* Investors attracted to Nigeria's growth, debt profile
* Gap between rich and poor rising, feeding insecurity
* Reforms to breach infrastructure gap too slow
By Joe Brock
LAGOS, March 1 (Reuters) - Roaring growth and fiscal stability are drawing investment to Nigeria, but it won't trigger the prosperity needed to lift millions out of poverty until the government reforms infrastructure and agriculture.
Africa's second largest economy and top oil producer has low debt by international standards and projected growth of around 7 percent for the next four years - a magnet drawing in both foreign direct and portfolio investors.
Oil production continues to attract large inflows. Shares in banks and in firms selling consumer goods to the continent's most populous nation are outperforming emerging market peers.
Yet investors remain reluctant to put funds into long term job-creating areas like agriculture or manufacturing until President Goodluck Jonathan makes good on promises to reform things like power, roads and the food industry.
"Investors will only begin to care once it becomes attractive to invest in those sectors so the government has to do their bit first," Renaissance Capital's Sub-Saharan Africa Economist Yvonne Mhango said at a conference last month.
"Transforming power and agriculture are long-term challenges," she said, adding that agriculture could attract foreign investors at the earliest "by the end of the decade if all reforms go to plan."
Planned agricultural reforms include direct subsidies for fertiliser handouts to farmers, free mobile phones and some more protectionist measures like higher taxes on food imports. Efforts to fix crumbling roads could have the greatest impact.
Agriculture employs around 60 percent of Nigeria's 170 million people, according to the statistics bureau, and makes up 45 percent of GDP, compared with just 15 percent for oil.
Yet it is in a mess. Poor roads mean a lot of produce rots before reaching domestic markets.
FDI ON A HIGH
Nigeria's foreign direct investment (FDI) is projected to continue rising, from $5.8 billion in 2011 to $6.8 billion for last year, once the figures are in, the International Monetary Fund says. The IMF projects FDI to grow to $7.3 billion this year, $8.7 billion next and $9.6 billion in 2015.
Yet much of this investment remains focused on oil and gas, which has never been very good at spreading wealth beyond a corrupt political elite.
"For a qualitative shift in FDI to occur, the authorities will need to speed up the implementation of structural reforms," Standard Bank's Samir Gadio said, citing state fuel subsidies and infrastructure as areas that were being reformed too slowly.
Economists have praised tight monetary policy from Central Bank Governor Lamido Sanusi and austerity measures implemented by former World Bank director Ngozi Okonjo-Iweala.
Foreign exchange reserves are at a 4-year high and Nigeria's excess crude account, which saves oil earnings over a benchmark price, has $8 billion in it, more than double when Jonathan took office. Credit rating agencies upgraded Nigeria last year and fixed income investment has soared since Nigerian bonds were included in JP Morgan's emerging market sovereign bond index last year, pushing T-bill yields down almost 5 percent.
Stocks are up almost 18 percent this year.
Despite a decade of fast growth, official figures suggested last year that absolute poverty was worsening, with 60.9 percent of Nigerians - around 100 million people - only able to afford the bare essentials of food, clothing and shelter in 2010, compared with 54.7 percent in 2004.
The World Bank's Vice President for Africa Makhtar Diop late last year said poverty had fallen as low as 46 percent, which could mean official statistics may be too pessimistic.
Either way, until investment gets refocused into areas that create jobs, poverty in Nigeria will remain stubbornly high.
Official unemployment is 23 percent and youth unemployment is more than double that, fuelling anger and unrest.
"I hear in Lagos they are building skyscrapers and the fat cats are getting richer. That's nice for them," says a frustrated Dauda Yahaya, 33, who runs a small grilled fish restaurant in the northern city Kaduna.
"All I need is for government to provide me with electricity and banks to lend me some small capital but it's impossible. I am someone who could give people jobs but no one is helping."