Despite Covid, Nigeria still a preferred investment destination for US companies, with 65.12% of them rooting for country – ABC survey

…Companies plan to spend $2.37bn in next 3 years
…Spent $2.57bn to expand operations in last 5 years
…Generated $1.08trn in revenue in 2019 versus $1.47trn in 2018
…Employed 13,100 jobs decreasing from 18,000 in 2018

Ben Eguzozie, in Port Harcourt

Nigeria, Africa’s largest economy with a GDP of over $475 billion, is still a preferred investment destination for US companies, particularly for the West Africa operations, despite the battering of its economy by Covid-19 pandemic, survey by the American Business Council (ABC), the US embassy in Nigeria, Veraki, KPMG and PwC, have revealed.

Over 65.12 per cent of US companies identified Nigeria as a regional hub for their operations in West Africa, the survey said. In the same vein, 64.58 per cent of the US companies have a local content target, this is reflected in areas such as people, supply chain and input, the survey further said.

The survey findings contained in a report titled: “Nigeria economic impact survey 2020,” analysed the economic effect of US companies (operating in Nigeria) on the Nigerian economy. It also measured changes in their business revenue, foreign investment, job creation, gross value added and plans for expansion.
At least, 45 US companies operating in Nigeria completed the survey, which was made available to Business A.M.

Checks by this newspaper from a report by Santandertrade.com indicate that the US remains Nigeria’s biggest investing country, followed by China, United Kingdom, the Netherlands and France. China, though a later entrant, has swept all of African countries including Nigeria from the West through its ‘Belt and Road policy of trade-with-aid. To date, China is Africa’s largest trading partner.

The report highlights of US companies’ impact on the Nigeria economy in 2019/2020 through gross value added to the nation’s economic output, investment, jobs and communities indicates that US companies during the period under review, created over 30,000 indirect jobs in Nigeria, which is a huge drop from 3 million such jobs in 2018. In fact, the survey said in 2018, one US company reported over 3 million indirect jobs from
multiple large-scale projects in the country.

Additionally, the 45 American companies recorded $1.08 in generated revenue in 2019, which is a decrease from the $1.47 trillion they recouped the previous year (2018). Recall that in the same year (2019), Nigeria’s total foreign direct investment (FDI) was $934.34 million as was reported by the National Bureau of Statistics’ (NBS) Nigerian Capital Importation 2020. The FDI figure shows a 21.8 per cent drastic decrease from 2018’s

The US companies, according to the survey have spent in excess of $2.57 to expand their operations in Nigeria in the last five years. They also spent over N1.44 billion on training in 2019.

Corporate social responsibility
Over $1.55 billion was spent by the US companies on corporate social responsibility (CSR) in 2019 down from $1.9 billion in the previous year (2018). Recent CSR projects for select companies include: 5for5 Charity Walk – aimed at raising funds and awareness for five selected charities; operationalization of EPRON (E-waste Producer Responsibility Organization of Nigeria).

A new e-waste eco-system, working closely with government, importers/ local industry to operationalize the Producer Responsibility Organization (PRO) for green jobs creation and recovery of valuable secondary material resources. Construction of digital village projects in 64 communities; rehabilitation of secondary school and provision of e-Library at Ogu Community in Rivers State; building and engaging a network of farmers to increase their productivity. This was achieved by training the farmers on agricultural practices and increasing their financial inclusion.

During the Covid-19 pandemic, the companies undertook CSR initiatives such as: N100 million COVID-19 intervention, consisting of initiatives targeted at various segments of society, including SMEs, vulnerable households and government. Palliative food & pharmaceutical products (rice, oil, seasoning, medications) distribution in multiple communities in Lagos and a few other cities in the country. N100 million worth of humanitarian package donation to support the government in combating COVID-19.

This intervention included hygiene products, handwashing stations, and personal protective equipment for frontline healthcare workers in all 36 states and the FCT. Donation of laptops to schools to aid online education. Sensitization of smallholder farmers on COVID-19 coupled with the distribution of face masks and hand sanitizers.

On the whole, the companies have earmarked more than $2.37 billion in planned investments in Nigeria in the next three years to 2023. When assessing the size and growth of the economy, the Nigerian government
measures the direct and indirect impact of each individual producer, industry or sector in Nigeria, the report said.

Widened gender gap
The survey found a widened gender gap in Nigeria – women are clearly excluded in organization. For example, in most organizations surveyed, less than one in five board are women. Women are less than 20 per cent of management; whereas 20 – 49 per cent of employees are women.

Top 4 issues impacting business in Nigeria
Meanwhile, the ABC, US embassy, Veraki, KPMG and PwC survey identified top four issues impacting business management in Nigeria: foreign currency access and policy;  general policy consistency/implementation/uncertainty; specific industry regulations; and crime and security. These place burden on the Nigerian government to direct its policy framework; especially as the current Muhammadu Buhari administration has been sermonizing on bettering Nigeria’s ease-of-doing business.

Key skills/roles relevant for businesses to thrive
The companies identified certain skills relevant for businesses to thrive in Nigeria: these include, digital marketing skills; big data and E-commerce knowledge; technological skills; leadership and emotional intelligence skills; increase awareness of environmental impact of doing business; business continuity planning; adaptability; and design thinking/problem solving skills.

The survey saw the industrial differentiation prevalent in the country, a call for drastic change: other services 7.5%; human health 6.0%; education 1.5%; public administration 1.5%; professional, scientific 11.9%; real estate 1.5%; finance and insurance 4.5%; information and culture 17.9%; oil & gas 11.9%; agriculture, 4.5%; manufacturing,10.4%; electricity, gas, 4.5%; water supply, sewage 3.0%; construction 3.0%; trade
3.0%; and transport 6.0%.