President Goodluck Johnathan
President Goodluck Jonathan, some days back, said the global community has come to realise that Nigeria is the new investors’ haven. However, a day after his assertion, a report indicated that the country has lost N1.33 trillion Foreign Direct Investment (FDI) owing to the security challenge posed by the Boko Haram Islamic sect, writes Assistant Editor OLUKOREDE YISHAU
Six days ago, Saudi billionaire Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud was a guest of President Goodluck Jonathan. The Prince, who is ranked by Forbes, Time and many other influential publications as one of the most influential investors in the world, said hisKingdom Zephyr Africa Management Company was set to invest in the country.
Alsaud, who is Saudi’s richest man, said: “Any investor in Africa who does not come to Nigeria has not started and has a long way to go.’’
He said his company was interested in hotels, banking, oil, and cement production in most African countries.
“I want to activate a strong relationship with Nigeria in whatever area we may find suitable and funds are not a constraint,” he said.
Jonathan directed the Nigeria Investment Promotion Council (NIPC) to facilitate investment relations between Alsaud’s company and Nigeria.
Jonathan said: “With a population of 167 million, a robust economy, extensive oil and gas reserves, a largely un-exploited petroleum downstream sector, Nigeria is the ideal place for serious investors. There are also opportunities in such strategic sectors as agriculture, energy and mining, with a robust plan by government to transform the nation.”
The president was silent about the challenges facing businesses in the country, such as epileptic power supply, growing insecurity, infrastructure deficits and high cost of doing business.
A day before Alsaud’s visit, another man rated by Forbes as one of the world’s influential businessmen, Alhaji Aliko Dangote, toed the Prince’s line.
Dangote said: “People forget that whoever captures the Nigerian market actually captures the entire ECOWAS region’s market. It means you are producing for over 300 million people. I keep on telling people that if I have $20 billion, I will invest everything in Nigeria because there are so many sectors one can invest in.”
President Jonathan, not surprisingly, said the country was the best place to invest. Speaking at the 17th Nigerian Economic Summit (NES) in Abuja, he said: “There is now as a global understanding that Africa and Nigeria, in particular, is the new investors’ haven. We are taking necessary steps to put in place appropriate legislation to guarantee and protect your investments.”
Jonathan, Alsaud and Dangote had hardly finished painting the Nigerian economy in glowing terms when the World Investment Report (WIR) of the United Nations Conference Trade and Development (UNCTAD) was released. It indicates that the economy has lost N1.33 trillion Foreign Direct Investment (FDI) owing to the security problem posed by the Boko Haram Islamic sect—which Jonathan wants investors to ignore and pump their money into the economy.
The report indicates that FDI flows to Nigeria fell to $6.1 billion (N933.3 billion) in 2010, a decline of about 29 per cent from the $8.65 billion (N1.33 trillion) realised in 2009 fiscal year. It shows that FDI represented about 78.1 per cent drop from $3.31 billion in 2009.
Statistics from the 2010 annual report of the Central Bank of Nigeria (CBN) show that the total foreign capital inflow into the Nigerian economy in 2010 was $5.99 billion.
A new Forbes report on the country also supports the WIR statistics. Last year, the country was in the 87th position in investment-friendliness. In the 2011 report, it is on the 101st position in global business competitiveness, economic growth and development, a development analysts said is evidence that the nation’s economy is distressed and in search of re-engineering, refocusing and redirection.
The report, entitled “2011 Best Countries for Business Report”, released last month, rated Nigeria as one of the countries with least attraction for Foreign Direct Investment (FOI) among the 134 countries covered in the survey.
The rating, based on Gross Domestic Product ( GDP ), per capita income, corruption, technology and public debt records as well as innovation, property rights, and investment freedom, placed Nigeria far behind South Africa , Zambia and Ghana. South Africa was placed 40th; Zambia was 56th; and Ghana 72nd.
Nigeria was not mentioned in the top 10 African countries. It placed 11th among the African countries rated.
The World Bank estimates that Africa requires more than $90 billion annually in investment in maintenance and new projects, but is spending less than half of that. The bank estimates that the Nigerian manufacturing sector must bear additional indirect costs amounting to 16 per cent of sales because of bottlenecks in the business environment, much of it related to infrastructure. Losses due to power outages alone amount to 10 per cent of sales.
