The Federal Government set up the Presidential Enabling Business Environment Council to facilitate ease of doing business in Nigeria. However, between July 2017 when the council marked one year in office and the first quarter of 2020, foreign direct investment dropped by 47.99 per cent, writes ANNA OBOHO
Foreign Direct Investment fell significantly during the 2016 recession, contracting from $2.3 billion in 2014 to $891.3 million by July 2017, according to data from the Central Bank of Nigeria.
FDI contracted further to $427.8 million in the first quarter of 2020. FDI is investment inflows into the country from foreign companies and individuals in oil, gas, information and communications technology, transportation, and other sectors. FDI makes available foreign exchange, access to foreign markets, transfer of technology and skills from developed countries.
The PEBEC, established by President Muhammadu Buhari in July 2016 to remove bureaucratic constraints to doing business in Nigeria, and make the country a progressively easier place to start and grow a business, was an initiative that sought to revive the economy, following the 2016 recession. PEBEC sought to make business work in Nigeria and also to move Nigeria up the World Bank Doing Business rating.
The council, headed by the Vice President, Prof Yemi Osinbajo, set out to implement far reaching reforms targeted at reduction in documentation processes for businesses, clearing of goods at Nigeria’s seaports, taxes and waivers aimed at encouraging more investments and so many other initiatives.
In line with the objective of attracting more foreign investment, the government also set up a Business Investment Forum, to sensitise potential foreign investors on the Ease of Doing Business initiative in Nigeria.
However, despite the ini- tiatives, FDI inflows keep dwindling. More so, foreign firms in the country had over the period been leaving, the recent one being the reported moves by South African retail conglomerate, Shoprite, to sell its majority shares in Nigeria and exit the country.
Advancing reasons for the low FDI inflows into Nigeria in recent years, the Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, blamed the trend on several factors in the economy since the recession.
Speaking during a recent Lagos Chamber of Commerce and Industry Presidential Policy Dialogue webinar, Adebayo said that the country is still facing infrastructure challenge despite government’s efforts and funding.
He said power and conges- tion at the nation’s seaports had continued to pose a major concern to potential investors and existing business operators.
Confirming his statement, an economic strategist with the Manufacturers Association of Nigeria, Ambrose Oruche, told Sunday Telegraph that Nigerian business owners generate more than 70 per cent of the power they consume.
Adebayo explained that the funding put in the power sector so far was insufficient to fix the problem. Citing a Nigerian Infrastructure Masterplan report, he said Nigeria required $3 trillion to upscale its national infrastructure over the next 30 years. “This breaks down to an average of $100 billion annually,” he explained.
According to him, part of the moves to resolve the power issue is the conclusion of negotiations with Siemens AG to revitalize the power sector as well as expand the generation of and supply of capacity from 11,000 megawatts to 25,000 megawatts by 2025.
“Also, the Federal Government is concluding plans to secure a $3 billion loan from the World Bank to bridge the gap between what is provided for in the current tariff, and the cost to businesses,” he added.
This, according to him, is in addition to the creation of a one-stop-investment centre domiciled within the Nigeria Investment Promotion Centre (NIPC) to facilitate and sustain investments in the country through speedy resolution of investment complaints and issues.
Adebayo equally blamed corruption, policy instability and insecurity for the reluctance of foreign firms to pitch in Nigeria.
He said despite the fact that Nigeria was considered an investment destination due to its natural resources and a large growing population, corruption perception was a huge hindrance to doing business in the country.
To tackle this, he said the government had strengthened its regulatory agencies and commenced automation of most of its key processes to eliminate human-to-human contact.
He also blamed policy instability for the lack of confidence from foreign investors, saying unstable policy could be a major hindrance to investment in the country.