admin

Commercial real estate and multifamily lenders set new record

Commercial and multifamily lenders had another banner year in 2018, when closed-loan originations rose 8% to a high of $574 billion.

“Borrowing and lending backed by commercial and multifamily properties hit another new record last year,” Jamie Woodwell, vice president of commercial real estate research at the Mortgage Bankers Association, said in a press release.

“Solid fundamentals, growing property values, low interest rates and strong appetites from both borrowers and lenders all helped drive an 8% increase in recorded multifamily lending from a year ago. Repeat participants in our survey increased their lending by 4% during 2018, with the remaining growth coming from the addition of new firms.”

Commercial bank portfolios provided the most capital to the market, representing $174 billion or nearly one-third of the total. Government-sponsored enterprises Fannie Mae and Freddie Mac were responsible for more than $142 billion or nearly one-fourth of the total.

Digital mortgages”Many capital sources rose to record levels of lending — including bank portfolios, life insurance companies and the GSEs,” Woodwell said. “Among property types, multifamily pulled even further ahead as the dominant lending target, growing to 46% of total mortgage banker lending — a series high.”

Office was the next largest property type after multifamily, representing 18% of the total. Retail, hotel/motel and industrial property types each represented 8% of the market for a combined 24% market share. Health care loans represented 2% of the market.

The previous record for commercial real estate and multifamily loans closed in a year was $530 billion, according to the MBA.

Source: Bonnie Sinnock, National Mortgage News

African Development Bank approves $15 million investment package for Infrastructure Credit Guarantee Company

The Board of the African Development Bank has approved a $15-million investment package to Infrastructure Credit Guarantee Company (InfraCredit), to support infrastructure financing through the domestic debt capital markets in Nigeria.

The investment package to InfraCredit is comprised of a subordinated loan of $10 million and a risk sharing facility of up to $5 million. This intervention will promote local currency infrastructure financing, and further development of the domestic capital market.

InfraCredit is a specialized infrastructure credit guarantee company, established to enhance local currency debt instruments – mainly bonds, to finance eligible infrastructure projects in Nigeria. This is intended to uplift the credit rating of such bonds, allowing institutional investors to include them in their portfolios.

African Development Bank

InfraCredit was founded by the Nigerian Sovereign Investment Authority (NSIA) in collaboration with GuarantCo (part of the Private Infrastructure Development Group). These initial investors have been joined by the Africa Finance Corporation (AFC) and KfW, the German Development Bank.

The African Development Bank’s investment in InfraCredit will catalyze local institutional investor funds, including pension funds, into financing long-term infrastructure projects through the local bond markets. The investment boosts InfraCredit’s qualifying capital base through the subordinated loan; it also improves its capacity to expand its guarantee business through the proposed risk sharing arrangement.

READ ALSO: THESE ARE THE TOP US COMMERCIAL MULTIFAMILY MORTGAGE ORIGINATORS

Through this intervention, the African Development Bank is helping to stimulate local currency financing across diverse infrastructure transactions, thereby improving economic diversification and competitiveness, as well as promoting more equitable growth, strengthening local value chains and financial markets in Nigeria. InfraCredit’s operations will catalyze infrastructure investments in critical sectors such as renewable energy, housing, transportation, agricultural infrastructure, and telecommunications, which are critical for the country’s economic development. These also align with the Bank’s High 5 agenda.

African Development Bank

Stefan Nalletamby, the Bank’s Director of the Financial Sector Development said, “The Bank’s support will strengthen the capital base of InfraCredit, underpinning the expansion of the Company’s core business of guaranteeing of bonds issued to fund infrastructure projects. This adds to the Bank’s existing initiatives to mobilize domestic institutional savings and stimulate non-sovereign local debt capital market development in Nigeria. This ultimately helps to increase private sector financing for critical infrastructure projects in key sectors including energy, agriculture, water, health and education, through local capital markets”.

