OPPORTUNITIES AGRIBUSINESS ATTRACTING SECOND GENERATION INVESTMENT

OPPORTUNITIES IN AGRIBUSINESS:ATTRACTING SECOND GENERATIONINVESTMENTPRESENTED BY:DULCE ZAHNISERINVESTMENT PROMOTION ADVISORUSAID MARKETSJUNE 10, 2009LAGOS, NIGERIA

IS THERE FOREIGN DIRECT INVESTMENT (FDI) IN THEAGRICULTURAL SECTOR IN NIGERIA?IN THE APRIL 2009 INVESTMENT POLICY REVIEW OFNIGERIA CONDUCTED BY UNCTAD, THE STUDYFOUND THE FOOD AND BEVERAGE MANUFACTURINGSECTOR GREW ITS FDI, REPORTING THAT IN 2000 ALITTLE MORE THAN $5 MILLION WAS INVESTED INTHE SECTOR, YET BY 2005 INVESTMENT HAD MORETHAN DOUBLED TO MORE THAN $14 MILLION.THERE ARE SUCCESSES IN DEVELOPING THESECTOR, BUT INVESTMENT IS WOEFULLY SHORT OFWHAT IS NEEDED TO GROW AND SUSTAIN THESECTOR. THERE IS A MARKET!

• THE NIGERIAN MARKET:– 140 MILLION NIGERIANS AND GROWING– MARKET DESIRES LOCALLY GROWN PRODUCTS TOREPLACE EXPENSIVE IMPORTS– A BURGEONING NIGERIAN MIDDLE CLASS WHOSETASTES ARE CHANGING FOR HIGHER QUALITYGOODS– FORMERLY THE “BREAD BASKET” OFAFRICA, NIGERIA HAS THE POTENTIAL TO GROWAND RESTORE THAT POSITION WITHINTRODUCTION OF NEW TECHNOLOGIES FORCORE PRODUCTS SUCH ASRICE, SORGHUM, CASSAVA, MAIZE AND OTHERCOMMODITIES– SURROUNDING COUNTRIES HAVE POTENTIAL FORNEW EXPORT MARKET FOR AGRIBUSINESS SALESIN THE NEAR FUTURE

• THE GOOD NEWS – INVESTMENT IN AGRIBUSINESS HASBEEN IDENTIFIED AS A PRIORITY, HAS BEEN DONESUCCESSFULLY AND THE MARKET WILL CONTINUE TOGROW• TO HARNESS THE FUTURE, ONE MUST PLAN NOW TOBUILD ON SUCCESS– DEVELOP A STRATEGY NOW FOR FUTURE GROWTH.– ALWAYS HAVE THE NEXT STEPS ON THE RADAR– STRENGTHEN EXISTING INVESTMENTS TO MAKE THEMARKET ATTRACTIVE FOR INTRODUCTION OF NEXTGENERATION PRODUCTS AND RESULTING SALES– IDENTIFY PRODUCTS THE GROWING DOMESTIC MIDDLECLASS WANTS AND SATISFY THOSE NEEDS

POTENTIAL SOURCES OFEQUITY, FINANCING AND INSURANCE FORSECOND GENERATIONINVESTMENT, INCLUDING:• NIGERIAN DIASPORA• “ANGEL” INVESTORS AND SOCIALLY RESPONSIBLEINVESTORS• PRIVATE EQUITY AND VENTURE CAPITAL• MULTILATERAL DEVELOPMENT BANKS– INTERNATIONAL FINANCE CORPORATION (IFC)– MULTILATERAL INVESTMENT GUARANTEE AGENCY(MIGA)– AFRICA DEVELOPMENT BANK (AFDB)• OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC)• EXPORT IMPORT BANKS• PRIVATE BANKS

WHAT ARE SOME OF INVESTMENTOPPORTUNITIES THAT WOULD HELP THEAGRIBUSINESS SECTOR GROW?PRIVATE SECTOR OPPORTUNITIES THATCOULD SHOW REAL GROWTH:• FARMING MECHANIZATION– EQUIPMENT LEASING– EQUIPMENT DISTRIBUTION AND SERVICINGCOMPANY• COLD STORAGE SYSTEM• STRONG SUPPLY CHAIN• POWER DEVELOPMENT

