Business a.m.

Nigeria, once investors’ beautiful bride, losing global attraction

Amazon, Hyundai, Kia, look to SA, Ghana, after Twitter move Oil majors also plan exit due to stringent operating environmen­t

- CHARLES ABUEDE

IT IS NOW BECOMING MORE ALARM ING, just as the past few weeks in Nigeria have looked like a mirage to many concerned Nigerians, how the ‘giant of Africa’, a once beautiful bride for investors, has again been left in the lurch as more multinatio­nals look away from Nigeria to countries with good ease of doing business rankings and less government interferen­ce, in a somewhat capitalist economic setting.

This was demonstrat­ed recently following an announceme­nt by the American microblogg­ing and social media platform, Twitter, after Jack Dorsey, its CEO announced the siting of its African headquarte­rs in Ghana with reactions trailing the decision. Barely 10 days after the announceme­nt, Amazon, a global retail giant, announced setting its African headquarte­rs in South Africa.

More of such investment apathy by global giants are expected to follow after Alan Kyerematen, Ghana’s minister for trade and industry, made the revelation­s that plans are

already underway by automobile giants, Hyundai and Kia motors, to establish assembly plants in Ghana by 2022 and joining the long list of other auto-makers who have a presence in the West African country. Other automakers that have made investment decisions include Toyota-Suzuki, Nissan, Kantanka, Volkswagen, and Sinotruck.

Toyota also chose to look away from Nigeria, choosing instead to establish its assembly plant in Ghana and Ivory Coast despite President Buhari’s plea to consider Nigeria.

The trend is a no brainer, say analysts looking at the situation, especially with regards to the steps the Nigerian government has taken to ameliorate these slaps on the face with policies that can be geared towards the attraction of foreign direct investment into the economy and thereby increasing Nigeria’s reserves.

Available on the media space are reports that several multinatio­nals are now seeking the exit door out of Nigeria as most foreign investors no longer find Nigeria an attractive destinatio­n for business investment in recent times.

There could be several reasons for the exit decisions of these multinatio­nal companies and high-tech driven businesses creeping around the continent in search of a suitable investment destinatio­n with high return potential as part of their growth and expansion strategy on the continent.

A reason is not far-fetched as can be seen after a 2020 World Bank report on ease of doing business ranked Nigeria 131st out of 180 countries in the world. According to the report, Nigeria, which is classified as a lower-middle-income group, has ease of doing business (DB) score of 56.9, approximat­ely 57, out of 190 indices that were ranked.

The country occupies position 105th in starting a business, 169th and 183rd in the area of getting access to electricit­y and registerin­g a property for the use of business, among other issues.

The last 10 years has seen Nigeria welcome internatio­nal investors into its oil and gas industry as players in the buzzing market and as financiers. But things are moving on the contrary with a growing trend that these foreign-owned businesses and investment­s are now taking to their heels out of the country.

Little accounts can be given on the timeline when Nigeria’s e-commerce giant, Jumia Technologi­es’ parent company, exited the company owing to lack of profitabil­ity. Also, Kenyan marketplac­e platform, OLX, exited Nigeria after it cited the high cost of doing business as a major reason.

This is not to mention telecoms giant, Econet Wireless, then a major competitor to MTN Nigeria, exited Nigeria that was its largest market in Africa owing to unfavourab­le policies and the political games involved in doing business in Nigeria.

Fast forward to the recent announceme­nt by South African retail and grocery giant, ShopRite on its plans to sell-off its assets to an indigenous buyer while it exits Nigeria.

Recent checks have also revealed that some oil majors such as ExxonMobil, Royal Dutch Shell, Total and Eni, domiciled in Nigeria, are taking the steps to cut costs, saving billions and shifting attention to renewable fuels and cost-effective markets following the hits on their profits in recent months in the face of the coronaviru­s pandemic and the present socio-economic realities that have made the current operating environmen­t bad for their business.

According to a publicatio­n by TheStreetj­ournal, out of the $70 billion committed into new projects in Africa between 2015 and 2019, it has been unravelled that Nigeria was able to attract only $3 to $4 billion, meaning that this developmen­t spells doom for an economy that solely relies on oil to thrive.

This developmen­t calls for concern from policymake­rs as it would appear that Nigeria’s touted economic status as the giant of Africa has not helped in recent times. However, the exit of these companies will lead to an increase in the number of unemployed Nigerians, which currently, the National Bureau of Statistics (NBS) Nigeria reported to be above 33 per cent and can be argued is the highest rate in the world.

It also could mean that the country is no longer an investment destinatio­n as there will be a significan­t decline in the rate of foreign direct investment (FDI) inflow, which will have an attendant effect on the gross external reserves.

Factors shaping incessant avoidance of Nigeria as investment and business destinatio­n

The myriad of events that has ensued within the past few weeks up to a decade ago could be sending signals to policies and the nation at large on the need to seek ways to salvage the situation and place Nigeria on the forefront as an investment destinatio­n in Africa, while her economic status could be regained by all claims on the foreign investment inflows and the increased rate of industrial­ization, so as to create more job opportunit­ies for the unemployed. These multinatio­nals and internatio­nal businesses may be fleeing Nigeria owing to the following:

Regrettabl­y, the insecurity challenge posed by bandits, kidnappers and herdsmen activities, causing panic in some regions with potential investment destinatio­ns, is worsened by the unstable power (electricit­y) supply conundrum; it has made many factories to rely on petrol and diesel to power their types of machinery with the resultant pressure on cost, which is then passed on the consumers through higher prices of their products. This is coupled with the triple rise in electricit­y charges by the power distributi­on companies (DisCos).

Furthermor­e, the incessant and unnecessar­y interferen­ce by the national government into the capitalist affairs of investors without permitting the values of a capitalist democratic setting which is sacrosanct to economic and developmen­t to thrive or permeate the economy presents another sad story.

The high cost and ease of doing business is another issue which needs to be tackled. There have been postulatio­ns or propositio­ns of favourable policies that can allow these internatio­nal businesses thrive in Nigeria, pay reasonable tax and help support effort at building Nigeria’s external reserves buffers, while giving them the opportunit­y for the transfer of technology, knowledge and skills and expertise to the teeming Nigerian youthful population.

Conclusive­ly, government and policymake­rs need to improve on policies and laws to promote private sector- focused involvemen­t for the economic growth of the country, particular­ly in the areas of MSMEs, startups, financial technology (Fintech), software and telecoms companies, because they are essential in today’s business world.

 ??  ?? Folasade Yemi-Esan (left), Head of the Civil Service of the Federation, and Aigboje Aig-Imoukhuede, chairman, Africa Initiative for Governance (AIG), during the handover of Standard Operating Procedures, globally recognised manuals that apply step-by-step instructio­ns, which were compiled by the AIG, for the Office of the Head of Civil Service of the Federation (OHCSF), recently
Folasade Yemi-Esan (left), Head of the Civil Service of the Federation, and Aigboje Aig-Imoukhuede, chairman, Africa Initiative for Governance (AIG), during the handover of Standard Operating Procedures, globally recognised manuals that apply step-by-step instructio­ns, which were compiled by the AIG, for the Office of the Head of Civil Service of the Federation (OHCSF), recently
 ??  ?? Governor Sanwo-Olu of Lagos State taking his first Covid-19 vaccine jab during the roll out exercise in Lagos.
Governor Sanwo-Olu of Lagos State taking his first Covid-19 vaccine jab during the roll out exercise in Lagos.

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