READ ALSO: DUBAI FEARS THE END OF ITS BUILD IT AND THEY WILL COME AND MODEL

The transaction will also result in the leverage and enhancement of the scope and impact of the Bank’s interventions alongside private sector financing, especially from pension funds as well as from co-investment partners. InfraCredit aims to support up to $1.25 billion in infrastructure financing over the next few years, by involving the private sector in infrastructure financing, essential to Nigeria’s economic resilience.

Source: AFDB.ORG

Over 200 CEOs to Attend AIHS CEO Forum in July

Nigeria’s premier and most established housing show, The Abuja International Housing Show (AIHS), is set to host over 200 Chief Executive Officers (CEOs) from varied companies and firms in the housing, construction and business industries across Africa and the world in July.

It will be the biggest convergence of such important figures sharing ideas, experience and expertise on how to lead a more effective and financially inclusive industry.

Registration for the 13th edition of the show which will hold this year from 23 July to 26 July has commenced and according to the event’s coordinator, Festus Adebayo, this edition will feature a CEO Forum on the first day (23 July) to tackle several challenges, especially the recurrent ones in the housing sector.

According to Adebayo, over 200 CEOs in the real estate, mortgage housing finance, construction companies and professional institutions will focus on macro-economic and socio-political environment and impact of real estate market.

“The forum which is a gathering of high profile professionals who are founders and business owners will give opportunity to present and discuss challenges facing their respective organisations and the way forward.

“It is a collaborative and supportive environment for leaders in Nigerian real estate industry support services and mortgage banks. Participating in the forum will increase high level business contact.’’

According to Adebayo, the forum will equally provide avenue for meeting counterparts from every parts of the country and outside the country on networking business relations.

With an ever changing world, it is indeed very timely to have all these top leaders converge for the sake of advancement. Various ideas and experiences from several places will greatly benefit the participants in forging more adaptable and effective models of operation.

 

Cross-fertilization of Information

The attending CEOs will proactively engage the show with first hand, authentic – not to mention relevant – information on a number of issues pertaining to the industry.

The most potent resource of the 21st century and especially in the Housing and Construction Sector is information. Things change quickly, and only those who can keep up will be able to compete and stay relevant in the industry.

Having access to veritable information has always been one of the most important benefits for stakeholders who attend the AIHS.

A major highlight of the event is the showcase of innovative developments in the housing industry, paper presentations from experts and leading names in the industry.

In addition, renowned experts will provide housing market forecasts and examine issues such as employment, home prices, production, demand and supply.

CEO Roundtables

There will be break-out sessions led by the attending CEOs to address emerging issues during the course of the show with some definitive and specialised solutions. This will be of great benefit for the entire industry as such recommendations will be largely adopted in order to effectively grapple with industry challenges ranging from the provision of affordable housing, mortgage, quality control and policy directions.

READ ALSO: HOUSING SHOW TO DRIVE FINANCE MODELS – CONVENER

The CEO forum will also be an opportunity for the promotion of new ideas, innovations and products looking for markets. It will also serve as a selection ground for those looking for ideas, businesses and products to invest in.

Clearly, there is no other platform in Nigeria that can bring together as many professionals, not only from housing, real estate and construction sectors, but also from government, investment, and capital markets to share their first-hand experience, knowledge and expertise on varied issues related directly or indirectly to housing and development.

For registration CLICK HERE

Hispanics Lead Recent Homeownership Surge in U.S

The National Association of Hispanic Real Estate Professionals released the 2018 State of Hispanic Homeownership Report on Tuesday at its Housing Policy & Hispanic Lending Conference.

The annual report found that from 2008 to 2018, the Hispanic population was responsible for 81% of U.S. labor force growth, accounted for 39.6% of U.S. household formations and represented 62.7% of the increase in U.S. net homeownership.

“The annual State of Hispanic Homeownership Report play an important role in noting important trends in the Latino megamarket and serves as a key informational resource for policymakers and industry stakeholders,” NAHREP said in a press release.

The 2018 State of Hispanic Homeownership Report is in its ninth year of publication, focusing on the impact of language and culture in home purchase transactions. In addition to statistics on these homeownership trends, the report also provides recommendations on marketing strategies to help companies effectively reach Hispanic consumers.

