Wednesday, September 9, 2015

Nigeria’s cloudy investment climate

The frenzy generated by the 100 days of President Muhammadu Buhari’s administration in the last week or so is palpable. So much is expected of the government who swept into office on the mantra of change. Though the President said he never committed himself to 100 days landmark celebrations, his media aides nonetheless took over the media space to highlight some of the quick wins or milestones that the new administration has achieved in its first 100 days. For instance, Femi Adesina, the President’s Special Adviser on Media and Publicity informed us in an opinion article published in many of the print media that a new sheriff is in town. That piece is full of sound bites.
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Adesina recounted inter alia the bloody nose being given to Boko Haram in the North-East, the rallying of leaders of other neighbouring countries to deploy a Joint Multinational Task Force, the openness displayed about government finances and the welfare package instituted for states that couldn’t pay salaries, the Treasury Single Account, which would promote transparency and accountability in governance, fast-tracking of the cleanup of Ogoni land, reduction in the cost of governance, and many others. He said that under the extant administration, stealing is now corruption. Adesina informed us that electricity generation has climbed to about 5,000 megawatts; some refineries, which had not produced a drop of fuel for years, have cracked into life and that the perennial queues in our petrol stations have disappeared. These are irrefutable facts!
The President’s SA Media and Publicity also said that Nigerians now have faith in their leaders and quoted NOI polls survey in July which shows that over 70 per cent of Nigerians were happy with the Buhari administration to back his claim. In June, just one month into office, the media aide claimed that with the plugging of some leakages and loopholes, foreign reserve surged from $29bn to $31.89bn.
On September 1, 2015 during the 45th Nigerian Accountants conference in Abuja, Vice President Yemi Osinbajo gave some inklings of Buhari administration’s economic blueprint. The VP said the APC government will give primary school pupils free meals, the multiplier effects of which would help to create 1.14 million new jobs; increase food production by up to 530,000 metric tonnes per annum, as well as attract fresh investments up to N980bn. Osinbajo also hinted at the capacity building to improve teachers’ quality. Other areas of focus in the Buhari economic plan according to his Vice are innovation and fighting piracy; diversification of the economy in the areas of agriculture to achieve self-sufficiency in rice and wheat production as well as manufacturing; entertainment and technology.
As the new administration gradually rolls out its economic plan, I hereby point the Federal Government in the direction of what could make mincemeat of its laudable economic recovery plan. That is, the astronomic cost of doing business in Nigeria. It’s important that the new sheriff in town knows that the World Bank has rated Nigeria among 16 worst nations in the world in the area of doing business. A report by the bank specifically placed the nation in 170th position out of 185 world economies polled.
Yes, Buhari has been globe-trotting seeking foreign direct investment in order to boost the economy and thereby tackle the monsters of unemployment, poverty and social insecurity. I recall that the President was in Germany for the G7 Summit in June and was also in United States of America in July. These diplomatic shuttles were partly to seek FDI, more so in the face of dwindling oil revenues. Attempts have also been made to revive the textile industry, reactivate local arms production and also increase agric-business. Just last week, Federal Government also promised to encourage and support the small and medium scale enterprises popularly called SMEs. However, the laudable plan of diversifying the economy and encourage local and foreign investors would be a mirage or remain a pipedream unless the Federal Government brings down considerably the cost of doing business in the country.
In truth, the World Bank report entitled ‘Doing Business: Distance to Frontier’ showed that Nigeria moved up by five points in the latest rating as against 175th position out of 189 countries polled last year. Nonetheless, to be ranked among the 16 worst countries to do business is not an enviable position. The report, excerpt of which was published in last Friday’s (September 4) edition of this newspaper gave some of the parameters used for the ranking as starting a business; dealing with construction permits; getting electricity; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts and resolving insolvency.
Sadly, Nigeria ranked last in the world in terms of the ease of registering property and emerged the third most difficult country for cross-border trade in the Economic Community of West African States region. In the ECOWAS region, Burkina Faso was ranked the most difficult country for trade across borders at 174. Mali came second at 163 while Nigeria ranked third at 159. Gambia was ranked the easiest country for trade across borders in the ECOWAS region at 77; Senegal came second at 79 while Cape Verde came third at 101.
The report stated that while it takes an average of 19 days to export goods at $1,040 per container and with six documents in the Gambia, it takes an average of 22.9 days to export goods in Nigeria at $1,564 per container and with nine documents. The document equally revealed that a trader in Gambia would require an average of 19 days to import cargo at $745 per container with six documents. But in Nigeria, it would take an average of 33 days to import cargo at $1,959.5 per container with13 documents.
To me, the World Bank report is a wakeup call to the relevant ministries, departments and agencies of government such as the Federal Ministry of Finance and its Trade and Investment as well as Interior counterparts, Nigeria Investment Promotion Commission and Nigerian Customs Service to work concertedly to ease the cost of doing business in the country. Federal Government also owes it a duty to set the right investment policy guidelines, strengthen our adjudicatory systems, provide adequate physical security and social infrastructures such as affordable and uninterrupted electricity, pipe borne water, good road networks and friendly tax regimes. If Nigeria is the largest economy in Africa in spite of the astronomic cost of doing business in the country, just imagine how greater the economy of the nation will be if we are able to clear the cloudy investment climate in the country.
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