September 14, 2023/CSL Research
President Bola Ahmed Tinubu was able to secure a pledge of investments worth US$14bn from Indian private investors and the Indian government at the Nigeria-India presidential roundtable and conference. These pledges are to be invested in the energy, petrochemical and steel sectors. One of the major deals worth US$1bn involves aiding the Defence Industries Corporation of Nigeria (a corporation under the control of the government of Nigeria responsible for the production for defence equipments) to attain 40% self-sufficiency in local manufacturing.
Also, the Indorama Corporation, the largest producer of polyolefins in West Africa especially Nigeria plans to invest an additional US$8bn to expand its petrochemical facility in Nigeria while Skipperseil Ltd and Bharti Enterprises have pledged the total sum of c.$2.3bn to build power generation plants. Another notable pledge of investment was from Jindal Steel and Power company, one of the largest steel companies in India with plans to invest US$3bn in Nigeria’s steel sector.
Nigeria’s Gross Domestic Product (GDP) growth fell to 2.51% in Q2 2023 from 3.54% recorded in Q2 2022 but rose marginally by 20bps from 2.31% in Q1 2023 according to the National Bureau of Statistics (NBS). The service sector was the major driver of the country’s GDP, recording a growth of 4.42% and contributing 58.42% to the aggregate GDP. The agriculture sector rose to 1.50%, higher than the growth performance of 1.20% recorded in Q2 2022, as the sector recovers slightly from incidences of insecurity. The Industries sector where these investments are expected to go into contracted by 1.94% y/y in Q2 2023 from a paltry growth rate of 0.31% y/y in Q1 2023. The industrial sector is in dire need of resuscitation and these Investments in the sector may encourage knowledge transfer, leading to more expansion and may boost the output of this sector in the long term. More so, investments in the sector could boost exports and become a source of foreign exchange inflow.
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