Download the full report here.

Source: By Alyssa Stringer

IMF again tasks Nigeria on removal of $5.2trn fuel subsidy

The International Monetary Fund (IMF) on Thursday insisted that Nigeria should remove its fuel subsidy, which it said has accumulated to the tune of $5.2 trillion since 2015.

The Washington-based Fund recommended the creation of a social protection safety net so that the most exposed in the population do not take the brunt of the removal of the subsidy.

“We believe that removing fossil fuel subsidies is the right way to go. If you look at our numbers from 2015, it is no less than about $5.2 trillion that is spent on fuel subsidies and the consequences thereof,” Christine Lagarde, IMF managing director, said during a press conference at the ongoing 2019 World Bank/IMF Spring meetings in Washington DC.

If the subsidy removal happens, she said there would be more public spending available to build hospitals, roads, schools, and to support education and health for the people.

She said the Fiscal Affairs Department has actually identified how much would have been saved fiscally but also in terms of human life if there had been the right price on carbon emission as of 2015.

“The numbers are quite staggering,” she added.

Lagarde advised the Nigerian government to make real effort to maintain a good public finance situation for the country in order to direct investment towards health, education, and infrastructure.

“I would add as a footnote as far as Nigeria is concerned that, with the low revenue mobilisation that exists in the country in terms of tax to GDP, Nigeria is amongst the lowest,” she said.

On the global scene, Lagarde said the global economy is currently quite uncertain and that as at a year ago, 75 percent of the global economy was going through the phase of synchronised growth.

“As you heard a couple of days ago, we are now talking about a synchronised slowdown by 70 percent of the global economy. So our forecast for growth this year is 3.3 percent, going back up we hope in 2020, based on our forecast, to 3.6 percent,” she said.

This expected rebound from 3.3 percent in 2019 to 3.6 percent in 2020, she said, is precarious and subject to downside risks, ranging from unresolved trade tensions, yet high debt in some sectors and countries, both public and corporate, to the risk of weaker-than-expected growth in some stressed economies.

In terms of policy recommendations, about this moment of uncertainty and precarious possible pickup, Lagarde suggested not a single policy but multiple policies because it will have to be country-specific as there is no one-size-fits-all.

“But we certainly would recommend two key principles. One is, do no harm. Second, do the right thing. So do no harm. The key is to avoid the wrong policies, and this is especially the case for trade,” the IMF managing director said.

The Fund urged countries to create more room in order to resist the next crisis when the downturn comes and that means enhancing resilience by making smarter use of fiscal policy and by strengthening financial sector policies and discipline.

“And in all of these efforts, we need stronger international cooperation. We need those policymakers that I would call the women and the men for all seasons in order to resist that uncertainty that we have at the moment,” she said.

Regarding the Africa and China debt issue, Lagarde said the World Bank and the IMF are working together in order to bring about more transparency and be better able to identify debt out there.

“We are constantly encouraging both borrowers and lenders to align as much as possible with the debt principles that have been approved by the G20 and that we have endorsed internally and developed ourselves.

“It is clear that any debt restructuring programmes going forward in the years to come will be more complicated than debt restructuring programmes that were conducted 10 years ago simply because of the multiplicity of lenders and the fact that not all public debt is offered by members of the Paris Club, for instance, which does not mean to say that any debt from a lender outside the Paris Club is an issue as long as the principal principles are adhered to,” Lagarde said.

Source By:Hope Moses-Ashike & Onyinye Nwachukwu

The Required Documents for Land Purchase in Nigeria

There are always documents involved in every business transaction carried out especially the ones involving money. Real estate transactions are no different. These documents serve as proof that a business transaction took place. The most common business document is a receipt which indicates that money was paid into an account or paid to someone. These documents secure one’s investments and make it possible to plead a case peradventure there is any dispute.

The nature of land disputes in Nigeria makes it extremely important that you have all relevant documents regarding ownership of a land or property. These titled documents are recognized by various government statues and laws on land and landed properties.

