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Foreign investment: from telecoms to beer

International oil and gas companies dominate foreign direct investment in Nigeria, while foreign investors have traditionally invested in breweries, food and bottling companies and car manufacturers as strategic investors or via the stock market. But recently the telecommunications industry has become something of a phenomenon

The size of Nigeria's population and its as-yet largely untapped demand is the primary reason that international investors have succeeded in building businesses in the country. And the government is encouraging them to come in as part of its overall reform commitments to supporting private-sector led economic growth and providing jobs.

Foreign investors helped to make the Nigerian Stock Exchange one of the world's best performers between 2000 and 2004, although admittedly from a very low base.

Two brewers dominate the market's capitalisation – Nigerian Breweries, producer of the ubiquitous Star brand, and Guinness Nigeria. In recent months, however, several banks have listed in an attempt to rack up their capital bases ahead of the central bank's end-of year deadline.

The government's privatisation plans should provide further opportunities for investors. However, there are some concerns at the level of supply – bank issues are yet to finish and NITEL and NEPA are still to go public. Already this year the stock market's index has stumbled under the weight. Then there are concerns about whether or not the security and the strength of the regulatory and infrastructural system are enough to cope with the boom in capital market activity over the last five years.

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