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CORPORATE GUIDES
www.corporate-nigeria.net
CORPORATE NIGERIA

The Business, Trade and Investment Guide 2009

 P R E FA C E

Dear Readers,

I am pleased to welcome you to the fourth edition of Corporate Nigeria, the

annual business, trade and investment guide that caters to the international
business community as well as Nigeria’s corporate and public elite, informing
about the economic developments and investment opportunities in the country.

In 2008, Africa’s most populous country has made great strides towards eco-
nomic and political progress, and there is no indication that the speed with which
the nation is transforming itself is slowing down anytime soon.

Thankfully and just in time, Nigeria’s 2005 banking consolidation has result-
ed in a more sound and stable financial sector ready to weather the challenges
of the current global financial crisis and providing the basis for adopting West
Africa’s single currency - the “Eco” - due to take off in December this year.
Anji Gill
With 57 million connected subscribers and a monthly growth rate of 1.1 mil-
Corporate Nigeria
lion new sign ups, Nigeria is now officially not only Africa’s fastest but also the Country Director
world’s eighth fastest growing telecommunications environment.

Last year has witnessed the Federal Government’s serious commitment to

developing the country’s tremendous agricultural potential with the introduc-
tion of Nigeria’s National Food Security Programme, which -in the light of the
world food crisis- is poised to attract international attention and will show first
short-term results in 2009.

The Oil & Gas sector, producing Nigeria's prime export good and generating
more than 90% of the country’s foreign-exchange earnings, has continued to
thrive despite the Niger Delta issue, and Nigeria’s quest to attract investors to
drive its USD 30 billion Gas Master Plan has drawn the unprecedented interest
of major global utility, gas and oil companies.

And last but not least, Nigeria has proved to the world that it is growing up
politically. Democracy has marked a few significant victories this year, with judi-
cial due process either revealing or reconfirming the country’s leaders, and the
Economic Financial Crimes Commission actively pursuing transparency and
accountability.

All these indicators ensure that Nigeria remains Africa’s prime investment
destination, and despite the global financial crisis, the nation was named the
least vulnerable economy in the world, according to a report compiled by a team
of experts from Merrill Lynch in November 2008, giving Nigeria's quest for for-
eign investment inflow a further boost.

Let Corporate Nigeria 2009 guide you through the country's countless com-
mercial opportunities and let us equip you with a comprehensive insight into one
of Africa's most vibrant and complex business environments.

Wishing you an eye-opening read.

Yours truly,

Anji Gill

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C O R P O R AT E G U I D E S N I G E R I A 3
CONTENTS

 Country Profile  Foreign Direct Investment

08 Nigeria at a Glance 42 Foreign Direct Investment Overview
10 Nigeria Country Profile 46 Interview: Engr. Mustafa Bello (FSNE),
CEO/Former Executive Secretary of
Nigerian Investment Promotion Commission
 History & Culture 48 Incentives for Investors
14 History & Culture Overview 49 Ten Reasons to Invest in Nigeria
16 Nigerian Culture 50 Doing Business in Nigeria
20 Nigeria – International Force for Peace 52 Interview: Dr. Bamanga Tukur, CON
President African Business Roundtable & Chairman
NEPAD Business Group
 Politics
22 Political Overview
26 President Umaru Musa Yar’Adua –  Special Investment Destinations
History and Vision 56 Benue’s Economy
60 Interview: His Excellency Gabriel Suswam,
Executive Governor of Benue State
 Economy 62 The Future of Benue State
30 Economy Overview 64 Ekiti State: History and Background
34 Interview: Dr. Emmanuel O. Egbogah (OON) 66 Interview: His Excellency Engr. Segun Oni
Special Adviser to the President on Petroleum Executive Governor of Ekiti State
Matters 68 Ekiti’s Economy
38 Economic Growth
40 Privatisation
 Legal & Accounting
74 What You Need to Know About
Doing Business in Nigeria
77 Legal Protection of Investment in Nigeria

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N I G E R I A C O R P O R AT E G U I D E S

 Banking, Finance & Insurance
82 Banking & Finance Overview
86 Interview: Mr Jacobs Ajekigbe,
CEO First Bank of Nigeria
91 In Focus: First Bank of Nigeria Plc
92 Interview: Mr. Okey Nwosu,
Managing Director FinBank
96 In Focus: Fin Bank Plc
98 Major Players in Global Finance
Now Turn to Local Microfinance
102 Facing the Global Financial Crisis:
What Risks does Nigeria’s Financial Sector Face?
106 Insurance Overview
 Capital Markets
108 Capital Markets Overview
112 Interview: Mr. Musa Al-Faki, Director General of the
Nigerian Securities and Exchange Commission
115 In Focus: Securities and Exchange Commission
116 Interview: Dr. Kalu Idika Kalu, Chairman BGL Limited
120 Crusader Nigeria Plc
124 Nigerian Sugar – Dangote
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C O R P O R AT E G U I D E S N I G E R I A
CONTENTS
 Energy
132 Energy Overview
136 Interview: Engr. Abubakar Lawal Yar’Adua,
Group Managing Director,
Nigerian National Petroleum Corporation
139 In Focus NNPC
142 LNG: The Russians are Coming
146 Interview: Mr. Ademola Adeyemi-Bero,
Managing Director BG Nigeria
148 Gas: From By-Product to Asset
150 OPEC: Turbulent Times
154 Oil: Delivery Disappoints
158 Interview: Mr Steve R Judd, Chief Operating
Officer, Ascot Africa Group Limited
162 In Focus: Ascot Africa Limited
5
CONTENTS

 Infrastructure – Telecommunications & IT  Industry

164 Telecoms Overview 190 Industry Overview
166 Mobile is Booming 192 Cement Boom
168 Internet Connectivity in Nigeria 194 Nigeria’s Trade Relations
170 Next-Generation Telecoms 198 Beer Industry

 Infrastructure – Transport  Solid Minerals

172 Transport Overview 200 Solid Minerals Overview
176 Interview: Mr. Richard Seaver, 202 Solid Minerals: Iron Ore
Managing Director, DHL Express in Nigeria 205 In Focus: EcoPhoenix Limited: Exploring the Future
183 In Focus: DHL Express in Nigeria
184 Partnering with the Private Sector
186 Investing in Transport
188 Transport Safety

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N I G E R I A C O R P O R AT E G U I D E S
 CONTENTS

 Agriculture  Listings
206 Agriculture Overview 232 States of the Federal Republic of Nigeria
210 Farming in Nigeria: Future Prosperity Through 233 Good to Know – Nigeria
Commercialisation? 236 Airlines
212 Biofuels: Revitalising Nigeria’s 237 Hotels
Dormant Agricultural Sector 241 Diplomatic Missions Abroad
214 Nigeria’s National Food Security Programme 248 Foreign Embassies in Nigeria
253 List of the Federal Cabinet
254 Weblinks Corporate Nigeria
 Construction
216 Construction Overview 256 Imprint
218 Cementing Nigeria’s Future
221 In Focus: Julius Berger Nigeria Plc

 Tourism
222 Tourism Overview
226 Interview: Mr. Panos Panayis, General Manager
Eko Hotel & Suites, Victoria Island
229 In Focus: Eko Hotel & Suites Lagos
230 Argungun Fishing Festival

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C O R P O R AT E G U I D E S N I G E R I A 7
COUNTRY PROFILE

Nigeria at a Glance
Lake
SOKOTO ma
e
Yob
Ri m adu
gu
Chad

Bu

Ko
nsu
ru
oto

So k
KATSINA

ga
Bun
dd a

Ga
ge

Nga
re JIGAWA uG
ana
Zamfara

ug
ad
Hadej
i a Kom BORNO
Kano YOBE
Sokot

ZAMFARA Maiduguri
o

Gulbin Ka KANO

m
KEBI

Yedsera
Ga ng ol a
Nig lm Go
er
Zaria

Kan
a

w al
BAUCHI GOMBE
Kainji

Ha
Kaduna
Reservoir
a

una
Marig

ga
Kad
Bun
Oli Shiroro KADUNA
Reservoir Kadu

Gongola
NIGER
na

la
Gongo ADAMAWA

ji
Ga
na
Kadu

shi
Mo

ABUJA ue
Guara

Ben
PLATEAU
FEDERAL
KWARA CAPITAL TERRITORY
S
NASSARAWA
hem
Okpara

OYO Ilorin ge
an
Ni

r kw
a da
kar

Dep
Ma

Ta
O

Ogbomosho ba
ra

ue
Oshogbo
EKITI Ben
Ede
Kat

Iwo Ado-Ekiti TARABA

sin

-Al
a

Ibadan Ilesha a

Og u OSHUN KOGI
n

Donga
b ra
am

Abeokuta OGUN An BENUE

ONDO
Siluk
o

e
ENUGU
s
Os

Mushin Kekki Lagoon

Lagos EDO ANAMBRA Enugu

EBONYI
Onitsha
r
Nige

Cross

DELTA CROSS
Cros

RIVER
ABIA
s

IMO
Bight of Benin
Im o

RIVERS
AKWA IBOM
BAYELSA
Port
G u l f o f G u i n e a Harcourt

NORTH ATLANTIC OCEAN Bioco

Official Name: Area:

Federal Republic of Nigeria 923.800 sq km

Conventional Short Form: Population:

Nigeria 2006 148 million (annual growth rate of 2 %)

Capital and Seat of Government: Ethnic Groups:

Abuja (approx. 2.6m residents) More than 250

Form of Government: Religious Groups:

Federal Republic, Presidential Democracy Muslims (50%), Christians (40%), indigenous religions (10%)
(“Fourth Republic”) was introduced in 1999
Languages:
Head of State and Government: English (official), Hausa, Yoruba, Igbo, Fulani
President Umaru Musa Yar’ Adua, Grand Commander of the
Order of the Federal Republic (GCFR), President and Currency:
Commander-In-Chief of the Armed Forces of the Federal Naira, 1 NGN = 100 Kobo
Republic of Nigeria, elected in April 2007 117 NGN = 1 USD; 174 NGN = 1 EUR

8 |
N I G E R I A C O R P O R AT E G U I D E S
 COUNTRY PROFILE

Memberships in International Organisations

Macroeconomic Indicators
ACP (African, Caribbean and Pacific States), AU (African
Union), Commonwealth, ECOWAS (The Economic GDP (current GDP growth GNI per Inflationrate
Community of West African States), FAO (Food and USD) billions rate capita
Agriculture Organization), G77, G15, G24, IAEA 2002 46.7 2 310 4
(International Atomic Energy Agency), IBRD (International 2003 58.3 11 360 21
Bank for Reconstruction and Development), ICAO 2004 72.3 6 400 20
(International Civil Aviation Organization), ICC, ICFTU 2005 97.0 6 520 25
(International Confederation of Free Trade Unions), IDA 2006 114.7 6 640 8
(International Development Association), IFAD 2007 165.7 6 930 5
Source: World Bank
(International Fund for Agricultural Development), IFC
(International Finance Corporation), IFRCS (International
Red Cross and Red Crescent Movement), IHO, ILO
(International Labour Organization), IMF, IMO (International
Maritime Organisation), Interpol, IOM (International
Organization for Migration), IPU (Inter-Parliamentary Major Media Outlets
Union), ITU (International Communication Union), MIGA
(Multilateral Investment Guarantee Agency), MINURSO, Press
MONUC, OAS observer (Organization of American States), BusinessDay, Champion, Comet, Daily Independent, Daily
OIC (Organization of Islamic conferences), ONUB, OPCW Sun, Daily Times, Daily Trust, Guardian, New Nigerian,
(Organisation for the Prohibition of Chemical Weapons), Newswatch, Punch, Tell, This Day, Vanguard, various daily
OPEC, UNCTAD, UNESCO, UNHCR, UNIDO, UNITAR, United papers, weekly magazines and political magazines.
Nations and sub-organisations (UNAMSIL), UNMEE,
UNMIL, UNMIS, UNMOVIC, UNOCI, UPU (Universal Postal Television and Radio
Union), WCO (World Customs Organization), WFTU (World Africa Independent Television (AIT), Channels TV, Degue
Federation of Trade Unions), WHO (World Health Broadcasting Network (DBN), Galaxy TV, Minaj TV, Nigerian
Organization), WIPO (World Intellectual Property Television Authority (NTA),Federal Radio Corporation of
Organization), WMO (World Meteorological Organization), Nigeria (FRCN), Ray Power, Voice of Nigeria and Private
World Bank, WTO. Broadcasting. ¶

