1

Investment Opportunities in Oyo State, Nigeria

1 August 2012

Presentation

by

His Excellency, Sen. Abiola Ajimobi

Executive Governor of Oyo State

at the

New World Nigeria

High Level investment & Business Summit

2

Our Objective – Why we are here

Oyo State Government of Nigeria is represented at the New World Nigeria, High Level Investment and Business Summit for a number of reasons, some of which include:

To initiate a partnership and strong working relationship with the Bank of Industry, as well as the international development and investing communities and entrepreneurs.

To create awareness on the numerous investment opportunities in Oyo State with a view to attracting more private investment flows into key sectors of the State

To highlight the Government’s priority areas for investment promotion. These include:

1. Agriculture

2. Transportation Infrastructure

3. Manufacturing and Small to Medium Enterprises

4. Solid Minerals

5. Culture & Tourism

6. Power

3

Outline

This presentation will throw light on the following:

History and Economic Profile of Oyo State

Strategic Vision for Oyo State

Priority Sectors and Opportunities for Investment

Incentives for prospective Investors in Oyo State

4

Oyo State’s Antecedents

First University

Cocoa House

We have been known to set the pace in the following areas:

First Sky Scrapper in Africa

First Industrial Estate in Nigeria

First University in the Country

First Stadium in Africa

First Television Station in Africa

Host to one of the first sets of University Colleges in Africa

One of the oldest states in Nigeria

And many others

Historically a Pacesetter State…

Large arable land – 27,107.5km2 (approximately 10,466 square miles)

Large population of about 6.7 million with diverse skills and expertise

Access to world class educational and research institutions (UNIBADAN, NISER, IITA, etc.)

A number of natural tourist attractions

Large deposits of solid mineral resources

…With abundant and largely untapped resources

5

Over the years, certain potentials have also been identified in the economic landscape of the State...

Economic Profile and Comparative Advantage of Oyo State

Feature Statistics Rank*

Land Area 27,107.5km2 • 1st in South West, Nigeria

Population Approx. 6.7m• 2nd in South West,

Nigeria

Gross State Product (GSP)

Approx. $1.7b• 3rd in South West,

Nigeria

Per Capita GSP $276• 4th in South West,

Nigeria

Research InstitutionsOver 5 world-class research institutes

• Highest in the South West

Civil Service Population 38,185 people• 2nd highest in the South

West

Emerging middle classSignificant market for product uptake

• 2nd highest in the South West

*Source: Economic Associates 2010

Popularly known as the “Pace Setter”

Oyo State: The Pace Setter

6

A review of the challenges and opportunities in Oyo State unveil the following…

Poor infrastructure especially in the rural areas including electricity, transportation, etc

Low productivity and value chain addition especially in agricultural production and processing

High rate of unemployment among youths and women

Ageing farming population

Inadequate funding especially for major/large projects

Shortage of technical expertise in the public sector to drive a private sector led economy

Challenges

Numerous investment opportunities in agricultural production, agro-allied industries and marketing of agricultural produce

Potentials for tourist attractions and development of the hospitality industry in the State

Exploitation and processing of solid minerals

Opportunities for infrastructural development – Logistics Center, Dry Ports, Free Trade Zone, and Okerete Transnational Border Market

Availability of a large market with a population of over 6.7 million people

Proximity to Lagos air and sea ports

Opportunity to leverage on abundance of skilled but low cost labor in the State

Higher security of life and property as well as a peaceful environment as necessary ingredients for investment flows

Relatively low cost of living fosters low overall cost of doing business

Opportunities

Despite these challenges , enormous economic opportunities abound

7

Having analysed the Opportunities and Challenges, this is our desire for Oyo State…

Our Vision“A State in which people can be the best they can”

Our Vision“A State in which people can be the best they can”

Strategic Objectives

Determined to make the state physically functional, economically vibrant, socially harmonious and aesthetically

delightful

Preferred destination for national, regional and international trade, investment flows and leisure activities

Agro-based economic nerve center for the West African sub-region

Good governance (participatory, transparent and accountable), effective and efficient service delivery

Prime center for the development of critical technical and vocational skills in specialized areas such as agriculture,

manufacturing and craftsmanship

The Restoration Agenda

Ground Zero

Ground Minus Zero

Before this administration

Where We Are Now

Where We Should Be

The Pace-setter State

Repositioning

Transformation

Restoration

8

Some of the ongoing economic/ business-friendly initiatives of Oyo State include…