READ MORE: MIXED FEELINGS ABOUT AFRICAN REAL ESTATE

Having all the documents required for a land purchase will help make your ownership legitimate after proper verification from the appropriate government agencies in charge of all land and land related issues in Nigeria.

Here are the documents required to make a land purchase in Nigeria:

Deed of assignment

The deed of assignment is the document that shows that you are the new owner of the land. It is always worrisome to see people buy land and not ask for this document. It is a very important document that you should of a necessity request that it be given to you at the end of the land or property transaction.

property

It is often time referred to as deed of conveyance however conveyance refers to the process where the seller transfers ownership of the land or property to the buyer. It is a mutual agreement between the owner of the land and the buyer. While the deed of assignment is a signed agreement where an assignor (Seller or owner) states his consent that from the date of the assignment (purchase) or any date stipulated therein, he assigns his ownership of that Land to the assignee (buyer).

The deed of assignment contains some very crucial information for a land/property transaction. Such as the date the ownership was transferred to the assignee and a clear description of the property or land.

READ MORE: 3 SIGNS OF A SHIFTING PROPERTY MARKET

Once you have the deed of assignment it is very mandatory that you go record it at the appropriate land registry to serve as legal evidence to the real estate transaction. At the land registry, the deed of assignment will then be stamped at the stamp duties office before it becomes authenticated in the form of a governor’s consent or registered conveyance.

 

Survey plan

This is a document that clearly delineates the boundaries, the length and breadth of the property or land purchased. It gives accurate measurements and description of that land. It also helps to reveal if the land is under Government’s acquisition or not or whether the land is in a Government acquired or committed area.

Simply put, with a survey plan, you’ll be able to know everything about the land. It is important you request for this document BEFORE you buy the land. Request that a copy be given you so you can take it to a surveyor to help you cross check the document as well as confirm that what’s on paper is the same thing on land.

The survey plan would also help you know the purposes for the land, whether it is for residential, agricultural or commercial purposes.

A survey plan should have the following:

The name of the owner of the land surveyed.

The Address or description of the land surveyed.

The size of the land surveyed.

The drawn out portion of the land survey and mapped out on the survey plan document.

The beacon numbers.

The surveyor who drew up the survey plan and the date it was drawn up.

A stamp showing the land is either free from Government acquisition or not

With the survey plan, you can do a proper land search and know about everything concerning the parcel of land. ALWAYS request for a survey plan BEFORE you make a purchase.

 

Certificate of occupancy

This document certifies the legal ownership status of any property or land in Nigeria. It signifies that the owner of the property has been given legal permission to occupy the property by the executive governor of that state.

A certificate of occupancy is given to owners of lands or properties situated in urban areas, if the property is situated in a rural area; a customary right of occupancy is given by the local government council.

READ MORE: GROUP TO LAUNCH REAL ESTATE DATA SYSTEM FOR HOUSING DELIVERY IN NIGERIA

A certificate of occupancy is a land title document issued by the government validating the owner’s right to ownership of a parcel of land for a period of 99 years. However, some lands or properties for sale already come with a C of O, in that Case, Endeavour to ask for it. If your land or property does not come with a C of O, ensure you get one.

Property

Receipt

This is a document that proves money was exchanged in the real estate transaction. Without this document, there is no way one can proof that money was involved. It shows that the seller acknowledges that he or she received payment for the land or property.

People often make a big mistake of thinking a deed of assignment is the same as a receipt. They are NOT the same. A receipt validates monetary payment while a deed of assignment validates ownership.

A real estate purchase that does not have receipt as evidence of transaction becomes untraceable in times of problem. No one is wishing evil to anyone but then these things do happen, that’s why it’s best you have all relevant document regarding the purchase of a land/property.

A bank cheque or draft is still one of the best payment methods, and you should have someone witness the transactions. If you want to carry out cash transactions, ensure you are given a receipt right there and then, else, your payment would not hold water.

You are strongly advised to get all these documents in hand so you can easily avoid and get out of all and any problems regarding land ownership in the country. Always remember to get professional real estate advice from trusted real estate consultants like FESADEB Ltd before putting in your money into any real estate investment.

