AHEAD of the ahead of the UK-Africa Investment Summit in London on January 20, President Muhammadu Buhari published an article in The Guardian, UK where he expressed Nigeria’s expectations from the summit. According to him, a better engagement with the United Kingdom (UK) government to invest in Nigeria would expand employment opportunities for the country’s highly skilled youths. In his words, “greater UK engagement in the economy would bring jobs to under-tapped sectors, such as agriculture and manufacturing. Millions of highly skilled, English-speaking but underemployed young people are eager to work but without the opportunities that foreign investment can bring to create jobs and build businesses.”
At the summit, a record 27 deals worth more than £6.5 billion ($8.5 billion), including a £167 million investment by brewer Diageo in Kenya and a £222 million deal by NMS Infrastructure to build six hospitals in Côte d’Ivoire, were signed. The UK government announced £1.5 billion in initiatives, including £350 million to develop sustainable infrastructure projects. The UK is also setting up “infrastructure partnerships” with Egypt, Ethiopia, Ghana, Kenya and Uganda alongside the African Development Bank (AfDB), with the aim of generating billions of pounds of private sector investment in sustainable energy, transport and telecoms. Nigeria was not named in any of these projects, except another deal in the oil and gas sector which is an enclave economy without significant impact on unemployment. Savannah Petroleum is investing £315 million in the acquisition of gas assets in Nigeria and Tullow Oil announced a £1.2 billion investment in oil production in Kenya.
An appraisal of the president’s expectations and the direction of the outcome of the summit shows that the factors that account for the failure to attract foreign investment in the non-oil sector are not driven by foreign governments or international investors. For all the talk by President Buhari, it is clear that the business environment in Nigeria is yet to be made investment-friendly. Indeed, Nigeria is categorised in the high-risk investment group because of the difficult business environment, and the president must take responsibility for the situation. This is the case not just because of the poor record in improving the business environment but also in his penchant to de-market Nigeria. In many of his travels abroad, he has seized every opportunity to de-market the country by his utterances. At the gathering of world leaders in Paris, France, to find solutions to the myriads of conflicts raging across the world, Buhari portrayed Nigeria as a highly corrupt country. He said, “corruption and fraudulent activities generate enormous unlawful profits in Nigeria, which prove so lucrative that the threat of a jail term is not sufficient to deter perpetrators.” On another trip abroad he described Nigerian youths as “lazy”.
On the policy front, the government has not made significantly successful efforts to ease the environment of doing business. An assessment of the cost of doing business by the Lagos Chamber of Commerce and Industry (LCCI) has projected a high cost of doing business in 2020. Muda Yusuf, the LCCI Director-General, attributed the projected high cost to poor infrastructure, multiplicity of levies and excessive regulations. He predicted that competition between foreign and local producers would fade on prolonged closure of land borders while inflation was expected to trend higher in 2020 owing to the higher Value Added Tax rate of 7.5 per cent. Economic growth will remain subdued at around 2 per cent by 2020 as consumer demand, as well as private sector investment, will most likely remain weak.
We think that the government needs to pay attention to these indices, because Nigeria is in competition for foreign private investors’ funds with other African countries. Nigeria will not benefit from open competition for investors’ funds if it is not competitive. The Federal Government must take measures to address these environmental issues and make great efforts to overcome the difficulties the country is facing with terrorism, insurgency, organised crime and proliferation of small arms and light weapons.
Besides, the competition promises to be very keen given that UK-African trade has been in decline. Africa accounted for 4.2 per cent of UK trade in 2012. This fell to just 2 per cent or $46 billion in 2018. As Nick O’Donohoe, Chief Executive of CDC Group, the UK’s development finance agency, said: “People are pulling back; banks are pulling back. That’s partly because the cost of capital post the financial crisis has gone up. The cost of compliance has caused doing business to be more expensive.”