Agribusiness for Africa’s Prosperity. Country Case Studies
Innovation capacity and human capabilities for technological development can be enhanced by all these proposed measures. However, it is necessary to link all these measures to the enterprises, especially also in agro-industry. Prospects for private enterprise and foreign direct investment (FDI) in agro-industries Nigeria has made the private sector the driver of economic development and growth, and the role of Government has essentially become that of a regulator. Nigeria is in the 99th position among 133 countries on the Global Competitiveness Index and in the 125th position out of 183 countries on the Ease of Doing Business Index. Simply put, this means that Nigeria is a difficult area for investment. To attract local and foreign investments, the business climate must be made attractive. The first area of attention should be ensuring macroeconomic stability. Fiscal management measures that are appropriate must be instituted to support economic activities, to promote sustainable growth rates, and to keep inflation rates, prices, exchange rates, and interest rates at levels that are not injurious to investment and production. Local and foreign direct investment (FDI) will flow in if the business environment is enabling. The rules must be respected and regulatory measures obeyed. Security of investment and of life and personal properties must be guaranteed. The justice system must operate to resolve disputes and to ensure safety of investment and ownership. A fair regime of business environment and security of life and property will attract private investments into the agro-processing sector from local and foreign interests. The Nigerian government’s policy of economic deregulation and liberalization has opened up new windows of opportunity for investors wishing to participate in the country’s economy. The government’s priority is to support the real sector of the economy, in order to diversify the economic base away from a heavy reliance on oil. Specifically, the Nigerian Investment Promotion Council (NIPC) has been strengthened to enable it to serve as a one-stop office for clearing all the requirements for investment in the country. The tariff structure is being reformed with a view to boosting production. Government has introduced a new visa policy to enable prospective and actual foreign investors to procure entry visa to Nigeria within a few weeks. The tax system is being reformed to establish a regime of fairness and to encourage investments. The reform comes in various forms, including deduction allowances in the determination of taxable income of manufacturing enterprises, granting pioneer status (a concession to pioneer companies located in economically disadvantaged areas), and providing tax holiday periods of five to seven years. Research and Development (R&D) expenditure is tax-deductible. There is a 30 per cent tax concession for five years to industries that attain minimum local raw materials utilization, and in order to boost employment opportunities for job seekers, labour-intensive production practices can enjoy an up to 15 per cent tax concession for five years. The rate is graduated in such way that an industry employing one thousand people or more will enjoy the full 15 per cent tax concession rate, while an industry employing about one hundred workers will receive 6 per cent, and those employing two hundred a rate of 7 per cent. With specific reference to FDI and foreign enterprises wishing to invest in Nigeria, any company incorporated in Nigeria is allowed to have a right to land for the purpose of its activity in any state of the country. It is, however, a requirement that the investor should comply with regulations on the use of land for industrial purposes and with the environmental regulations. Land lease is usually a term of 99 years unless the company stipulates a shorter duration. As a means of encouraging industrial technology, company and other organizations that engage in research and development (R&D) activities for commercialization are to enjoy a 20 per cent investment tax credit on their qualifying expenditure. In the same vein, all companies engaged wholly in the fabrication of tool parts and simple machinery for local consumption and exports are to enjoy a 25 per cent investment tax credit on their qualifying capital expenditure, while any tax
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