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8 Things You Need To Know Before Investing In Nigeria

8 Things You Need To Know Before Investing In Nigeria

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Nigeria is Africa’s leading economy, and the idea of investing in Nigeria is gaining momentum. It is also the most populous nation on the continent with about over 170 million people. It has a federal system of governance made of 36 states.

The west African oil-producing nation is a leading destination for both local and foreign investors. They are flocking the country to invest in the manufacturing and service industries among others.

Below are some of the things that one should know before investing in Nigeria.

Sources: The Independent, BBC, Trading Economics, Daily Trust, Premium Times, The Nation, Bloomberg

ca. 1983-1985, Nigeria --- General Muhammadu Buhari of Nigeria --- Image by © William Campbell/Sygma/Corbis
ca. 1983-1985, Nigeria — General Muhammadu Buhari of Nigeria — Image by © William Campbell/Sygma/Corbis

Politics

Nigeria has had both military rulers and democratic elected presidents. Muhammadu Buhari was elected president on March 28, 2015. He is a former military general who served from 1961 to 1985. General elections have been characterized by violence and politically instigated assassinations, since 1999 when the nation returned to civilian rule after years of military rule.

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themiddleeastmagazine.com

Economy

Investing in Nigeria is possible because it is one of the most developed nations in Africa. The services industry is the largest sector while agriculture is second. Its economic growth rate is currently at about 1.4 percent due to a drop in oil prices on the international market. Oil export is the country’s largest source of revenue and accounts for over 70 percent of its annual budget financing.  About 62.6 percent of the nation’s population lives in poverty.

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altcoinpress.com

Sectors with potential

Agriculture is Nigeria’s main economic activity. It has over 80 million hectares of arable land. It contributes about 40 percent. There is a significant growth in startup businesses and Small and Medium Scale Enterprises. They are pillars of the nation’s economic recovery program. The country has one of the fastest growing telecommunications market on the continent.

bbc.co.uk
bbc.co.uk

Money Laundering

In March 2016, Nigeria started a joint exercise with British government’s agency, Crown prosecution Service, to fight money laundering. This is also aimed at recovering proceeds from money laundering have been invested in foreign bank accounts. There are also efforts by Buhari’s office and the National Assembly to strengthen laws to fight economic crimes. They are Money Laundering Prevention and Prohibition Bill of 2016 and the Mutual Legal Assistance in Criminal Matters Bill of 2016.

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www.almanar.com.lb

Terrorism

The threat is homegrown due to the existence of the Boko Haram militants who have carried out deadly attacks in Northern Nigeria. The Fulani militant group that has spread to neighboring Central Africa Republic was named the fourth deadliest terrorist group in 2015. It is Africa’s most affected nation. In 2015, Nigeria was the third most hit nation by terrorism. Since 2014, more than 7,512 people have been killed in terrorism-related attacks.

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Corruption

It is widespread in the country and has left many Nigerians in poverty. This is despite Nigeria being Africa’s largest oil producer. In the 2015 Corruption Index that is based on how corrupt a country’s public sector is perceived to be, Nigeria was ranked 136 least corrupt out of 175 nations globally. This is a good sign for those investing in Nigeria.

A newly built railway track in Lagos, Nigeria (Image: bbc.com)
A newly built railway track in Lagos, Nigeria (Image: bbc.com)

Infrastructure

Road is the most used mode of transport. It accounts for 80 percent of the transport in Nigeria. Rail transport has been neglected and much of the transport is done on the roads. In 2002, the nation started a $60 billion programme to upgrade it. They include the 1124 km Lagos-Kano railway worth $8.3 billion and 1402 km Coastal railway from Lagos to Calabar at a cost of $12 billion. In 2013, upgrade of Lagos and Abuja Airports started. This is set to double their capacities to handle cargo and passengers.

Thinkstock
Thinkstock

Organized Crime

There are rampant organized groups engaging in drug trafficking, cyber crime, fraud and extortion activities. Organized crime in Nigeria has increased due to lack of legislation and enforcement, corruption and lack of goodwill within government agencies to fight them. Some of the gangs have tribal backgrounds.