South Africans intending to conduct business should, in all circumstances, make the Nigerian embassy their first port of call, to avoid being taken in by unscrupulous partners, newly-appointed ambassador to South Africa Olugbenga Ashiru urged an investment conference in Sandton yesterday.

He said that corruption, while on the decrease, remained a problem in the West African country, despite government intervention and market reforms.

In an attempt to increase trade and other interactions between sub-Saharan Africa's two largest economies, the Nigerian government has opened a second commercial visa office in Pretoria, to complement the existing operations in Johannesburg, Ashiru said.

“I would like to take this opportunity to pledge the High Commission and government's support for all South African investors who want to do genuine business in Nigeria and with Nigerians,” he added.

A key focus of the incumbent (Olusegun) Obasanjo government has been the integration of Nigeria's economy with the rest of the world, as well as attracting higher levels of investment in the country, according to economist Bismarck Rewane.

The government has undertaken a number of reform initiatives, including currency 'convertibility' and reforms of the legislation governing pensions and the banking sector, as well as a general privatisation drive.

Ashiru pointed out that, as part of the campaign to attract investment, companies in Nigeria can now be 100%-foreign owned.

Foreigners are also allowed to repatriate 100% of dividends or profits - a rare provision on the continent.

Other incentives include concessions for investments in economically-disadvantaged local government areas and export-promotion incentives, including the abolition of export tax.

Key areas of opportunity for foreign investors include agriculture, natural resources, up- and downstream operations of the oil industry, textiles and healthcare, Ashiru said.

Foreign mining firms have been offered a package of incentives to invest in the country, including possible capitalisation of expenditure and exploration and surveys, and provision of 100% foreign ownership or concerns, in addition to roll-over relief under the capital-gains tax.

South Africa-Nigeria Chamber of Commerce President Yunus Suleman added that there are also significant untapped opportunities in the Nigerian building-materials and construction sectors.

The Nigerian government has also introduced concessionary tax incentives and soft loans to potential investors in the country's tourism industry, Ashiru said.

Benefits outweigh uncertainty

On the Nigerian economy, Rawane said that he was confident that any political uncertainty would be outweighed by the economic benefits of investing in the country.

The GDP is expected to grow at a rate of 8% in 2006, agricultural output is on the rise, and the privatisation of the telecoms system has had a positive effect, he said.

Nigeria is in discussions with the Paris Club to settle a significant portion of debt, and will soon see notable benefits from its bank-sector reform process.

However, Rawane cautioned that the country's economy remains acutely oil- and gas-dependant, despite recent policy shifts.

“Oil revenue growth is forecast at 295% for 2005, compared with a GDP growth rate of some 6%.

“This suggests the existence of structural weaknesses in the Nigerian economy, and dilution of oil revenues,” he commented.