Nigeria: Reforms Deliver "High Returns" - Trade & Investment Minister Aganga

Washington, DC — Nigeria, which has long been Africa's leading oil producer - and most populous nation, is aggressively pursuing investment to diversify its petroleum-dependent economy. Leading the campaign on behalf of President Goodluck Jonathan is Olusegun Olutoyin Aganga, who has been Minister of Trade and Investment since June 2011, after serving for 14 months as Finance Minister. He is a chartered accountant who spent 20 years at Ernst & Young and Goldman Sachs International. In several U.S. appearances this month, Aganga is making the case that reforms implemented by Nigeria's government have dramatically changed the investment climate but remain little understood outside or inside Nigeria. Following are excerpts from his AllAfrica interview following his presentation as part of a ministerial roundtable hosted by the Corporate Council on Africa on 20 September.
What is the essence of your pitch to prospective investors?
We operate in a new paradigm in the world economy. Countries controlling 75 percent of the world's GDP have issues today they've not faced before - large budget deficits, fiscal consolidation, low growth. In Africa, we are now a high-growth environment. Six of the 10 fastest growing economies are in Africa, Nigeria being one of them. Seven of the 10 fastest growing by 2015 will be from Africa, and Nigeria will be one of them. We are in a very different economic and political situation today. We have grown at an average rate of 8.8% over the last 10 years. When you look at the debt to GDP ratio, it is under 20%. Average in Europe is 18.4. When you look at return on investment, we rank at number four globally with an average return of 35%.
So we are a high-growth, high-returns environment for the first time ever, and the developed economies are in a low-growth, low-return environment. Money follows money. Where the opportunities are, where the high returns are today, where the market is today, where the raw materials are today - that is Nigeria. The country is far more stable and stronger. We have had unbroken democratic rule for the past 14 years. We've had three changes in government. In 2011 we had an election that was described locally and internationally as the freest and the fairest in the country ever.
When you look at the macroeconomic situation, exchange rates have remained stable. Inflation is down to single digits. Debt-to-GDP ratio is low. So it is not a surprise that Nigeria, for the first time, was the preferred number one destination in Africa for investors in 2011, attracting $8.1 billion - 46% higher than in the previous year. In 2012 Nigeria retained that position.
As a country we have done very well in attracting investment. That is not a surprise because the UNCTAD (United Nations Conference on Trade and Development) World Investment Report ranks Nigeria at number four globally in returns on investment at an average rate of 35.5% compared to 7% on average rate globally. Based on those returns, our goal is to be attracting more than $30 billion worth of investment per annum, because the opportunities here are huge.
What measures have you introduced to meet that goal?
First, we make sure we have a clear role for the government and private sector. We do the policy part. It is the private sector that is going to deploy capital. Second, we now have very clear policies that we are implementing rigidly. In the past, we were satisfied with exporting raw materials and buying back [finished products], which means exporting jobs. You use the proceeds from the sale of the raw materials to buy finished goods - which is wrong policy that we have followed for decades. All that has changed. The game now is industrialization - it's about adding value.