Firstonline's Export Service closed last week with an article about the current economic situation in South Africa which is our country's main trading partner on the African continent. Today, however, we want to talk about the economic situation of second trading partner in Africa, Nigeria, as well as possibilities inherent in exports and investments in the West African state.
Compared to South Africa, Nigeria earns the second position among the major economic realities of the continent but manages to far exceed the South African state in terms of population (160 against 50 million inhabitants respectively in Nigeria and South Africa). The current situation, from a political point of view, is rather unstable internally both due to dynamics that could be described as "historical" and due to more recent events. On the one hand, in fact, internal politics has been grappling with many for several years incidents of terrorism autochthonous by the jihadist organization Boko Haram (the last one, just a week ago, saw the killing of about 90 civilians, source: ANSA). On the other, too there is no shortage of fractures in government institutions; the latest, the deposition of Lamido Sanusi as governor of the Central Bank for accusations of "financial carelessness" by President Goodluck, a suspension that he also received effects on the domestic currency, the Naira, which subsequently depreciated by 4% against the dollar.
Where, however, the political situation of the country does not seem to be the most favourable, economically Nigeria strive to send reassuring signals to international entrepreneurs (such as the statements by the Nigerian ambassador to Italy who reassured the media last July by affirming the supportive attitude of the African state towards our entrepreneurs). Economically, Nigeria's performance is almost entirely positive: the country's GDP in 2012 amounted to approximately 213 billion euro (up 6,3% compared to the previous year), inflation is decreasing (from 12,2% in 2012 to 9% in 2013 ), the ratio between public debt and GDP remains constant at around 20%, unemployment is decreasing and the recent depreciation of the national currency, all in all, can be an incentive for the country's exports. Sure, there are some discordant elements with the climate of openness towards the international market. The last was the deterioration of Nigeria in the ranking of Doing Business for which the country lost 16 positions passing from 138th place in 2013 to 147th in 2014. The reasons for this downgrading are to be found, according to World Bank analysts, in a worsening of some performances of the country such as: the ease of undertaking a new production activity, the electricity connection, the obtaining of building permits, the granting of credits and the protection of investors (one of the issues most felt by foreign investors). Such climate of uncertainty is confirmed in the analyzes also concerning only the topic of risk in relation to debt collection of investors by Nigerian debtors. Indeed SACE, our export credit agency, classifies the risk of not being repaid a loan or of encountering a breach of contract or, even worse, an expropriation as highly probable (ranging from a minimum risk of 54/100 when the debtor is represented by a sovereign counterparty to a maximum of 87/100 as regards the risk of breach of contract, the so-called breach of contract). These elements of uncertainty tend, unfortunately, to undermine reliability of an economy that it is possible, from many points of view, to be able to define as "solid" also with regard to the long past with our country. In fact, in addition to the major macroeconomic indicators considered at first, a whole series of material and effective considerations of the Central African country cannot be ignored. First of all, it cannot be ignored how the Nigeria is the world's leading gas producer, the first OPEC country for associated gases burnt in the atmosphere, and that in the country there are various extractive industries not only of gas but also of crude oil, coal, tin and columbite (source: InfoMercatiEsteri). There endowment not only natural but also infrastructural of Nigeria has meant that over the years important relations have been established with our country, relations which have expanded beyond mere energy supplies. Indeed, although it is true that Italy imports 4% of its crude oil requirement from the African State, it should be noted how the commercial exchange between the two countries also flows into the agricultural sector, forestry, machinery and equipment, chemical products and motor vehicles. Also according to the Ministry of Foreign Affairs, Italian imports in 2012 amounted to 1.328 million euros and exports were around 640 million. Certainly, the sectors which have been the results to date most interesting for our investments were concerned constructions, infrastructures, and among exports, however, machinery, electronics and even catering are the most popular areas.
The Nigerian government is committed to promoting the many possibilities that the country offers on the investment front. Nigeria is described as an FDI happy island in light of a variety of incentives which include: a favorable tax system, rapid certification measures of imported goods, license extensions to imports and, for investments aimed at the telecommunications sector, duties reduced from 25% to 5% (for a period of two years) and a status of pioneer which guarantees important tax relief on income provided for by theIndustrial Development Act of 1990. The telecommunications sector is one of the areas in which the government is most engaged in the search for investments at an international level. To the latter are added: the agricultural sector, - historically - the extractive sector (both crude oil and gas), raw materials and the manufacturing industry (which paves the way for what the government calls "sub-systems" to stimulate the growth of a strong industrial base and provide a catalyst for industrialization in Nigeria).
On the export front, up to now our country has been engaged in the sale of mechanical engineering products, metallurgy and refined energy products, however, as reported by SACE, among the sectors of opportunity in the field of exports it will certainly be necessary to include that in the next few years agricultural and also the manufacturing. When it comes to exports to Nigeria, however, it must be kept in mind that, in order to position the products on the local market, it is necessary to refer to theNigerian Organization of Standards (SON) which, through the SONCAP (a program that includes the controls and verifications of conformity necessary for importing into the country), dictates the guidelines for the regulation of exports in the African state. The SONCAP, which officially entered into force in March 2013, as well as indicating the control program is also the name of the certificate issued by SON against another valid certificate, the Certificate of Conformity of the imported goods (so-called "CoC"), and it is mandatory for the customs clearance of the goods in accordance with the import procedures established by the Federal Government. For a complete guide to the certification required for exports to Nigeria, please visit the site of the product inspection, testing and certification company, Intertek Group plc.
The possibilities related to the development of exports and investments are therefore not lacking in Nigeria. It is now up to each entrepreneur to evaluate them case by case.