WHAT WILL PARTNERS AND/OR FINANCIERSLOOK FOR IN AN INVESTMENT?• A SOUND BUSINESS PLAN WITH PROPERSCALE/STAGING• COMMERICAL VIABILITY• PARTNER CAPITAL• A MARKET FOR THE PRODUCT• EXPERIENCED MANAGEMENT• THE ABILITY TO REPAY THE LOAN, MEANINGCONTRACTS FOR PURCHASE OF THEPRODUCTION• A EQUITY HOLDERS, A RATE OF RETURN ONTHEIR INVESTMENT IN A TIMELY FASHION

WHAT DO 2 ND GENERATION INVESTORS WANT TO SEE?– EXISTING SUCCESSFUL BUSINESSES AS ADEMONSTRATION EFFECT– RULE OF LAW– QUICK REGISTRY OF A BUSINESS– SWIFT REGISTRY OF LAND AND A LAND TITLE REGIME– ENFORCEMENT OF CONTRACTS AND DUE PROCESS INDISPUTES– EXPEDIENT AND TRANSPARENT PERMITTING PROCESS– AN ATTRACTIVE TAX REGIME– EASE IN SECURING CREDIT– SOUND AND RELIABLE IMPORT/EXPORT PROCEDURESBUSINESSES WILL TURN TO THE ANNUAL WORLD BANKDOING BUSINESS INDICATORS AND UNCTAD’SINVESTMENT POLICY REVIEW TO DETERMINE THEIRAPPETITE FOR NIGERIA

What will attract investment?EXISTING SUCCESSFUL BUSINESSES AS A DEMONSTRATION EFFECTRULE OF LAWQUICK REGISTRY OF A BUSINESSSWIFT REGISTRY OF LAND AND A LAND TITLE REGIMEENFORCEMENT OF CONTRACTS AND DUE PROCESS IN DISPUTESEXPEDIENT AND TRANSPARENT PERMITTING PROCESSAN ATTRACTIVE TAX REGIMEEASE IN SECURING CREDITSOUND AND RELIABLE IMPORT/EXPORT PROCEDURESGLOBAL BUSINESSES WILL TURN TO THE ANNUAL WORLD BANK DOING BUSINESSINDICATORS TO DETERMINE THEIR APPETITE FOR NIGERIA

Nigeria’s Top Performing StatesSource – 2008 World Bank Doing Business Indicators Power Point May 20, 2008IndicatorNigeria’sperformance inDoing Business2008*Best performing stateBestpracticeProcedures to start a business 9 Abuja, FCT 5Days to open a business 34 Abuja, FCT 22Cost to open a business 57% Abuja, FCT 37%Procedures to build a warehouse 18 Bauchi, Kaduna 12Days to build a warehouse 350 Sokoto 46Cost to build a warehouse 1,016% Kaduna 142%Procedures to register property 14 Abuja, FCT, Bauchi 12Days to register property 82 Kano 38Cost to register property 22.2 Abuja, FCT 9%Days to enforce a contract 457 Abia 315Cost to enforce a contract 32% Kaduna 13%* In the global Doing Business report, Nigeria is represented by Lagos

• THE BAD NEWS:– THE 2009 DOING BUSINESS REPORT FORNIGERIA, TABULATED THAT NIGERIA ACTUALLYSLIPPED IN THE REVISED INDICATORS FROMTHE ADJUSTED 2008 REPORT OF 114 TO 118 IN2009. THIS CREATES AN UPHILL BATTLE FORATTRACTING FDI.– RECOGNIZING THESE CHALLENGES, HOW DOESTHE BUSINESS PERSON IN NIGERIA MOVEFORWARD?

• NEXT STEPS TO ATTRACT 2 ND GENERATIONINVESTMENT– CONTINUE TO DEVELOP AND SHOWCASE SUCCESSSTORIES IN THE SECTOR, INCLUDING THE MARKETSPORTFOLIO– LOOK TO THE CONSUMER IN TERMS OF IDENTIFYINGNEW PRODUCT INTEREST AND DEMAND AS WELL ASEVENTUAL EXPORT MARKETS– SEEK PARTNERS WHO HAVE EXPERIENCEDMANAGERS, EQUIPMENT AND CAPITAL– IDENTIFY POSSIBLE DOMESTIC JOINT VENTUREPARTNERS– LOCATE POSSIBLE SOURCES OF LONG TERM FINANCING– START TALKING TO INDUSTRY LEADERS NOW TO BUILDTHE FOUNDATION FOR FUTURE INVESTMENTBE PATIENT – THIS PROCESS WILL TAKE TIME AND WILLNEED DETAILED ATTENTION.

THANK YOU!