Establishment of a PPP Unit

Enhanced e-Governance Initiatives

Establishment of a functional socio-economic management team for the State

Preparation of a 10-year Development Plan in progress

Effective and efficient monitoring and evaluation framework for the State

1

2

3

4

5

Steadfast promotion of partnership with the Development community6

Government has no business in business

9

Oyo State is willing to partner with Investors in exploiting the opportunities in these sectors

AgricultureTransportation Infrastructure

Culture & Tourism/ Hospitality

Solid Minerals

Highlights of the current state of each sector and the aspiration of the State for each of the key focus sectors are presented in the subsequent slides

Manufacturing & SMEs

Power

10

Sectoral ReviewAgribusiness and Food Processing – Current State

• Agriculture is the major occupation and source of income for a larger portion of the people of Oyo state.

• Oyo State is the 12th largest crop producing state and 15th largest livestock farming state in Nigeria.

The State produces well below its full potential due to the following issues:

– Ageing Farming Population

– Up to 30% post harvest losses due to poor harvest handling/ storage facilities

– Sub optimal agricultural value-chain (lack of processing companies)

– Large scale subsistence farming

– Inadequate infrastructural facilities and outdated farming methods due to lack of finance

– Sub-optimal utilisation of dams for irrigation in the state

– Unavailability of managerial expertise amongst others. • Agricultural produce in the State includes:

– Tree crops such as cocoa, oil palm; Arable crops such as cassava, yam, maize, rice and Fruit crops such as pineapples, orange, lime, pawpaw, tangerine, guava, banana and tomatoes, etc

• Livestock farming is carried out on a small-scale basis.

11

Sectoral Review Agribusiness and Food Processing – Ongoing Initiatives & Investment Opportunities

Goal

To make agriculture a major driver of growth for the state’s economy, ranking amongst the top 5 agricultural producing states through a profitable, sustainable and technologically driven agricultural sector

Ongoing Initiatives Construction of three agricultural storage silos (10,000 metric tonnes each) Preliminary plans for the establishment of canning/ processing factory for key crops Ongoing resuscitation of farm settlements and school farms in the State Commercialisation of the Government-owned Fashola Farm Plans for the development of a 1,377 hectare logistics centre which would be expanded to

15,000 hectares

Investment Opportunities

Agriculture Fruits and vegetable production Arable crop production Aquaculture activities Livestock farming Farm machinery leasing

Agro-Processing – Value Chain Additions Food and Cash crop processing i.e. cassava, oil palm, cocoa, maize, yam, etc. Tomato paste and fruit juice processing – through the establishment of canning factories Silo and storage facilities building and operations

12

Sectoral ReviewSolid Minerals – Current State

• Oyo state is endowed with soil-based resources which include granite chips, red clay , sand and gravel that have high potentials in the construction industry

• The State also has mineral resources including Amphibolites, Marble, Dolomite, Tantalite and Talc

• Oyo State is and currently ranks 7th in terms of solid minerals production in Nigeria however, the potentials are yet to be fully explored

• The state is also renowned for its impressive gemstone collection and deposits

Mineral Industrial Linkage Key Demand Markets

Marble and Dolomite

Cement Works, Construction

India, China, France, Hong Kong

Tantalite Electronics Brazil, UK, Colombia

Tourmaline JewelryUS, UK, China, Hong Kong, Brazil, Canada

Gold JewelryIndia, China and Saudi Arabia

Although there are over

10 solid mineral types in

Oyo State, the following

are strategic and posses

significant international

industrial linkage

Majorly, current exploitation is

focused on marble. Thus leaving

significant potential for the exploitation of other available mineral resources

13

Goal

To significantly leverage the extensive solid mineral potentials for socio economic development of the State

Ongoing Initiatives Plans for the establishment of a center for the processing of gemstones in

Oyo State

Sectoral ReviewSolid Minerals – Ongoing Initiatives & Investment Opportunities

Investment Opportunities

Exploitation of available mineral resources especially with the proven reserves of granite, marble & dolomite, kaolin, etc.

Investment in large scale industrial ventures and industrial clusters

Local and international trade of commodities in the State: Solid minerals

Opportunity to participate as a player in the logistics center which will ultimately be developed into a Free Trade Zone

14

Sectoral ReviewTransportation infrastructure – Current State

Transportation in Oyo State is largely by land. Key transport infrastructure issues include:

Inadequate Road Network

• Over 1,150km length of Federal Roads in the State

• Over 2,345 tarred roads in the State

The State’s road network is still largely inadequate to support the large population, especially in the major cities.

Non-Motorable Roads

A number of the major city roads are not motorable leading to frequent motor accidents and traffic congestion.

