Thompson: Economic Diversification Crucial for Nigeria’s Success
Ahead of the UK-Africa Investment Summit holding in London this January, the British Deputy High Commissioner, Harriet Thompson, in this Interview with Peter Uzoho, gives details of what the UK Government is doing to attract more mutually beneficial investment to Nigeria in 2020 and beyond. Excerpts:
Can you shed more light on the UK-Africa Investment Summit scheduled to hold in London?
With pleasure. Hosted by the Prime Minister, the summit will bring together UK and African Heads of State and Government, business leaders, young entrepreneurs, and international institutions. It takes place in London on 20 January, and intends to promote the breadth, depth and quality of investment opportunities across Africa. The summit’s overall aim is to help unlock investment to deliver more trade and jobs for both Africa and the UK, securing sustainable growth and long-term prosperity: this is win-win. The summit is a great opportunity to highlight and discuss the investment issues that are relevant for both the UK and Nigeria.
Other countries will also be looking to promote their investment offers. We’ve seen how competition to attract foreign direct investment has increased – across most emerging markets and particularly in Africa. So, we are keen to provide a platform for Nigeria to showcase projects of interest to potential investors. At the summit, the Nigerian delegation will have the chance to engage investors on business environment issues and to emphasise Nigeria’s commitment to continuing to improve conditions for doing business, as recognised in its steady climb up the World Bank’s Doing Business index from 146th to 131st in last October’s report.
There are also events before and after the summit on manufacturing, renewables and infrastructure. We know that these are all priorities for the Nigeria at federal and state level and are areas where Nigeria has great potential. We want to focus on facilitating deals, engaging one-to-one and actually doing the business. That’s ultimately the goal of the summit: to attract investors. The UK is known for the quality of its investments, and a key element of that is ensuring investments are sustainable. Using our world-leading innovation and technology, this will be a major theme for the UK Government in a year where the UK will also host the global climate change summit: COP 26.
Why is the UK interested in attracting more investment to Nigeria?
As Africa’s largest economy and most populous country, Nigeria’s success matters – to Nigerians, first and foremost, but to the rest of the world, including the UK, as well.
Realising the enormous potential of Nigeria’s markets, human capital and natural resources will require massive and sustained investment in security and stability, job creation and growth, and human development. These are areas in which the UK is already supporting the Nigerian government and will continue to do so.
We support Nigeria’s work towards economic reform to promote the conditions for sustainable and inclusive growth. We welcome President Muhammadu Buhari’s continued commitment to this cause through his second term, particularly his focus on creating jobs, as well as the dedication of his administration and states’ efforts to increasing investment, diversifying the economy and boosting growth; not only GDP but also Nigeria’s per capita income. Efforts to promote diversification, particularly around agribusiness and manufacturing, are crucial for Nigeria’s success. Encouraging greater investment is key to the work that the UK government is doing in Nigeria.
And our companies tell us there is more to do. There are many British companies who’ve been operating successfully in Nigeria for decades, and more coming all the time. But they – and indeed the many Nigerian companies we talk to – tell us it can be hard, citing issues such as the high cost of logistics, customs delays, and sometimes unpredictable policy changes, for example. But when it works, it’s good for Nigeria and it’s good for the UK. So, whether that’s DFID’s programming supporting investment promotion (at both Federal and State level); the UK’s global Prosperity Fund supporting further reform of the business environment, trade, and investment capacity; CDC (the UK’s development finance organisation) investing in projects or British companies opening new facilities, the UK government will continue to support greater investment from the UK to Nigeria.
The Africa Investment Summit is part of that effort, mobilising our impressive private sector alongside our government efforts. Nigeria is already a top destination for UK investment in Africa and we want the UK to remain a major partner in achieving Nigeria’s huge economic potential. Our investment stock in 2018 was valued at £4.2 billion. As the UK leaves the EU, and with Nigeria set to become the world’s third most populous country by 2050, we want the UK to be the investment partner of choice for Nigeria.
What is the UK’s trade relationship with Nigeria?
I’m sure your readers will know that the UK has a longstanding and highly valued trade relationship with Nigeria. We want that partnership to grow. The UK’s two-way trade with Nigeria stood at £5.5 billion in 2018, an increase of around 40 per cent from the previous year. While oil and gas still dominate our two-way trade flows, UK companies invest in a wide range of sectors in Nigeria’s economy, including consumer goods, food and drink, financial services and waste management.
Although Nigeria remains the largest oil producer in Africa, we are keen that British businesses think beyond this sector, and there is plenty of scope to trade in a wider range of goods and services. Our world-class export credit agency, UK Export Finance (UKEF), has notionally allocated up to £1.2 billion to support UK companies selling to Nigeria. UKEF’s support for overseas buyers, primarily in the form of guarantees on bank lending – including in Nigerian naira, can help the Nigerian government and business community access attractive financing terms to accompany their purchases of goods and services from the UK.
Many UK businesses operate successfully in Nigeria. British Airways first flight from the UK to Nigeria was 84 years ago; Diageo/Guinness, Shell, and Unilever all have strong and long-established operations in Nigeria. We would like to see more UK businesses investing in Nigeria – and increase our bilateral trade ties for long-term, sustainable and mutual benefit.
What is the value of the United Kingdom’s Investment in Nigeria?
