If there were security problems in Nigeria, no business person would go to the country to explore opportunities; companies like Celtel, Etisalat would not have ventured into a security risk country to do business. Those who spread a rumor about security and corruption problems in Nigeria are saying to stop others from making money. Figures don’t lie. They are the biggest testimonies of how conducive Nigeria’s environment for business and opportunities are. If you want to do business in Africa and record good returns on your investment, I welcome you to Nigeria. The political environment in Africa, particularly in Nigeria, is tremendous.
Dr. Hamadoun Toure,
International Telecommunications Union,
Cited in the Punch Newspaper, May 13, 2008)
What is happening currently with the Nigerian financial system is far from being affected by the global credit crisis. At the global level currently, the banks are under-capitalized, but Nigerian banks are over-capitalized. And I do not think this is a problem at all. I believe that Nigerian banks are under pressure from other economies within Africa that are affected by the credit challenges.
– Gordon Smith,
Head of Research, Africa and the Middle East, International Consilium,
(Reported in the Punch Newspaper, June 30th, 2008).
The foregoing statements aptly connote two understandings of the state of the Nigerian economy. These understandings show that the economy is one of the fastest-growing economies in Africa and the world. Although Nigeria has had a hash economic history, it has undergone and still undergoing economic reforms to make Nigeria Africa’s financial hub and one of the twenty largest economies in the world by the year 2020. Needless to say that the country has experienced political instability, corruption, and poor macroeconomic management in the past; this was responsible for the unpleasant and harsh economic situation.
The government’s relentless efforts to reposition the economy have translated into remarkable economic growth and development. Several mechanisms have been put in place to sustain this growth and development, capable of balancing stakeholders’ interests. Perhaps, this view must have influenced Gordon Smith’s submission. He described Nigeria as the most dynamic market in Africa, which is under severe pressure from some countries in Africa to serve as a cushion against global turbulence. He also noted that some countries like Ghana, Malawi, Mauritius, among others, were depending on her at the moment due to global risk exposure and that the country’s economy, led by the consolidated banks, was far from being affected by the global credit crisis currently rocking the world’s financial giants. He stressed further that foreign investors, who will be patient enough to weigh the Nigerian financial system on the credit risk perspective relative to global events, will find the nation’s financial sector more interesting to invest and raise capital from.
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Faced with numerous challenges, the Nigerian government is determined to strengthen, diversify and make the economy attractive and investment-friendly to both local and foreign investors. The government has adopted total liberalization and globalization as the economic policy, instituted privatization and commercialization programs of public enterprises, provided total security for business and people, extended invitation to domestic and foreign investors, abolished laws inhibiting competition, embraced and fine-tuned policies to ensure the quick realization of growth and development of all sectors of the economy. The effort is already paying off as Nigeria is now the focus for foreign investment, thereby increased exponentially Foreign Direct Investment (FDI). Scores of economic missions and delegations from developed and developing countries have visited Nigeria, thus accelerating its growth at a speedy rate.
It becomes pertinent to direct the course of this discussion to embrace the second understanding of the above statements made by Hamadoun Toure and Gordon Smith. However, it becomes more pertinent to enumerate the inherent investment opportunities in the Nigerian economy before discussing security as raised by Toure.
No doubt, Nigeria is an investment haven with countless and lucrative investment opportunities, including oil and gas, solid mineral, agriculture, tourism, telecommunication, power and steel, transport, trade processing zone, financial sector, real estate/property, manufacturing, sport, and entertainment, and fashion industry. Investors have a wide range of opportunities to choose from. It is important to note that the growth rate of investment is fantastic and exponential in any of these sectors. Investors are at the advantage of presenting their products and services to already-made markets, taking advantage of over 140 million.
In telecommunication, statistics reveal that mobile phone users in Africa were about 280 million, overtaking the United States and Canada with their 277 million users in the opening quarter of 2008. With 70 million connections in 2007, the Continent became the fastest-growing region globally, representing a growth of 38 percent, ahead of the Middle-East (33 percent) and the Asia-Pacific (29 percent). It was also revealed that the fastest-growing markets are located in northern and western Africa, representing 63 percent of the total connections in the region altogether. The record showed that Nigeria, Zambia, Tanzania, The Democratic Republic of Congo, Kenya, Algeria, Tunisia, Ghana, and South Africa are highly competitive markets in the Region. The record further contends that two-thirds of Africa’s telephony are in their early development phase, with penetration rates below 30 percent at the end of 2007. In percentage terms, it was noted that Africa is the fastest-growing market globally, but also the second smallest in terms of connections after Middle-East.
As Nigeria accounts for 57 percent of the West Africa mobile phones, the country is acknowledged as the leading and the fastest-growing telecom market in Africa. With mobile phone users at 44,932,181 and 734,444 for GSM and mobile CDMA, respectively, her contributions to West Africa and Africa’s telecommunication growth can not be overemphasized. While the overall economic growth rate stands at 7% per annum, mobile telephony is about 35-50%. Assuming that each of these connections was busy for a minute in a day, the country telecoms market has the capacity to generate over USD 16 million per day (USD16, 666,667) and close to USD 6 billion per year (USD 5,833,333,300). This is why telecom companies such as Visafone and Etisalat quickly joined MTN, Globacom, Celtel, and other telecoms service providers in exploiting opportunities in the country.