Source: Housingnews

REDAN President, Ugo Chime, Reveals Why 2019 Expo Will Be Best Ever

In an interview granted Housing News, the President of Real Estate Developers Association of Nigeria (REDAN), Rev Ugo Chime (UC), reveals why this year’s Expo will be the most improved and anticipated.

Q. Can we meet you Sir?

UC. My name is Reverend Ugo Chime. I am the President of Real Estate Developers Association of Nigeria, REDAN Expo 2019.

Q. Can You Tell Us About REDAN and the Expo?

UC. REDAN is an umbrella body of all real estate developers in the country. They’re the ones handling the supply side of the housing and construction industry. While people make demands, REDAN supplies. The REDAN Building Expo is coming up on 7th to 8th May 2019. This year’s theme is, ‘’REAL ESTATE DEVELOPERS: THE BEDROCK FOR NATIONAL ECONOMIC STABILITY.” The REDAN 2019 Expo is the third edition and it is aimed among other things to bring to floor the professional developers in the real estate and housing industry, and discuss how best they can serve as a catalyst in the development of the Nigeria economy.

READ ALSO: DEVELOPERS EVERYWHERE YET HOUSING GAP PERSISTS

Q. Where is the Venue of the Event?

UC. The Expo is holding at the Musa Yaradua Center, Abuja.

Q. What Are the Key Activities?

UC. Activities lined up includes mandatory continued professional development for participants; opportunities for the players in the industry to showcase their products; and the programme will also feature exhibition of building materials and corporate presentation of new products. This year’s expo will feature many exhibitions of real estate projects across the country, it will also feature display of new building technologies, innovations in home interiors and design.

Q. Who is the Guest of Honor?

UC. The guest of honor for this year’s REDAN EXPO is no other person than the Minister of Power works and housing, Mr Babatunde Raji Fashola. He will be the one to officially declare open the EXPO on the 7th of May.

Redan

Q. Who are the Speakers at This Year’s Expo?

UC. This year’s lead guest speaker is no other person than Mr. Hakeen Ogunniran, who is the present Managing Director of Exima Realities. He was the former Managing Director of UBDC. Other guest speakers include Mr. Femi Adewole, the chief Executive managing director of family home funds.

READ ALSO: FHF PARTNERS 14 STATES AND OTHERS TO PROVIDE AFFORDABLE HOUSING POST

Q. What is the Level of Compliance So Far?

UC. I can confirm to you that many estate developers have already registered for participation and many stakeholders have already confirmed their participation. So this year’s REDAN EXPO is going to be greater and better than the previous ones. In that line, we are calling all stakeholders to register for the REDAN EXPO before it is too late. Everything has been going based on strict schedule.

Q. What are the benefits of attending this Expo?

UC. The 2019 REDAN Expo will create an unparalleled network opportunity for stakeholders who will be participating; it will be an avenue for stakeholders and other members who are looking for opportunities to relate with Family Homes Fund — a new establishment of federal government, to meet with the MD and get to know how they can benefit from Family Homes fund.

For the first time, REDAN is collaborating with CBN and six other agencies which will be launching Real Estate Data at the opening ceremony. This year’s Expo will also be attended by all the Chief Executives from Federal Mortgage Banks in Nigeria, Mortgage Finance, Family Homes Funds and others including the Federal Ministry of power works and housing.

Q. How ready is REDAN to host this Expo?

UC. From the reponses from people, stakeholders and partners I can tell you that REDAN is ready. The necessary logistics have been put in place and all willing participants are encouraged to register in time.

Source: Housingnews

45 Schools Built By Borno for Orphaned IDPs

The Borno Government on Wednesday said it had constructed 45 mega schools to cater for the education of children orphaned by Boko Haram insurgency in the state.

The Commissioner of Education, Alhaji Inuwa Kubo, told newsmen in Maiduguri that the schools were established in the 27 local government areas of the state.

Statistics by the government indicate that over 53, 000 children were orphaned and 50,000 women widowed by the insurgency in the North/East state.

