As Foreign Investors Shop In Nigeria… By Ikechukwu Onyewuchi on October 18, 2015 8:49 am

French President, Francois Hollande and his

Nigerian counterpart, Muhammadu Buhari,

during the latter’s visit to France.

Experts Warn Against Unfair Agreements, Want
Emphasis On Local Manufacturing
AFTER President Muhammadu Buhari won the
2015 presidential elections and jetted out for the
G8 meeting in Germany with his wish-list, not
many thought the trip was the right choice for a
new leader, who had the herculean task of
recalibrating Nigeria’s fortunes.
Even as some thought that international support
was germane for impactful steering of the ship of
state, others wanted a marshal plan, at least,
before the last line of Buhari’s inaugural speech
dries up.
Many expected that the president would, first,
among other things, assemble a cabinet that
embodied the change slogan and hit the ground
running for an economy that was bearing the
brunt of falling oil prices, a weak Naira,
crumbling public infrastructure, corruption and a
jobless youth population.
But Buhari had to wait for four months to
announce his ministers, within the space of
which he had traveled out of the country more
than four times, leaving the economy to suffer
under the weight of pseudo-fiscal and monetary
policies formulated in the boardrooms of the
Central Bank of Nigeria (CBN).
However, with the trickle of foreign investment
missions into Nigeria in the last month, which
comprise delegations from France, England, the
United States, Germany and Poland, it appears
the president’s trips might have, indeed, paid-off
in turning the gaze of investments poachers to
the country.
Though investment experts say there may be a
link with the influx of foreign investment
missions into the country with President Buhari’s
international trips, they argue that the intentions
of the visits could be either to secure old
investments and/or initiate new ones, as “the
carriage, integrity and sincerity exhibited during
the trips abroad must have sold the country as
attractive.”
They note, however, that Nigeria ought to be
wary of the kind of agreements it enters with the
missions, and that particular emphasis should be
on protecting Small and Medium Enterprises
(SMEs), as well as, attracting investments in the
manufacturing sector as against mere trade
agreements that would turn the country into a
‘dump yard’ for foreign products.
The Mayor of the City of London, Hon. Alan
Yarrow, during his recent visit to Nigeria, assured
government and people of Lagos State of the
readiness of large number businesses in the
United Kingdom to invest in the economy of the
state, noting that there were huge potential for
investments in the country.
Leading a trade delegation, Yarrow said the UK
business group would come to the state to
identify with the new administration and explore
different areas of business collaboration and
investment opportunities available.
He solicited appropriate policies and enabling
laws to protect their investment, noting that
investors are willing to collaborate in the areas of
maritime, alternative and renewable energy, as
well as, infrastructural development in the area
of health and education.
Yarrow also visited Abuja to continue with the
task of strengthening ties with Nigeria.
Not wanting to be left behind, members of the
Movement of the Enterprises of France (MEDEF),
a consortium of over 50 companies around the
world, also came calling. Led by Chairman, Perre
Gattaz, the group, on a courtesy to Lagos State
Governor Akinwunmi Ambode, said there were
several economic opportunities that could be
mutually beneficial to both countries, adding that
language and cultural differences must not be
allowed to hamper the relationship.
Gattaz said he led the team to Lagos to discuss
areas of business partnership in the country and
especially Lagos State.
He noted aside visiting Abuja, the team has
visited Eko Atlantic City in Lagos and many other
trade zones to see how they can partner with
Lagos, adding that it would be of great advantage
if the governor can identify areas of possible
collaboration.
He also expressed readiness to link with Nigeria
and particularly Lagos on energy, agriculture,
transportation, food production and economy.
But when MEDEF met with the Executive
Secretary of the Nigerian Investment Promotion
Commission (NIPC), Mrs. Uju Baba, they were told
that government was interested in developing
“enablers of rapid industrialisation through some
sectors’’.
The priority areas, according to her, are
agriculture, power, manufacturing, solid
minerals, critical infrastructure, and waste
management.
She explained that the One-Stop Investment
Centre created in the country was the
government’s strategy to streamline investment
procedures, provide prompt, efficient and
transparent services and coordinate investment-
facilitating agencies.
The NIPC boss also said that the country had
attractive incentives, including three to five years
tax holiday for pioneer activities, for investors.
Also, a trade delegation of 16 U.S. companies,
representing several sectors, visited Nigeria last
month, as part of the largest overall U.S.
Government-led trade mission to Africa in
history.
The Trade Winds-Africa spinoff trade mission to
Lagos saw a day of meetings for U.S. business
executives with government leaders and
entrepreneurs, extending numerous U.S.-Nigerian