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C O R P O R AT E G U I D E S N I G E R I A 9
 COUNTRY PROFILE
Nigeria Country Profile
The future is bright
£ Since 1999 and the return to democ-
racy, the Federal Republic of Nigeria has
entered something of a new golden age,
finally laying to rest the demons of the
past. In April 2007, the first civilian han-
dover of power in the country’s history
saw President Umaru Musa Yar’Adua
come to power. Under Yar’Adua’s prede-
cessor, Olusegun Obasanjo, the govern-
ment of the African giant had begun to
implement some much-needed reforms,
in an attempt to move the country’s econ-
omy away from its dependence on oil and
reduce corruption.
It looks like these reforms are starting
to bear fruit. Over the next few years, GDP
growth is expected to remain healthy, at
about 6.5 per cent per year. Not only that,
high export earnings should ensure a
current-account surplus until at least
2012. Despite the global economic crisis,
direct foreign investment in the country
10
... direct foreign investment in the country
(mostly in oil and related fields) is expected
to stay high too, at over USD10 billion per
year.
(mostly in oil and related fields) is expect- cent of the region’s GDP, Nigeria is still
ed to stay high too, at over USD10 billion heavily dependent on its huge oil and
per year. Much remains to be done, but a gas sector. Oil and gas together provide
stable political system combined with 95 per cent of foreign exchange earn-
Yar’Adua’s efforts to modernise the coun- ings, and about 85 per cent of budgetary
try’s infrastructure makes Nigeria an revenues. Most of the oil comes from
attractive investment opportunity – and onshore fields, although an increasing
not just for the oil sector. amount is produced offshore. However,
oil’s contributions to GDP, currently
Economy and resources standing at about 20 per cent, are de-
creasing as the continued insurgency in
The second largest economy in Sub- the oil-rich Niger Delta region adversely
Saharan Africa, responsible for 41 per affects output. Nigeria's proven oil
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N I G E R I A C O R P O R AT E G U I D E S

reserves are estimated to be 36 billion
barrels; natural gas reserves are at least
100 trillion cubic feet (2.8 trillion cubic
metres). The country is a member of the
Organization of Petroleum Exporting
Countries (OPEC). Crude oil production
averaged about 2.45 million barrels per
day in 2006. By late 2008, production had
fallen to about 2 million barrels per day,
due to rebel attacks. There is some hope
that tension in the region may be eased
in the near future, preferably without
outside intervention. Nigeria is rich in
several other valuable minerals, includ-
ing coal, tin, columbite (an iron-bearing
mineral that accompanies tin), iron ore,
copper, lead and zinc. There are signifi-
cant uranium deposits in the northeast
of the country, which have yet to be
exploited on a large scale.
The agricultural sector, neglected for
many years in favour of crude, has
emerged to take up the slack caused by
the oil output reduction. The sector con-
tributed about 42 per cent of GDP in 2007
and employed two thirds of the country’s
workforce, mostly in small-scale sub-
sistence production. With construction,
agriculture accounted for the majority of
growth in Nigeria’s non-oil growth rate,
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C O R P O R AT E G U I D E S N I G E R I A
COUNTRY PROFILE
which reached 9.6 per cent in 2007, and States (51.1 per cent); Brazil (7.9 per
is estimated to be at 8 per cent in 2009. cent); Spain (7.6 per cent). Major import
The country was once a net exporter of partners, for goods such as machinery,
produce, but chronic underinvestment chemicals, transport equipment, manu-
in infrastructure has left the agricultur- factured goods, food and live animals
al sector underdeveloped – as a result include China (11 per cent), the Nether-
Nigeria's proven oil reserves are estimated
to be 36 billion barrels; natural gas
reserves are at least 100 trillion cubic feet
(2.8 trillion cubic metres).
production has been unable to keep up lands (8.1 per cent), the US (8 per cent)
with urban growth and Nigeria now has and the UK (5.8 per cent). Nigeria’s gov-
to import food. Important agricultural ernment sees significant growth poten-
products include cocoa, peanuts, palm tial in the tourism, telecommunications,
oil, corn, rice, sorghum, millet, cassava manufacturing and technology indus-
(tapioca), and yams. With the unfortu- tries. About one-third of the country’s
nate decline in the oil sector, it is hoped power is provided by hydroelectricity,
renewed investment will reinvigorate the although this source has the potential to
agricultural sector, which still has much provide even more power.
potential for growth.
In 2007, estimated GDP (purchasing
Countries which are major export power parity) was USD296.1 billion
partners, largely for petroleum but also (USD166.8 billion at the official exchange
cocoa and rubber, include the United rate), with a real growth rate of about
11
COUNTRY PROFILE

6.2 per cent. The inflation rate showed a
notable decrease from two years before
– 5.4 per cent in 2007, down from 17.8 per
cent in 2005.
Geography and population
Nigeria is huge, both in physical size
and in population. It has an area of 923.8
thousand square km (356,700 square
the most part made up of sandy beach-
es, behind which lies a belt of mangrove
swamps and lagoons that average 10
miles (16 km) in width but increase to
about 60 miles (100 km) wide in the huge
Niger delta in the east. The Jos Plateau,
1220 metres (4000 feet) high, lies in the
centre, culminating at Shere hill, 1780
metres (5800 feet). Then there are the
highlands along the south-eastern bor-
dense population in the extreme north:
the Sokoto area and the Kano-Katsina
area. The Kano concentration is based
on intensive agriculture in an area of rel-
atively fertile soil, but the densely settled
areas around nearby Katsina have low
quality soil and struggle to produce
enough food for the local population.
Media and communications

Nigeria has openly embraced mobile

The south, or Guinea coastlands, is the
most economically developed part of
Nigeria. All of the country’s major industrial
centres and oil fields, as well as its sea-
ports, are concentrated in the region, and
its forest resources are intensively exploited.
miles), about the size of the US states of der, bordering Cameroon, which rise to
California, Nevada, and Arizona. The 2419 metres (7936 feet) at Chappal
country is the most populous in Africa, Waddi, in the Gotel Mountains and 2042
with a fast-growing population of about metres (6699 feet) at Mount Dimlang
148 million people, increasing at a rate (formerly Vogel Peak), in the Shebshi
of just over two per cent a year. Major Mountains, south of the Benue River.
cities are Lagos (17,6 million), Kano Finally, there is the plain of Sokoto and
(population 9.3 million), Ibadan (5 mil- the Lake Chad Basin, which forms part
lion), Enugu (500,000) and the capital, of the Sahel region, and is semi desert.
Abuja, with an estimated population of The River Niger with its largest tributary,
1.452,000. the Benue, forms a large 'Y' across
Nigeria. The country’s territorial waters
The country is a rich mix of ethnicity extend 12 nautical miles out to sea, com-
and religion, with an estimated 250 eth- plemented by an exclusive economic
nic groups. The largest ethnic groups are zone that stretches 200 nautical miles
the Hausa-Fulani in the north, the Igbo in offshore.
the southeast, and the Yoruba in the
southwest. Other ethnic groups in the The south, or Guinea coastlands, is
north include the Nupe, Tiv, and Kanuri. the most economically developed part
English is widely spoken, but as many as of Nigeria. All of the country’s major
478 other languages are in use, the most industrial centres and oil fields, as well
common of these being Hausa, Yoruba, as its seaports, are concentrated in the
Igbo, Fulani, and Kanuri. Around 50 per region, and its forest resources are
cent of the population are Muslims, intensively exploited. The central region
another 40 per cent Christians, and the is the most sparsely settled and least
remaining 10 per cent hold traditional developed part of Nigeria, comprising
indigenous beliefs, although the bound- about two-fifths of the country’s land
aries between organised religions and area but supporting less than one-fifth of
indigenous beliefs are vague. the total population, although there are
pockets of dense population in the tin
Nigeria’s terrain can be divided into fields of the Jos Plateau and in the
several zones: it has a coastline of southern Tiv-inhabited area. The north,
approximately 500 miles (800 km), for or Nigerian Sudan, has two regions of
communication. According to President
Yar’Adua, in the seven years since,
investment in the sector has topped
US$11 billion. The mobile network oper-
ators have increased tele-density from
0.73 per cent in December 2001 to 38.09
per cent by October 2008, with over 55
million mobile network subscribers. By
September 2008, Nigeria had a total of
10 million Internet users. The mobile
industry is now sufficiently advanced
that many Nigerians no longer have a
need for landlines.
There are many dozens of daily,
Sunday, and weekly newspapers in
Nigeria, nearly all of which are in
English. Some are state-owned. Outside
of the cities, many Nigerians still rely on
radio for news – all 36 states run their
own radio stations. The Nigerian
Television Authority operates stations
throughout the country, and the Federal
Radio Corporation of Nigeria broadcasts
in English as well as several African lan-
guages; there are also many privately
owned television and radio stations.
Transportation and Infrastructure
The country’s road system carries the
vast majority of freight. It has about
120,000 miles (193,000 km) of roads, of
which just under 19,000 miles (30,000
km) are paved. Road traffic is heaviest in
the cacao belt of south western Nigeria,
the peanut and cotton belt of the Kano-
Katsina region, the Jos Plateau tin fields,
and the palm belt of south eastern
Nigeria, which have a dense network of
all-weather roads. The sparsely popu-
lated areas of the central region, the
Cross River region, and the Lake Chad

12 |
N I G E R I A C O R P O R AT E G U I D E S
 COUNTRY PROFILE

basin have tenuous road links that carry

only a few trucks a day. A combination of
poor maintenance and heavy traffic has
seen the quality of the network decline If Nigeria can successfully negotiate these
over the last thirty years. However, many challenges, it may yet achieve its laudable
state governments are implementing ‘Vision 2020’ goal of being among the top
long-needed repairs and building new twenty global economies by 2020.
roads where necessary, in partnership
with the private sector.