Kubo, who spoke on the sideline of the humanitarian stakeholders’ forum meeting, said the projects were part of a deliberate policy, to enhance access to quality education for orphans and out-of-school children.

READ ALSO: CITY SCHOOLS BELIEVE STABLE HOUSING IS KEY TO STUDENT LEARNING

He disclosed that the schools were designed with state-of-the-art facilities such as e-learning devices, air condition systems, power generators and other modern educational accessories.

orphaned

Kubo explained that meals, uniforms and instructional materials would be provided free to pupils in the schools, to create an enabling teaching and learning environment.

The commissioner revealed that the enrollment process of the children had commenced in the 27 LGAs, while the state government would embark on an awareness campaign to mobilise guardians to enrol their wards in school.

According to him, the state government has so far recruited 1,000 teachers to ensure the provision of quality services and sustainability.

READ ALSO: DELAYED INVOICE SETTLEMENTS THREATEN NIGERIA POWER PROJECTS

“Already, we commenced recruitment of 1,000 teachers and plans are underway to recruit additional teachers for the mega schools.

orphaned

While commending humanitarian and development organisations over their support to persons displaced by insurgency, the commissioner called on the organisations to provide scholarships for orphans and vulnerable children to enable them to pursue higher education.

READ ALSO: LAGOS ISLAND IS LONG OVERDUE FOR TOTAL REGENERATION

He also called on the organisations to provide livelihood support for poor families and sensitise them on the need to enrol their children in school.

The News Agency of Nigeria (NAN) reports that the humanitarian stakeholders’ forum meeting was organised by the National Emergency Management Agency (NEMA), to appraise interventions, identify gaps and enhance collaborative efforts for emergency response services in the state.

Source: Tribuneng

Delayed Invoice Settlements Threaten Nigeria’s Power Projects

The Federal Government has settled the past 10 invoices of the Azura Independent Power Plant(IPP), but it has often come too close to missing the deadline and this is giving investors cause for concern.

Azura has been called the ‘guinea pig’ for the long-term development of the sector due to its innovative financing structure which could be a template for other power plants in Nigeria.According to the terms of the Power Purchase Agreement (PPA), the power supply invoice should be settled within 15 business days after the invoice date by the Nigerian Bulk Electricity Trader (NBET), Ministry of Finance (MoF), and Central Bank of Nigeria (CBN).
But the FG has settled past invoices within 30 days, and although this is not in breach of the PPA, it is playing it too close to the margin and threatens the project’s project completion date (PCD).

The project’s completion date is important for contracts with a lien or bond claim deadline “driven by completion”.

READ ALSO: FHA BUILD LOW COST HOUSING

We learnt that at present, the PCD definition requires that NBET must have paid within five business days of due date for six consecutive months.
Sources tell us that given the structural realities of the NBET/MoF/CBN payment processes, it is unlikely that this hurdle will ever be met.

Azura

“This means a relaxation of the PCD definition is required,” a source said.
Other criteria to achieve PCD have been met by Azura IPP, including the plant being in operation for nine consecutive months, operating in excess of PPA performance levels, all financial covenants being met or exceeded, lower than budgeted project costs, and early operational cash flows.

We understands that the late payments are stirring investor concern as it is now assumed that the PCD will never occur in the foreseeable future because the FG has only settled the invoice within 30 days, according to a project document seen by our correspondent.
According to the document, if the PCD is not achieved for three years, Azura will accumulate $135 million of stranded cash, shareholder internal rate of returns (IRR) would be impacted by 95 basis points (bps) even assuming this amount was then subsequently distributed.

The company’s position will be severely impacted if the naira suffered depreciation similar to 2016 and shareholders could potentially lose more than $65 million, though the project will be insulated from ruin.

READ ALSO: INSPECTION SCORES DECLINE IN US FUNDED HOUSES FOR THE POWER

Azura is the first Nigerian power project to benefit from both the World Bank’s “Partial Risk Guarantee” structure ($237 million of debt used to build the plant), the political risk insurance supplied by the Multilateral Investment Guarantee Agency, Azura delivered on budget and ahead of schedule by seven months.

