Wale Edun: Incentives Lure $3bn Investments to Oil & Gas

Nigeria Attracts $3bn Oil & Gas Investments

“The oil and gas sector has been revamped, with incentives yielding about...”

Nigeria's oil and gas sector receives $3 billion in investments, driven by incentives. Wale Edun shares insights on the industry's growth prospects.

Nigeria's Minister of Finance, Wale Edun, announced at the Nigerian Economic Summit in Abuja on October 15 that the country's oil and gas sector has received a significant boost of $3 billion in investments thanks to recent incentives. This development is a testament to the government's efforts to revitalize the industry and attract foreign investment.

Incentives Attracting Investments

Some of the incentives that have contributed to this success include:

Tax Exemptions: Exemption from federal, state, and local government taxes, levies, and rates 

Repatriation of Profits: 100% repatriation of profits and dividends

Foreign Ownership: 100% foreign ownership allowed.

Streamlined Procedures: Fast-track cargo clearance procedures and simplified import/export regulations.

These incentives have created a favorable business environment, making Nigeria an attractive destination for investors. The oil and gas sector is crucial to Nigeria's economy, and this injection of $3 billion is expected to have a positive impact on the country's economic growth.

Nigeria's Economic Growth Strategy

The government's strategy to drive economic growth through investments in the oil and gas sector seems to be paying off. With this $3 billion investment, Nigeria is poised to increase its oil and gas production, create jobs, and stimulate economic activity.

“The oil and gas sector has been revamped, with incentives yielding about $3 billion in investments. ExxonMobil has pledged $10 billion, and local players are following suit,” Edun said.

“ExxonMobil announced $10 billion and there are Nigerians coming behind. That is also a driver of the economy. The first place to look for foreign exchange (FX) and oil revenue is the oil sector.

“We are being promised by operators in the oil sector 2 million barrels per day (bpd) and, of course, the Dangote refinery.”

On October 2, the Federal Government rolled out a series of concessions to revitalize the sector, focusing on both upstream and downstream growth. These incentives include the 2024 Value-Added Tax (VAT) Modification Order and tax breaks for deep offshore oil and gas production.

Key Incentives for Growth

• Tax Exemptions: Exemptions from federal, state, and local government taxes, levies, and rates
• Tax Reforms: Modifications to the VAT and tax incentives for deep offshore production
• Investment Promotion: Encouraging foreign investment through favorable business conditions

According to Minister Wale Edun, these initiatives are paying off, with companies in the manufacturing sector eager to invest heavily in the economy. A major manufacturer has already committed $2 billion in new investments, demonstrating the government's policies are attracting business growth.

Economic Outlook

Nigeria's economic trajectory is looking optimistic, with projected real GDP growth of 3.76% in 2024, driven by government reforms. The National Development Plan aims to establish a strong foundation for a diversified economy, with robust MSME growth and a resilient business environment. The Nigerian Economic Summit Group's Economic Transformation Roadmap outlines phases for achieving sustainable economic transformation.

“The other areas are manufacturing. Just last Saturday, I was with a major manufacturer. Of course, we have reeled out a whole range of incentives, tax reforms and exemptions and so forth for the manufacturing sector to help them with their cost,” he said.

“And the manufacturer said, having noted and followed the reforms over the years, they are now at the stage where the environment is now conducive for them to bring in $1.2 billion worth of investment across different areas of the economy. Of course, these are the specific incentives that have been unveiled, including cheaper funding.”

Minister Wale Edun announced that the federal government's revenue will be allocated to fund social intervention programs, benefiting 20 million Nigerians. These initiatives aim to enhance citizens' welfare and tackle pressing societal issues, contributing to Nigeria's economic transformation. The programs are part of the government's efforts to promote economic growth and development, as outlined in the Economic Transformation Roadmap. This roadmap includes medium-term policy priorities, focusing on stabilization, consolidation, and acceleration phases to achieve robust and sustainable economic transformation.

Objectives:

Improve Citizen Welfare: Enhance the overall well-being of Nigerians through targeted social interventions.

Address Societal Needs: Provide support for vulnerable populations and address pressing social issues.

Foster Economic Growth: Stimulate economic development and job creation through strategic investments.

By directing revenue towards these programs, the government demonstrates its commitment to promoting inclusive growth and reducing poverty.