Business

Investment in Nigeria’s economy down by 62%

Country records $4.81 bn in 3 months

Investments so far announced in the country in the first quarter of this year indicated a sharp drop in interest in the economy as the total money committed by investors dropped by 62 per cent when compared with last year.
The announcements for Q1’20 as captured by the Nigeria Investment Promotion Council (NIPC) stood at $4.81 billion at the end of March, a sharp decline from $12.71 billion recorded in the same period of 2019.

According to NIPC, the $4.81 billion investments so far announced this year were committed to a total of 19 projects across the14 states of the federation and the Federal Capital Territory (FCT).

In terms of sectoral distribution of the investments, the transportation sector got the lion share as $2 billion, representing 42 per cent of the total announced, went into projects in that sector.

The information and communication technology (ICT) sector came second as it accounted for $1.61 billion, representing 33 per cent of the total investments announced in the quarter, while the mining and quarrying sector got $0.99 billion, which is 21 per cent of the total announced investments.
The agriculture sector also received $0.17 billion (four per cent) within the three months, while the remaining $0.04 billion went to other sectors.

According to the NIPC report, in terms of destinations, $2.61 billion, representing 54 per cent of the total investments went into projects in Kaduna State.

Projects in Nasarawa and Lagos states attracted $0.06 billion and $0.03 billion respectively. Ekiti State $20.01billion, while $2.11 billion, representing 44 per cent of the total investments.

NIPC noted that $2 billion, representing 42 per cent of the total investments came from U.S. investors, while $1.6 billion, representing 33 per cent of the fund, came from South Africa.
The report indicated that $0.78 billion, representing 16 per cent, was from investors within Nigeria while $0.40 billion came from the United Kingdom (UK).

It added that the top 10 investors in the country in the period under review included 328 support services, GmbH from the US; MTN South Africa; African Industries Group (Nigeria); Savannah Petroleum from the UK; and Notore Chemical Industries Plc from Nigeria. Others are Agrotech Nigeria; Blue Seal Energy Group (BESG) Nigeria; Villam Agric Ltd from the UK; Greatman Legend from Canada; and Tomato Jos (Nigeria).

The Nigerian government had last year declared that it was in search of more investors and financiers to fund infrastructure projects valued at $140 billion.

The projects, the government said, would be targeted at bridging existing infrastructure gaps in the country and would be spread over the next four to five years.

Meanwhile, in its bid to encourage more investments, the NIPC said it had granted tax holidays to eight more companies as it approved their pioneer status applications in the first quarter of 2020.

Some of the companies, which received the approval-in-principle, were Main Data Nigeria Limited, Honeywell Flour Mills, Apple & Pear Nigeria Limited, and Tranos Contracting Limited. Others are Elvis Hotels, Medlog Nigeria Limited, Kalambina Cement Company, and Wells Hosa Greenhouse Farms.

Obu Cement Nigeria Limited got a two-year extension of the tax holiday.

The Commission said it received 18 new applications, three of which were denied, and one application for an extension during the first quarter. Industries that qualify for the PSI are given a three-year holiday from paying company income tax for an initial period of three years with the possibility of an extension for one or two years.

This incentive is listed in the Industrial Development (Income Tax Relief) Act, which is administratively regulated by the NIPC.

“The companies made a total investment of N151.916 billion, have 1,460 staff, and are in various sectors including agriculture, construction, administrative service, information & communication, and manufacturing.
One company was granted an extension for two years; the company had a total investment of N88.700 billion, while its staff strength was 573,” a statement by the commission read. According to the report, 39 companies were enjoying the PSI as of March 31, 2020, with 125 applications are still pending, and no PSI certificate has been cancelled.

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