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FACTBOX-Investment in Nigeria

Wed 11th May, 2016 12:12pm
LAGOS, May 11 (Reuters) - Nigeria is counting on foreign 
investment to help diversify its oil-dependent economy. Fears 
its naira currency is overvalued have deterred many investors, 
but some, including China, see its fast-rising population as a 
powerful long-term draw. 
    Official data showed Foreign Direct Investment (FDI) up by 
42 percent to $174.46 million in the first quarter compared to 
the same period last year; some was reinvestment by firms 
struggling to repatriate profits given the naira is fixed at 198 
to the dollar while it trades unofficially at 320, analysts say. 
    South Africa fashion retailer Truworths is among firms 
planning to leave Africa's largest economy due to hard currency 
shortages. 
    Companies are hoping for a fillip from the record $30 
billion 2016 budget signed by President Muhammadu Buhari last 
week. The government aims to inject $1.7 billion into the 
economy this quarter to pay contractors and revive construction 
projects and Buhari is seeking investment in mining, cocoa, 
agriculture and the leather industry.  L5N17T2FW  
    The International Monetary Fund has recommended a more 
flexible exchange rate but the 73-year-old Buhari has said that 
when he ran Nigeria as military ruler in the 80s he did not bow 
to pressure from the Washington-based fund and will not now. 
    Aside from the exchange rate, the IMF welcomed government 
pledges to improve security and transparency and create jobs, 
but said, given low oil prices, Abuja needed to raise VAT, 
broaden the tax base and improve financial management. 
    James Nelson, Head of Debt Capital Markets, Africa, at 
Standard Chartered said Buhari faced big challenges but had 
begun to make changes. "He is making a huge improvement in 
Nigeria," he said.  
     
    Major investments since Buhari took office in May 2015: 
    -- Coca-Cola bought a 40 percent stake in leading Nigerian 
juice and drinks maker Chi in January, paying a "mid-digit" 
million dollar sum, according to industry sources. 
    -- Dangote Group, the company owned by Africa's richest man 
Aliko Dangote, signed a $2 billion loan deal in April with the 
Industrial Commercial Bank of China Ltd to build two cement 
plants. 
    -- In total, Nigeria got offers from China for loans worth 
$6 billion to fund various infrastructure projects, Nigerian 
officials have said. According to the presidency, the following 
deals were signed during a visit by Buhari to China in April: 
    -- Nigerian energy firm North South Power and Chinese state 
energy firm Sinohydro Corp signed a $478 million deal to build a 
300 mega watt power plant in Niger state. 
    -- Local miner Granite and Marble Nigeria and Shanghai 
Shibang signed a deal worth $55 mln to build a granite mining 
plant. 
    -- Nigeria's Infrastructure Bank signed a deal with 
Sinohydro Corp to build a $1 billion railway between the capital 
Abuja and Lagos, the commercial centre. The firms also agreed to 
build a 27-storey residential complex for $250 and spend $2.5 
billion on a subway in Lagos, which is famous for traffic jams. 
    -- Nigerian energy firm Mojec International Limited and 
China's Microstar signed a $25 mln agreement to develop power 
metering systems. 
 
 (reporting by Ulf Laessing; additional reporting by Karin 
Strohecker, editing by Philippa Fletcher) 
 ((Ulf.Laessing@thomsonreuters.com; Reuters Messaging: follow me 
on twitter @ulflaessing)) 
 
Keywords: NIGERIA ECONOMY/
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