KPMG: Nigeria Among World’s Four Major Investment Destinations

President Goodluck Jonathan

By Kunle Aderinokun

Nigeria has been ranked as one of the four major investment destinations and growth areas in the world.

According to KPMG, one of the world’s foremost audit, financial and tax advisory firms, Nigeria’s newfound status followed the disappointing returns recorded by the BRICS, with the exception of China.

BRIC was the term coined by Goldman Sachs’ economist, Jim O’Neill in 2001, to symbolise the emerging global economic powerhouses of Brazil, Russia, India and China. The term was later expanded to BRICS to accommodate South Africa.

However, KPMG at the weekend, said the poor regulatory environment, slower than expected growth prospects and disappointment returns on investment recorded by the BRICS, with the exception of China, has worked in the favour of Mexico, Indonesia, Nigeria and Turkey which have been termed the MINTs, as well as the ASEAN (Association of South East Asian Nations) region, now considered the new destinations for global capital and investors.

Global Chairman, KPMG International, Mr. Michael Andrew, who was on his first visit to the country last week, told reporters in Lagos that Nigeria and the other countries among the MINTs have attracted increasing investment offers and enquiries through the services of KPMG, amongst others investment and financial advisories, with the view of taking advantage of the high rates of return on investment.

According to him, with the exception of China, international investors have found the Brazilian, Russian, Indian and South African economies disappointing in the last few years and are looking for safe havens with better returns for their investments.

“The offers for the MINTs are intense and we are getting a huge amount of enquiries about these countries. People want to know how to do business in these countries, how to access the markets and how to take advantage of the long-term growth that is coming.

“If you are a CEO and you are sitting in London, New York or Frankfurt, because the market is growing and the cash inflow to these markets, the markets are putting pressure on the CEOs to try and find new markets where they can find growth.

“Particularly, companies in consumer markets such as financial services, food and energy are the ones that they are really focused on in these emerging economies,” he said.

Andrew, who spoke alongside the National Senior Partner, KPMG Professional Services, Mr. Seyi Bickersteth, and Partner, Management Consulting, KPMG Professional Services, Joseph Tegbe, said the international investors are interested in investing in the Nigerian capital market and could later move to the real and other sectors of the economy.

He said: “Initially they are going to move into the stock market, then they will move into the property market, then they will start to move into the real sector in economies such as Nigeria.

“So everyone is watching where this cash goes, but the real question is what are the factors that will actually drive this growth?”   

Elaborating on the determining factors, Andrew said: “People are looking for a growing middle class, they are looking for a predictable regulatory environment, and they are looking for stable and transparent corporate governance structures.
“In the last few weeks, I have been to Mexico, Indonesia, India and then Nigeria, and their similarities are remarkable – between those economies and this one are the ones attracting a lot of interest.

“In the last few years, we have talked about the BRICS being the area of focus. But if you talk to international investors, their views will be that the BRICS, with the exception of China, have been quite disappointing.
“So they have found it difficult to invest in these countries, their regulatory environment is unpredictable and they have not been able to get good returns on their investments.

“As such, people are now focused on the MINTs – Mexico, Indonesia, Nigeria and Turkey. They are the four countries that international investors are really focused on for growth and investment.”

Bickersteth while fielding questions on the power reform and recent sale of successor companies of Power Holding Companies of Nigeria (PHCN), gave a pass mark to the Federal Government on the exercise.

He said: “The process is being handled by someone for whom I have a lot of respect for – Mr. Atedo Peterside. The process has been very transparent.

“However, you are not going to satisfy everybody in this particular deal, so my own opinion is that we must move forward. We need to move forward because if we don’t we are going to have a real problem in the power sector.”

Stressing that it has been shown quite clearly that the public sector cannot deliver the amount of electricity that the country needs to form the industrial base in the country, he observed that Nigeria needs the resources and the expertise of the private sector.

“On the overall basis, the power reform programme is something that I welcome; the process has been fair and the valuation, from what I understand, has been fair. So let’s move on and deliver the power objective that we say we want to deliver,” he submitted.