With a population of over 120 million, every fifth African is a Nigerian. The country has however been unable to actualize its full potential for growth and development due to military intervention in governance. The return of democratic rule in 1999 marked a new period of concerted effort to develop and manage the country’s huge human and materials resources to their full potentials.
In line with developments across the world and recognition of the fact that it cannot alone bear the cost of developing and modernizing the country, the government has opened the country to private local and foreign investors. The huge investments that poured into the country in the last 5 years confirm returns on investments are among the highest in the world.
One area that holds tremendous opportunities for investment in Nigeria is the Water Resources sector where the Federal government alone has committed nearly 300 billion Naira (over 2 billion dollars) in the past 5 years. This huge spending on the sector was necessary because only about 30 percent of Nigerians had access to potable water in 1999. Today, thanks to the sustained effort of government, nearly 60 percent of Nigerians have water.
The Nigerian government recognizes that water is vital for domestic, agricultural and industrial use but due to competing demands for scarce resources, it would be unable to provide the finances it required to optimally develop the sector. This is why the government has indicated its willingness to allow the private sector participation in the development and management of Nigeria’s huge water resources potentials.
And unlike in the past when military dictatorships made it difficult to guarantee investments in Nigeria, the climate for foreign investment has never been better. This is a fact testified to by investors in the petrochemicals, communications, manufacturing and services sectors. It is a matter of record that returns on investments in Nigerian are one of the highest in the world.
The logical question therefore comes up: What are the investment opportunities available in the development and management of Nigeria’s water resources and other related sectors? Can investments be guaranteed and if so, what are the expected returns?
Nigeria has vast surface water resources, receiving a very large part of her water from drainage arteries of west and central Africa. It is a well drained country with a close network of rivers, lagoons, lakes and streams, most of which carry less water in the dry season. The major surface water resources are the Niger River system, Lake Chad and Cross River, in that order. In all, the country’s surface and groundwater resources are estimated at 267 and 52 billion cubic meters, respectively.
One of the areas in the water resources sector most open for investment is in water supply. Nigeria’s remarkable success in improving water supply coverage from 30 to 60 percent is built around the need to bring about immediate relief for the long-suffering masses. This necessarily is based on drilling of boreholes. The government plans an integrated approach to sustainable water resources development and requires private investment to actualize this strategy. The population is fast growing especially in urban conurbations and studies have proved that Nigerians are ready to pay for effective water supply delivery. Working with local partners, the potential in this area is huge and largely untapped. The French approach to water resources management and similar models will work excellently.
To develop water resources on a sustainable basis for treatment and reticulation, emphasis is being placed in the construction of small and environmentally friendly dams and reservoirs, which receive renewable water. Some of the Nigeria’s over 200 dams are too large to be managed and maintained effectively (Tiga Dam in the Northern state of Kano has more water that all of Israel) the government therefore plans to decentralize dams and sources of water and construct hundreds of small environmentally friendly dams across the Nigeria to facilitate water supply and irrigation. This represents another area of business for interested investors.
Furthermore, the harnessing, treatment and reticulation of water supplies from these dams represent another opportunity for investments because these activities depend on pipelines, the manufacture of which becomes essential. To cover the large landmass of the country and its huge population in urban, semi-urban and rural areas, millions of miles of pipelines are required. The huge market potential is better imagined.
Even as the integrated water resources development of the country is on course, huge regional variations in precipitation and availability of water means that boreholes will continue to play a crucial role in water supply. More often than not, boreholes depend on electricity or diesel, which are either erratic or too expensive. The most viable alternative therefore is solar powered boreholes. Due to the fact that solar panels are cost effective and require almost no maintenance, any investor who goes into the manufacture or assembly of solar panels capable of powering boreholes and water treatment facilities would be tapping into a gold mine.
The new government focus on the spread of dams for effective coverage means that smaller, possibly mobile water treatment plants would be required by the states and local government areas whose responsibility is the task of providing residents with treated water. Any firm that sets up a factory for the manufacture or assembly of this innovative, low-cost technology, especially in any of Nigeria’s duty free export processing zones will have a huge market not just in Nigeria but the whole of Africa.
In the same manner, tremendous opportunities exist for the manufacture of water treatment plants, most of which has to be imported at huge cost. Nigeria has huge deposits of kaolin, which can be easily extracted and processed for water treatment. As emphasis on boreholes reduces, focus will shift to the harnessing of renewable surface water supplies, which have to be treated before reticulation. Here too, investment opportunities abound.
Nigeria has some of the most spectacular and beautiful dams in the world. Of the over 200 that currently exist in the country, a third are not in direct use and therefore lend themselves to use for tourism and recreational activities such as yachting, fishing and other water games. With a fine, warm temperature all year round, the potential to attract tourists from all over the world strongly invites.
For a country that no longer depends on the vagaries of weather for agricultural development, the country’s many dams also represent important investment opportunities in the area of irrigated agriculture. The Nigerian government has indicated its readiness to lease out these dams to interested parties on short or long term basis for use in food production.
A huge local market exists for food and agro-allied products and even for export. A sure bet in this area is the cultivation of cassava which has proved to be a viable alternative for use as animal feed, due mainly to Europe’s experience with the mad cow disease, BSE.
Conclusively, these are just some of the many opportunities begging for interested investors in the water resources sector of Nigeria. The Federal Ministry of Water Resources is keen to engage prospective investors and provide them will all information and guidance required to ensure fruitful working relationships. The climate for investment has never been better and returns on investment higher. The county has the required manpower to partner and participate in any investment activity to ensure returns because investing in Nigeria today will provide a foot hold in Africa, which for all intents and purposes is the last best frontier for global investment.
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