INTERVIEW: What Worries UK Investors About Nigeria – Country Director For DIT Chalemera

Chim Chalemera is the Country Director for the UK Government Department for International Trade (DIT) in Nigeria.

A Quantity Surveyor by profession, Chalemera has worked in different sectors across several countries including the UK, Nigeria, South Africa, DRC, Malawi and Zambia.

In this interview with THE WHISTLER, she speaks on the trade volume between Nigeria and the UK, the major concerns for UK Investors when it comes to investing in Nigeria, among others.

Excerpts:

Currently, What Is The Trade Volume Between Nigeria And The UK?

The UK has a long and historic relationship with Nigeria. Our shared culture, people and relationship span decades.  With respect to our trade volumes, our latest recorded figures show the total trade in goods and services (exports plus imports) between the UK and Nigeria in the four quarters to the end of Q3 2022, to be £6.7 billion – this is an increase of 84.1% or £3.0 billion from the four quarters to the end of Q3 2021. Of this £6.7 billion, the total UK exports to Nigeria amounted to £3.8 billion and the total UK imports from Nigeria amounted to £2.8 billion.

Globally, Nigeria is currently the UK’s 39th largest trading partner accounting for 0.4% of total UK trade. Our trade and investment relationship spans a wide range of sectors including education, agriculture, healthcare, infrastructure, consumer goods, financial services, energy / power, ICT and the creatives.

In 2021 At The Energy Sustainability Conference, You Mentioned In Your Keynote Speech That £1.5bn Financing Set Aside For Nigeria By The UK Export Finance Has Remained Largely Untouched. Are There Nigerian Companies That Have Been Able To Access This Fund? 

I’m aware that there are a couple of Nigerian companies and project owners that are engaged with UK Export Finance (UKEF) at present, but I wouldn’t be able to confirm the status of those discussions due to commercial sensitivities. I can say that it is encouraging to see more Nigerian companies taking an interest in the UKEF offer.  

What Type Of Businesses Can Access This Fund?

UKEF is the UK’s export credit agency and a government department, working alongside my department, the Department for Business & Trade. UKEF works with over 100 private credit insurers and lenders to help UK companies access export finance (the particular class of loans, insurance policies or bank guarantees that enable international trade to take place as easily and securely as possible).
Nigerian buyers of UK exports (at least 20% of overall value) can access UKEF’s financing solutions. These buyers include Nigerian businesses, government and project owners. UKEF can support exports for any size of company and across all sectors, from capital goods to services and intangibles such as intellectual property.

In Africa, Which Country Is UK’s Biggest Trading Partner? What Is Nigeria’s Position In This Regard?

Nigeria is the UK’s second largest trading partner with a total trade figure of £6.7 billion while South Africa is the UK biggest trading partner in Africa, with £10.4billion in total trade of goods and services in the four quarters to the end of Q3 2022. In the Global context, South Africa is the UK’s 29th largest trading partner whereas Nigeria, as I mentioned earlier, is the 39th largest trading partner accounting for 0.4% of total UK trade.

I’m hopeful that the trade between our two countries will increase, especially in light of the recent launch of the Developing Countries Trading Scheme (DCTS) due to come into effect this year. You may be aware that in January, the British Deputy High Commissioner hosted an event here in Lagos on the DCTS for Nigerian businesses wishing to export to the UK. The DCTS provides tariff reductions and simpler terms of trade to 65 developing countries including Nigeria, and will replace the UK’s Generalised Scheme of Preferences (GSP).

The scheme will boost UK trade with Nigeria, help Nigeria’s economic growth and prosperity as well as strengthen Nigeria’s economic ties with the UK and ensure mutual prosperity between our two countries.. The scheme liberalises trade with developing countries by removing tariffs so that 95% of all trade in goods is covered by zero or preferential tariff rates. Nigeria is a major beneficiary of changes introduced by the DCTS and will see tariff reductions on over 3000 products, meaning that 99% of existing Nigerian exports to the UK by value will be duty free. Tariffs have been removed on Nigerian goods which promote value addition in important non-oil export sectors such as cocoa butter and paste, sesame oil and clothing.

I should equally add that our Prime Minister will host a UK-African Investment Summit in London on 23-24 April 2024. The Summit will bring together Heads of State and Government from 24 African countries with British and African business leaders and will strengthen UK-African partnerships to create jobs and growth, supporting British and African talent in sectors such as finance and technology, and promote women entrepreneurs.

What Are The Major Concerns For The UK Investors When It Comes To Investing In Nigeria?

At present, foreign exchange volatility, particularly with supply of forex, the value of the Naira and the parallel FX market are mainly what investors worry about. Some investors that are already in-country are having challenges repatriating their profits and earnings back to the UK which creates issues for their shareholders, etc.

Security remains a concern for investors due to violent crimes, kidnappings for ransom, and terrorism in certain parts of the country. Lastly, the ease of doing business in Nigeria is also a deterrent for investors.
Infrastructural challenges are real in Nigeria. Whether it is port infrastructure, roads, bridges and the like, infrastructure that is well-developed will certainly attract and retain investors as that is seen as a catalyst for economic development.

What Can The Nigerian Government Do To Attract More Investors From The UK?

