Reactions trail Nigeria’s drop to 14th position in Africa’s Investment destinations ranking
…insecurity, COVID-19, naira devaluation, inflation, crude oil dependence responsible —Experts
…Fix regulatory bottlenecks, provide enabling investment environment – Former LCCI DG advises FG
…Government should constitute Economic Think-tank to outline policies – NIWOSEC
By Seun Ibiyemi, Abimbola Abatta, Matthew Denis, Abuja, Ariemu Ogaga, Abuja
Business, Finance and economic stakeholders have expressed mixed feelings over Nigeria’s drop from Africa’s top 10 investment destinations ranking to 14th in a report released by RMB, a division of FirstRand Bank Limited,
While Nigeria was ranked 14th, in the RMB’s report titled, “Where to Invest in Africa 2021,” Egypt tops the list.
According to RMB, the ranking was based on the operating environments of the Countries on the continent.
RMB Africa Economist, Daniel Kavishe, said the pandemic ushered a new world and a new approach to this year’s list.
Kavishe said, “We created a new set of rankings that incorporated some of the unavoidable COVID-19-induced challenges, of which the operating environment score was one.
“The inclusion of a fiscal score in our rankings aimed to score governments’ fiscal positions and provided a basis from which investors can understand specific jurisdictions.
“Although the pandemic brought devastation, it also enabled opportunities for reimagining policies and trade relationships. Increasingly clear now is that home-grown strategies to tackle poverty, inequality and unemployment across Africa must be implemented. If not, all of Africa suffers.”
The top 10 African countries to invest in, according to him, are Egypt, Morocco, South Africa, Rwanda, Botswana, Ghana, Mauritius, Côte d’Ivoire, Kenya and Tanzania.
The Company said, “The sheer size of Nigeria’s economy and large population base has undoubtedly aided the country’s economic environment and has led to an increase in investments in the economy over the past 10 years.
“The Country boasts significant hydrocarbon resources and considerable agricultural and mining potential. With fiscal support expected to increase and continue over the next few years, given both the coronavirus shock and oil price collapse, the economy is expected to grow but at a slow and steady pace.
“One of the key tenets for its development will be the efforts that have been made to support small and medium enterprises through monetary policy reform. This should support the country’s efforts as it continues its expansion into sectors such as information technology.”
The Company further said, “Nigeria’s heavy reliance on oil means that the drop in oil prices and production generated by the OPEC+ agreement is strongly impacting the economy. COVID-19 came at a time when the economy was still rebalancing from the drop in oil prices during the 2014 to 2016 period.
“Therefore, a lower drop in reserves, tight liquidity and a weak currency can still be expected. The Government, which has been criticised for its slow pace of reform, still faces a myriad of security challenges that destabilise the country, such as the activity of the Islamist terrorist group Boko Haram in the northeast, forcing many people to flee.”
Meanwhile, in 2018 and 2019, Nigeria was ranked in the top 10 (eighth in both years). Nigeria was also ranked six and 13 in 2016 and 2017 respectively.
In 2014, Nigeria ranked as number two and dropped to number five in 2015.
While reacting to the development in an interview with Nigerian NewDirect on Sunday, the CEO, Centre for Promotion of Private Enterprise (CPPE) and former Director General, Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf said Nigeria’s progress on investment promotion has been slow, stating that the Federal Government should fix all structural and regulatory bottlenecks and provide improved enabling investment environment to attract foreign investors.
According to him, “Issues raised in RMB report are not new. They are issues that investors operating in the economy had been complaining about. These include macroeconomic challenges manifesting in high inflationary pressures; the exchange rate depreciation; the liquidity challenges in the foreign exchange market; and the mounting pressure of debt service on the finances of government.
“It is also true that the heavy dependence of Nigeria on crude oil for foreign exchange earnings aggravates the vulnerability of the economy. The economy is diversified in structure, but not in earnings.
“Progress in the promotion of economic reforms has also been slow. There are reform imperatives in the foreign exchange policy, oil and gas sector, investment policy.
“Fixing the structural and regulatory issues in the investment environment are also important in making Nigeria a leading investment destination. But the fact remains that the large Nigeria market offers opportunities which most Countries in Africa do not have.”
Meanwhile, as experts from some quarters have linked the rationale informing the fall to inflation, currency devaluation, insecurity, and COVID-19, among others, some experts believed the credibility of the report could not be fully substantiated as the indices used to arrive at the ranking were vaguely expressed.
In a swift reaction to the report, past President of the Chartered Institute of Bankers of Nigeria (CIBN) Prof. Segun Ajibola, said “the problem with this kind of analysis is that we do not know how the grading was done. What was the parameter? If we know the parameter, then we will know where we have veered off, if at all. But without knowing what basket of indicators that led to the rating, it will be difficult for anybody to speak directly to the issues.
“Generally, we all know that the global environment has been quite troubled, and Nigeria is not an exception. We have the pandemic, and don’t forget that we just came out of economic recession.
“We are still struggling with the issue of inflation and the value of our currency. We also have the issue of insecurity. So, all of these put together will have affected our rating as a Country among the international investors. These are some of the general factors one could point out in reacting to such a report for now.”
Speaking on how the government can intensify efforts in making Nigeria an investment-friendly country, he said, “Nigeria is already doing a lot. There are tax incentives to encourage investors. Some laws are being relaxed in terms of some basic requirements from Corporate Affairs Commission and others to register businesses.
“New policies are coming up to encourage small to medium scale enterprises, tax waivers, and so on. And we also know that the government is doing a lot to address the issue of insecurity.
“Then, we also have the national development plan that contains a lot of policies. National development plan for 2021 to 2025. So, if all of these are well implemented, then we will be able to redress some of the negative perceptions about our business environment and attract foreign investors.”
On his part, the Executive Director, Nigerian Workforce and Enlightenment Centre (NIWOSEC), Dr. David Kayode Ehindero said “The President Buhari’s administration hasn’t provided a smooth atmospheric conditions for business activities to strive.
“A situation where Government tiers and agencies charges multiple taxation thereby forcing foreign companies and local ones to shutdown. Some of them have relocated to Countries like Ghana, Rwanda, Eyght and South Africa where they can survive.
“The ranking of Nigerian not being among the 1-10th is not surprising to us as we saw it coming. There are no financial experts in the Government to navigate policies towards expanding the Economy coped with the Covid-19 challenges.
“I will suggest that the government should Constitute an Economic Think-tank comprises of the public and private sectors to outline policies and Programmes to regain our credibility.
“Contrary to President Buhari claim that Nigeria is the investment destination in Africa. I will say I will rather concur with the findings that Nigeria drops as an investment destination. While I will appreciate President Buhari for doing his duties of advertising his counter, yet the reality is that due to the security challenges bedeviling the nation of Nigeria, potential investors could be discouraged. Apart from the huge domestic market present in Nigeria, other factors are grossly unappealing to have attracted investors.”