business leads and deals.
It is estimated that the Trade Winds-Africa trade
mission in 2015 has brought more than 100 U.S.
companies to the continent.
“Nigeria is the largest economy in Africa with
countless business opportunities, and it can be a
great launching point into other African
markets,” said U.S. Acting Consul General in
Lagos, when the Trade Winds-Africa
mission visited the state. “Nigeria’s burgeoning
market means untold possibilities for U.S.
companies, which can provide quality goods,
services, and solutions in a broad array of
sectors,” said U.S. Senior Commercial Officer
Brian McCleary, who is based in Lagos.
Commenting on the newfound interest in the
country by foreign trade missions, the Director
General (DG) of the Lagos Chamber of Commerce
and Industry (LCCI), Muda Yusuf, said that
despite its numerous challenges, Nigeria is still a
juicy investment destination.
He said, “The truth is that despite the challenges
inherent in doing business in Nigeria, there are
still considerable attractions for foreign
investors.  This economy remains the largest
economy and the largest market on the African
continent. The returns on investment are
acknowledged as being much better than in many
parts of the world.  The risks are high, but the
returns on investment are commensurate to the
risk.”
He also stressed that the influence of positive
outcome of the last general elections may have
spiked the interest, adding, “The fact that
Nigerian is one of the most stable democracies in
Africa is also a positive.  The outcome of the last
elections, especially the rather seamless
transition, earned the economy and the country
tremendous goodwill.  But generally, this is an
economy for investors with high appetite for risk.
For Associate Professor of Economics and an
expert in Public Policy at the Department of
Economics at the University of Lagos (UNILAG),
Prof. Femi Saibu, the carriage, integrity and
perceived sincerity of the president during his
visits overseas may be credited for renewed
inquest.
According to him, the international community
has seen that the Nigerian government is now
“more sincere and ready to play by the rules. For
instance, we can see that the government is ready
to establish framework for a good
macroeconomic environment.”
He said it is a bit surprising that while some
people are shouting that macroeconomic
parameters are on the downturn, investors are
“seeing the future, not the present,” adding that
none of the investors want to be left out when
the economy starts booming.
He said, “I think this is an opportunity for them
to come in when things are down, so that when
things change, they would reap of the benefits.
The cost of doing business in Nigeria would soon
drop. Before, they needed a lot of money to settle
different people in order to get into the system.
But now, they realise that they can directly relate
to whoever is in charge, know whether they can
get things done or not without necessarily
engaging in PR. It is about cost and interest. They
know things would now be done on merit.”
However, he noted that government ought to be
wary of new found interest more than ever,
because some of the trade missions are not
necessarily coming in to set up new businesses,
but to protect interests secured in the past,
saying, “if they come in legally now, they can use
that as a means to cover up interest they might
have illegally acquired in the past.”
“We should be wary of the kind of agreement we
go into. Any agreement that would jeopardize
local production should be avoided. Government
should be careful with anything that would
negatively affect agriculture and the likes. They
should rather come and establish their industries
here and produce within Nigeria.”
A major factor in the movement of capital around
the world for production is labour cost, as
businesses seek opportunities that would reduce
their spending on manpower, a factor, that has,
over time, driven manufacturing activities to
China and its Asian neigbours, where booming
population provides cheap labour.
Suaibu believes cheap labour might also be the
reason investors find Nigeria attractive, especially
those willing to tap into the African market.
According to him, “In terms of labour cost,
Nigerian is still cheaper than any European
country. I think government should have an
upper hand in the negotiations. It shouldn’t think
that these countries are doing us a favour by
coming down here. It should make sure that
agreements should prioritize direct production in
the country. This would help us engage the
youths that are presently restive. Anything that
would turn the country into a dumping ground
and aggravate the unemployment situation is not
a solution to Nigeria’s problem.
“Nigerian-made goods should be cheaper than
foreign goods. The cost of producing in Nigeria,
in actual fact, is low, despite the energy cost. If
we can guarantee a conducive environment by
granting them some concession in electricity and
gas that can boost their production to mitigate the
energy cost, they should produce in Nigeria, even
if they want to sell in other countries.
“We have a lot of export processing zones in
Nigeria that are just on paper. This is an
opportunity where they can be asked to come
and exploit the opportunities in these zones. We
have arable land, which is an opportunity for
mechanized farming too.”