Nigeria is not only a leading Sub-Saharan economy, but also one of the UK’s strongest trading and investment partners. Nigeria deserves credit for intensifying reforms towards making the power sector commercially viable, licencing payment service banks to expand access to mobile money and a commitment to making customs clearance easier for businesses such as the Single Window portal for clearing exports and imports. This will help competitiveness and support diversification by making it easier to export non-oil products.

The government should continue with infrastructural development as businesses/ investors need easy access, adequate and reliable power supply and effective digital connectivity in underserved and unserved communities.

When it comes to the availability of forex, reducing leakages in the oil sector that are caused by banditry and oil theft would increase Nigeria’s supply of crude oil which in turn would increase foreign reserves.
The UK will continue to encourage the Federal Government of Nigeria to do everything possible to facilitate market access and create an environment which will attract more companies into Nigeria.
It is also in our interest to make it easier for UK companies to export to Nigeria and for UK investors in Nigeria to bring in essential imports that will boost their business operations, encourage growth and create new jobs in Nigeria. We’re keen to keep working with the Federal Government to implement these changes.

In terms of support, the UK in Nigeria has and will continue to:
Engage with the Federal Government of Nigeria on executing the Enhanced Trade & Investment Partnership (ETIP) and reducing market access barriers, ensuring that consumers and businesses can benefit from both.

Facilitate export & investment opportunities in growth sectors of clean energy, tech, agriculture, education, infrastructure and mining.
Provide and facilitate financing and funding options via engagements with British International Investment (BII), UK Export Finance and others for Nigerian business to aid business expansion and for the development of infrastructure for Federal and State government.
Deliver technical support, including but not limited to feasibility studies and research on novel initiatives across sectors.

Organise trade shows/missions to showcase Nigeria/UK capabilities to promote partnerships and collaboration across various sectors in both UK and the Nigerian market.
Enhance UK-Nigeria business partnerships and facilitate business matchmaking

How Many Nigerian Companies Operate In The UK? 

Specific data on this is not available, but the likes of Dangote, UBA, First Bank of Nigeria have offices in the UK and no doubt there are many others. I’m sure the Nigerian High Commission in the UK should keep such data or would have a better idea on numbers.

As The Global Push Towards Energy Transition Intensifies, There Is Growing Opportunity In Decommissioning In The Oil And Gas Industry. Are There UK Companies Interested In Taking Advantage Of This Opportunity In Nigeria? And What Level Of Partnerships Should Nigerian Companies Be Expecting?

I want to highlight the UK’s position as a global leader in decommissioning. With over 20 years’ experience of decommissioning, we are helping to shape the agenda technically, commercially, regulatory and environmentally.

We are also backed by a world leading and strong R&D capability like the National Decommissioning Centre (NDC) and the Oil and Gas Technology Centre (OGTC), which has helped to reduce the cost of decommissioning by 25% since 2017.
To add, the UK also boasts of the world’s first and only Master of Science (MSc) in Decommissioning.
As the market develops in Nigeria, UK companies are primed to share (or export) this expertise across the project lifecycle, including project consultancy, planning and management, engineering, and subsea engineering, plug and abandonment, lifting, cutting, and dealing with hazardous materials as the demand increases.

I know for example, that CeraPhi – a UK Geothermal company is leading conversations in Nigeria around repurposing end-of-life oil and gas wells to harness their geothermal potential with its patented technology. I would want to see more of such conversations taking place.  

Former Prime Minister, Theresa May And President Muhammed Buhari In August 2018, Launched Economic Development Forum (EDF). How Impactful Has EDF Been In Enhancing Trade And Investment Between The Two Countries?

The UK-Nigeria Economic Development Forum (EDF) was established primarily to address market access barriers, respond to opportunities and challenges of doing business and boost bilateral trade and investment between the UK and Nigeria.

Since 2018, the EDF has played a crucial role in strengthening the UK-Nigeria trading relationship and through this forum, both our countries have been able to unlock finance, facilitate better regulatory link ups, support British and Nigerian businesses and engage on important global issues.
The establishment of quarterly business dialogues was equally introduced through this forum to provide Nigerian and UK businesses a platform to raise market access challenges they are facing. Furthermore, the EDF has been instrumental in.

the resolution of some market access barriers such as the removal of Import Adjustment Tax;
the establishment of a formal partnership between the British Standards Institute (BSI) and the Standards Organization of Nigeria (SON) to share best practices, boost standards-compliance, and expand Nigeria’s non-oil export; customs tariff reforms for solar products;
facilitating UK support to Nigerian SME’s to attain relevant certifications in order to facilitate the export of Nigerian goods to certified markets;
Through the EDF, we achieved:
Two joint technical working groups in Legal Services as well as Finance and Financial Services. The aim of the Technical Working Group is to address legal and finance-related issues with a view to identifying mutually beneficial and acceptable solutions to boost trade and investment in those sectors.
An agreement to pursue an Enhanced Trade and Investment Partnership (ETIP) which will offer an alternative high-profile mechanism to progress bilateral economic issues of mutual strategic importance. Under the ETIP, both countries will continue to work together to resolve market access issues and enhance economic cooperation.