The Nigerian Economic Summit Group (NESG) has said that the ongoing action taken by the Kogi State Government against Dangote Cement PLC sends inappropriate signals to both foreign and local investors.
NESG in a statement signed by Asue Ighodalo on behalf of the Board of Directors, said this crisis could result in increase in Nigeria’s risk rating.
He said the actions taken by the Kogi State government gives the impression that such a commercial dispute cannot be amicably settled using the existing dispute resolution mechanisms.
“The recent dispute between Kogi State and Dangote Cement Plc and the action taken by the State Government gives the impression that such a commercial dispute cannot be amicably settled using the existing dispute resolution mechanisms.
“Such action sends inappropriate signals to investors, both domestic & foreign, and could result in an increase in our country risk rating.
“Our inability as a Nation to give the right signalling to investors will lead to subdued investment flows and capital flight which has a number of consequences”, the statement said.
Furthermore, NESG said the ongoing crisis may “hamper our ability to sustain the growth and development of the non-oil sector which is expected to reign in needed revenues to finance the 2023 budget and remain so for the next foreseeable future;
“The expected investment into the oil sector of which the full implementation of the newly passed Petroleum Industry Act is expected to attract, for which the government has taken a number of steps, may be jeopardised;
“Dwindling foreign exchange earnings through limited capital inflows will lead to the continued devaluation of the Naira;
“Wrong signalling will further lead to the
underdevelopment of the financial and capital market with very limited financial instruments and investable assets;
“The lack of investor confidence also implies that the cost of borrowing for both the government and corporates will increase. Furthermore, the Nigerian government will be under pressure to service its debt and this could either constrain future budget non-debt expenditures or result in more borrowing.
NESG pointed out that in recent times, Nigeria has experienced low foreign investors’ confidence arising from a number of issues ranging from insecurity, foreign exchange scarcity, entrenched capital controls and an unfriendly business environment.
In spite of these challenges, NESG said Nigerian entrepreneurs have continued to exhibit faith in the economy by investing in the country.
NESG noted that following the constrained fiscal space faced by the Nigerian government, investment in critical sectors is what will drive economic recovery and sustain the growth momentum in the medium term.
It said investment, both local and foreign direct, is often associated with job creation, technical know-how, technology, economic growth and the strive towards efficiency.
“We recognise the effort of the government towards improving the business environment, nevertheless there is room for improvement.
“Thus, it is imperative for both the Federal and State governments to work together towards ensuring improved ease of doing business and good governance practices,” NESG noted.
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Kogi/Dangote feud: Wrong signal to foreign, local investors ― NESG
Kogi/Dangote feud: Wrong signal to foreign, local investors ― NESG
Kogi/Dangote feud: Wrong signal to foreign, local investors ― NESG