Nigeria has about 5,300 miles (8,600

km) of waterways, while its major ports
are at Calabar, Lagos, Onne, Port
Harcourt, Sapele, and Warri. The coun-
try has nearly 70 airports, although
Abuja International Airport and Lagos
Murtala Muhammed Airport are by far
the biggest.
There are about 2,200 miles (3,505
km) of narrow gauge railways in Nigeria.
The lack of standard gauge makes the
trains unsuitable for transporting large
cargoes such as peanuts and cotton
from the north, and as with the road
system, years of underinvestment have
made the rail system unreliable. An
additional small standard gauge sys-
tem exists in the centre of the country,
largely for connecting mines to steel-
works. Plans are underway to privatise
state operator, the Nigerian Railway
Corporation, and an ambitious USD30
billion project to replace the narrow
gauge network with standard gauge
track is in its early stages. A mass tran-
sit system is also planned for Lagos,
which should be operational by 2011.
However, the drop in Nigeria’s oil prof-
its, coupled with President Yar’Adua’s
desire to renegotiate contracts signed
by his predecessor’s government may
well cause these plans to change.
Nigeria has suffered problems with
brownouts, caused by inadequate power
supply. It is hoped that a combination of
private sector financing for construction
of new power plants, an upgrade of the
transmission network and a reorgani-
sation of the Power Holding Company of
Nigeria will make power cuts a thing of
the past. If Nigeria can successfully
negotiate these challenges, it may yet
achieve its laudable ‘Vision 2020’ goal of
being among the top twenty global
economies by 2020. ¶

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C O R P O R AT E G U I D E S N I G E R I A 13
 H I S T O R Y & C U LT U R E
History and Culture Overview
From uncomfortable union to peace and prosperity
£ The state of Nigeria came into exis-
tence on January 1, 1914 when Britain
merged the Protectorate of Northern
Nigeria, and the Protectorate of Southern
Nigeria, which contained Lagos, to form
the Colony and Protectorate of Nigeria.
Britain had annexed Lagos in 1861, the
Protectorate of Southern Nigeria between
1885 and 1894, and the Protectorate of
Northern Nigeria in 1903.
Britain had used a system of ‘indirect
rule’ in the Muslim north – local govern-
ment was to be left in the hands of the
emirs, subject to the guidance of British
officers. Caliphate officials were trans-
formed into salaried district heads and
became agents of the British authorities,
responsible for peacekeeping and tax col-
lection. The British high commissioner
was at the top of the chain of command. On
joining north and south, the indirect rule
principle was applied throughout Nigeria.
14
Nigeria was divided into three autonomous
regions with overlapping economic interests,
but little in common, socially or politically:
the north, the southwest and the southeast.
Nigeria was divided into three auto- Western education undermined their
nomous regions with overlapping eco- power. On occasion, the British created
nomic interests, but little in common, new political hierarchies, but the over-
socially or politically: the north, the riding principle was to rule through the
southwest and the southeast. In the most malleable, whether they were of
north, the colonial government respect- royal blood or not. The rapid spread of
ed Islam and avoided any appearance of Western education and Christianity in
a challenge to traditional values that the south caused it to develop much
might incite resistance to British rule. faster than the north, and this growing
Christian missionaries were barred, and disparity began to cause tension.
education was harmonized with Islamic
institutions. In the south, traditional lead- Movements for self-rule developed
ers were sometimes employed as vehi- earlier in the south than in the north. The
cles of indirect rule, but Christianity and 1922 constitution established a new
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N I G E R I A C O R P O R AT E G U I D E S

legislative council in the south, and
encouraging the emergence of political
parties. Herbert Macaulay, the ‘father of
Nigerian nationalism’, emerged as the
founder of the Nigerian National
Democratic Party (NNDP). Nigeria's first
political party to have nationwide appeal
was the National Council of Nigeria and
the Cameroons (NCNC), founded in 1944
by Nnamdi Azikiwe, with Macaulay as its
president. The Northern People’s
Congress (NPC) emerged in the late
1940s, founded by a group of Western-
educated northern Muslims who want-
ed to counterbalance the activities of the
southern-based parties. In 1950, Aminu
Kano broke from the NPC to form the
Northern Elements Progressive Union
(NEPU), which formed a parliamentary
alliance with the NCNC.
The British attempted to ease the
pressure for an independent Nigeria by
granting political concessions. In 1946,
each group of provinces was granted its
own House of Assembly; there were also
a House of Chiefs and, in Lagos, a cen-
tral Legislative Council. In 1954, as part
of Nigeria’s reconstruction into a fully
federal state, the protectorates were
renamed the Western, Eastern, and
Northern regions.
From independence to civil war
Nigeria became an independent
country with dominion status within the
British Commonwealth on October 1,
1960. Azikiwe was installed as governor
general of the federation and Abubakar
Tafawa Balewa continued to serve as
prime minister, as he had since 1957. In
1963 Nigeria proclaimed itself a Federal
Republic, with Azikiwe as its first
President. The country was effectively
controlled by three ethnic groups: the
west by the Yoruba, the east by the Igbo,
and the north by the Hausa-Fulani. There
was an atmosphere of mutual distrust –
the south complained of northern dom-
ination, and the north feared a power
grab by the southern elite.
After two disastrous elections in 1964
and ‘65, smouldering ethnic tensions
exploded in January 1966. Prime Minister
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C O R P O R AT E G U I D E S N I G E R I A
Balewa and the premiers of the northern
and western regions were assassinated
by a group of mostly southeastern Igbo
army officers. A military administration
was set up under Johnson Aguiyi-Ironsi,
whose plan to abolish the federal
regions further stoked ethnic tension. In
July 1966, northern officers staged a
countercoup, Aguiyi-Ironsi was assassi-
nated, and Yakubu Gowon came to power.
The massacre of thousands of Igbo in the
north prompted hundreds of thousands
of them to return to the southeast, where
a separatist movement developed. In an
attempt to defuse tensions by giving
greater autonomy to minority ethnic
groups, the four regions were divided
into 12 states. Relations deteriorated
further, and in 1967, three states in the
eastern region seceded, as the Republic
of Biafra. A civil war ensued until Biafra
was defeated in 1970, and the territories
reincorporated into Nigeria.
From military rule to the Second
Republic and back again
Despite a huge, oil crisis funded in-
crease in government revenue, General
Gowon was removed in 1975 in a blood-
less coup, amid dissatisfaction at the
corruption of central government, and
delays in returning the country to civilian
rule. Murtala Muhammed, assassinated
in 1976, replaced Gowon. Muhammed’s
chief of staff, Olusegun Obasanjo,
then became leader. Obasanjo shared
Mohammed’s desire to return the coun-
try to civilian rule, and continued other
policies, like the moving of the federal
capital to Abuja. A constituent assembly
was elected in 1977 to draft a new con-
stitution, published in 1978 when the ban
on political activity was lifted.
In 1979, northerner Alhaji Shehu
Shagari, of the right-wing National Party
of Nigeria (NPN) was elected president.
Ordinary Nigerians saw little improve-
ment in living conditions or moral guid-
ance from the return to democracy.
Despite his shortcomings, Shagari was
returned as president in a 1983 election
marred by violence and allegations of
vote rigging and electoral malfeasance.
On December 31 1983, the military
H I S T O R Y & C U LT U R E
stepped in, replacing Shagari with
Muhammadu Buhari. Ibrahim Babangida
peacefully replaced Buhari in 1985.
Despite increasing press freedom and
releasing political detainees, Babangida
kept a firm grasp on power. After abor-
tive elections in 1993, sabotaged by
Babangida, Sani Abacha assumed power
until his death in 1998.
The Abacha regime proved to be
Nigeria’s low point, marked by the cur-
tailment of due process of law, press
freedom and human rights. Abacha’s
successor, Abdulsalam Abubakar, had
little choice except to reintroduce democ-
racy, or see the country collapse. In 1998
and 1999, the Independent National
Electoral Commission (INEC) held elec-
tions for all levels of government. Former
ruler Olusegun Obasanjo ran as a civilian
People’s Democratic Party (PDP) candi-
date for president and won.
The return of Obasanjo and the
blossoming of democracy
Shortly before Obasanjo was inaugu-
rated, a new constitution, based on the
Second Republic, was introduced, shar-
ing power between executive branch and
the office of president and increasing
powers to the judiciary. Conditions
improved under Obasanjo, and he was
re-elected in 2003, in the first civilian-
administered elections since the country
achieved independence. Despite some
ethnic and religious tensions, Obasanjo
managed to maintain peace, even during
the difficult process of the transfer of
the Bakassi Peninsula to Cameroon. In
2006, Obasanjo’s proposed constitution-
al amendment to allow him to stand for
a third term was rejected.
Umaru Yar’Adua was selected to stand
as the PDP’s candidate and was declared
the winner of the largely peaceful presi-
dential election in April 2007. It’s a testa-
ment to Nigeria’s strengthening democ-
racy that in the 2007 national legislative
elections, over 35 political parties took
part. The Yar'Adua administration has
shown unprecedented restraint in allow-
ing the legislative and judicial branches
to operate free from influence. ¶
15
 H I S T O R Y & C U LT U R E
Nigerian Culture
Offers so much diversity, from afrobeats to Nollywood
£ With over 250 ethnic groups and a
variety of languages spoken, it’s little
surprise that Nigeria’s culture is so
diverse. The country is internationally
famous for its writers and musicians.
Some notable artists include writer
Chinua Achebe, juju musician King
Sunny Ade, afrobeat musician Fela Kuti,
Nigerian gospel singer Onyeka Onwenu,
writer Ben Okri, playwright Ken Saro-
Wiwa, Nobel prize winning writer Wole
Soyinka, actor Nkem Owoh, director
Chico Ejiro and British/Nigerian artist
Yinka Shonibare.
The Hausa and Fulani, Yoruba and Igbo
make up the three major ethnic groups in
Nigeria. Both Hausa and Fulani come
from the Muslim north. The Yoruba, who
come from southwestern Nigeria, are
mostly farmers, and practice both Islam
and Christianity. The Igbo of the south-
east are usually Christian. There is a
16
notable overlap between organised reli-
gion and traditional indigenous beliefs –
it’s common for Muslims and Christians
to observe some degree of indigenous
practices as well. Smaller groups include
the Ibibio, the Edo, the Tiv and the Nupe.
Food
Traditionally eaten by hand, Nigerian
food varies greatly from north to south.
Seafood, beef, poultry and goat are the
primary sources of protein. In the
southern areas a variety of soups con-
taining a base of tomatoes, onions, red
pepper, and palm oil are prepared with
vegetables such as okra and meat or
fish. Soups can be thickened by adding
ground egusi (melon) seeds. Gari
(ground cassava), iyan (yam paste), or
plantains accompany the soup. Crops
such as corn, yams, and sweet pota-
toes form the base of the diet.
These vegetables are often pounded
into a thick, sticky dough or paste. This
is often served with a palm oil-based
stew made with chicken, beef, goat,
tomatoes, okra, onions, bitter leaves, or
whatever meats and vegetables might
be on hand. Fruits such as papaya,
pineapples, coconuts, oranges, mangos
and bananas are very common in the
tropical south. In the north, grains such
as millet, sorghum and corn are boiled
into a porridge-like dish that forms the
basis of the diet. This is served with an
oil-based soup usually flavoured with
onions, okra, and tomatoes. Sometimes
meat is included, though it is often
reserved for special occasions among
the Hausa. In areas inhabited by Fulani
cattle herders, fresh milk and yogurt are
common. Rice is eaten throughout the
country. Beans and root vegetables are
ubiquitous. Many dishes are flavoured
with onions, palm oil and chilies.
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N I G E R I A C O R P O R AT E G U I D E S

