Nigeria

With local refineries unable to meet domestic demand, Nigeria – Africa’s largest exporter of crude oil – currently imports more than 70% of its petroleum needs. However, this could change if plans to build three new refineries are realised.

More robust enforcement of mandatory insurance laws is set to increase Nigeria’s insurance penetration rate, which currently stands at less than 10%. In August, the National Insurance Commission (NAICOM), the regulatory agency for the sector, announced that starting this month it would implement compulsory insurance laws that have been on the books – but largely unenforced – for many years.

The prime functions of a newly revamped ministry are to reverse a decline in foreign direct investment (FDI) and to boost trade. On July 11, the federal government said it would replace the Ministry of Commerce and Industry with the Ministry of Trade and Investment (MTI). The new ministry, to be headed by Olusegun Aganga, the former minister of finance, will lead Nigeria’s efforts to increase private investment from both domestic and international sources, as well as to expand the manufacturing base and the number of local jobs.

While agriculture accounts for about 40% of its national GDP, Nigeria currently produces only a small portion of the fertiliser consumed by its farmers. However, a radical change is in sight, with the recent announcement that two new fertiliser production facilities will come on-line within the next few years.

The Central Bank of Nigeria (CBN) has introduced a new initiative that could boost private sector lending to the agriculture industry. The Nigerian Incentive-based Risk-sharing System for Agricultural Lending (NIRSAL) was formally unveiled at a conference in Abuja on July 5-6. The purpose of the CBN-organised event was for stakeholders to gather to discuss the new initiative.

Two years after the margin lending crisis first struck, the process of cleaning up Nigeria’s banking sector continues. Most recently, the Central Bank of Nigeria’s (CBN) aggressive efforts to improve governance and reporting requirements have grown to include a revision of the licensing framework, which looks to provide greater segmentation in the market. Several financial institutions were recently licensed under the central bank’s new regime, while the nine lenders the government bailed out in 2009 are looking for new sources of funds to meet a recapitalisation deadline of September 30, 2011.