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Nigeria's Investment Clime (Posted 28th October, 2003) Tell your friends about this page! Email it to them.

One of Lagos' Business DistrictsGlobalisation has underlined the need for nations to be inter-dependent in all spheres, especially in economic and trade issues. Today liberalisation and trade cooperation is the buzz-word with the World Trade Organisation, WTO, spearheading a global trading network. Economic cooperation in Europe, Asia, South America, West Africa, Southern Africa and even in Africa has evolved a fresh perspective in multilateral trade relations based on regional and continental networking. Further, developments in communication and transportation has virtually bridged the world in terms of cross-fertilization of ideas and labour. 

After years of protracted authoritarian rule in Nigeria, democratic administration came as a relief in 1999. The task of cleansing the soiled international image of the country fell on the shoulders of the President, Chief Olusegun Obasanjo. His democratic government embarked on a mission to rid Nigeria of corruption, smuggling, drug trafficking, advance free fraud and the nation’s pariah status. The government’s effort entailed diplomacy and re-negotiation of trade terms on both bilateral and multilateral basis, re-commitment to regional and international peace and the re-opening of the Nigerian market to foreign investors. 

The questions need to be asked: what is Nigeria’s investment climate like now? Has the government’s policy of wooing foreign investors had any meaningful impact four years after? Where did the country get it wrong or right? What is the way forward? 

A little over four years down the economic lane with Olusegun Obasanjo’s government, the Nigerian economic terrain is still littered with pot-holes and craters. Corruption still looms large in the private and public space. Two good examples suffice here. One, El-Rufai, the Minister for the Federal Capital Territory (FCT), Abuja’s recent accusation of two prominent members of the Nigerian Senate of demanding for bribe for ministerial approval is still fresh in our memory. Two, Transparency International’s latest rating has Nigeria as the second most corrupt nation after Bangladesh. Daily the Nigerian Police are seen on our highways extorting money forcefully from motorist at illegal checkpoints and also refusing to pay commercial transport fares in cities like Lagos. 

The states of many basic social infrastructures are yet to improve. Roads in the South-South and South-Eastern parts of the country have become death traps with lives being lost on a daily basis. The new Minister for Works, Senator Adeseye Ogunlewe in a statement accused identified contractors for not making the necessary repairs on the roads after obtaining payment. It is expected that the government should make such contractors face legal consequences to deter future occurrence. In a recent statement by the President, he ordered the power generating authority, NEPA, to disconnect power supply to any indebted government and non-government organisation. Subsequently, NEPA disconnected the power supply to the Murtala Mohammed International Airport, Lagos. This led to an undue dependence by the airport on a generating set which exploded after 3 days of non-stop operation leading to a fire outbreak around 7.48 a.m. on Thursday 23rd October, 2003 disrupting flights.   

The unemployment market has been swelling unabated annually, with the government at a loss for solution. The Nigerian educational system is near comatose due to poor funding and periodic strike actions by the academic staff of the institutions. The Nigerian Labour Congress, NLC, has also been on the battle front with the government especially in the last 4 months. National strike actions and picketing have been organised to protest poor public servant salary, non-payment of pensions, casual labour, and arbitrary increment of fuel prices. 

A few banks appear to be in distress in the country with public and private organisations constantly down-sizing. The industrial sector of the economy is limping from stiff competition from foreign industries, smuggling, high exchange rate and high cost of operations. 

The federal government lacks fiscal discipline especially in the choice of projects. Projects like the Abuja National Stadium and the recent hosting of the 8th All Africa Games which gulped billions of naira may have served as conduit pipe in siphoning scarce funds from the national treasury. The President has not improved the situation by his perceived reckless utterances. Recent statements credited to him show gross disregard for the people he professes to serve and lack of consultation of the electorate’s representatives. A good example is the announcement of increment in the pump price of fuel on October 1, 2003 to the chagrin of Nigerians. All effort to diversify the economy has not yielded much fruit and the country’s foreign debt remains high. 

Without doubt these factors have to a great degree discouraged both foreign investors and investments. A view of Nigeria from the international plane paints a picture of a nation with abundant human and mineral resources, a big consumer market, semi-stable polity, unstable economic base, low-level security of lives and property and a neck breaking cost of business operation. 

On the positive side, the deregulation of the different economic sectors has yielded some fruits. A good example is the telecom sector which has increased the nation’s teledensity and has reduced the cost of telephone acquisition and charges. Privatisation of government-owned and controlled organisations have encouraged investment and optimal performance of such organisations. The Nigerian private sector has become more vibrant and innovative. Entrepreneurship has been encouraged with more businesses in the service sector and support services. 

The Nigerian investment climate can be improved if the government takes a more proactive stance and confronts issues head-on without sentiments and political considerations and NEPA, the colossus power generating company, continue to improve its services. The transformation of Singapore in less than 20 years became a reality because of patience, planning, fiscal discipline, sense of direction and focus and good leadership. Nigeria could borrow a leaf from this experience.

Editor's Note: NEPA is now called Power Holding Company of Nigeria, PHCN from 2005.

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