Low Investment

Low investment in the rehabilitation and maintenance of existing infrastructure have resulted in low levels of access to basic amenities and high costs of doing business in the State.

• The State has an airport in Ibadan, however the airport is currently sub-optimally utilised

• Rail transport in Oyo State has ceased to be relevant in recent times although there are ongoing efforts to expand the rail facility in the State

15

Goal

To provide quality infrastructure and transport services for socio-economic transformation and sustainable development of the State

Ongoing InitiativesConstruction of modern terminusOngoing plans for the development of a master plan for Oyo State “Keke Ajumose” scheme which provides tricycles to riders under the umbrella body of their

associationConstruction, upgrade & beautification of various roads within the metropolis (Circular road)Planned construction of flyovers at key traffic interchanges

Sectoral ReviewTransportation Infrastructure – Ongoing Initiatives & Investment Opportunities

Investment Opportunities

Conversion of the under-utilized Ibadan airport into a cargo airport under a sustainable PPP model

Construction/rehabilitation of major roads under public private partnership

Deployment and Implementation of a mass transit scheme through a sustainable PPP model

Provision of multimodal transport services, including multi-storey car parking facilities

16

Sectoral ReviewManufacturing & Small – Medium Scale Enterprises (SMEs)– Current State

• Oyo State currently accounts for less than 1% of total manufacturing in Nigeria. However, Ibadan is the industrial hub of the State with over 60% of the State’s manufacturing output

• Oyo state contributed N4.2 billion to the total national revenue from manufacturing, making it the third highest in the south-western region.

• Oyo State’s manufacturing industries currently operates below 20 percent capacity

• A number of big players in the manufacturing industry have established businesses in the State. Some of such key players include

Nigerian Breweries Plc

British American Tobacco

Procter and Gamble

PZ industries

Various printing & publishing organisations

• Oyo State ranks third among south-western state and 14th overall in the country with respect to dependence on trading

• Oyo State has embarked on the establishment of enterprise zones across the State in a bid to have a structured market model to take care for unskilled workers and artisans

17

Goal

To encourage and attract small to medium scale businesses and manufacturing from within and outside Oyo State.

Ongoing Initiatives

Ongoing activities toward the development of a Free Trade Zone to promote and develop manufacturing industries amongst others

Provision of incentives (such as land etc.) to attract foreign businesses and manufacturing companies

Ongoing plans for the facilitation of micro-finance loans to SMEs

Sectoral Review Manufacturing & SMEs – Ongoing Initiatives & Investment Opportunities

Investment Opportunities

Public Private Partnership arrangements with the State Government resuscitate and manage the State-owned companies into commercially viable entities:

(a) Cashew-nuts processing

(b) Juice &Tomato processing

(c) Electric Products manufacturing

(d) Paper milling

Establishment of new manufacturing industries to take advantage of the numerous available resources in the State

18

Sectoral ReviewPower and Energy – Current State

• The demand for electric power in Nigeria is estimated at a very modest 20,000MW, but we are only able to generate 4,000MW at the peak of our power generation

• Oyo State in line with the general trend in the Country has constantly suffered huge supply gaps in a bid to meet electricity demand

• The Ibadan Distribution Company draws approximately 11.5% of electricity from the National grid which is shared amongst five States and as such barely meets the demand

• Despite huge supply gaps, monthly revenues for the Ibadan distribution company are in excess of $9.6m monthly.

• Oyo State has potential for power generation through the exploitation of the power generation capabilities of the Ikere gorge, one of the 17 dams in the State which has a capacity of generating about 450MW of electricity.

• Oyo State is also home to Nigerian Cables and Wires producing housing wires, armored cables, bare conductors, telecommunications cables and customised cables

• Oyo State has the potential to support the retail distribution of electricity through the manufacturing of electric poles by Conpole limited, a company with majority share ownership by the State

• Conpole (equipped with requisite equipments for production) has over the years performed sub-optimally and currently moribund.

