Nigeria is a highly populated country of over 200 million people and currently the largest economy in Africa with a gross domestic product (GDP) of $446.543 billion (2019); the population is quite diverse which gives room for potential growth of the economy. The 1973 oil boom pushed the transportation sector to a point where both infrastructural and transportation improvements became high in demand thereby necessitating the quest for knowledgeable business partners and investors that are ready to explore and tap into the abundant opportunities available within the sector.
This stirred up the need for constant improvement, upgrading and opening up of the transportation sector of Nigeria. The enormous resources available in the sector are yet to be fully harnessed and are still very much in the low developmental stages, for example the quality and standard of public bus and rail system as obtained mostly in the developed nations are not fully available in Nigeria.
The government of today on resumption of office started investing heavily in railway, agriculture and information technology as a way of boosting and opening up the economy to improve global competitiveness and attract more investment opportunities to the economy, although previous governments never gave the sector much attention ,commendation must be given to this present government for all its efforts so far in revamping and building the sector.
Transportation sector contribution to the nations GDP increased to $720.241 million in the third quarter of 2019 from $642.927 million in the second quarter of 2019 and contributed 2.49 percent to nominal GDP in Q1 2019, an increase from 1.85 percent recorded in the corresponding period of 2018 and higher than 2.05 percent recorded in the fourth quarter of 2018.
Apart from crude oil, Nigeria is blessed with diverse natural resources such as gas, tin, iron ore, coal, limestone, lead, zinc, arable land, deep ocean, vast seas which are worth billions of dollars and there can be no denying the fact that there are tremendous opportunities available for foreign investors in Nigeria’s transportation sector (railway, pipeline, airways, maritime and land),this also includes Agriculture, communication ,Power ,tourism, consumer goods, textiles, entertainment, sports are other good investments areas for consideration.
There are two ways for investors to look at investment opportunities in Nigeria Transportation sector, they are foreign portfolio investments which includes investing in stocks and securities of an existing Nigerian Transportation company (Railway, Maritime ,Air, pipeline and Road transportation) or foreign direct investments (FDI) which involves establishing a business organisation and acquisition of business assets and also playing actively in transport businesses in Nigeria. Some examples of nations that have benefitted from this type of strategy of developing their economies by attracting international investors are USA, UK, China, Netherlands, Ireland, Brazil, Singapore, Germany, India and France
Our government in Nigeria must begin to take active steps to improve our economy in key areas that can positively attract FDI, such as improving wages rates, labour skills, tax rates, availability of modern transport infrastructure, size and potential for growth of our economy, political stability, exchange rate, access to free trade areas and streamlining the process for organisations interested in doing businesses in Nigeria, such company must also be incorporated as a separate entity in Nigeria or have a local company as partners or be exempted by the President of Nigeria if it is not incorporated according to the Nigerian law.
The economy of Nigeria some years ago came out of recession caused by low oil revenue and because of lack of strong diversification strategy in other key sectors of the economy. However, the government made strong policy decisions through determination which helped to rekindle and reposition the economy to be the largest economy in Africa. The Nigerian Bureau of Statistics reported that capital inflows, foreign direct investment, portfolio and other investments reached $12 billion in 2017 majorly as a result of policy changes and improvement in the oil sector.
There are a lot of components that can influence the level of foreign investments into the Nigerian economy and transportation sector, one of such is the large consumer market. The Nigerian government also provided a number of incentives related to taxes, exports changes in policies and other key factors to boost more investments opportunities from within and outside the country to ease doing business in Nigeria.
The process of registering a business has also been simplified, the free flow of investments capital and freedom from expropriation of investments has further boosted Nigeria as an investment hub and investors are now allowed to freely repatriate their capital and net profit after tax without any restrictions provided, there is also evidence of certificate of capital importation(CCI) which is an evidence that their investment came into the country. The system is generally very simple and transparent.
The increase in the influx of direct investment in Nigeria has been a crucial factor in the economic growth of the country and has facilitated improvements in the working population through transfer of knowledge and technical skills which has aided the quality and standardisation of processes and products ,infrastructure development ,generation of revenue through taxation that has encouraged exports of locally produced goods.
In early 2017, the government launched the Economic Recovery and Growth Plan (ERGP), which led the drive to review previous policy decisions. This new policy included an investor and exporter foreign exchange window (IEFX) and tightening of monetary policies. Some of the priorities of the ERGP include improving transportation infrastructure, driving industrialisation, focusing on SMEs, stabilising the macroeconomic environment and achieving agriculture and food security.
Some of the advantages of doing business and exploring the investment opportunities in Nigeria are taking advantage of the high population growth, abundance of natural resources ,untapped target market ,great economic potential due to large number of people, quest for modern transport infrastructure and technology, high demand for global imports, largest consumer market in Africa, investment incentives in exports oriented businesses.
Currently, the Nigerian economy is very well positioned for investments opportunities and its transportation sector should be a destination hub for any investor globally, especially because of its huge population ,urgent need for speedy and exhaustive upgrade across all modes of transport, hunger of the present government to deliver the dividends of democracy to its citizens by providing quality life for its citizens ,improve the socio-economic status of its citizens by providing modern infrastructures, a business friendly government in place and the need to diversify and open up the economy to attract more investment opportunities and also make it globally competitive. These are some of the key factors that makes Nigerian economy one of the best destination hub for investments globally.
FESTUS OKOTIE
