- The Nigeria-Saudi Business Council could see the Middle Eastern country fund several sectors of the West African economy.
- Through the council, the Kingdom of Saudi Arabia plans to replicate various investments made in Pakistan, Indonesia, and India in Nigeria.
- Africa has increasingly become the subject of high competition between global economic powers.
Nigeria anticipates multi-billion-dollar “immediate” investment flows from the Kingdom of Saudi Arabia. This follows the signing of an agreement between the countries to establish a business council. The Nigeria-Saudi Business Council could see the Middle Eastern country fund several sectors of the West African economy. These include technological advancements, telecommunications, energy, oil and gas, and agriculture.
The two countries resolved to restore the Nigeria-Saudi Business Council. Crown Prince Mohammed bin Salman Abdulaziz proposed the Business Council in 2019. However, the former president of Nigeria, Mahammadu Buhari, resisted the council.
“We expect to see significant investment flow immediately,” Abubakar Atiku Bagudu, Nigeria’s minister of budget and economic planning, said in an interview in Riyadh after a business round-table between the officials of Saudi and Nigeria.
Closing deals through the Nigeria-Saudi Business Council
Through the council, the Kingdom of Saudi Arabia plans to replicate various investments made in Pakistan, Indonesia, and India in Nigeria. According to the minister, these investments could be worth several billion dollars. However, the minister did not state the exact figures they expect from the investment inflows.
According to Bagudu, several companies, including the Saudi Agricultural and Livestock Investment Co, have committed to close various deals with Nigeria by the end of 2023. Nigeria’s minister of Agriculture held talks with his Saudi Arabia counterpart and Salic executives.
“They told us that they are in the process of making additional investment decisions in Nigeria, which they hope to close before the end of the year,” the minister said.
The oil-rich Middle Eastern economy has reiterated that it is finalising investment plans that will see officials from the Kingdom close several deals when they tour Nigeria by the end of December 2023.
“We know you are ready for business, so we do not want to come to Nigeria for any exploratory discussion. We are coming for implementation, it’s an action visit. It will be to sign and begin delivery on all agreements,” Saudi Kahlid El-Falih, Arabia’s trade and investment minister, told Nigeria’s President Bola Tinubu during the business round-table.
Support for Nigeria’s foreign-exchange reforms
Moreover, Nigeria and Saudi Arabia have made several cooperation and investment deals. The deals include a Saudi Arabia’s government pledge to invest, offering financial support for the country’s foreign exchange reforms. According to Nigeria’s information minister, Saudi Arabia plans to provide “substantial” financial support for Nigeria’s foreign exchange reforms process.
“To support the central bank’s ongoing reforms of Nigeria’s foreign-exchange regime, the Saudi government will make available a substantial deposit of foreign exchange to boost Nigeria’s forex liquidity,” Information Minister Mohammed Idris said in a statement without providing specifics on the funding. The pledge came in a meeting in Riyadh between Nigeria’s President Bola Tinubu and Saudi Crown Prince Mohammed Bin Salman.
Since June, the Nigerian government has allowed the naira to trade more freely against the dollar. This move has resulted in a 40 per cent devaluation. Consequently, the government seeks to attract more dollar inflows and improve liquidity, which dried after years of pegging the naira against the dollar. Meanwhile, the parallel market flourished against an inflexible official exchange.
The authorities are trying to clear a backlog of dollar demand that the Nigerian government estimates at $6.7 billion. The hard currency shortages have led to the naira hitting record lows on the official and parallel markets.
“Prince bin Salman commended the economic reforms being implemented by President Tinubu, and expressed the commitment of the Saudi government to supporting these reforms,” Idris said.
President Tinubu’s commitment to a free market economy
In response to the expected investment from the oil-rich nation, President Bola Ahmed Tinubu assured Saudi Arabian investors that Nigeria “will not disappoint” them, committing to a free market economy. Tinubu spoke on Saturday in Riyadh, Saudi Arabia, after meeting with the country’s captains of industry, according to communication from Ajuri Ngelale, presidential spokesperson.
Market forces of supply and demand drive a free market economy, as opposed to the one regulated by the government. In a free market economic system, sellers do not face trade barriers as the government does not control resource allocation or exchange.
At the meeting with the Saudi government, Tinubu also said Nigeria is open to doing business, reiterating that his government has removed all bottlenecks.
“I believe in the full application of free market economics. Your money will flow easily in and easily out. The arbitrage around our nation’s old foreign exchange policy regime and the corruption that was associated with it is also gone,” the president said.
“We took on those bold endeavours from day one in preparation for serious investors like you seated here. The most significant opportunity for any entity to prosper lies in its human capital. My team is prepared.
“We can produce. Our market is full of brilliant Nigerian youths, highly educated, industrious, and passionate about innovation and engagement with world-class services.
“The navigation of the ship of this great nation lies in the membership seated here. We are ready to answer all of your questions directly, even into this night, if need be. “The sky is not just the limit, but the destination for our two countries and peoples.”
Additional investments from Saudi Arabia
Saudi Arabia also plans to invest in the revamping Nigeria’s oil refineries. State oil company Aramco will spearhead these investments. The upgrades will be completed within three years.
Through the Nigeria-Saudi Business Council, the Kingdom will consider additional investments in other sectors, including renewable energy and agriculture. Nigeria and Saudi Arabia will spend the next six months developing a blueprint and roadmap for the proposed investments.
Saudi Arabia’s economic interests in Africa
Africa has increasingly become the subject of high competition between global economic powers. The US, Europe, India, China, Russia, and Saudi Arabia want to make economic and political inroads. Global leaders are keen to take advantage of the opportunities available in Africa. Africa has some of the world’s fastest-growing markets and natural resources critical to the future economy.
The million-dollar investments in Nigeria form part of the Middle-Eastern economy’s economic interests in Africa. Saudi Arabia has committed millions of dollars in investments and loans to African economies. Riyadh seeks to expand its political influence on the continent while taking advantage of the available commercial opportunities in Africa.
Speaking at the Saudi-Arab-African Economic Conference in Riyadh, a forum that brought together leaders from 50 countries in Africa and the Middle East and aimed to strengthen ties between the Kingdom and the African Union (AU), the Saudi Arabian finance minister Mohammed Al-Jadaan emphasised the diplomatic and economic importance the government has placed on Africa.
“We have established partnerships with Africa to expand in several sectors and the Kingdom supports more than 400 projects in the African continent,” he said. “The Kingdom is keen to consolidate its relations with the African continent, which is one of the most important axes for the future of the global economy.”
Al-Jadaan noted that African markets are also “one of the priorities of the Public Investment Fund (PIF),” the Kingdom’s $700 billion sovereign wealth fund. Similarly, Saudi investment minister Khalid Al-Falih later added that PIF will make “game-changing” investments in Africa.