19

Sectoral Review Power and Energy – Ongoing Initiatives & Investment Opportunities

Goals

To promote industrialisation and ensure stability of power supply in the State through IPP projects and embedded power generation

Ongoing Initiatives Ongoing discussions with private sector players for the possibility of power generation in the

State through the Ikere gorge dam Discussions with interested parties for the resuscitation of Conpole

Investment Opportunities

Private sector investment in the Ibadan Distribution Company – following the renewed drive by the Federal Government to complete the privatisation process of the unbundled PHCN companies by 2012

Investment in power generation through the establishment of independent power projects and captive power generation

Technical support to tap the 450MW potentials in the Ikere Gorge Dam as well as optimise other dams and rivers for hydroelectric power generation

Manufacturing of electrical materials from the availability of materials locally

Solar power generation

20

Sectoral ReviewCulture & Tourism/ Hospitality – Current State

• Potential tourist attractions that have historical, cultural and artistic appeal in Oyo State include:

Ado – Awaye Suspended Lake

Captain Bower’s Tower, Ibadan

Royal Forest (Igbo- Oba) in Igboho;

Old Oyo National Park

Rock formation (Agbele hill) in Igbeti

Sogidi Lake in Awe

Alaafin’s Palace, Oyo

Agodi Park and Gardens, Ibadan

Samuel Ajayi Crowther’s Birth Place

University of Ibadan Zoological garden

National Museum, Ibadan

Alagba – The 324 year old tortoise in Soun’s Palace in Ogbomoso

Many of the tourist sites require investments in terms of infrastructural and aesthetic upgrade in order to attract sufficient tourism traffic in the state

Old Oyo National Park

• Tourism in Oyo State (hotels and restaurants) contributes 0.49% to the State’s GSP, which translates to about N1.2b in 2010 (approx. $7.5m).

• There is currently one UNESCO heritage site nomination in Oyo State. The Old Oyo National Park nominated since 1995

Alagba, 324 year old Giant Tortoise in Soun’s Palace, Ogbomoso

Erected in honor and memory of Captain Bower, the first resident colonial Administration of Oyo group of provinces in December 1936 as a result of his effort at maintaining peace and social development in the whole of Yoruba towns and cities.

Captain Bower’s Tower

21

Goal

To make Oyo State a preferred destination for tourism and leisure activities in Nigeria

Ongoing Initiatives

Signing of an MoU with hotel developers for the development of 2 world class hotels in the State which together with existing hotels barely meet the market demand in the State

Renewed drive towards the development of tourist sites in the State

Sectoral ReviewTourism/ Hospitality – Ongoing Initiatives & Investment Opportunities

Investment Opportunities

Public Private Partnership arrangements with the government to develop and manage existing tourist sites

Establishment of new tourist sites such as amusement and theme parks.

Provision of necessary support services such as

Accommodation: Many of the hotels in Oyo are below international standard and in most instances do not have standard facilities to support the demands of visiting tourists.

Restaurants, Bars: Most of the state’s tourist sites presently have little or no entertainment facilities such as restaurant and bars which are required to attract tourists.

Tour operators: Owing to its undeveloped tourism industry, there are presently no tour operators to provide tourist packages in Oyo State

22

The Federal Government of Nigeria along side Oyo State has put together exciting incentives to attract investors who are willing to play in the focus sectors…

• Pioneer Status: 100% tax holiday for up to seven years granted to qualified eligible industries located in economically disadvantaged local government areas of the Federation

• Corporate Tax Relief: Tax relief of up to 120% of expenses on research and development carried out in Nigeria and are connected with the business from which the income or profits is derived

• Liberalisation of Ownership: investors can own up to 100% equity shares in any company

• Repatriation of Profit: Foreign investors are free to repatriate their profit and dividends net of taxes

• Guarantees against Expropriation: There is a guarantee that no enterprise will be nationalised by any government in Nigeria

• Minimum Local Raw Material Utilisation: A tax credit of 20% is granted for five years for industries that attain the minimum level of local raw material sourcing and utilisation

• PPP Incentives: The State is willing to partner with private investors to increase production capacity, and deliver quality infrastructure across various sectors

• Access to land: Prompt access to land through timely issuance of relevant land title documents

• Land at Discounted Rates: Available at highly discounted rates as incentives for investors

• Personal Tax Relief: Availability of personal income tax reliefs of players in priority sectors of the State

• Provision of Infrastructure: Provision of support infrastructure (where required) e.g. access roads, as part contribution of the State towards large projects.

• Expeditious Processing: Expeditious processing of required regulatory consent and other regulatory requirements

• Guaranteed Security: Extremely successful working relationship with security agents

Federal Government Incentives Oyo State Government Incentives

23

Soliciting for the Sustainable Partnership for the Development of Oyo State

Let us join hands on our drive to tap the significant potentials, create wealth for both the investor and the people of Oyo State.

We look forward to welcoming you into Oyo State!

• At this juncture, and on behalf of the Oyo State Government, I extend our unreserved invitation to willing investors interested in taking advantage of the numerous opportunities that abound in the State

• Please join us in unearthing the significant untapped wealth that our State possesses