Literature
Most Nigerian cultures have a story-
telling tradition, and much of pre-colonial
history in Nigeria is the result of stories
handed down from generation to gener-
ation. Since independence, Nigeria’s
literature has primarily been concerned
with the problems of building a nation
out of its diverse ethnic entities, the
struggles of a people whose country is
undergoing the painful process of trans-
formation from colonial through neo-
colonial to wholly self-determining
nation. Perhaps Nigeria's most famous
writer is Wole Soyinka, a novelist, poet
and dramatist, who won the 1986 Nobel
Prize for literature, and whose most
famous works are The Interpreters, A
Dance of the Forests, The Swamp
Dwellers and The Lion and the Jewel.
Other famous Nigerian authors include
Chinua Achebe, whose 1958 novel Things
Fall Apart is a favourite among Western
schools as an example of the problems
inflicted on African societies during col-
onization, and Ben Okri, whose novel The
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C O R P O R AT E G U I D E S N I G E R I A
H I S T O R Y & C U LT U R E
Famished Road won Britain's 1991 saw Ifeoma Okoye and Zaynab Alkali fol-
Booker Prize. Most well-known Nigerian lowing in their footsteps. In 2007,
authors write in English, although a few Chimamanda Ngozi Adichie, described
highly literate Nigerians, such as by one critic as ‘Chinua Achebe's 21st
Professor Akin Isola, have chosen to write Century daughter’ won the Orange
in their indigenous languages instead. Broadband Prize for her book Half of a
... most famous works are The Interpreters,
A Dance of the Forests, The Swamp
Dwellers and The Lion and the Jewel.
Another Nigerian with a growing rep- Yellow Sun, about the Biafran civil war.
utation is Biyi Bandele-Thomas, a play- Dulue Mbachu, like Adichie an Igbo
wright and novelist, known for his novel writer, has set up The New Gong publish-
Burma Boy and play Two Horsemen, ing house to ensure Nigerian writers con-
selected as Best New Play at the 1994 tinue to have a voice in their native land.
London New Plays Festival. Female writ-
ers are well represented in Nigerian lit- Music
erature too – Flora Nwapa emerged in
the 1960s, followed by Buchi Emecheta Nigeria's musical output has achieved
and Adaora Ulasi in the ‘70s. The 1980s international acclaim not only in the
17
H I S T O R Y & C U LT U R E
fields of folk and popular music, but also
in Western art music, in the case of Fela
Sowande. In the 1920s, the country devel-
oped highlife and palm-wine music,
which fused native rhythms with sounds
from the Congo. These evolved into other
unique Nigerian pop music styles, such
as apala, fuji, jùjú, highlife, and Yo-pop.
More recently, the country has produced
its own take on US hip hop and Jamaican
reggae. With some of the most advanced
recording studio technology in Africa,
No mention of Nigerian music would be
complete without afrobeat, and its chief
exponent Fela Kuti.
Nigeria can provide robust commercial
opportunities for musicians of all styles.
Nigerian music plays a vital role in its
tradition of folk operas, such as Hubert
Ogunde’s Yoruba Ronu, Kola Ogunmola’s
Omuti Apa Kini, Duro Ladipo’s Oba kò so
or Soyinka's Opera Wonyonsi.
18
Processional and recessional songs,
songs of praise and of lamentation are
used in John Pepper Clark’s folklore
epic Ozidi, while drumming, chanting
and singing feature in Ola Rotimi's
Ovonramwen Nogbaisi.
No mention of Nigerian music would
be complete without afrobeat, and its
chief exponent Fela Kuti. Afrobeat com-
bines the brash horn stabs, spiky guitar
licks and muscular bass lines of US funk
with freeform jazz improvisation and
dazzlingly complex Yoruba rhythms.
Billing himself as the Black President,
Fela has been described as ‘the ultimate
rebel, a spiritualist, pan-African revolu-
tionary and a prodigious dope smoker
and polygamist’. During his long career,
he sold over a million records worldwide
and was venerated by the likes of Paul
McCartney, James Brown and Brian
Eno. Over a million people attended
Kuti’s funeral in 1997. His sons, Seun
and Femi Kuti, draw on his legacy in their
own music.
Film
Known as Nollywood, Nigeria’s bur-
geoning film industry now has an income
of over USD250 million per year – an
impressive figure for a business which
only began in 1992, with the release of
Living in Bondage. Films are shot on
video and copied straight on to tapes or
DVDs and then sold on from thousands
of street stalls and hole-in-the-wall
shops, not just in Nigeria but also across
the continent, as well as to the African
diaspora via markets in Europe and the
Caribbean. About 30 new titles arrive
weekly at Lagos's giant open-air mar-
kets. A new movie costs the equivalent of
USD2.20 to buy, and only about 40 US
cents to rent from a video club. The aver-
age Nollywood production costs about
USD15,000, has a one- or two-week shoot
and sells between 25,000 and 50,000
copies, although blockbusters can sell
as many as 500,000. By Hollywood stan-
dards, production values are low, but the
films are hugely popular because they
deal with issues facing ordinary
Africans: religion, family conflict and
corruption. Although these issues are
often presented in a soap-opera style,
there are hopes that as the industry
matures, so will the film content. ¶
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N I G E R I A C O R P O R AT E G U I D E S
 H I S T O R Y & C U LT U R E

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C O R P O R AT E G U I D E S N I G E R I A 19
 H I S T O R Y & C U LT U R E
Nigeria – International Force for Peace
Protecting democracy, by peacekeeping the continent and beyond, is a foreign policy priority
£ From its days as a British colony,
when Nigerian troops fought in both
World War I and II, Nigeria has never
shied away from becoming involved in
international affairs. Since it gained
independence in 1960, the country has
become a leading global peacekeeper.
Its foreign policy is based on the princi-
ple that the continent of Africa should
consist of independent African nations,
and that these nations should act in har-
mony and unity.
An ethical foreign policy
Nigeria’s foreign strategy centres on
these ideals: non-alignment and non-
interference in the internal affairs of
other nations, the peaceful settlement of
disputes, and supporting regional eco-
nomic co-operation and progress. In
1963, Nigeria was a founding member of
the African Union, and has often used it
20
to transmit major policy initiatives. In
1975, the country helped to found the
Economic Community of West African
States (ECOWAS).
The first chance for Nigeria to
demonstrate its foreign policy commit-
ment came with its support for the free-
dom fighters of Zimbabwe and South
Africa. From the 1970 onward the coun-
try supported the leftist rebels in Angola.
Nigeria extended diplomatic support to
Sam Nujoma's SWAPO movement in
Namibia, to help destabilise the South
African-installed puppet regime. The
nation also sent military equipment to
Mozambique, to help suppress the South
African backed RENAMO guerrillas. The
country did not go so far as to provide
soldiers in support of the conflicts, but
instead provided military training in
the 1970s for the forces led by Robert
Mugabe and Joshua Nkomo, who were
fighting against Ian Smith’s white rule
government in Zimbabwe, then Rhodesia.
Keeping the peace in Liberia
Within days of the declaration of inde-
pendence in 1960, Nigeria had sent
peacekeeping forces to the Congo. More
recently, the nation was the driving force
behind the Economic Community of
West African States Monitoring Group
(ECOMOG), which was established in
1990. The armed monitoring group was
successful in bringing stability back to
Liberia by 1997, and was instrumental in
protecting Sierra Leone shortly after-
wards. Almost 10,000 Nigerian troops
were sent to Sierra Leone in 1999, and
were essential in the establishing of the
2002 peace agreement. In 1999, ECO-
MOG troops were successfully deployed
in Guinea-Bissau. By 2001, the govern-
ment of Nigeria estimated that it had
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N I G E R I A C O R P O R AT E G U I D E S
 H I S T O R Y & C U LT U R E

greater effect on its economy and eat

Nigerian forces have been present in all
the United Nations peacekeeping missions
in Africa: Cote D'Ivoire, Sudan, Ethiopia,
Eritrea, the Democratic Republic of the
Congo and Western Sahara. Many of the
7,000 soldiers in the African Union military
force based in Darfur, Sudan until December
2007 were Nigerian.
spent USD13 billion on peacekeeping since been integrated into the United
operations over the previous 12 years. Nations African Union Mission in Darfur
ECOMOG's role should eventually be (UNAMID), a joint African Union and
taken over by the African Union's African United Nations peacekeeping mission.
Standby Force. At present about a third of the 26,000
strong force has been deployed. Since
Nigerian troops are still in Liberia Nigeria joined UNAMID, two of its
today, as part of the United Nations peacekeepers have been killed, one in
Mission to Liberia (UNMIL). In August July and one in October 2008, when his
2008, UN Envoy Ellen Margrethe Løj patrol was ambushed by as many as 60
awarded peacekeeping medals to 1,649 gunmen. A ceasefire was announced in
Nigerian infantry, engineering and med- November 2008.
ical military personnel. Recounting
Nigeria's leading role in UN peacekeep- A positive economic influence
ing, both in Liberia and the rest of the
world, Ms Løj commended Nigeria’s Peacekeeping remains the corner-
commitment to peace. stone of Nigeria's regional influence, but
the nation exerts an economic influence
Maintaining stability in Sudan on the region as well. Nigeria has set up
a trust fund in the African Development
Nigerian soldiers have carried out Bank for poorer countries to borrow
peacekeeping duties all over the world, money. Nigerian leaders helped policy
including Bosnia, Haiti and Iraq, but have makers in other countries with their
had their highest profile roles nearer own economic reforms. The Nigerian
home. Nigerian forces have been pres- government also finances a program to
ent in all the United Nations peacekeep- send doctors, lawyers, teachers and
ing missions in Africa: Cote D'Ivoire, other professionals to work in other
Sudan, Ethiopia, Eritrea, the Democratic countries. Former president Olusegun
Republic of the Congo and Western Obasanjo played an instrumental role in
Sahara. Many of the 7,000 soldiers in the creating the New Partnership for
African Union military force based in Africa's Development, by encouraging
Darfur, Sudan until December 2007 other heads of state to create a conti-
were Nigerian. nent-wide strategy for development.
into foreign reserves. Dr Edmund
Daukoru, former minister of Petroleum
Resources, was OPEC’s president from
2005 to 2007. By the end of 2008, falling
oil prices left OPEC with no choice but
to request that all its member states cut
production further. In October, Nigeria
agreed to make a five per cent reduction
in line with OPEC production quotas,
leaving the country’s output at a theo-
retical 2.261 million barrels per day. In
reality, continued rebel attacks in the
Niger Delta region mean the country
will struggle even to meet this reduced
quota. Its current output is estimated at
1.99 million barrels per day.
Relations with the US were frosty
until Nigeria’s military rule ended in
1999, having reached a low-point during
Sani Abacha’s leadership, which com-
mitted numerous human rights abuses.
However, since 9/11, the Nigerian gov-
ernment has given its firm support to
the American government. President
Yar’Adua visited then-President Bush
at the White House in December 2007.
A member of the Commonwealth and
United Nations, Nigeria recognizes the
International Court of Justice and fol-
lows its rulings. Despite the Nigerian
congress voting to void the agreement,
Nigeria completed its transfer of the
Bakassi Peninsular to Cameroon in
August 2008, giving up potentially
lucrative oil rights, following the ICJ’s
decision to award the land to Cameroon
in 2002. ¶

Peacekeeping comes at a price As a member of the Organisation of

though. In October 2007, seven Nigerian
soldiers were attacked and killed by
rebels near Darfur. The peacekeepers
were members of the African Union
Mission in Sudan (AMIS), which has
Petroleum Exporting Countries (OPEC),
it has been painful for Nigeria to cut
production in the past. A far poorer
nation than many of the Arab member
countries, revenue loss can have a far

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C O R P O R AT E G U I D E S N I G E R I A 21
 POLITICS

Politics Overview
Political stability has offered Nigerians and investors alike a new path of opportunities

£ In 2007, Nigeria moved further down

the path towards a mature democracy,
with the first handover of power from one
elected civilian to another. The election of By 2020, Yar’Adua has a vision for Nigeria
President Umaru Musa Yar’Adua after to become one of the 20 largest economies
almost a decade of civilian rule by in the world.
Olusegun Obasanjo was not without its
flaws, but was a step forward in confirm-
ing the stability of its nascent democracy.

President Yar’Adua won the election
with 24,638,063 votes, or 69.82 per cent of
the total cast. Since then, the president
has done much to distinguish himself
from his predecessor, emphasising the
rule of law and examining many contracts
signed by the previous administration, to
ensure they are providing value to ordi-
nary Nigerians. From the moment he
took office, the president has pledged to
tackle corruption and increase the role of
the private sector, reducing government
intervention where necessary. By 2020,
Yar’Adua has a vision for Nigeria to
become one of the 20 largest economies
in the world.
The three branches of government
and the constitution
As head of the executive branch of
government, President Yar’Adua is
responsible for administering federal
decisions, in consultation with Goodluck
Jonathan, the vice president, and mem-
bers of the cabinet, both of whom he
appoints. As provided for in the constitu-
tion, the president has a dual role as chief
of state, the role occupied by the Queen
in the UK, to represent the state diplo-
matically and ceremonially. The presi-
dent is also the head of the armed forces.
He is directly elected to a four-year term,
and as with the US constitution, can only
serve in office for two terms. While he
was president, Olusegun Obasanjo
attempted to amend the constitution to
enable him to serve for a third term, but
was overruled by the National Assembly.

