One of IFC's fastest-growing client countries, Nigeria is already our ninth-largest portfolio and largest exposure in Africa. If the business environment continues to improve, activities could increase even further in coming years as IFC seeks to enter new sectors, including agribusiness, infrastructure, and manufacturing.
IFC's Executive Vice President Lars Thunell recently visited Nigeria to explore opportunities for IFC to diversify its portfolio. "Nigeria is among IFC's top ten country exposures globally and our largest market in Africa. We had a record year for investments last year and we expect to exceed that this year," said Mr. Thunell during his trip. "We are collaborating with the World Bank to help improve investment opportunities for businesses, exploring work in new sectors, providing more products, and increasing our focus through improved support at the local level."
IFC's activities in Nigeria have been growing sharply for several years, as the government has implemented key reforms to tackle corruption and improve governance, foster private sector growth, and improve social service delivery. In FY06, IFC committed $266 million from our own account to 10 projects in Nigeria, a jump of almost 30 percent from the year before. IFC's portfolio in Nigeria now comprises about a third of our entire portfolio in Sub-Saharan Africa, up from only about 10 percent in 2001.
IFC's Strategy in Nigeria
- Develop businesses and projects in key sectors
- Diversify our portfolio in financial markets
- Increase our financial products and advisory services
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Developing businesses and projects in key sectors
IFC's focus includes financial markets, infrastructure, manufacturing, and oil, gas, and mining. In particular, we are examining ways to become more actively involved in infrastructure projects. Infrastructure is a frequent bottleneck and a major reason for the high cost of doing business in Nigeria, which lowers the overall competitiveness of the country's economy. Hence IFC is supporting the government's reforms and privatization efforts.
In the power sector, for example, IFC is scaling up dialogue with a range of stakeholders to assist in preparing and financing viable projects. An example of this approach is our collaboration with Geometric Power Limited, where IFC is providing both advisory services and financial products to increase the private company's power generation capacity.
Diversifying our financial markets portfolio
IFC's work is expanding from traditional banking credit lines to new products, including trade finance, housing finance, insurance, and credit for micro, small, and medium enterprises. In 2005, three Nigerian banks—Guarantee Trust Nigeria, Diamond Bank, and Investment Banking & Trust Company Plc—became the first from Africa to join our global trade finance program, which provides guarantee coverage of bank risk in emerging markets and enhances recipients' trade finance coverage. The program allows recipients to expand their trade finance transactions within an extensive network of countries and banks. It also supports trade with emerging markets worldwide by promoting flows of goods and services, especially between developing countries.
Increasing our products and services
IFC also plans to increase financial product and advisory service offerings to improve Nigeria's business climate and enhance private sector development. Here we have recently advised the government on the privatization of Abuja International Airport.
To expand our reach and more easily diversify into newer sectors and companies of different sizes, IFC has also started offering local currency financing in Nigeria. The move, approved by the Central Bank, lets companies that do not have foreign currency earnings access longer-term naira financing from IFC without taking on foreign exchange risks. The first such loan, announced during Mr. Thunell's visit, consists of 390 million Nigerian naira ($3 million) to Hygeia Nigeria Limited to support an upgrade of three hospitals. The goal is to expand and improve affordable health care for local people.
Given the size of Nigeria's population and its economy, development here has global significance—and Africa's ability to meet its Millennium Development Goal targets depends in large part on Nigeria's success. IFC remains committed to helping the country's private sector make its crucial contribution to reaching these goals.
Learn more by reading the
IFC in Nigeria fact sheets... [pdf]
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27 11 731 3179
E-mail:
hbassiri@ifc.org
Published January 31, 2007
