The Nigerian economy held much potential and reward for foreign investors as progress had been made in terms of corporate governance and banking sector reform, but some risks and challenges remained.

Minister at the Nigeria High Commission OC Cocodia said at a seminar hosted by Frontier Advisory and the JSE in Johannesburg, that Nigeria would become the gross domestic product (GDP) leader in Africa in the next ten years to 15 years.

Nigeria is the most densely populated African country with about 150-million residents. It is also the third-largest African economy, with a projected GDP growth of 8,3% this year.

The country has vast natural resources, most prominently oil and gas reserves, a strong manufacturing sector and its telecommunications industry is one of the fastest growing in Africa, Frontier Advisory director and Business Division head Abdullah Verachia said.

Cocodia told the seminar, which focused on investment opportunities in Nigeria, that the country would see an increase in private investment in a number of sectors, including telecommunications, mining and tourism, and added that investors could expect a good return on their investment.

He also said that the high cost of production and investment would decline in the years to come.

South Africa-Nigeria Chamber of Commerce honorary CEO Dianna Games agreed that the private sector would have a significant role to play in infrastructure investment in Nigeria.

She noted that much of the development in the African country would be dependent on electricity supply and other infrastructure, which, owing to the leadership challenges in the country, was unlikely to develop quickly.

There were "pockets of excellence" in some of the 36 states in Nigeria, which Games said would eventually uplift the entire economy, but not without the addition of private investment.

Further, she highlighted that one of the biggest constraints for doing business and investing in Nigeria, was the "hugely congested" Lagos port. As there were also few other fully operational ports in the country, it was easier for companies to send their goods to Nigeria through neighbouring Benin.

Constraints on the road and railways system, as well as technology constraints, were further impeding business growth in the country, added AGH Capital CEO Dr Charles Okeahalam.

Without appropriate infrastructure, it was difficult for business to operate, he said, agreeing that more private investment was needed, while also suggesting that the Nigerian government should deregulate some markets.

SA-NIGERIA RELATIONSHIP

Meanwhile, Games highlighted that Nigeria was South Africa's largest trading partner in West Africa, with exports to Nigeria having risen to R5,4-billion in 2009, compared with just R500-million in 1999.

However, the perception held by some South Africans that Nigerians were involved in criminal activity, has led to some tension between these two countries, with Nigerians suspecting South Africans of taking over their market.

These perceptions, along with complex visa requirements, had the potential to undermine trade and investment by South Africans in Nigeria, said Games.