22 |
N I G E R I A C O R P O R AT E G U I D E S

Further in common with the US model,
the executive branch is constitutionally
required to share power equally with the
separate branches of judiciary and the
legislature.
Nigeria’s current constitution has its
basis in the constitution adopted by the
Second Republic, during the last brief
period of democracy, which saw a sys-
tem based on the UK’s parliamentary
system replaced with one based on the
US presidential model. The constitution
emphasises that it is the supreme law of
Nigeria, although it may be amended
through judicial process, and that
Nigeria is, by nature, a federal republic.
Chapter IV of the constitution deals with
fundamental human rights, prohibiting
torture and slavery, guaranteeing the
right to silence in case of arrest, and
protecting freedom of thought, con-
science and religion. At the end of 2008,
a committee was expected to be inaugu-
rated to review the constitution, which
has been unchanged since 1999, with a
view to increasing representation of eth-
nic minorities and refining federal tax
distribution.
All citizens over the age of 18 have the
constitutionally guaranteed right to vote.
The constitution allows for a bicameral
National Assembly, consisting of the
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C O R P O R AT E G U I D E S N I G E R I A
House of Representatives (the lower
chamber) and Senate (the upper cham-
ber). Nigeria is divided into 36 states,
plus the Federal Capital Territory at
Abuja – the constitution also includes a
provision that more states can be creat-
ed as needed. According to its population
size, each state directly elects members
to the 360 strong House of Represen-
tatives, under the ‘first past the post’
system. Three members, plus one from
the Federal Capital Territory, are elect-
ed per state to the 109 member Senate.
Both houses serve four-year terms.
Nigerian legislative process broadly fol-
lows the US model – before they can
become law, bills must be passed by
both the upper and lower houses, before
receiving presidential agreement. If no
agreement is forthcoming, the bill can
be passed by a two-thirds majority vote
by both chambers.
In the third branch of government,
the judiciary, the courts act as a balance
to the executive and legislature, ensur-
ing they act in accordance with the con-
stitution. The Supreme Court, with its
presidentially appointed justices, is the
apex of judicial authority. Below that are
the Federal Court of Appeal, the Federal
High Court and The High Court of the
Federal Capital Territory, Abuja. The jus-
tices of these courts are also appointed
POLITICS
by the President, subject to the Senate’s
approval. If he believes that any of these
judges have become unfit for office, the
President can request that the Senate
begin impeachment proceedings against
them.
Each state has its own High Court,
administered by a chief judge. If federal
legislation conflicts with state legislation,
it overrules it. Nigerian statute law, which
follows English law, is used in the mag-
istrates’ court, and all courts above that.
As well as Nigerian statute law, the
Nigerian legal system contains two other
codes of law: customary law, and Shariah
(Islamic law). Traditional rulers are the
authority at customary courts; they usu-
ally hear cases about family problems
such as divorce. Kadis (judges) apply
Shariah based on the Maliki Islamic code.
Since 1999, several states in the largely
Muslim north have instituted Shariah
law.
Local government and political
make-up
Each state has a governor and a
House of Assembly, varying in size from
24 to 40, according to the size of its pop-
ulation. Like the federal President, the
governor can serve a maximum of two
23
POLITICS
four-year terms. The states are further
divided into Local Government Areas
(LGAs), of which there are 774 at present,
which are governed by councils that
oversee basic amenities. Unlike the
United States, the central government
plays a more active role in taking each
state’s revenue and redistributing it. At
present, 28 out of the 36 governors
belong to the People’s Democratic Party.
Political parties are required to have
a national presence, rather than appeal-
ing to one ethnic or religious group. The
PDP also dominates the national politi-
cal landscape, holding a clear majority in
both upper and lower chambers, with
260 seats in the House of Representa-
tives and 85 in the Senate. Following the
PDP is the All Nigeria Peoples Party
(ANPP), which has 62 seats in the House
of Representatives and 16 in the Senate.
The Action Congress has 32 seats in the
House of Representatives and one in the
Senate. Of the smaller parties, the
Progressive Peoples Alliance has three
seats in the House of Representatives
and one seat in the Senate; the Labour
Party has one seat in the House of
Representatives; and Accord has one
seat in the Senate.
Regional and international
responsibility
Nigeria plays an active role in many
international organisations, including
the Organisation of Petroleum Exporting
Countries (OPEC), the Commonwealth,
the Organization of African Trade Union
Unity (OATUU) and the Nonaligned
Movement. It abides by the rulings of the
International Court of Justice, even
when they go against its economic inter-
ests, as happened in the case of the
resource-rich Bakassi Peninsula, which
Nigeria ceded to Cameroon this year.
Nigeria plays an active role in many
international organisations, including
the Organisation of Petroleum Exporting
Countries (OPEC), the Commonwealth ...
24
The country’s size and economy have made
it something of a regional superpower.
Nigeria has a policy of being first among
equals in West Africa.
The country’s size and economy have
made it something of a regional super-
power. Nigeria has a policy of being first
among equals in West Africa. Nigeria
was a founder member of the Economic
Community of West Africa (ECOWAS) in
1975, and played an essential role in
reviving the organisation in 1993.
Through ECOWAS, Nigeria has taken a
lead role in resolving regional conflicts,
such as those in Sierra Leone and
Liberia. As a member of the African
Union’s peacekeeping force, Nigeria has
contributed troops to both Somalia and
the Sudan. The country has been playing
an active role in guiding the African
Union New Partnership for African
Development (NEPAD) – ex-president
Obasanjo was a founder member in
2001.
State education and health care
Federal and state government are
responsible for the provision of educa-
tion in Nigeria. Non-government organ-
isations, such as religious groups (par-
ticularly in the Muslim north), may also
run primary and secondary schools. At
the primary level, school lasts for six
years, starting at age six. Secondary
education also lasts for six years. Most
secondary schools, colleges of educa-
tion and of technology, technical insti-
tutes and teacher-training colleges are
under state government control.
The state governments also oversee
hospitals, which offer medical and
health services to large cities and towns.
Many of the state capitals have a univer-
sity teaching hospital, as well as special-
ist hospitals. Private hospitals, clinics,
and maternity centres, outside of state
control, are available to those who can
afford it. A free health service scheme
was introduced in the five western states
of Kwara, Lagos, Ogun, Ondo, and Oyo in
1979, although services are fairly basic.
Many hospitals are understaffed, and
drugs are scarce, even more so in rural
areas.
More than 50 federally controlled uni-
versities and colleges are spread
throughout the country in an attempt to
make higher education accessible to
every member of the federal republic.
Nearly all courses offered are conduct-
ed in English.
At present, there is no nationwide
health insurance scheme or social wel-
fare system, although most commercial
firms and factories provide free basic
medical care for their employees. Civil
servants are entitled to free medical care
in government-financed hospitals. The
extended family still serves as the tradi-
tional social welfare system for many
Nigerians. ¶
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N I G E R I A C O R P O R AT E G U I D E S
 POLITICS
President Umaru Musa Yar’ Adua –
History and Vision
£ April 2007 was a momentous occa-
sion in Nigeria’s history, marking not
just the election of Umaru Musa
Yar’Adua, to Nigeria’s highest office, but
also the first civilian handover of power
since independence in 1960. The presi-
dent, who maintains a firm belief in the
rule of law, tight monetary policy and
the power of the private sector, seemed
ideally placed to build on his predecessor,
Olusegun Obasanjo’s legacy. However,
as 2008 draws to a close, President
Yar’Adua is having to guide Nigeria
through new and daunting challenges.
The path to power
In contrast to previous president
Obasanjo, a southerner, Umaru Yar’Adua
was born in Katsina, Katsina State in
1951, into an elite Muslim Fulani family.
His father, Musa Yar’Adua, was to serve
as Minister of Lagos Affairs in the first
26
post-independence government, and
was later briefly vice chairman of the
National Party of Nigeria, while his older
brother, Shehu Musa Yar’Adua, acted as
second-in-command to Obasanjo, dur-
ing his first period running the country
from 1976 to 1979. Despite his aristo-
cratic roots, Yar’Adua has always been
politically left-wing – he admits to being
a Marxist while studying at Ahmadu
Bello University, Zaria from 1972-75. The
revolutionary lecturer, Dr Bala Usman,
was a strong influence on Yar’Adua at this
time. Yar’Adua received a BSc Education
degree, specialising in chemistry, from
the university and later a master’s degree
in analytical chemistry in 1980. From
1975 to 1983, he taught in various col-
leges and at Katsina Polytechnic before
becoming a businessman.
Yar’Adua’s political career began dur-
ing the late 1970s as a mobilizer for the
leftist People’s Redemption Party, lead
by fellow northerner Mallam Aminu
Kano. For much of the 1980s, Yar’Adua
concentrated on business, working as a
board member for the Katsina State
Farmers' Supply Company from 1984
to 1985, and as general manager at
Sambo Farms Ltd in Funtua, Katsina
State, between 1983 and 1989. In 1988,
Yar’Adua became a member of Nigeria’s
Constituent Assembly. During then
President Babangida’s transitional pro-
gram to restore civilian rule, Yar’Adua
was a founding member of the Peoples’
Front, a political association led by his
elder brother, in which he served as
Secretary in Katsina. The Peoples’ Front
evolved into the (now-defunct) Social
Democratic Party, with Yar’Adua contin-
uing the same role in the new party.
Yar’Adua began to focus on state politics
in 1991, when he contested Katsina’s
gubernatorial election, but was defeated
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 POLITICS

by Saidu Bara, an ally of Babangida’s. In

1998, Yar’Adua was one of the founders of
the K34 political association, which
became part of the People’s Democratic
Party (PDP). On his second bid in 1999, on
a PDP ticket, Yar’Adua was elected
Governor of Katsina State. He was re-
elected in 2003, holding office for a total
of eight years.

Yar’Adua ran an office free of corrup-

tion, with the same emphasis on follow-
ing the rule of law he now applies to the
whole of Nigeria. He was among few
Nigerian governors to publicly declare
their assets before being sworn in.
Governor Yar’Adua was known for his
strong political and moral principles and
concentrated in improving socio-eco-
nomic conditions in Katsina state,
improving the road network and over-
seeing a huge increase in the number of
children enrolling at primary school, as
well as a reduction in class size. As an
indication of his economic shrewdness,
when his term as governor was com-
plete, the governor had not only man-
aged to pay off the state’s debt, but the
state treasury had a surplus of about
NGN6.5 billion. It is a measure of the achieving this vision, the president has ture, wealth creation and employment;
esteem in which Yar’Adua was held as supported several strategies to facilitate mass transportation; land reform; secu-
governor, that he received the National rapid economic growth in Nigeria – the rity; and education. It also emphasises
Primary Education Productivity Merit National Economic Empowerment and the problems in the Niger Delta and the
Award in 2004, and was honoured with Development Strategy (NEEDS) II, which enfranchising of disadvantaged ethnic
the Central Bank of Nigeria best comprises the country’s medium-term groups.
Governor Award under the Agricultural
Credit Guarantee Scheme in 2005.

