Long known as one of the world’s most prolific sources of oil, Nigeria is trying to diversify its economy by seeking U.S. investment in agriculture, health care and entertainment.
“Nigeria is in some ways the poster child,” said Terence McCulley, the U.S. ambassador to Nigeria. “Incredible opportunity, but considerable risk.”
McCulley was in Houston this week as part of a four-city swing with a group of Nigerian business executives courting investors as part of an Obama administration initiative to promote business with Africa.
The group was also scheduled to visit New Orleans, Orlando and Atlanta.
Fossil fuels have long been a draw for western companies and account for 70 percent of foreign exports.
“Oil is always going to be an important part of the economy,” McCulley said.
The CIA’s World Factbook ranked Nigeria 10th in proved reserves of crude oil globally, with 37.2 trillion barrels, as of January 2011. (Saudi Arabia ranked No. 1; the United States ranked No. 13.)
McCulley said the country also has 180 trillion cubic feet of natural gas reserves.
But oil has been found elsewhere along the coast of western Africa in the years since McCulley entered the foreign service in the 1980s, and he said that could ultimately force changes in Nigeria, which has tried for the past six years to create a new national oil company with a separate regulatory body.
The latest effort failed in 2011, although he said the effort continues.
“All up and down the west African coast, there are huge deposits of oil being found,” he said. “That’s an important lesson for Nigeria, because global markets are global.”
Nigeria’s enormous reserves give it power, McCulley said, but the new discoveries also give it an incentive to change.
For many western companies, both energy companies and those in other industries, the biggest change would be for more security.
McCulley acknowledged that it is a legitimate concern as are issues about corruption and whether contracts will be respected.
He said the government elected last year has pledged to deal with the issues.
And while security, especially in the north and in the oil-rich Niger Delta, remains a problem, he said it has improved.
As evidence, he said oil production in the delta has increased from about 800,000 barrels a day in the mid 2000s to about 2.3 million barrels a day, which he said is at least partly due to better security.
“There still are kidnappings,” he said. “There still are places you should avoid after dark. But you can take security precautions. You can do business in Nigeria.”
In Houston, McCulley said he met with members of the city’s large Nigerian community, as well as with business leaders to encourage investments in agriculture, health care and other sectors of the Nigerian economy. One private hospital is looking for a hospital management company, hoping to stem the flow of Nigerian patients who travel to Dubai and elsewhere for surgery and other treatments, he said.
But the trip isn’t really about selling the country, the largest in Africa, McCulley said.
Instead, he said he is hoping to help Nigerian business leaders form relationships with their U.S. counterparts.
“I’m interested in raising people’s consciousness,” he said. “I think American and other investors think this is just too hard, but Africa is more than that.”