Geneva, 5 May 2009 -- Nigeria should adopt a strategy for foreign direct investment (FDI) that will spur FDI growth outside the oil sector and lead to stronger manufacturing, including agro-industrial production, an UNCTAD Investment Policy Review (IPR) recommends.
"The experience of many countries shows that FDI can indeed be a powerful driver of development," said UNCTAD Secretary-General Supachai Panitchpakdi as the IPR was unveiled this afternoon at UNCTAD´s Commission on Investment, Enterprise and Development.
In Nigeria, Mr. Supachai said, "The lion´s share of foreign investment to date has gone to the oil sector, with very low inflows to manufacturing and services. Although FDI has helped generate significant export and fiscal revenues, it has not had a major impact on economic diversification, technological innovation, employment, and thus poverty reduction."
"The Government pledges to do its utmost best to implement the recommendations" contained in the IPR, said Humphrey Enemakwu Abah, Nigeria´s Minister of State for Commerce and Industry.
UNCTAD carries out Investment Policy Reviews at the request of developing-country governments. Now completed for 26 countries, IPRs provide an objective evaluation of the policy, regulatory and institutional frameworks for FDI in beneficiary countries, with the objective of attracting increased FDI and maximizing the benefits from it. A follow-up review is generally performed five years after an IPR is issued to see how recommendations have been implemented and to determine the effect of altered Government policies on FDI flows.
While praising the Nigerian Government for reforms of its investment framework, the study urges the government to adopt policies that can induce and support foreign affiliates to make efforts to increase high-value-added manufacturing. Such economic diversification is necessary for FDI to lead to greater development benefits. UNCTAD also emphasizes the need for the country to improve the overall environment for doing business, and recommends that Nigeria adopt an effective investment-promotion approach.
The IPR urges the government to design and implement a strategy to attract non-oil FDI, focused around key measures to improve the regulatory framework; invest in physical and human capital; take advantage of regional integration; review external tariffs; foster linkages and local industrial capacity; and strengthen institutions dealing with investment and related issues.
Nigerian authorities reported progress already on a number of the report´s recommendations, including the setting up of a "one-stop shop" for investment facilitation, and a review of all fiscal and financial incentives to investors in different economic sectors. Other recommendations are included in new policy steps, such as a Presidential initiative to revise land legislation to make access to land titles more efficient.
UNCTAD also completed, in March 2009, a Blue Book on Best Practice in Investment Promotion and Facilitation for Nigeria. The project, funded by the Government of Japan, includes 15 recommendations from the IPR which can be implemented within two years. UNCTAD is working towards ensuring that the Blue Book will be launched by the President of Nigeria by the end of June.
Participants from private companies, which included Nestle, Holcim, Cotecna, DuPont, Addax Petroleum, the French Association of Foreign Investors in Africa and the Swiss-Africa Chamber of Commerce, attended this afternoon´s meeting and participated in the discussion.