Presidential Vision The seven point agenda focuses on the

At the end of 2008, the challenges
facing President Yar’Adua are, if any-
thing, greater than when he took office
the year before. Many domestic prob-
lems have been exacerbated by factors
outside the country’s control – a huge fall
in the price of oil, on which Nigeria
depends for much of its GDP, and a glob-
al economic slowdown.
While president, Olusegun Obasanjo
had initiated the Nigeria 2020 Vision
strategy, in which Nigeria aims to be one
of the global top 20 economies by 2020.
When he took over, Yar’Adua pledged to
continue the policy. As a means of
issues Yar’Adua considers most important
for Nigeria’s development: power and
energy; food security and agriculture,
wealth creation and employment; mass
transportation; land reform; security;
and education.
economic plan and Poverty Reduction Over the course of 2008, it became
Strategy Paper (PRSP), essential for increasingly clear that the president’s
attracting support from the World Bank top priorities would have to be dealing
and IMF, and his own seven point agenda. with the unrest in the Niger Delta, which
The seven point agenda focuses on the is having a deleterious effect on the
issues Yar’Adua considers most impor- nation’s oil output, and preventing the
tant for Nigeria’s development: power power cuts which plague Nigeria’s
and energy; food security and agricul- industry. In September, the president

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C O R P O R AT E G U I D E S N I G E R I A 27
POLITICS
created the Ministry of Niger Delta to
address the area’s specific needs, and
engage its citizens. Results are not
expected for some time. As the president
himself has said, progress will be meas-
ured in years, rather than months.
Yar’Adua also took steps to deal with the
energy crisis by dividing the Ministry of
Energy into two ministries: the Ministry
of Power and the Ministry of Petroleum
Yar’Adua’s wealth creation strategies centre
on widening production in areas of the
economy like agro-business and the solid
mineral sector.
Resources. The previous year, the pres-
ident declared a ‘state of emergency’ in
the energy sub-sector, and this is still
very much in operation. Yar’Adua estab-
lished the National Energy Council at
the end of 2007, with a view to guiding
the huge oil and gas industry through a
turbulent future. As a means of alleviat-
ing its energy problems, Nigeria signed
a memorandum of understanding with
Germany, a world leader in sustainable
energy. Projects in progress are aimed at
generating an additional 6,500 mega-
watts of energy for the nation and
expanding and renovating existing power
generating facilities. Discussions are
under way on establishing new facilities
using renewable energy sources such
as wind, solar and waste. Germany has
also agreed to help train Nigerian engi-
neers to give them a sufficient level of
expertise.
With an inflation rate almost certain-
ly creeping into double figures by 2008
year-end, tight control of the economy
will be vital for 2009. Over the last ten
years, Nigeria’s GDP growth has aver-
aged 5.4 per cent. In order to achieve the
2020 targets, Yar’Adua’s administration
aims to grow the domestic economy by
13 per cent. The president aims to
achieve this by reducing government
intervention and increasing the role of
28
the private sector. This should be imple-
mented through a Medium Term Sector
Strategy (MTSS). The World Bank pre-
dicts GDP growth for 2007 through 2011
for Nigeria of 7.9 per cent, so signs are
looking promising.
One big step forwards since 2007 has
been in the field of human rights. One of
the president’s core tenets is that with-
out law and order, the nation cannot
progress, and without discipline, it will
be impossible to create the right envi-
ronment for investment to take place.
So far, Yar’Adua’s presidency has shown
unprecedented restraint in allowing the
legislative and judicial branches to oper-
ate free from influence, even giving free
reign to electoral tribunals and the
courts to investigate the legitimacy of his
election. The case was still in the courts
by November 2008. If the Supreme Court
overthrows the result, Yar’Adua has indi-
cated he will step down.
In the area of food security, the
President hopes to revolutionise agri-
cultural production by promoting the use
of modern technology, increasing fund-
ing for research and developing local
capacity. The government’s land reform
plans will also help to develop commer-
cial agriculture. The President plans to
encourage land reforms to enable the
use of land for commercial farming and
to allow small farmers to use their land
as collateral for obtaining micro-credits.
Yar’Adua’s wealth creation strategies
centre on widening production in areas
of the economy like agro-business and
the solid mineral sector. In 2009, the
Federal Ministry of Agriculture and
Water Resources plans to significantly
increase land under cultivation through
irrigation, with the aim of a hugely
increased yield. It will also target the
fisheries, where there is significant
room for improvement. To this end, the
UN Food and Agricultural Organisation
provided USD410,000 of funding in
November for aquaculture development.
To encourage private development,
the nation’s infrastructure needs to be
upgraded. In order to allow the easy
movement of goods around the country,
for example between commercial farms
and markets, new access roads are
planned. Major roads, including the
Lagos-Ibadan and Benin-Shagamu
expressways, are being reconstructed
and expanded through public-private
partnerships. The Nigeria Railway
Corporation (NRC) is slowly being
reformed, with the aim of allowing pri-
vate investment – in November a law
was put forward in the Senate to sepa-
rate policy operation and regulation, as
well as to create a new industrial frame-
work for the sector. An ambitious USD30
billion project to replace the narrow
gauge rail network with standard gauge
track, enabling it to carry heavier freight,
and reduce pressure on the roads, is in
its commissioning stage. To enable fur-
ther growth and ease congestion in
Lagos, a mass transit system should
running by 2011. ¶
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C O R P O R AT E G U I D E S N I G E R I A 29
 ECONOMY
Economy Overview
Diversification from oil and gas is becoming a number one priority
for the government as oil prices continue to fall
£ Nigeria is the most populous country
in Africa, with more than 148 million
residents and an economy that is second
in size only to South Africa's. The World
Bank estimates its gross domestic prod-
uct at USD165,690 billion in 2007.
For decades, Nigeria's economy has
been dominated by the revenue generat-
ed by its vast oil reserves. As the leading
African oil producer and the sixth largest
producer in the Organisation of Petroleum
Exporting Companies (OPEC), Nigeria
pumps out 2.6m barrels a day, with
proven oil reserves estimated at 35.876
million bbl (2006) and natural gas
reserves of 5'229 trillion m3 (2006). The
government plans to eliminate gas flar-
ing by the end of 2008. Major importers of
Nigerian oil and gas are North America,
Europe and the Far East. Current esti-
mates suggest that oil provides 20% of
GDP, 95% of foreign exchange earnings,
30
... the government is in a position, when oil
prices are high, to put the surplus funds
aside and use them if and when there is a
budgetary shortfall.
and about 80% of budgetary revenues. New fiscal rules have gone some way
While there is vast potential in the oil and to de-linking the prosperity of the econ-
gas industry, Nigeria's over-reliance on omy from the unpredictable price of oil.
oil revenues has made the economy vul- The government now demands a pru-
nerable to fluctuations in world oil prices. dent estimate of revenue from oil, and
The shortfalls that a drop in the price of by budgeting for the year ahead based
oil could create in state budgets led to on realistic oil-based income it has
capital projects being delayed or aban- avoided committing to projects which it
doned, while civil servants and those con- subsequently cannot afford when oil
tracted to carry out development works prices drop. Conversely, the govern-
for the government frequently went ment is in a position, when oil prices are
unpaid. high, to put the surplus funds aside and
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N I G E R I A C O R P O R AT E G U I D E S

use them if and when there is a budg-
etary shortfall.
This conservative approach – brought
in by the Obasanjo government in 2003
and maintained under the current ad-
ministration of President Umaru Musa
Yar'Adua – saw the fiscal balance turn
from a deficit to a surplus, increasing
foreign reserves five-fold between 2003
and 2006, from USD7.5 billion to USD38
billion.
The boom in the Nigerian oil sector,
which started after independence was
attained in 1960 and expanded rapidly
throughout the 1970s, had an inverse
negative effect on other sectors of the
economy. As workers migrated from
rural areas to work in the city-based oil
industry, agriculture went into serious
decline. Once the dominant sector of the
Nigerian economy – with agriculture
accounting for 57% of GDP at independ-
ence – by the year 2000 this figure had
fallen to just over 26%. Agriculture was
failing to keep up with the burgeoning
population. By tying the economy to oil
and neglecting agriculture, Nigeria –
once a significant exporter of cocoa, rub-
ber and groundnuts – had become a net
importer of basic foods.
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ECONOMY
... palm oil sector – a foreign exchange
earner in the 1970s – is also being redeveloped,
and revenue from livestock farming is on the
increase.
That said, agriculture provides for- Agriculture accounted for an average of
mal and informal employment for the 35% of GDP between 2000 and 2003, and
majority of the population. The sector is World Bank figures for 2007 show this
still dominated by subsistence small- figure now holding at 32.6%.
holders – growing crops such as wheat,
millet rice, corn, maize and cassava – While Nigeria is no longer the power-
but large plantations managed in part- house of tin mining that it was in the
nerships with multinational organisa- 1970s, there are still large enough
tions are achieving success growing raw reserves of tin to make this a viable area
materials for industry (such as grain for for development. Independent estimates
breweries). put iron ore reserves at 800 million
tonnes, and these reserves are being
Efforts to revitalise agriculture are exploited with the long-term goal of sup-
ongoing, and there are signs that irriga- plying a national steel industry. Nigeria
tion schemes, an overall improvement also boasts deposits of gold, lead, zinc,
in rural infrastructure and higher pro- uranium and tungsten that have yet to be
ducer prices are having a positive effect exploited.
across the sector. The palm oil sector –
a foreign exchange earner in the 1970s – The failure of Nigeria's former mili-
is also being redeveloped, and revenue tary rulers to diversify away from the
from livestock farming is on the increase. capital-intensive oil sector has taken its
31
ECONOMY
toll across all sectors of the economy.
Inadequate investment in infrastructure
– notably in roads and electricity – has
for decades hamstrung development in
the non-oil economy. Nowhere has this
effect been felt more acutely than in the
... has seen Nigeria reach a stage where
it can enter negotiations on the world
economic stage.
services industry, with low power and
telecommunications density crippling the
sector. The electric network currently
operates well below its capacity of 5'900
megawatts and power outages are com-
monplace. The telecommunications
industry also requires massive govern-
ment or private investment to spur
growth across the economy.
The return to civilian rule in Nigeria in
1999 has seen the economy take its first
steps away from the stagnation of mili-
tary rule in the 1990s, and towards a
more prosperous, stable business envi-
ronment.
The largely successful implementa-
tion of the Obasanjo government's
National Economic Empowerment Devel-
opment Strategy (Needs) during its sec-
ond term in office has seen a degree of
macro-economic stability return to the
country, largely due to greater fiscal dis-
cipline, lower inflation and the removal
of the majority of Nigeria's external debt.
While the military regimes oversaw
annual increases of gross domestic prod-
uct (GDP) of just 2.25% a year between
1992 and 2000 – against a yearly popu-
lation increase of 2.8% – the figure has
averaged about 6% since then and is
continuing to improve.
Given the government's efforts to
diversify the economy away from depend-
ence on oil, it is encouraging to see sig-
nificant growth in the non-oil sector.
World Bank figures show that growth
32
outside the oil industry has averaged
5.9% since 2000. Wholesale and retail
trading improved marginally from 13%
to 13.6% between 2000 and 2003,
although manufacturing's share of total
GDP fell from 4.4% to 3.75%.
A longer-term economic develop-
ment programme is the UN–sponsored
National Millennium Goals for Nigeria.
Under the programme, which covers the
years from 2000 to 2015, Nigeria is com-
mitted to achieving a wide range of
ambitious objectives involving poverty
reduction, environmental protection,
improved education, gender equality,
health, and international development
cooperation. In an update released in
2004, the UN found that Nigeria was
making progress toward achieving sev-
eral of these goals – having advanced
efforts to provide universal primary edu-
cation, protect the environment, and
develop a global development partner-
ship – but was lagging behind in its
efforts to eliminate extreme poverty and
hunger, reduce child and maternal mor-
tality, and combat diseases such as
HIV/AIDS and malaria as well as tuber-
culosis.
Another key issue in securing a sta-
ble and prosperous future for Nigeria is
tackling corruption, which stunts devel-
opment and taints Nigeria's business
environment. The results of a survey
carried out in 2002 showed that the
majority of Nigerian companies were
continuing to pay bribes to secure trade
permits (70%), utility services (83%),
procurement (90%) and favourable judi-
cial decisions (70%). The Obasanjo gov-
ernment's campaign against corruption,
which included the arrest of officials
accused of financial misdeeds and the
recovery of stolen funds, won praise
from the World Bank. The government
set up two commissions to prosecute
corrupt practices, and in September
2005, with the assistance of the World
Bank, Nigeria began to recover USD458
million of illicit funds that had been
deposited in Swiss banks by the late mil-
itary dictator Sani Abacha, who ruled
Nigeria from 1993 to 1998.
These positive moves towards sta-
bilising the political and economic sys-
tems, while tackling the corruption that
has dogged both in the past, has seen
Nigeria reach a stage where it can enter
negotiations on the world economic
stage. A milestone agreement with the
Paris Club of lending nations in 2005 and
a similar agreement with the London
Club of lending nations in 2006, saw
Nigeria succeed in eliminating USD18
billion of external debt. The agreements
consisted of a combination of debt for-
giveness and repayment from the coun-
try’s energy revenues, which saw public
debt as a proportion of GDP reduce from
74.8% in 2003 to 14.2% in 2006.
While Nigeria’s economy remains
inefficient outside the energy sector and
human capital is underdeveloped, suc-
cessive governments have taken steps to
improve the efficiency of public spending
and annual reviews examine how effec-
tively each year's budgets have been
spent.
Nigeria's central bank has also stuck
to tighter monetary targets to cut infla-
tion. The year-end rate fell from 21.8%
in 2003 to 10% in 2004. After a further
two years of stability, the year-end rate
for 2007 was 6.5% – a dramatic improve-
ment in a very short space of time. ¶
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 ORGANISED BY NIGERIAN PARTNER

