Nigeria. A. Definitions and sources of data

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1 Nigeria A. Definitions and sources of data Foreign direct investment (FDI) in Nigeria is defined as investment undertaken by an enterprise that is either wholly or partly foreign-owned. The Investment Code that created the Nigerian Investment Promotion Commission (Decree No. 16 of 16 th January 1995) and the Foreign Exchange (Monitoring and Miscellaneous Provision) also enacted in 1995 give full legal backing for FDI in the country. Data on FDI were collected by the Central Bank of Nigeria and are based on company surveys. Enterprises covered by the surveys are those in which foreigners hold at least 75 per cent of total equity. The data encompass foreign share capital, unremitted profits, liabilities to head offices and other foreign liabilities. The International Monetary Fund (IMF) also provides data on FDI in the country in its balance-of-payments statistics. The Nigerian Government actively promotes FDI into the country. In particular, the Government welcomes foreign investors in the manufacturing sector, offers a number of incentives for the ownership in all industries, except for petroleum and certain key industries such as military equipment, created a number of export processing zones (EPZs) and actively participates in a number of regional integration schemes. The incentives that are available to investors include tax relief, legislative provisions pertaining to taxes and repatriation of foreign capital investment at any time of capital appreciation of the investment. No import or export licenses are required and up to 100 per cent foreign ownership of enterprises is allowed. Additional concessions are also available in the local raw material development, local value-added, labor-intensive or export-oriented activities that involve significant training. The country's investment law allows an appropriate treatment and protection of foreign investment. It has provisions for capital assets depreciation allowance, provides against nationalization, expropriation and compulsory purchase of company assets. Disputes between an investor and any entities of the Government of Nigeria, which cannot be amicably settled, may be submitted by an aggrieved party to arbitration in accordance with Nigeria's Arbitration and Conciliation Decree 1988 or within the framework of any bilateral or multilateral agreement on investment protection to which the Government and the investor's country are parties or in accordance with any other national or international machinery for the settlement of investment disputes as agreed to by the parties. Nigeria's general legal environment, which is based on English common law, further upholds the sanctity of contracts and the rule of law. In line with IMF monitored structural adjustment programmes, starting from the 1980s, Nigeria undertook a far-reaching privatization programme. Public enterprises in several sectors have been privatized and most of the remaining ones are up for sales. The EPZ scheme is targeted to promote the diversification of the export base of the nation through the acceleration of export business with incentives. It includes industrial production, offshore banking, insurance and reinsurance, international stock, commodities and mercantile exchanges, commercial industrial research, agriculture and agro-allied industry, mineral processing, as well as international tourist resort development and operations. Provisions had been put in place to cut off the bureaucracy in

2 investment approval, by allowing the Nigerian Export Processing Zones Authority (NEPZA) to administer, manage, control and coordinate the quick approvals for participating foreign investors. These include issuing application forms and approval, company registration and construction licensing among others. Nigeria s natural resources are dominated by petroleum and to a much smaller extent, natural gas. The country has sizeable coal reserves, but production is substantially lower than the proven potential. Known oil reserves are sufficient to give Nigeria another 35 years of output. However, the diversification of the economy has led to de-emphasizing the role of oil production and exports within the country's economy. Much needed focus has thus been devoted to other sectors like solid minerals, tourism, telecommunication, commerce and manufacturing. As a way of boosting size of market, for manufactured good and other processed items, Nigeria joined a number of African regional integration schemes. Nigeria is currently a member of the Economic Community of West African States (ECOWAS) and the African Union (AU). ECOWAS has as its principal objective to establish a customs union and a common market to promote the free movement of goods and people within West Africa. The AU carries forward the aims of the OAU, which included the creation of an African Economic Community, in accordance with the Lagos Plan of Action, drawn up in In 2000, Nigeria and five other countries, The Gambia, Ghana, Guinea, Liberia and Sierra Leone signed an agreement to create a second monetary union in the region. Nigeria is eligible for the African Growth and Opportunity Act, of the United States. It is also signatory to international conventions such as the Multi-lateral Investment Guarantee Agency and the World Trade Organization. The United States and the United Kingdom are the two largest investors in Nigeria. A number of French corporations are also prominent in the processing, oil and construction industries. For example, TotalFinaElf is a leading distributor, and Peugeot is the largest Nigerian car-maker. Other Asian corporations, mainly from India and China are strongly present in the national economy.

3 B. Statistics on FDI and the operations of TNCs

4 Table 1. Summary of FDI Variable Inward Outward 1. FDI flows, (annual average) FDI flows as a percentage of GFCF, (annual average) FDI stock, FDI stock as a percentage of GDP, Sources : Based on tables 3 and 4; UNCTAD, FDI/TNC database.