Nigeria is already the second largest destination for UK investment in the whole of Africa. As I’ve mentioned already, in 2018 that investment was valued at £4.2 billion. UK companies invest in a wide range of sectors and there is scope for more. Diversification is an important aspect of our partnership, essential to create jobs and tackle poverty. We know how important boosting agriculture and manufacturing are for Nigeria’s future and the UK has a range of programmes designed to support these sectors. We listened when Nigeria told us that they wanted a mutually beneficial partnership that moved beyond aid, one that would attract quality investment that drives growth and creates the millions of jobs needed.
Working with the Nigeria government, the UK will build stronger partnerships to secure investment that will deliver exports, jobs and economic growth that are essential to lift people out of poverty, and which will benefit both Nigerian and British businesses. The UK will also ensure that future investment is green, sustainable and transformative by using innovation and technology to provide solutions to our shared challenges. I mentioned earlier the progress we need to see on the Nigerian side to encourage that much needed investment. Together, in partnership, I’m looking forward to seeing those efforts come to fruition.
So, how will the UK-AIS directly benefit Nigeria and Nigerians?
The summit will create new, long-term partnerships that will deliver more investment and jobs. This will benefit people and business in both Nigeria and the UK. The UK is already here in Nigeria, in a big way, with numerous examples of mutually prosperous partnerships. But we want to do more, and the UK-AIS will be a vital landmark towards that goal. To help Nigeria take full advantage of the opportunity the summit represents, we have worked together to create an investment guide and nine sector brochures that highlight some of the major commercial opportunities in Nigeria.
This builds on a successful event we held in London in November last year, at which we showcased some promising opportunities to more than 50 companies, and as a result are already working on concrete deals. More generally, the UK has much to offer ambitious Nigerian firms, with the City of London – home to the world’s major investors, regulators, innovators and multinational businesses – as the global financial gateway for investment and expertise. One of the UK’s strengths is as a world class financial centre to raise capital for investment. Investment which is important for Nigeria’s long-term growth – and that’s how “the average Nigerian” will benefit from this summit. The UK ambition is to become the investor with the greatest impact in Africa: that impact will be quality jobs, economic growth, reliable infrastructure and sustainability.
Nigeria has an economy with a reputation for innovation. The summit will help Nigeria demonstrate this to potential investors. Further investment in innovative industries will help young Nigerian people reach their potential, and help to create the millions of new jobs needed every year to keep pace with Nigeria’s rocketing population. We will also use the summit to highlight the importance of supporting and empowering women entrepreneurs with the skills and connections to overcome the gender gap and grow their businesses. Empowering all girls and women is fundamental to ending poverty and achieving the Sustainable Development Goals. For example, in the tech sector – so exciting in Nigeria – the UK’s Female Tech Founders programme has selected five female tech entrepreneurs from Nigeria to travel to London in the week of the Summit to receive expert advice on developing their businesses further.
How is the UK helping Nigeria’s economy?
We know how important it is to continue efforts to tackle poverty and to boost growth, so that the fall in Nigeria’s per capita GDP of the last five years can be reversed. In particular, we realise how crucial job creation is. The World Bank’s most recent report noted that five million Nigerians joined the labour market in 2018 and we can expect this trend to continue, given Nigeria’s demographic trend for greater population growth. The UK has already committed more than £200 million to support economic development in Nigeria over the next five years.
The money goes towards helping the poor to access financial services, for example, or raising the incomes of at least 4 million poor Nigerians by at least 25 per cent. Our Solar Nigeria programme has given at least 3 million people access to solar energy, Thanks to Enhancing Financial Innovation and Access (EFINA, a financial sector-deepening programme), over 2,000,000 active customers have accessed financial services through products supported by UK’s financial sector programme.
The Growth and Employment in States (GEMS 3) programme has helped 3.9 million people and households with either services or improved incomes. The Rural and Agriculture Markets Development programme for Northern Nigeria (PrOpCom Mai-karfi) has already helped increase the incomes of 850,000 workers in Nigeria’s northern states. These programmes and many more, provide technical assistance to support Nigeria’s economic priorities ranging from infrastructure to agriculture to the rapidly growing digital sector. There is a particularly strong investment support element across many of them.
CDC Group, the UK’s development finance institution, has a portfolio in Nigeria approaching half a billion dollars, with around 100 investments in power, fertiliser manufacturing, telecommunications and private equity fund managers (supporting diverse market segments including small and medium enterprises). Those investments have supported 41,000 jobs in Nigeria. It established a permanent office in Lagos in November 2019 and is looking to partner with Nigerian businesses operating in various sectors including agriculture, infrastructure, manufacturing, health, education, financial services, construction and real estate that present significant opportunities to deliver development impact. As I mentioned earlier, Nigerian companies can also benefit from UK Export Finance (UKEF), which offers attractive finance terms for buyers of UK goods and services. We hold a six-monthly ministerial meeting with the federal government to discuss further co-operation. It’s called the UK-Nigeria Economic Development Forum and the next meeting – due to take place in spring – will be an opportunity to build on the Africa Investment Summit.
While many Nigerians speak of the deep friendship between the UK and Nigeria, there have been some questions about whether the UK is still a major economic and commercial partner for Nigeria, whether we could be doing more given our shared history. With the varied support provided through the UK government, and significant and growing trade and investment links, it’s clear the UK remains a serious partner, and that our offer to Nigeria is compelling. The Summit, which takes place in just two weeks’ time, will open a new, exciting chapter in a partnership that can deliver long-term, sustainable prosperity for Nigeria and the United Kingdom.