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ECONOMY
Interview:
Corporate Nigeria (CN) talks to
Dr Emmanuel Egbogah, P.Eng, OON
Special Adviser to the President on Petroleum Matters
Restructuring Nigeria's Energy Sector
with a Master Plan
CN: Dr Egbogah, you are the Special Adviser on Petroleum
Matters to President Yar’Adua. Can you describe your respon-
sibilities and activities as Special Adviser to the President on
Petroleum Matters?
Dr Egbogah: I advise Mr President holistically on matters of
oil and gas resources planning, exploration, development,
exploitation, processing, transportation, management, asset
valuation, economics, policy regulation, strategy, governance,
legal and regulatory framework, fiscal regimes and petroleum
arrangements, financing and all issues pertaining to orderly
development of the nation’s petroleum resources.
What prospects do you think are in store for Nigeria’s oil and
gas industries in 2009?
e The implementation of the Gas Master Plan will commence
in 2009. The twelve months of 2009 will serve as the full tran-
sition period for the implementation of the most important and
fundamental Reforms in the Oil and Gas Sector, including the
commencement of the conversion of existing Joint Ventures to
Incorporated Joint Ventures.
The Federal Government plans to dissolve the Nigerian
National Petroleum Corporation (NNPC), replacing it with five
separate organisations. Why is the government taking this
step, and how long before it comes into effect?
e The transformation of the Nigerian National Petroleum
Corporation, NNPC, as it is currently organized and managed
34
as a huge amorphous cost centre with conflicting roles in
Policy, Regulation, Commercial Operations as well as National
Asset Management, is central to the Reform Agenda.
The reform seeks to transform NNPC from its present status
as a “guardian” of Government Oil and Gas Assets into an
integrated, international, commercial oil and gas corporation
driven by revenue generation and profit oriented motives.
The kind of corporation that will emerge at the end of the
restructuring process would be one that is divorced of some
“... to transform NNPC from its
present status as a ‘guardian’ of
Government Oil and Gas Assets into
an integrated, international, commer-
cial oil and gas corporation driven by
revenue generation and profit oriented
motives. ”
of its current roles of policy regulation and national assets
management to function properly as a profit-oriented, com-
mercial and duly capitalized limited liability company with
rights to raise funds for its projects and operations.
Restructuring the NNPC will further decentralize the industry,
which is the mainstay of the nation’s economy, and make it
more efficient and result-oriented.
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The restructuring will help streamline operations in the
nation’s oil and gas industry in such a way that the major tasks
of policy regulation, commercial operations and national
assets management are carried out by separate public enti-
ties as opposed to current conflicting roles by NNPC.
The new NNPC Ltd will be focused on profitable commercial
activities as a world-class oil and gas company. Under a
restructured industry, the NNPC would be operating with a
new orientation as every public institution with a business
mindset.
The Act establishing the NNPC must be repealed and an
enabling Act enacted by the National Assembly before the
operation of the New Companies. This also implies that full
legislative process must be followed to insure that appropri-
ate enabling laws are enacted before the OGIC recommenda-
tions and decision of Government can be implemented.
In achieving these broad objectives, the new NNPC Ltd must
have a Clear Mandate, Financial Autonomy, Operational
Independence and Managerial capacity/capability, which the
current structure and its management practices could not
achieve.
The post reform institutions will include:
– The Minister of Petroleum Resources
– National Petroleum Directorate
– The Nigerian Petroleum Inspectorate
– NNPC Ltd
– Petroleum Products Regulatory Authority
– National Petroleum Asset Management Agency, and
– National Petroleum Research Centre
– Petroleum Equalisation Fund
– Petroleum Technology Development Fund, and
– Petroleum Training Institute
Apart from the reorganisation of the NNPC, what other effects
will the Petroleum Industry Bill have?
e One of the key tasks of the Oil and Gas Sector Reforms
Implementation Committee was to transform the broad pro-
visions of the National Oil and Gas Policy into enabling legis-
lation. Accordingly, a Draft Petroleum Industry Bill has been
completed. It is a document covering most of the relevant
issues pertaining to Oil and Gas exploration, production, trans-
portation and marketing in the country. Other issues covered
include matters of state participation and control, fiscal issues,
regulation, safety, health and environmental concerns; and
finally issues regarding community relations and empower-
ment. The enabling legislation is holistic in depth and scope,
and brings the Nigerian Oil and Gas Industry well into the 21st
century modernity.
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ECONOMY
The Petroleum Industry Bill creates the institutions of reform:
– The Nigerian Petroleum Directorate, NPD
– Nigerian Petroleum Inspectorate, NPI
– Petroleum Products Regulatory Authority,PPRA
– National Petroleum Asset Management Agency, NAPAMA
– National Petroleum Research Centre, NPRC
– Provides for the incorporation of the Nigerian National
Petroleum Company Ltd (NNPC)
– Includes amendments/updated laws recreating e.g. the
Petroleum Equalisation Fund
The post reform institutions include:
– The Minister of Petroleum Resources
– National Petroleum Directorate
– Nigerian Petroleum Inspectorate
– NNPC Ltd
– Petroleum Products Regulatory Authority
– National Petroleum Assets Management Agency
– National Petroleum Research Centre
– Petroleum Equalisation Fund
– Petroleum Technology Dev Fund, PTDF
– Petroleum Training Institute
The Bill:
– Lays down broad guidelines for the Nigerian Oil and Gas
Sector in ‘Fundamental Premises’
– Provides for a Minister with supervisory powers over the
industry, with the assistance and guidance of fully qualified
Directors-General of the Institutions.
Provides guidelines for:
– Upstream Sector (Oil and Gas)
– Downstream Sector
– Downstream Natural Gas
– Health, Safety and Community Issues
– Fiscal Issues
– Nigerian Content
Creates a liberalised, deregulated professional oil and gas
sector and institutionalises the Incorporation of Joint Ventures
whereby:
– All existing Joint Venture operations in the country shall be
converted into incorporated autonomous commercial enti-
ties, IJVs
– The existing Shareholder Agreements between the NNPC
and the IOCs shall form the basis of the new IJVs
– The concept of cash call for funding operations would be
replaced by equity, debt and third party finance.
– The Incorporation process including capitalisation, restruc-
turing of the new companies would be carried out through
negotiations with the IOCs during a defined transition period.
– Each IJV shall have its Independent Governance Structure
(Board and Management) to be defined in the Shareholder
Agreements.
– The IJVs will be governed by the PPT Act regardless of
incorporation under Companies and Allied Matters Act.
35
ECONOMY
What are the roles and responsibilities of the new National
Energy Council, which came into operation in 2008? Has the
council faced any significant challenges since its creation?
“The NEC underlines the strategic
place of Oil and Gas in the national
economic wellbeing and Nigeria’s
future prospects of developing into
the top 20 economies of the world.”
The National Energy Council (NEC) is the supra-ministerial
council chaired by Mr. President, charged with the responsi-
bility for broad, long term policies of the nation’s Oil & Gas
Industry.
The NEC ensures that the strategic decisions relating to the
Oil and Gas Industry are not only coordinated at the highest
level of government, but are also carried out from the perspec-
tive of macro-economic linkages.
The NEC underlines the strategic place of Oil and Gas in the
national economic wellbeing and Nigeria’s future prospects of
developing into the top 20 economies of the world.
The National Energy Council, NEC, shall advise the President/
Minister of Petroleum Resources on Public Policy and overall
orderly development and management of the nation’s petro-
leum resources.
What needs to be done to raise the profitability of the natural
gas industry in Nigeria?
The significant current and projected increases in demand
give further impetus to the Federal Government’s desire to
grow and develop Nigeria’s and gas sector, kick-start the
domestic economy, and ultimately achieve the objectives of
Vision 20-2020.
Government’s aspirations can therefore be summarised as
follows:
a) develop Nigeria’s oil and gas sector and grow the local econ-
omy;
b) deliver significant additional gas capacity in line with the
increasing local and global energy demands;
c) address all the environmental issues associated with gas
exploitation; and
d) create as much value from gas as oil in the shortest possi-
ble time.
e) achieve 40 billion barrels of oil reserves and 4 million bar-
rels of daily production by 2010.
The implementation of the recently launched Gas Master Plan
36
will serve as the solid foundation upon which a new phase of
gas development is founded; it will serve to raise the profitabil-
ity of the natural gas industry in Nigeria.
With the Gas Master Plan, the government introduced a num-
ber of far-reaching measures, as part of the Gas Policy and
Regulation, to address the gas and energy supply problems of
this country. The gas master plan provides the framework for:
a) stimulation of the multiplier effects of gas on the domestic
economy;
b) positioning Nigeria competitively in the high-value export
markets;
c) Guaranteeing the long-term energy security for the nation.
“With these measures it is envisaged
that in the short-term, domestic gas
supply will double to 1400 million
standard cubic feet by the end of 2008
and triple to 2050 million standard
cubic feet by end of 2009. ”
The measures also include the Nigeria Gas Infrastructure
Blueprint, which contains projects aimed at boosting gas pro-
duction and distribution to grow the local economy.
With these measures it is envisaged that in the short-term,
domestic gas supply will double to 1400 million standard cubic
feet by the end of 2008 and triple to 2050 million standard cubic
feet by end of 2009.
What this reflects is a rapidly increasing local demand for gas,
which is in line with increasing global gas and energy demands.
Global demand for gas is expected to grow at an annual rate
of 2% from about 100 trillion cubic feet in 2004 to about 140 tril-
lion cubic feet by 2020, with most of this increase coming from
non-OECD countries notably China and India. Africa’s demand
will grow from 13.7 trillion standard cubic feet to 21.2 trillion
standard cubic feet during the same period.
Nigeria has the means and resources to realise these aspira-
tions, and satisfy the energy needs of not only Nigerians but
also that of all the contiguous nations. With over 187 trillion
cubic feet of gas, Nigeria has the 7th largest proven gas
reserves in the world, and over one third of Africa’s gas
resources. More than half of this proven gas volumes are inci-
dental to oil exploration, which means that there is consider-
able scope for even higher gas reserve volumes with dedicat-
ed gas exploration activities.
Oil and gas companies (international, national, small or big oil
companies) as well as financial institutions, have a huge role
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N I G E R I A C O R P O R AT E G U I D E S