5 Equity Year loans loans Source : Central Bank of Nigeria, unpublished. Table 3a. FDI flows, by type of investment, Inward investment Reinvested earnings Total Equity Outward investment Intracompany Intracompany Outward investment Intracompany Reinvested earnings Total Equity Table 3b. FDI flows, by type of investment, Inward investment Reinvested earnings Total Equity Year loans loans Source : International Monetary Fund, Balance of Payments CD ROM, August Intracompany Reinvested earnings Total

6 Equity Table 4. FDI stock, by type of investment, Outward investment Intracompany Inward investment Intracompany Reinvested earnings Total Equity Reinvested earnings Year loans loans FDI inward stock are estimated by accumulating inflows since FDI inward stocks were estimated by accumulating outflows since Note : No breakdown by components is available. Total

7 Table 6. FDI flows in the host economy, by geographical origin, Economy Belgium / Luxembourg Bulgaria France Netherlands Pakistan Switzerland United Kingdom United States Note: Data are based on information on FDI destined to Nigeria as reported by the above listed economies. Table 9. FDI flows abroad, by geographical destination, Economy Belgium / Luxembourg China Czech Republic France Pakistan TFYR of Macedonia United States Note: Data are based on information on FDI originating from Nigeria as reported by the economies listed above. Table 12. FDI stock in the host economy, by geographical origin, Economy Bulgaria Czech Republic France Germany Netherlands Pakistan Slovenia Switzerland United Kingdom United States Note: Data are based on information on FDI destined to Nigeria as reported by the above listed economies. Table 15. FDI stock abroad, by geographical destination, Economy Brazil France Indonesia United States Note: Data are based on information on FDI originating from Nigeria as reported by the economies listed above.

8 Tables 21. The number of affiliates of Nigerian TNCs, by geographical location abroad, Economy Armenia Indonesia United States Notes: Data are based on information on affiliates of Nigerian TNCs located in and reported by the economies listed above. Table 23. The number of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany India Italy United States Note: Data are based on information on foreign affiliates of home-based TNCs, as reported by the economies listed above, which are located in Nigeria. Tables 28 and 43. Assets and sales of affiliates of Nigerian TNCs in the United States, Table number Variable Assets Sales Notes: Data are based on information on affiliates of Nigerian TNCs located in and reported by the economies listed above. Table 30. Assets of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany United States Note: Data are based on information on foreign affiliates of home-based TNCs, as reported by the economies listed above, which are located in Nigeria. Table 35. Employment of affiliates of foreign TNCs in the host economy, by geographical origin, (Thousands of employees) Economy Germany Italy Switzerland United States Note: Data are based on information on foreign affiliates of home-based TNCs, as reported by the economies listed above, which are located in Nigeria. Tables 40, 50, 60, 65, 70 and 85. Wages and salaries, value added, export, import, research and development expenditure, and royalty payments of affiliates of United States TNCs in Nigeria, Table number Variable Wages and salaries Value added a Export a Import a Research and development Royalties payments a Note: Data are based on information on foreign affiliates of home-based TNCs, as reported by the economies listed above, which are located in Nigeria. a Majority-owned affiliates of home-based TNCs Table 45. Sales of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Italy United States Note: Data are based on information on foreign affiliates of home-based TNCs, as reported by the economies listed above, which are located in Nigeria.

9 Table 86. Largest home-based TNCs, 2002 (Millions of dollars and number) Company Industry Sales Employees A. Industrial SociØtØ des Mines de l air Mining and quarrying B. Tertiary Nigerian National Shipping Line Transport and storage Computer Systems Associates Trade C. Finance and insurance Assets Employees Union Bank of Nigeria Finance a First Bank of Nigeria Finance a Afribank Nigeria Finance b Sources: The Banker s Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, a March b March 2002.

10 Table 87. Largest affiliates of home-based TNCs, 2002 (Millions of dollars and number) Company Name Host Economy Industry Sales Employees A. Industrial Mines de l air France Metals.... B. Tertiary Nigerian National Shipping Line Germany Transport and storage.... Neptune Software United Kingdom Computer and related activities.... C. Finance and insurance Assets Employees Banque Internationale du BØnin (BIBE) Benin Finance a Sources: The Banker s Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003). a December 2001.

