On Tuesday the 21st February, the Centurion Law Group successfully held their webinar entitled “Investing in Africa with Centurion Law Group’’, which aimed to address both diversification and investment in African countries.
Panellists Leon van der Merwe (South Africa), Tamararemi Jombai (Nigeria) and Pablo Obama Mitogo (Equatorial Guinea) all touched on the ease of doing business, improvement in banking systems; incentives for diversification; tax incentives for investors; real estate opportunities, while making a strong case for an alternative, expert-backed solutions to current economic issues.
Nigeria
Firstly, Tamararemi Jombai explored the various benefits of trade and investment with Africa’s most populous nation, Nigeria.
According to Tamararemi, the Nigerian Government is working hard to ensure that investment is flowing into the country. Nigeria is one of Africa’s key oil producers, producing high-value, low-sulfur crude oil. The economy is heavily dependent on oil. In the first quarter of 2021, oil accounted for about 9.25% of Nigeria’s gross domestic product (GDP) (Trade.gov).
Tamararemi stated that the African Continental Free Trade Area (AfCFT), consisting of 54 (from 55 African nations) has ‘‘ensured the ease of doing business over Africa and ensuring (they) have favorable business environments’’.
According to the Central Bank of Nigeria, the benefits of the AfCFT (amongst others) will be:
- Larger market access, free movement of labor, goods, services and capital.
- The AfCFTA Agreement will motivate Nigerian SMEs to expand their businesses to other African countries.
- Foster business growth and increase profit as well as contribute substantially to the development of the manufacturing sector.
- Increase in job opportunities and the demand for labor, thus reducing unemployment.
- Overall, the AfCFTA Agreement is projected to create over 13 million stable jobs.
- Increase export of commodities (particularly agricultural and other non-oil commodities), manufactured products as well as services.
Source: Central Bank of Nigeria
In July of 2021, Nigeria passed the Petroleum Industry Act (PIA) which should help to increase investments in Nigeria oil and gas industry. Tamararemi affirmed that the PIA ‘‘will help facilitate Nigeria’s economic development by attracting and creating investment in opportunities…if implemented correctly,’’.
The digitization of company registration is another key step that Nigeria has taken to improve advancement. Tamararemi mentioned ‘‘that everything from the first to the last stage is being done online so now you have a 24 hour timeline for the approval…’’.
Another reform of note is the One-stop Center, which houses roughly 24 government agencies. The One-stop Center allows companies to expedite their founding process by keeping all various agencies in one area.
Nigeria also boasts various incentives for foreign trade and investment. For instance, the Tax Pioneer status, zero-import duty and exemption of interest on loans for Agricultural companies being the most notable. Moreover, the E-visa option for business travelers, which is all processed and approved online within 48 hours.
South Africa
Following Tamararemi Jombai, Leon van der Merwe spoke on the panel, representing South Africa, which is home to 75% of the largest African companies.
In an encouraging address, Leon stated South Africa is ‘‘one of the most popular trade and investment destinations in the world’’ as ‘‘it can meet specific trade and investment requirements of prospective investors’’.
Leon appreciated the role of government and free-market as investment vehicles: ‘‘I think we need to appreciate what government and private sector has done, over actually a relatively short democratic period and most importantly what we continue to do in moving the country forward’’.
Leon continued: ‘‘South Africa is one of the most sophisticated, diverse and promising emerging markets globally. We are strategically located at the tip of the African continent and we are a key investment location both for market opportunities within our borders and also as a gateway to the rest of the continent ’’.
He also touched on the Total Energies new discovery of oil or gas at the Brulpradda and Luiperd basins, which were discovered in 2018 and 2020, respectively. Now, Total Energies plans to spend more than $3Bn in exploiting these resources.
Leon highlighted how both ‘‘transparent’’ and ‘‘efficient’’ South African laws and courts are, respectively. He affirmed that ‘‘the South African government has further introduced a wide range of legislation that further promotes training and skill development and fast-tracking the building of world-class competitiveness and competencies’’.
‘‘One of the reasons that South Africa is such a popular trade and investment destination is due to the country ensuring it can meet specific trade and investment requirements of prospective investors’’.
In 2010, South Africa joined the BRICS (Brazil, Russia, India, China and South Africa), which is an acronym for nations at a ‘‘newly advanced economic development’’ (Jim O’Neill) which highlights the economic development of the country.
With that said, Leon did also mention the rolling blackouts which are proving problematic at the moment and are unfortunately costing the economy more than 1 Billion Rand (€51,598) per day. However, the government has announced a plan to stop them within 12 months and a new energy minister has been appointed to help administer these efforts.
Lastly, Leon proudly mentioned that the South African Government’s pledge to attract $100bn (€90bn) in new investment in 5 years is on track with 95% of the amount already secured.
Equatorial Guinea
Finally, Pablo Obama Mitogo represented Equatorial Guinea, whose main exports include both Crude Petroleum and Petroleum Gas. The West-African, Spanish-speaking nation boasts three different types of incentives available to companies foreign.
Firstly, the participation in government and private projects. Pablo stated that companies ‘‘can apply for a joint-venture fund managed by the Holdings of Equatorial Guinea which is a public investment company created especially for companies’’.
According to Holding Guinea Equatorial, the country is ‘‘currently immersed in an emergency phase that is committed to economic diversification capable of guaranteeing long-term sustainable growth. This process of economic diversification corresponds to the second phase of the ‘National Plan for Economic and Social Development for the Emergence of Equatorial Guinea towards the 2020 Horizon’’.
The second type is Investment Aid for Small and Medium-sized companies (SMEs). In this incentive, the government has a special fund designed to share the risk with commercial banks when it comes to a SME. The fund is managed by the Business Development and Promotion Institute.
Thirdly, tax and fiscal incentives are also extended to companies, especially those in the livestock, fishing, agricultural and energy sectors. Pablo stated, ‘‘according to the tax code, oil production, transformation, conservation and sales activities in agriculture, livestock and fishing are exempt from corporate tax’’. Similarly, these same industries are exempt from VAT when it comes to direct-to-consumer sales.
Centurion Plus
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