into the economy now at about $35 billion. Out of this, China's investment alone accounts for $10 billion.
This is set to be boosted with the possible injection of another $375 million into the economy by Standard Bank of Africa if its proposed deal with IBTC Chartered is approved by the Nigerian bank's shareholders today.
The FDI inflow, according to the NIPC, is now growing at a rapid rate and translates to an average of about $4 billion over eight years, starting from 1999 to 2007.
Disclosing this in an exclusive interview with THISDAY in Abuja, the Executive Secretary of NIPC, Engr. Mustapha Bello, said most of the investments came from telecoms and oil and gas sectors.
According to Bello, "as at 2002, the World Economic Forum reported that Nigeria received about $22 billion FDI and substantial part of it came from oil and gas, followed by the telecoms sector. That was about the time we had the auction of the GSM licences and GSM companies began to move in their foreign capitals to be able to establish the infrastructure to support the distribution of GSM service.
"But as at today, we are in the neighborhood of $33 to $34 billion. Even going by the CBN record, it's an average of $2 to $3 billion a year but if we are able to fast-track our growth to a target of 10 per cent, we must be able to drive a minimum of $3 billion a year, then we can keep pace with the 10 per cent growth. If we are able to make much more than that, then we should see a growth of 10 per cent just like the Chinese.
"Again we can only talk relatively because we have 10 per cent of Chinese population and the land area is 10 per cent. Even if we are able to achieve 10 per cent, it doesn't mean 10 per cent growth of Chinese. That means we can on year-in, year-out be removing a certain class out from poverty. Between 1999 and 2007, we have taken up $33 billion over 8 years. An average of $4billion," he added.
Bello however said if the nation could focus more on the non-oil sector, it would experience faster growth in FDIs into the economy, which would in turn translate to higher gross domestic product (GDP) growth.
"If we get more into the non-oil which is the target of the government now, then we would even see much faster growth because what investment of $5 million in the non-oil will do, that of $50 million in the oil and gas will not do. Because $5 million in the non-oil gas in the non-oil and gas should be able to create at least 500 jobs. Our drive is to get more into that," he said.
He said, "currently the Central Bank said that remittances or transfers into the economy from Nigerians in Diaspora was $8 billion, but you will notice most of it have come in to invest in the petroleum sector, small percentage of it goes into helping parents, relations."
Bello argued that "we don't really need that kind of money to go into those areas, we need it to go into other productive sector to support non-oil and gas activities particularly value addition.
"Take for example, our cocoa, it about $1,800 per ton. If you can add value to the same cocoa, you would be able to sell it 10 times faster, people will get employed. If we consume it here, you can get more than 20 times because if you sell out, it is regulated by the global commodities market, but if you sell locally, it depends on availability."
On China's investment in the economy, Bello said the Asian tiger's commitment in Nigeria jumped from $26 million in 1999 to $10 billion in 2007.
While saying many had expressed discontentment at some un-scrupulous Chinese companies, which had been corrupting the economy, Bello, however, advised that the country should find ways of dealing with the bad eggs, so that they would not affect the thriving Nigeria-China investment and business relationship.
According to him, "actually, if you look at the total investment of China in Nigeria, I think it moved from $26 million as at 1999/2000 but today when you include even the facilities the Chinese Gover-nment has given Nigeria, it is over $10 billion. If Chinese authorities can commit that to help us develop our railways, which is a major infrastructure, develop dams to be able to produce about $12,000 MW, this is our friendly country. Whatever some of their citizens are doing, we must try to find ways of tolerating them and then stopping them from misbehaving. If I come in to work and I give you over $10 billion, then you have to find ways of making me your friend so that I can give additional billions of dollars.
"Whatever they have done, then you would be prepared to moderate and make them realise what they are doing is wrong. The Chinese Government has been making effort to assist this country build infrastructure, in building capacity. Some of their IT enterprises are helping us develop rural telephony, ZTE, Huwaei Technology amongst others. I believe we are getting a lot more than whatever problems we have with the Chinese and I believe what we need to do is to continue to engage ourselves."
Meanwhile, as the IBTC Chartered Bank Plc tender offer, which is expected to culminate in the merger with Standard Bank of South Africa, ends today, it is not clear if the latter would secure 51 per cent controlling stake in the enlarged institution.
This is because securing the 51 per cent controlling stake would to a large extent depend on the willingness of some of the big shareholders of IBTC Chartered Bank to sell their shares. If the shareholders decide to hold back and Stanbic does not secure 51 per cent stake, it would have to renegotiate with IBTC Chartered Bank.
This does not, however, stop Stanbic from being the biggest shareholder in the enlarged IBTC Chartered Bank Plc. Stanbic Bank will now have to enter into a management agreement with IBTC Chartered.
But if Stanbic Bank succeeds, portfolio investment worth about N50.3 billion will flow into the country.
The first leg of the merger of the two institutions had commenced September 22 last year when Standard Bank Africa signed a Memorandum of Understanding (MoU) with IBTC Chartered Bank. The second leg is the Court-Ordered Meetings of shareholders of Stanbic Bank - Standard Bank's local subsidiary and IBTC Chartered, which is billed to hold in Lagos today. Shareholders of both institutions are expected to vote for the merger.
The third leg is the tender offer by shareholders of IBTC Chartered Bank, which also holds today.