to play in the realisation of these aspirations through sustained
investment of capital, technology, expertise, etc. Significant
opportunities exist in this sector for international investors. For
example, extensive gas gathering and processing opportuni-
ties beckon international investors to be able to feed our exten-
sive planned independent power projects.
The aim of Corporate Nigeria is to inform the global business
community about business, trade and investment opportuni-
ties in Nigeria. Why should foreign investors consider investing
in the oil sector Nigeria? What, if anything, should be done to
further open up the sector to foreign investment?
Investments in the Nigerian Economy is very much needed and
required. In a recent address to a private sector group at a
presidential breakfast, the President declared that his meet-
ing with them was expected to create requisite platform to
clarify government’s policy thrust and particularly engage our
vibrant private sector in responding to the challenges of our
development including, in particular the call for private and
international foreign direct investment to our economy. He
made it known that this government is rooted in Rule of Law;
anchored on good governance, and driven by an uncommon
sense of service. “Our key economic policies as encapsulated
in the Seven-Point Agenda are aimed at boosting business con-
fidence and ensuring macro-economic stability and predictabil-
ity. We are unequivocally committed to strict adherence to the
Rule of Law, Transparency, Accountability and Zero-Tolerance
for corruption in the conduct of all government business.”
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C O R P O R AT E G U I D E S N I G E R I A
ECONOMY
“We are reviewing the existing incen-
tives regime towards developing
sector-specific national policies on
Investment. ”
Mr President acknowledged that without the Private Sector
and International Investment, the seven-point agenda of his
administration will not be achieved. Mr President assured that
his administration will continue to pursue the Inflow of Foreign
Direct Investment (FDI) to support rapid economic growth and
also aggressively promote Domestic Private Investment (DPI)
in order to have in place a robust home-grown growth strategy.
Government is constantly strengthening the Nigerian Invest-
ment Promotion Council (NIPC) and adopting pro-business and
investment-friendly policies in order to create an environment
conducive for business prosperity. Conscious effort is being
made to evolve reforms targeted at reducing the cost of doing
business in Nigeria.
We are reviewing the existing incentives regime towards devel-
oping sector-specific national policies on Investment. This is
with a view to articulating a generic policy and incentive pack-
age that will insure policy consistency, predictability and a
level-playing field for investors. ¶
37
 ECONOMY
Economic Growth
The Nation is making every effort to diversify the economy to support
continuous growth and attract more investments to develop her full potential
£ With the return to civilian rule in 1999,
the Obasanjo government took steps
towards restructuring the economy –
initially focussing on developing elec-
tricity supplies across the country and
cutting down on vast areas of financial
waste that were allowed to exist under
corrupt military regimes. However, the
accumulated arrears owed to contrac-
tors had reached NGN150 billion
(USD1.17 billion) by 2003.
This instability in public finances
hampered any long-term investment
plans by the private sector, with the only
realistic opportunity for sensible invest-
ment being short-term ventures, par-
ticularly in retail.
Coming off the back of 16 years of mili-
tary rule, the priority for the Obasanjo
government's first term in office was to
secure a politically stable environment
38
The purpose of Needs was to raise the
country’s standard of living and secure
long-term economic stability through a
variety of reforms, including greater trans-
parency and accountability in government,
deregulation, and more privatisation.
and nurture Nigeria's fledgling democ- tackling the basic issues that undermine
racy. It used its second term, from 2003- the stability and prosperity of the
2007, to implement an economic reform Nigerian economy – from the lack of
program called the National Economic fresh water for household use and irri-
Empowerment Development Strategy gation, to unreliable power supplies,
(Needs). The purpose of Needs was to decaying infrastructure and impedi-
raise the country’s standard of living and ments to private enterprise – and aims
secure long-term economic stability to encourage the participation of the pri-
through a variety of reforms, including vate sector in resolving them.
greater transparency and accountability
in government, deregulation, and more Working in tandem with the federal
privatisation. The Needs programme is initiative, Nigeria's 36 states have also
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N I G E R I A C O R P O R AT E G U I D E S

drawn up their own State Empowerment
and Development Strategies (Seeds).
While the national economy is show-
ing signs of recovery, this return to sta-
bility has so far done little to improve
The revised National Economic and
Empowerment Development Strategy
(Needs 2) has seen the government set
a target of annual growth of 10%-11%
up to 2011.
the day-to-day lives of the vast majority
of Nigeria's citizens. The challenge for
the current president, Umaru Musa
Yar'Adua, elected in May 2007, is to find
a way of harnessing the country's pro-
gress towards prosperity and translate it
into real benefits, new jobs and higher
living standards for the estimated 70% of
the population currently living below the
poverty line.
President Yar’Adua has undertaken a
policy known as Vision 2020 to trans-
form Nigeria into one of the world’s top
20 economies by 2020. Vision 2020
envisages the enactment of a Seven
Point Agenda, a national plan that will
build and improve upon the following
areas: power and energy infrastructure;
food security and agriculture; wealth
creation and employment; mass trans-
portation; land reform; security, includ-
ing bringing stability to the Niger Delta;
and education.
Key to achieving this goal will be
diversification of the economy. The
recent improvement in Nigeria's GDP
has largely been the result of the high
price of oil, and though the oil industry
utilises much of the country's workforce
and other economic resources, it does
not pay dividends to other sectors of the
economy.
For the economy to prosper, emphasis
must therefore be placed on exploiting
resources other than oil. Manufacturing
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C O R P O R AT E G U I D E S N I G E R I A
in Nigeria currently operates at just 45%,
while, despite a recent rally in agricul-
ture, productivity remains low and is
often merely the preserve of the poorest
members of the population, as opposed
to an activity pursued with federal guid-
ance. Nigeria's vast non-oil resources –
including a population struggling under
the burden of mass-unemployment –
must become part of the economy in
order to secure future stability and a
more even distribution of wealth.
If the various targets set out by
President Yar'Adua and his predeces-
... increased productivity in agriculture
must be met with increased capacity to
process food on an industrial level.
sors in the previous administration are
to be achieved, it is estimated that the
Nigerian economy will have to achieve
GDP growth of at least 7%-8% per
annum to meet its eight Millenium
Development Goals – which include the
eradication of extreme poverty by 2015.
The revised National Economic and
Empowerment Development Strategy
(Needs 2) has seen the government set
a target of annual growth of 10%-11% up
to 2011. While the World Bank acknowl-
edges that this level of growth would be
'desirable' and a significant step towards
alleviating the economic strain felt by
ECONOMY
many Nigerians, it goes on to warn that
achieving this level of growth will be
'challenging given the present socio-
economic and political situation in the
country'.
Politically, the government of
President Yar'Adua must continue to
pursue greater integrity, transparency
and accountability – at state and local
government levels – and spread the fight
against corruption to all levels of gov-
ernment.
The government will also need to
develop links between different sections
of the economy – increased productivity
in agriculture must be met with
increased capacity to process food on an
industrial level, for example. And if the
individual sectors of the economy –
many of which are displaying signs of
progress – are to work together as an
effective unit, the country's poor infra-
structure must be overhauled to meet
the demands of a modern, prosperous
economy. The lack of decent roads,
water, power supply and reliable
telecommunications are hindrances to
private investment that must be
removed if Nigeria is to become a com-
petitive place to do business in the eyes
of local and international investors. ¶
39
 ECONOMY
Privatisation
A continuos challenge offering so much potential for investors and government
£ Years of neglect have caused public
sector enterprises to fall into a condition
of disarray, and a broad programme of
privatisation is now seen as an essential
tool in the reinvigoration of both the pub-
lic sector and the Nigerian economy as
a whole. Building on work started by his
predecessor, President Umaru Musa
Yar'Adua is continuing to pursue a pro-
gramme of privatisation, with mixed lev-
els of success. Since 1999, Nigeria's pri-
vatisation programme has been governed
by two bodies. The National Council of
Privatisation (NCP) oversees and ap-
proves policies on privatisation, while
the Bureau of Public Enterprises (BPE)
carries out the privatisation process.
Privatisations under Previous
Administrations
The first privatisations took place at
the start of the 1990s, while Nigeria was
40
still under military rule. General Ibrahim
Badamasi Babangida's government
brought in a structural adjustment pro-
gramme, but this round of privatisation
involved only a few commercially viable
enterprises.
In July 1999, President Obasanjo's
government oversaw a more wide-rang-
ing programme aimed at tackling those
state-owned enterprises that suffered
from 'excessive bureaucratic control or
intervention, inappropriate technology,
gross incompetence and mismanage-
ment, blatant corruption and crippling
complacency'.
Most of the 1'000 enterprises involved
in this round of privatisation required
annual subsidies to remain operational.
Tax exemptions and soft loans that were
never repaid more than doubled the cost
to the national treasury, with estimates
from the Adam Smith Institute suggest-
ing that the Nigerian Ports Authority, for
example, cost the government USD558m
between 2000 and 2003 in subsidies and
other lost revenues.
But privatisation has also helped stem
the losses previously being made by gov-
ernment-owned companies. In 1999, the
National Council on Privatisation began
the process of selling off all government
shares in companies listed on the stock
exchange. They also disposed of car
assembly plants and hotels, and large
enterprises such as the Power Holding
Company of Nigeria (PHCN), the Nigerian
National Petroleum Corporation's oil
refineries, and Nigeria Telecommunica-
tions (Nitel). Between 1999 and 2006, 116
loss-making companies were sold off
across sectors including aluminium,
telecommunications, petrochemicals,
insurance and hotels.
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N I G E R I A C O R P O R AT E G U I D E S
 ECONOMY

Successes, Setbacks and Future
Benefits
To date, the major success of this gov-
ernment scheme has been the privatisa-
tion of Nigeria's ports. The process of pri-
vatising the ports, which began in 2004,
saw the government offer 25 separate
concessions relating to 11 main ports.
By the end of 2006, the programme –
hailed by the World Bank's Public-Private
Infrastructure Advisory Facility (PPIAF)
as 'one of the most ambitious infrastruc-
ture concessioning programmes ever
attempted' – saw 20 concessions fully
completed.
tration to sell off oil refineries at these Ajaokuta Steel Company, were 'lagging
facilities. Another policy decision of the behind' and not performing as well as
Obasanjo government was abandoned in expected.
2007 when the new Education Minister,
Igwe Aja-Nwachukwu, ruled that the pri- But despite these setbacks, privatisa-
vatisation of the state schools system tion is still pursued and promoted by the
By the end of 2006, the programme – hailed
by the World Bank's Public-Private Infra-
structure Advisory Facility (PPIAF) as 'one
of the most ambitious infrastructure con-
cessioning programmes ever attempted' –
saw 20 concessions fully completed.

Private-sector investment and man- was moving too quickly to allow proper BPE as the most promising method of
agement have seen operational activi- consideration for how schools could be ensuring a prosperous, stable Nigerian
ties at each port improve in quality, with effectively managed in the future. economy in the years to come. Years of
a marked decrease in wait times at the corruption and mismanagement have
ports. Speaking in October 2008, BPE's weakened the economy's infrastructure,
director general, Mrs. Irene Chigbue, and though there is no 'quick fix' to such
One key area that can benefit from admitted that the experience of the deep-rooted problems, it is hoped that
privatisation is the power sector. Only council on privatisation is mixed. While the discipline of private-sector invest-
40% of Nigeria’s population has access pointing out that some privatised com- ment can put Nigeria on a road to pros-
to electricity, although the government panies were thriving, others, such as the perity that matches its potential. ¶
plans to expand access to 85% of the
population by 2010 through a rural elec-
trification program. This process began
with the break up of the PHCN into 18
separate units for the generation and
transmission of electricity across the
country. The failure of the PHCN to pro-
vide a reliable source of electricity has
not only hindered the development of the
economy and discouraged investment,
but between 1999 and 2007 has cost the
treasury more than USD6 billion in sub-
sidies.

President Yar'Adua had previously

pledged to complete the privatisation of
the power sector by the end of 2008, but
this project has yet to be completed and
there is still some debate nationally
regarding a solution to this chronic prob-
lem.

Although the programme of privatisa-

tion has had considerable success, there
have been several stumbling blocks. In
2007, following strikes at Port Harcourt
and Kaduna, the government reversed
the decision by the previous adminis-

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C O R P O R AT E G U I D E S N I G E R I A 41