Xenophobia And Nigeria’s investment climate

Posted by News Express | 16 October 2019 | 1,288 times

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Nigeria is one of the world’s largest producers of crude oil, is home to about 44 solid minerals, has an amazing population and in a state of development that makes it a choice investment destination. However, recent recurrent events all over the world speak to a downturn in the fortunes of her citizens.

At home, he does appear to be fed up with life, and away, faces incessant harassment, humiliation and even death. One wonders where salvation lies. Does it lie in retaliatory responses like physical attack on foreign business interest? 

Reciprocity, perhaps, but I dare say physical attack however popular in some quarters or approvable by some schools of thought, is not the right approach. Consumers suffer the most immediate consequences of the destruction of any amenities servicing them. 

So “fire for fire” approach is like trying to eliminate smoke without thinking about the causative fire or perpetually cleaning dust without attention to the invisible but ever present wind. That most definitely cannot work a sustainable solution.

This is where new thinking is needed to revolutionise our investment climate locally to bolster the acceptability and popularity of home-evolved services and companies. 

The solution may lie in finding ways and means to make Nigerian consumers go for services and products with substantially local contents and ownership structures. For instance, to patronise such services with some local ownership, such as StarTimes/NTA; GLO Telecommunication and supermarkets operated by Nigerian investors. 

What actually causes a people to leave the comfort of their home with all the pride of citizenship and to foray into uncertainties of foreign lands? The truth must be told: “Man must survive”. The sooner we face the reality the better for us. Unfortunately, our concentrations have been on oil, the only industry or sector which appears to actually have a local content regulatory framework. How many Nigerians are employed in that industry? The vast majority of the workforce is employed by small and medium-sized firms which are mostly owned by Chinese, Lebanese, South Africans, Arabians, etc. 

No nation of the world is altruistic. No country whose home and priority businesses are all owned by foreigners is economically independent and safe. A country whose small and medium industries and macro-economy is maximally controlled by foreigners will perpetuate in unemployment and continuously suffer exodus of its most productive labour force. Particularly, such a country like Father Christmas Nigeria, where it takes virtually nothing different for a foreigner to do business than a local. For example, besides the requirement of 51 per cent share ownership by Nigerians in the case of a foreign company seeking to bid for contract in the oil and gas industry, a foreigner can fully own his company and do business in Nigeria with several tax exemptions and holidays, entitlement to repatriation of capital and interest, etc. It is also easy for foreign interest to equally import their workers from their countries of origin, since it is equally easy to secure all applicable permits. 

Section 17 of the Nigerian Investment Promotion Commission Act (NICPA) provides that: “Except as provided in section 18 of this Act and subject to this Act, a non-Nigerian may invest and participate in the operation of any enterprise in Nigeria.”

Under section 56 of the Companies and Allied Matters Act (CAMA), a foreign company can do certain businesses in Nigeria without registration. The section provides that: “A foreign company may apply to the President for exemption from the provisions of section 54 of this Act, if that foreign company belongs to one of the following categories, that is 

(c) foreign governmentowned companies engaged solely in export promotion activities.”

One may be excited by the mere mention of “export promotion activities” as basis for granting an exception to a foreign company, but one should not be fooled by that. Of what importance and value is an “investment” of a foreign company which applies its resources in this country, perhaps, with funds borrowed from its origin where the so-called investor utilises imported workforce and at the end repatriates all capital and profit and pays interest to its foreign lender? This is, perhaps, another way to siphon local resources. 

We have always talked about ease of doing business, as a way of encouraging foreign investment in Nigeria. This is good, no nation is an island. But do we consider the ease of doing business in Nigeria for Nigerians?

Countries all over the world encourage local content by all forms of laws and policies, but it appears the reverse is the case with “Big Brother” Nigeria that has un-favourable fiscal and monetary policies and negative tax regime applicable to her citizens. This, from the outset, creates an investment market competition imbalance between foreign and local investors, especially where the foreign investor is from a domestic climate with good incentives for export. 

Moreover, some other major factors greatly discourage local investors: ethno-religious crises, economic inferiority complex, besides a very negatively flexible, politically manipulated economic policy where a lot of business investments become victims of political vendetta. These factors account for the sudden disappearances of erstwhile prosperous locally-owned businesses. 

This clearly points to the herculean tasks before the government and regulatory authorities, such as the Nigeria Investment Promotion Commission (NIPC), which is regulatory authority for doing business in Nigeria. The NIPC is established under section 1(1) of the NIPC Act, with far-reaching functions, as stated in section 4 of the Act which provides, among others, that: 

“The Commission shall encourage, promote and co-ordinate investment in the Nigerian economy and accordingly, shall:

(a) Be the agency of the Federal Government to co-ordinate and monitor all investment promotion activities to which this Act applies;

(b) Initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors;

(c) Promote investments in and outside Nigeria through effective and non-Nigerian investors.”

The only exception for a foreigner is as stated in Section 17 of the Act which prohibits investment in the “negative list”, which is defined under section 31 to mean production of arms and ammunition, production and dealing in narcotic drugs and psychotropic substances and production of military, para-military wears. 

It is important for the NIPC to re-organise the Nigerian business climate in the light of present circumstances to favour Nigerian investors. The negative list is not positive to Nigerians either, considering the few items listed therein and amount of their contribution to the national gross domestic product. There are more viable industries like telecommunication, the media, consumer goods outlets, etc., which account for a greater percentage of investment opportunities. These greatly affect and almost control the socio-cultural lives of the people and offer better investment returns. Government policies and legal reforms must redirect in this regard. 