The challenge for Azura is how to adequately incentivise shareholders so they continue to perform their obligations because starving the shareholders of a reasonable return could potentially enhance operational risk instead of de-risking the project.
Azura may have been the guinea pig for the long-term development of the sector but replicating the feat has been difficult.

“Unless the Federal Government grants the same sovereign risk guarantees Azura enjoys, it will be difficult to replicate,” Dolapo Kukoyi, partner at Detail Commercial Solicitors, said.
Azura project has been challenged by naira depreciation which has made it difficult to raise tariff and improve cash flow, an industry-wide malaise that has seen shortfalls rise to over N1 trillion.

Azura

To keep the project alive, Nigeria will need to migrate to a price deregulated atmosphere and operationalise the eligible customer policy, interim additional support from the Federal Government, more support from the World Bank and other lenders, said the document.
Azura is critical to Nigeria’s quest to deepen energy access.

READ ALSO: NIGERIA IS ALMOST AT THE BOTTOM OF THE EVERYTHING

It contributes 10 percent of grid capacity but concerns remain about the ability of the Federal Government to sustain payment for Azura Power considering the huge cost involved in executing the project.

“The issue is, how can the government pay for the power in an electricity market that is not liquid?” Chuks Nwani, energy lawyer, said.
Azura secured a $900 million debt financing from a consortium of 15 banks from nine different countries, including most of the European development finance institutions, to build a 450MW Open Cycle Gas Turbine in Benin City, Edo State, Southern Nigeria.

Source: By Isaac Anyaogu

Nigeria Opens Special Economic Zones to Double Manufacturing by 2025

Nigeria is targeting to double manufacturing output to 20 percent of GDP within six years and will set up production hubs across the country in partnership with regional aid banks.

Nigeria is Africa’s biggest economy but it lacks a strong manufacturing base, which contributes less than 10 percent to its total gross domestic product (GDP). The country has maintained a strong currency to ensure it can keep imports pouring in, with a growing proportion coming from China.

“Project MINE’s (Made in Nigeria for Export) strategic objectives are to increase (the) manufacturing sector’s contribution to GDP to 20 percent … and generate over $30 billion annually by 2025,” the ministry of industry, trade and investment said in a statement.

READ ALSO: NIGERIA NEEDS GROWTH TO DEFUSE POVERTY TIME BOMB

The government has set up Nigeria SEZ Investment Company, which will finance industrial parks in special economic zones in the commercial capital of Lagos, southeastern state of Abia and northern state of Katsina.

The government is currently raising capital of $250 million for Nigeria SEZ Investment Company. It plans to double its equity to $500 million over four years, the ministry said.

Manufacturing

Lenders such as African Development Bank, Afreximbank, African Finance Corporation and Nigerian Sovereign Investment Authority have shown interest in co-investing with the Nigerian government, which would own a 25 percent stake. Two Chinese groups have also shown interest, the ministry said.

The West African country’s manufacturing and agricultural sectors have been neglected since the 1970s oil boom, when Nigeria began making easy money from crude oil sales.

READ ALSO: THE UNTOLD STORY OF LAGOS BUILDING COLLAPSE

Nigeria, where the vast majority of the population lives on less than $2 a day, recently emerged from a recession but growth is fragile and the government is trying to diversify its revenue away from its reliance on oil.

President Muhammadu Buhari, who is due to start a second four-year term next month, has pledged to revive the economy and is focused on building roads and expanding the railway network to lower production costs.

Manufacturing

The ministry said that the new investment company would facilitate investment into the special economic zones. However, some lawmakers have questioned government’s investment in the company, which is meant to be private-sector led.

READ ALSO: DANGOTE CALLS ON NORTHERN GOVERNORS TO FIGHT POVERTY

Critics point to lacklustre interest in some other free trade zones around Nigeria, such as the $300 million Tinapa resort in the southeastern state of Cross Rivers, which was set up in 2007 and envisaged as a tourist resort and duty-free shopping area.

In 2010, Lagos state, touted plans to set up a free trade zone with Chinese investors to develop local manufacturing but little production has been set up there.

Translate »