Certainly, many Nigerian investors still prefer to invest their money in Ghana than at home. Four days ago, the Ghana Investment Promotion Centre said 17 registered firms owned by Nigerians had invested 1.5 billion dollars (about N325 billion) in Ghana’s economy.
The agency’s Chief Executive Officer Mr George Aboagye, presenting the investment opportunities in Ghana at the ongoing 2011 Lagos International Trade Fair, said the investments were recorded between September 1994 and June 2011.
He said investments were expected to grow by $500 million (about N75 billion) by 2015. Such investments are in agriculture, manufacturing, building, liaison services, tourism and the general and export trade sectors.
He said Nigeria was his country’s 5th and 6th largest source of investment in terms of value and number of projects registered.
Aboagye said: “Ghana is richly endowed with human and natural resources. These resources present numerous business opportunities in oil and gas, agriculture, manufacturing, tourism, energy and property development. Whenever a Nigerian comes to do business, the knowledge and experience he brings always proved very useful to us in Ghana.”
He revealed the incentives with which his country has been luring Nigerians to include: relief from double taxation, location incentives of between 25 and 50 per cent tax rebates for manufacturing companies and automatic immigrant quotas, depending on the paid up capital.
Of recent too, many international airlines have found the Kotoka International Airport, Accra irresistible. The low cost of aviation fuel and other aviation related activities are the attractions for the airlines. The country’s decision to begin exploration of oil is also believed to have opened it up to more passenger traffic.
The National Co-ordinator and Chief Executive Officer, the Nigeria, China Business Council and Africa, Chief Matthew Uwakwe, urged the Federal Government to formulate policies that would encourage the private sector and create an enabling environment that would encourage foreign investment and make the cost of doing business cheaper.
He said: “The Federal Government must formulate policies that will encourage the private sector and create the enabling environment for them to thrive, if she is to be amongst the industrialised nations in the year 2020.
“No nation can develop without paying attention to SME. Because SME contributes 30 to 40 per cent of most countries, like Germany, United States and some European countries.”
Uwakwe said the Federal Government should diversify the economy by encouraging investment in the non-oil sector.
“We must develop non-oil based economy in favour of our economy. We should not have a nation that solely bases their revenue income on oil. We have a whole lot of solid minerals in the northern part of Nigeria and in some other states,” he said.
The US Ambassador to Nigeria Terence McCulley said the country still has to put some measures in place for the investors to troop into the country. He said: “Investors require a safe harbour for their investments. They want a place where the rule of law obtains, where contracts are respected, and where all companies enjoy a level playing field. Absent these conditions, investors are reluctant to engage, economic growth is less robust, and opportunities to create jobs are lost.”
A former National President, Association of National Accountant of Nigeria (ANAN), Dr. Sam Nzekwe, said the level of insecurity posed by the Boko Haram is preventing the inflow of FDIs into the country. Nzekwe said the sect’s activities have put the country on the group of terrorist nations, which is scaring foreigners away.
An international rating agency, Standard Poor’s Rating Services (SP) last week said the country’s economic climate was still risky.
The SP, in a statement, said: “Nigeria is a country with a high political risk, low GDP per capita, and large infrastructure needs, all factors that contribute to a volatile and risky operating environment for banks. Nigeria has large natural resources, low government debt, and high economic growth potential, which partly mitigate these risks. The slow recovery of the domestic economy has slowed credit growth and kept the stock market muted, limiting economic imbalances.”
Jonathan agrees there is need to make the business environment friendlier. He, however, believes that the indices on ground show that Nigeria is where to invest. He said: “There are many strong indications that the global community has renewed its confidence in our great country.
“Messrs. Fitch also affirmed the short term rating at ‘B’ and Country Ceiling at ‘BB’-. For me, this means that the effort we have made so far is yielding dividends. I can only but thank the organised private sector for supporting the government in achieving this target.
“We must, however, not relent in our effort. Instead, the recognition of our efforts by the ratings agencies should ginger us to be more diligent and strategically focused, in our response to the challenges we have as a country.”
Author: Chief Editor
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