Minister of Trade and Investment, Mr. Olusegun Aganga
The Federal Government Thursday disclosed a new regime of tax incentives targeted at supporting local investors in the Nigerian economy as well as to encourage more foreign investment flow into the country.
Minister of Trade and Investment, Mr. Olusegun Aganga, dropped the hint in Lagos at the on-going second edition of the Nigerian International Investment Forum (NIIF) organised by the ministry in collaboration with the Commonwealth Business Council (CBC).
The incentives are coming just as the Group Managing Director/Chief Executive Officer of Access Bank Plc, Mr Aigboje Aig-Imoukhuede, projected that by the end of this year, Nigerian banks would post a total profit to be equivalent to about 10 per cent of the aggregate profit of banks in the European Union.
Explaining the new incentives packaged in the form of tax credits, Aganga said going forward, companies that had invested in the development of infrastructural facilities such as access roads, power plants and water plants in the course of setting up their businesses are now entitled to tax credit of up to 30 per cent of the cost of generating the infrastructure.
Aganga described the initiative as a temporary relief measure introduced by the federal government to help cushion the debilitating effects of the challenges posed by the lack of infrastructural amenities in the country, which he described as a major setback to the inflow of investments into the country.
Another phase of the tax incentives, according to the minister, which is targeted at employment generation, provides tax reliefs for any employer that hires above 10 staff members.
The minister noted that for any 10 people employed by any company on a particular year, the employer gets tax credit for additional employments with more credits guaranteed if the employees are kept in the organisation further than two years.
“The federal ministry of works is currently working hard on the development of trade related infrastructure with a target time of completion of 2014. But before then we have introduced measures to cushion the effect of infrastructure deficiency one of which provides that any company that has invested in infrastructure will have tax credit of up to 30 per cent of the cost of generating the infrastructure,” he said.
Aganga also noted that the federal government had concluded plans towards fast-tracking the process of company registration in the country to less than 24 hours as has been achieved in Abuja.
He said the first step was to achieve the 24 hours target in Lagos, Kano and Enugu and then ensure that it becomes the norm even when you are registering the company from any other part of the world. He noted that the target for the achievement of the milestone is 2013.
“Investors like MTN took advantage of the opening up of the telecommunications industry in Nigeria while other global players were indecisive. Today those who failed to invest in the sector blame themselves when they see what MTN is making from its Nigerian operation.”
Meanwhile, explaining the comparative trend in profit in Nigeria and Europe, Aig-Imoukhuede, argued that about five years ago when the total profit posted by all European banks was about $60 billion, all the Nigerian banks recorded a combined profit of $386 million.
He, however, noted that in 2011, the figure changed significantly with the combined profit of all Nigerian banks climbing to $1.6 billion compared to an aggregate profit of $52 billion recorded by the European banks.
He said it was safe to project that by the end of 2012 the aggregate profit of all Nigerian banks would easily be up to 10 per cent of the total profit that would be declared by all the European banks.
Aig- Imoukhuede urged investors not to underestimate Nigeria’s economic potential and the profitability of business in the country.
“Nigeria cannot be ignored in the global business and economic scene for four major reasons, which include an extensive market; a rapidly growing economy; a stable political environment and a vibrant media and civil society sector,” he said.