Undoing Nigeria’s FDI potential intentionally

Vice President, Prof. Yemi Osinbajo

As recently as February 2018, Vice President Yemi Osinbajo was cited MTN as a success story of Nigerian investment when he launched a policy laboratory, to accelerate the intervention of the Economic Recovery and Growth Plan (ERGP). If only there had been a foreshadowing of the woes that have subsequently been inflicted on MTN by Nigerian authorities – the Central Bank and the Office of the AGF! Having already paid a hefty $1bn in 2016 over unregistered sim cards, MTN has again been slammed with additional “regrettable and disconcerting” demands which have wiped nearly 25 per cent off their share value and were recently issued a $8.1 billion demand over concerns around repatriation of funds.

The Managing Director of Nigerian Sovereign Wealth Investment Authority, Mr. Uche Orji,has stated that the country requires $35 billion yearly over the next six to seven years to bridge its massive infrastructure gap- a major reason that Nigeria has been designated as the country with the largest number of poor people in the whole world as the pressure from a lack of resources in power, roads, education, healthcare and industrial capacity continue to erode the quality of life for an exploding population. Despite this shocking statistic, our government officials – career civil servants and political appointees alike – play hard and fast with one of the most globally effective tried and tested mechanisms for bridging these gaps; public private partnerships backed by foreign investment.

Anyone doing business in Nigeria runs up against what might be termed institutionalized gridlocks, with enormous political demands bordering on coercion and outright intimidation. Take Wale Babalakin (SAN), chairman of the Resort Group, a leading private investor, who can surely be described as having received some of the worst battle scars at the hands of government officials over his investments in critical sectors of the economy.Today, his ’MMA2’ airport terminal is the first to be built in Nigeria with private funds under a Build, Operate and Transfer (BOT) agreement with the Federal Government.

This same Federal Government through a parallel agency, daily violates the exclusivity terms of said agreement by running a domestic aviation terminal in direct competition with the privately funded one. Away from government pressure, one finds that PPPs are faced with a high degree of cynicism and public backlash from civil society and labour groups due to a perceived lack of transparency. These critics argue that privatizing key public sector services violates the Nigerian constitution. Private investors who usually have a high degree of foreign debt who’ll often find themselves dealing with the multiple pressures of inconsistent and unfavourable government policy as well as a high degree of public opprobrium from vested interests and fifth columnists which further undermines investor confidence.Additionally, many foreign investorsare in a perennial battle to legitimize their existence in the eyes of the media, frequently trying to explain to the people why their presence in the country is beneficial in the long term.
It’s probably impossible to analyze Nigeria’s complex mix of business, politics and cronyism. Venturing into these parts can be quite a risky business. UAE-based environmental utility group, Visionscape found themselves in the eye of a socio-political storm when it became clear to all that embattled governor Akinwunmi Ambode had not adequately addressed the convolutedpolitical patronage systems (designed at Bourdillon?) that were being supported by the previous ‘PSP’ system. One can only imagine the calls between Lagos and Dubai held after Speaker of Lagos State House of Assembly, Mr. Mudashiru Obasa, referred to the company as ‘a ghost not known to the state’! This disclaimer came on the heels of the foreign companyemerging after a controversial tender process which saw a number of local and international firms compete for Lagos state’s domestic waste collection amid a liberalisation of the waste management industry which many have argued is tantamount to destroying local investment.

Krispy Kreme was recently faced with consumer backlash and jeopardy of their multi-million-dollar investment by the Babatunde Irukera-led Consumer Protection Council who chose to investigate allegations of the US doughnut franchise using expired mixes in a ‘trial by social media’. Subsequent investigation by NAFDAC- the relevant agency for food and beverage regulation – found that the goods were within legal limits and tests proved the food products were fit for consumption. In other climes, this admission would have been announced with the same fanfare as the criticism but alas, our officials are accountable to no one. Krispy Kreme is now left to clean up the mess and do its own explaining to an already skeptical public.

Our intentional undercutting of FDI in Nigeria did not begin with this government or even the last one. When billionaire Richard Branson launched Virgin Nigeria in 2005 ago he was lauded by the then-government for bringing a credible national airline to a country with an appalling air safety record. By 2008, he accused Nigerian officials of ‘mafioso’ style tactics and we all watched the ignominious pull out and subsequent loss of a national carrier. Eleven years later, the federal government has ‘launched’ a new carrier with no technical partner, no known private investor and no aircraft – demonstrating very clearly the difficulty in finding credible investors given past form and antecedents.  Countries like the United States of America and many in Europe provide strong protection for all investors, both foreign and domestic. This is why for decades, the US has remained the number one destination for FDI, followed closely by the United Kingdom and China. Both Brazil and India also have top 10 positions due to active reforms that encourage FDI. Nigeria will need to do the same, and our legislators and courts have a role to play.

High level corruption on all levels will need to be addressed, as well as bureaucratic bottlenecks that make it nearly impossible to get anything done in a timely manner.

An administration led by a president who appears to drive economic and foreign policy through ‘body language’, seems unable to see the contradiction between multiple criss-crossing of the globe looking for ‘foreign investors’ while parastatals and other branches of government at the state and federal levels continue toharass, malign and misrepresent the ones that were intrepid enough to come here in the first place does not bode well for another four years of (mis)management!Indeed, the recent assertion by HSBC that the Nigerian economy has “structural shortcomings,” and should not continue in the present direction, while embarrassing to the president, rings true, because the rise in oil prices have in recent months masked severe deficiencies in other areas, while we continue to clash with foreign investors, as if they are the source of our problems.

In this article:
Yemi Osinbajo
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