11 Table 88. Largest affiliates of foreign TNCs in the host economy, 2002 (Millions of dollars and number) Company Home Economy Industry Sales Employees A. Industrial Texaco Nigeria United States Chemicals Agip Nigeria Italy Chemicals Dunlop Nigeria United Kingdom Rubber and plastic products Halliburton Nig United States Petroleum West African Portland Cement France Non-metallic mineral products D N Meyer United Kingdom Chemicals Mobil Producing Nigeria Unlimited United States Petroleum Nigerian Breweries Netherlands Beverages Nigerian Agip Oil Company Italy Petroleum Nestle Nigeria Switzerland Food Thermocool Engineering Co United Kingdom Machinery and equipment Smithkline Beecham Nigeria United Kingdom Pharmaceuticals Livestock Feeds United States Food Haco United Kingdom Pharmaceuticals Dynamic Industries Bermuda Rubber and plastic products Allied Energy Resources United States Petroleum Amo Sanders France Food Roche Switzerland Pharmaceuticals Nigerian Agip Exploration Italy Petroleum Reckitt Benckiser United Kingdom Pharmaceuticals Coca Cola United States Food British American Tobacco United Kingdom Tobacco Crown Cork And Seal Company United States Wood and wood products Reals Pharmace United Kingdom Chemicals.... Triplex Security Glass Greece Motor vehilcles.... B. Tertiary R T Briscoe Denmark Trade Panalpina World Transport Switzerland Transport Trevi Foundations Italy Other business services Elf Petroleum France Trade Dizengoff West Africa England Trade Halliburton Energy Services United States Other business services L M Ericsson Sweden Telecommunications Milson England Other business services.... Eiffel France Other business services.... Fougerolle France Construction.... Und Nigerian Electr Generating United States Electricity, gas and water.... Toyota Denmark Trade.... B A S F Nigeria Germany Fed Trade.... Sgs Inspection Services Switzerland Other business services.... C. Finance and insurance Assets Employees NBM Bank Belgium Finance a Stanbic Bank Nigeria South Africa Finance a Ecobank Nigeria Togo Finance b First City Monument Bank United Kingdom Finance c Citibank United States Finance b Sources: The Banker s Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003). a December b December C April 2001.

12 D. Sources of information Official Central Bank of Nigeria ( Nigerian Investment Promotion Commission ( Secondary Albaladejo, Manuel (2003). Industrial Rrealities in Nigeria: from Bad to Worse (London: Queen Elizabeth House). Bala, Julius (2003). "The challenge and opportunities of the investment environment in Nigeria". Paper presented at the international meeting for promotion of investment to Africa, organized by the Ministry of foreign affairs of Japan, 26 February. Bennell, Paul (1997a). "Foreign direct investment in Africa: rhetoric and reality", SAIS Review (Summer/Fall), pp (1997b). "Privatization in Sub-Saharan Africa: progress and prospects during the 1990s", World Development, vol. 25, no. 11, pp Boocock, Colin N. (2002). Lesson from FDI in Mining in Sub-Saharan Africa (Paris: OECD), February. Central Bank of Nigeria (CBN) (various years). Annual Report and Statement of Accounts (Abuja: CBN). Economist Intelligence Unit (EIU) (2003a). Country Profile: Nigeria (London: EIU Ltd.). (2003b). Country Report: Nigeria (London: EIU Ltd.), April. International Monetary Fund (IMF) (2001/2002). Staff Country Report, Nigeria: Statistical Appendix, August 2001 and 2002 Article IV Consultation (Washington D.C: IMF). International Finance Corporation (IFC) (1997). "Foreign direct investment, IFC: lessons of experience series ", No. 5 (Washington, D.C.: World Bank). Pigato, Miria (1999). "Foreign direct investment in Africa: old tales and new evidence" (Washington D.C.: World Bank), Mimeo. Rashid, Faruqee (1994). Nigeria: Ownership Abandoned, Adjustment in Africa: Lessons from Country Case Studies (Washington D.C.: World Bank), March. Ruffer, Tim, S. Jones and S. Akroyd (2002). "Development box proposals and their potential effect on developing countries." (London: U.K. Department for International Development), Mimeo.

13 United Nations Conference on Trade and Development (UNCTAD) (1995). Foreign Direct Investment in Africa, (Geneva and New York: United Nations), United Nations publication, Sales No. E.95.II.A.6. (2000). Capital Flows and Growth in Africa (Geneva: UNCTAD/GDS/MDPB/7), July. World Bank (2002). Global Economic Prospects and the Developing Countries 2003: Investing to Unlock Opportunities (Washington D.C.: World Bank). World Economic Forum (2003/2004). Africa Competitiveness Report (New York: Oxford University Press).