Equally relevant and worthy of mention is the National Office for Technology Acquisition and Promotion, otherwise called the National Office. The National Office is established under section 1 of the National Office for Technology Acquisition and Promotion Act (NOTAPA) to carry out functions with wide ranging effect. Section 4 of the Act provides the functions to include:

(a) The encouragement of a more efficient process for the identification and selection of foreign technology;

(b) The development of the negotiation skills of Nigerians with a view to ensuring the requirement of the best contractual terms and conditions by Nigerian parties entering into any contract or agreement for the transfer of foreign technology;

(c) the provision of a more efficient process for the adaptation of imported technology;

(d) the registration of all contracts or agreements having effect in Nigeria on the date of the coming into force of this Act, and of all contracts and agreements entered into for the transfer of foreign technology to the Nigerian parties; and without prejudice to the generality of the foregoing, every such contract or agreement shall be so registrable if its purpose or intent is, in the opinion of the National Office, wholly or partially for or in connection with any of the following purposes:

(i) the use of trademarks;

(ii) the right to use patented inventions;

(iii) the supply of technical expertise in form of preparation of plans, diagrams, operating manuals or any other form of technical assistance of any description whatsoever;

(iv) the supply of basic or detailed engineering;

(v) the supply of machinery and plant;

(vi) the provision of operating staff or managerial assistance and the training of personnel;

(vii) the monitoring, on a continuous basis, of the execution of any contract or agreement registered pursuant to this Act.

The National Office can effectively drive the formulation of a local content requirement in the area of technology and related products or goods with far-reaching effect on business ownership in Nigeria.

In August 2016, Dr Dan-Azumi Mohammed Ibrahim, Director-General of the National Office made a statement which seems to point the right direction, but clearly reveals the unfortunate state of affairs of the nation. According to him: “In the last six years, more than 99.9 per cent of the software that are used in the banking industry are imported and if you see the quantum amount of money that leaves this country as software licensing fees, you will shed tears. In fact, it is with pain and difficulty that we approve those agreements. But, we have not option.

“So, five to six years back, we said to ourselves, we have to do something to ensure that the deployment of every software package coming from abroad to Nigeria must be done by Nigerians. Through this exercise you will be able to develop the capacity of Nigerians in terms of the deployment of those software in the various sectors. By the time you maintain it; you may be able to acquire some of the skills and technologies. So, in the process, I would insist that any software coming into the country, Nigerian firms must be involved.

“The issue is, yes, local software have started penetrating, but at a slow space. But it is a matter of time, as far as I am concerned. The software imported into the system are paid for in dollars. The truth is that Nigerian economy can no longer sustain that kind of extra-expenditure. 

What is local is by far cheaper: It is robust, in terms of maintenance, and the people that develop the software are always there locally to support you 24/7.

“Technology, in real sense, is what demarcates developed and developing nations. Nations that have developed very well, I think, have been able to come up with technologies that could power their economies and, according to our records, more than 90 per cent of the technologies that power the Nigerian economy are foreign. And as a nation that is aspiring to become independent, we have to come out with policies and programmes to ensure that we develop local technologies.

“We cannot shy away from the fact that every developed country is guilty of national geographic and economic racism; they always prioritise the welfare and wellbeing of their citizens, beginning from their investment market as clearly reflected in their legal and regulatory reframe work, policies and practice. For example, on September 27, 2017 China’s cabinet extended the Value Added Tax exemption policy for companies with monthly sales revenue of less than 30,000 yuan (USS4,520) for three years; while the State Council equally cut reserve requirement ratios or commercial banks to strengthen financial guarantee agencies – with a national loan guarantee fund to be set up - in its quest to help small businesses obtain loan at a lower interest rate. In doing so, the Cabinet made a profound statement:

“Increasing the fiscal and financial support for small and micro firms … is good way to boost employment, generate new growth opportunities and invigorate the economy.

“Traditionally Chinese policies favoured state-owned entities at the expense of privately-owned businesses. This factor had to be addressed and there is currently a high government promotion of investment in commercial and entrepreneurial activities by providing attractive financial incentives in the form of tax breaks, grants, low-cost government sponsored inducements besides greatly lessening the burden of administrative fees and financing costs.”

Nigeria must adopt the same approach and extend the same measures to be enshrined in the Nigerian Oil and Gas Content Development Act, 2010. Section 3(3) of the Act provides thus:

 “Compliance with the provisions of this Act and promotion of Nigerian content development shall be a major criterion for award of licences, permits and any other interest in bidding for oil exploration, production, transportation and development or any other operations in Nigerian oil and gas industry.”

In the wake of the deadly and violent xenophobic attacks by black South Africans against other North-Southern African blacks, especially Nigerians. There are conversations across board on what measures the government and citizens should adopt in such a way as to encourage more Nigerians to invest and stay in Nigeria.  

There have been talks of possible boycott of such South African-owned and operated businesses, such as MTN, MultiChoice, Shoprite, among others. 

The most profitable measure to be adopted is for more Nigerians to boycott the services of such South African-owned businesses like MultiChoice, and to look towards subscribing to the pay television services that are executed by StarTimes, which is basically partly-owned by Nigerian public through the Nigerian Television Authority. StarTimes has remarkably made a tremendous image for itself in the area of top-quality services with rich contents to fully entertain Nigerians.

•RIGHTSVIEW appears on Wednesdays and Saturdays, in addition to special appearances. The Columnist, a popular activist (www.huriwanigeria.com, www.emmanuelonwubiko.com), is a former Federal Commissioner of Nigeria’s National Human Rights Commission and presently National Coordinator of Human Rights Writers’ Association of Nigeria (HURIWA).

Source: News Express

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