Report: Nigeria is no longer Africa’s top investment destination
Zacheaus Somorin with agency report
Africa’s richest man, Alhaji Aliko Dangote, has partnered the Bank of Industry (BoI) and the Kaduna and Kebbi State Governments to acquire a majority stake in Peugeot Automobile Nigeria (PAN) Limited.
This disclosure was made by the Kaduna State Governor, Nasir el-Rufai, at the launch of the BoI Youth Empowerment Scheme (YES).
“We have submitted bids for the car maker … with Aliko Dangote on board together with BoI, Kebbi and Kaduna States… We are confident our bid will sail through,” reported Reuters on Thursday.
Peugeot is a joint venture between ASD Motors and the French automaker, with a long history in Nigeria, the anticipated hub of automotive assembling on the Africa continent.
El-Rufai said Kaduna and Kebbi, along with BoI and Dangote, had submitted bids for the stake which the Asset Management Corporation of Nigeria (AMCON) is looking to sell.
Peugeot Nigeria assembly plant located in Kaduna State has Peugeot Citroen PEUP.PA as its technical partner “with a capacity to assemble 240 cars a day”.
Though conceived in 1969, Peugeot found its roots in Nigeria only two years later, after winning a bid during the Yakubu Gowon-led government.
In November 2006, PAN was privatised in line with government’s agenda to build a stronger, more competitive and diversified economy.
ASD Motors emerged as the successful core investor and took over the management of the company in January 2007, with a 54.78 per cent stake, making Sani Dauda CEO of both ASD Motors and Peugeot Nigeria.
The expectation was that the privatisation of PAN would create a quantum leap in performance, but that has not happened, the company confirmed.
“Following the accumulation of huge non-performing loans (NPL) indebtedness to banks, in October 2012, the Asset Management Company of Nigeria (AMCON) acquired the debts of the company and converted a portion to equity to help restructure the firm,” Peugeot had said.
The planned acquisition is expected to revamp the presence of the company in Africa’s largest economy.
But as news of the bid for Peugeot Nigeria broke yesterday, a new report by Nielsen, a US-based global and information measurement company, showed that Africa’s largest economy was no longer the top investment destination on the continent. In its place, Cote d’Ivoire has risen to the top of the rankings.
According to Nielsen, Cote d’Ivoire has been buoyed by a fast growing economy and a lengthy period of political stability highlighted by successful elections last year to become the prime destination for investments in Africa.
However, that status could now be affected following a recent attack by Al Qaeda in the Islamic Mahgreb (AQIM).
Having been ranked as the top investment destination at the start of 2015, Nigeria has now fallen to fourth on the rankings in Africa.
The ominous slide fits the narrative of Nigeria’s slowing economic growth amid a global slump in commodity prices, the report said. Oil in particular, Nigeria’s main export and revenue source, has been badly hit.
According to the research firm, Nigeria’s slide was “driven primarily by deteriorating macro-economic indicators”. It also added that “consumer indicators and overall confidence levels” have also dipped.
A recent capital importation report by the National Bureau of Statistics (NBS) also confirmed the Nielsen report.
Last year, Nigeria’s recorded total inflow of capital into the economy stood at $9.6 billion —a 53 per cent drop from the previous year and the lowest recorded total since 2011.
While incidental economic factors have largely contributed to Nigeria’s floundering economy, the country’s government has also come in for criticism for not managing the crisis effectively.
President Muhammadu Buhari’s handling of the economy has been questioned with the Central Bank of Nigeria (CBN) instituting strict monetary controls in response to commodity prices and a currency slide.
These controls, which inevitably strained citizens and hardly had the desired effect, have been described as unorthodox.
As Buhari closes in on his first year in office, many Nigerians will be hoping that in his second year, the focus will be on triggering an economic rebound in Africa’s biggest economy following slowed growth.