Investing in Nigeria: World Bank Support

1

• Investing in Nigeria World Bank Support

Steven Dimitriyev Senior Finance and Private
Sector Development Specialist Nigeria Country
Office Email SDimitriyev_at_worldbank.org

2
World Bank Portfolio - Nigeria

• Largest Portfolio in Sub-Sahara Africa
• (2007) 23 IDA projects and 2 GEF projects with
  about US2.6 billion in commitments about 12 of
  the Africa Regions total commitments of about
  US21.1 billion.
• (2009) Portfolio over 30 projects, now up to 3.7
  billion
• (2010-2012) Additional 3.3 billion forthcoming
• Country Partnership Strategy (CPS I) focus on
  basic social infrastructure and human
  development, public sector reforms, enabling
  environment for private sector development
• CPS II Aligned to Governments Priorities -
  Human development, governance and non-oil growth
• Over 50 of CPS II Fund to Support Removing
  Obstacles to Non-Oil Growth
• Est. 1 billion in support to Power, Transport,
  Agriculture sectors Est. 1.1 billion in
  cross-cutting PSD support (economic stimulus
  package, industrial clusters/value chains, PPP
  framework and finance)
• Accent on Subnational Economies

3
Riskiness of World Bank Portfolio
Risks of investing in Nigeria mirror risks of
World Bank portfolio
4
Why is Riskiness Improving?Nigeria is maturing,
consolidating, and taking lead
Challenges
Achievements
5
Sectoral Distribution of World Bank Portfolio -
2007

• From 2009 on, this pie chart will show radical
  shifts
• Private Sector-led Infrastructure investment
  programmes will lead

6
Removing the obstacles to competitivenessongoing
agenda to improve business enabling environment

• Public Financial Management (i.e., tax planning,
  tax collection and administration, revenue and
  expenditure management, information systems,
  asset management, debt management systems, etc.)
• Infrastructure Regulatory Framework (i.e., tariff
  setting, tariff collection, subsidies policies,
  sector regulators, private sector role,
  investment planning, etc.)
• Corporate Governance (i.e., procurement process,
  safeguards, monitoring and reporting systems,
  audited financial statements, credit ratings,
  etc.)
• Financial Regulatory Framework (i.e., debt
  regulation for sub-national borrowing -- fiscal
  responsibility legislation, monitoring and
  reporting to central government, capital market
  regulation, bankruptcy and legal claims against
  sub-national entities, etc.)
• Capacity Building (i.e., training, staffing,
  incentives, etc.)
• Investment Incentives Regime (taxation policies,
  profit repatriation, accounting allowances)

7
Investment Climate Current Imperatives

• PSD REFORM SYNERGIES PACKET
• Strengthening of Bank regulation, Sub-national
  credit market development, non-banking financial
  sector
• Simplification of Business Regulations to reduce
  red tape and strengthen investor/creditor
  position
• Strengthening of National and Subnational PPP
  capacity best practice transactions skills,
  complete regulatory framework, and remaining
  sectoral regulatory agenda
• Selective investment projects, accompanied by
  Risk Mitigation support for maximizing financial
  leverage
• IFC to diversify to Real Sector investments and
  PPP

8
Top performers on Doing Business (2008)
9
Potential for improvement in ranking
Taiwan 50 Botswana 51 Italy 53
Nigeriana to 51

• After wider adoptation of already existing best
  practices

Ethiopia 102 Bangladesh 107 Nepal 111
Nigeria - from 108
10
Nigeria - low labor productivity and high unit
labor costs
11
Share of firms reporting each constraint as
serious
12
Impact of Constraints on Indirect Costs on Firms
Intl Comparison
of sales
13
NEW Flagship Investment Promotion Programmes
(cross-cutting and sectoral)

• Benchmarking/diagnostics of all 36 state
  economies (DOING BUSINESS and INVESTMENT CLIMATE
  SURVEYS)
• Implementing reforms in Lagos, Kano, Kaduna and
  Cross River in tax administration, land
  management, investor information other states
  to follow in 2009-11

DFID GBP 6.5 million grant IFC 1.8 million grant
ICP (Subnational Investment Climate Programme)

• GEMS (Growth Employment and Markets in States)
• Scaling up of ICP in above states
• Investment in high-growth clusters/value chains
  of
• Construction, ICT, Meat Leather, Wholesale/
  Retail markets, Entertaintment (Nollywood),
  Offshoring (in above 4 states to be added)

IDA 180 million DFID GBP 70 million grant
14
NEW Flagship Investment Promotion Programmes
(cross-cutting and sectoral)
IDA 300 million
PPP Infrastructure and Finance

100 million for Capacity Strengthening 200
million for Financing Liquidity fund, PRGs
IDA 500 million
POWER SECTOR Gas-powered IPP Gas supply PRG,
PPA
IDA 500 million
TRANSPORT and AGRIBUSINESS
Roads, Railways, Ports and Downstream Processing
15
SUMMARY

• Investment regimes are improving across the
  Subnational landscape
• A stable, competent National institutional
  framework is nearly complete
• Tremendous needs (and opportunities) for private
  investment
• Tremendous profits being made, yet still
  virtually untapped and growing potential
• Now is the time to get in