Friday, 29th March 2024
To guardian.ng
Search

How Nigeria can attract huge foreign direct inflow, by report

By Helen Oji
09 October 2017   |   3:58 am
For Nigeria to attract meaningful Foreign Direct Investment (FDI) and enhance competitiveness, government must articulate an integrated policy that would unlock rapid development of transport infrastructure in Nigeria.

KPMG

For Nigeria to attract meaningful Foreign Direct Investment (FDI) and enhance competitiveness, government must articulate an integrated policy that would unlock rapid development of transport infrastructure in Nigeria.

This formed highlights of a new report issued at the end of a survey on “Doing Deals in Nigeria”, conducted by KPMG Professional Services, to ascertain foreign investors’ experiences in executing deals in Nigeria.Besides, the report also identified low level of transparency in Nigeria’s business environment as a major obstacle to FDI inflow, especially at the “due diligence” stage.

According to the KPMG report, the parlous state of road infrastructure in the country, especially those connected to the ports, has become a major concern to foreign investors, as the inadequacies pose a significant challenge for businesses, by adding substantial amount to time and ultimately increasing overall cost.”With only 20 per cent of roads being paved despite road transportation being the means of movement for 80 per cent of goods in the country leaves much to be desired. Much of Nigeria ‘s potential for economic growth remains untapped due to the chronic lack of electricity, which increases cost of domestic production.

“The country’s population is young and fast growing and companies are seeking to capture rising consumer spending. Nigeria is expected to remain Africa’s largest consumer market as income continue to rise, with fast moving consumer goods and food beverages companies set to benefit.

“However, there still exist challenges that need to be overcome. Underdeveloped infrastructure services push up operating costs, while a lack of transparency can cause unwanted delays in deal making process,” the report noted.Furthermore, the report observed that bribery and corruption regulations are not well developed in Nigeria, especially in the real sector, thereby exposing businesses to risks, but urged government to implement stricter controls and regulatory measures that would help protect businesses under such conditions.

Reviewing the report, the Africa Head, Deal Advisory and Private Equity, KPMG in Nigeria, Dapo Okubadejo, explained that international corporates and private equity investors are seeing new growth opportunities across a variety of sectors in Nigeria.

He noted that Nigeria is a growing market with increasing level of return generating opportunities across sectors., adding that this is attracting new investors’ from across the globe.He, however added that the constraints represents an investment opportunity, as government strive to seek private capital to finance huge capital projects especially infrastructure.

The Associate Director, Deal Advisory KPMG in Nigeria, Ijeoma Emezie-Ezigbo argued that transparency issues are difficult to overcome once the business have begun, as it creates inaccurate forecasts and can completely hamper business objective.

“There is notable low level of transparency in Nigeria’s business environment, which is a challenge for investors, particularly at the due diligence stage. Such opacity can make investing risky by clouding accurate forecasting and valuations.”

She stressed the need for government to ensure that Nigerian firms operate with high level of corporate governance and well-structured financial reporting standard to enhance ease of doing business in Nigeria.

In this article

0 Comments