THIS year’s World Economic Forum, WEF, in Davos Switzerland confirmed that the annual WEF meeting remains the foremost gathering to contemplate and shape global economic agendas. The prestigious gathering captures in all ramifications the anxieties global business and finance are currently contending with and highlights the crisis of trust facing both public and private institutions.
Increasing investment and economic production, deciding optimal levels of taxation and use of public funds, and jobs creation are some of the key issues which need to be resolved in advanced economies as well as Nigeria albeit with varying degrees of urgency. What has become very clear since the 2008 global economic crisis is that policy actions are required both in the advanced Northern economies as well in developing countries such as Nigeria to create conditions conducive to profitable investment of capital everywhere.
An investment by a New York-based private equity group in an e-commerce business in Nigeria not only creates jobs and the opportunity to buy goods more easily and at cheaper prices in Nigeria, it also creates wider and more efficient markets for Western and Nigerian manufacturers as well as enabling investors to pay pensions of former British or American pensioners.
The dense interconnections between the flow of capital and global patterns of production, consumption and welfare explain the interests that the members of the World Economic Forum who are also the world’s biggest firms have in countries like Nigeria, hence the decision to hold the 24th World Economic Forum in Abuja.
The interconnections between capital flows and production were also reflected in the opportunity given to Africa to promote her investment potential in Davos in January. President Goodluck Jonathan, leading a robustNigerian delegation, underscored the continent’s understanding that political stability is critical for investment and economic growth.
He touted the continent’s huge and youthful population, calculated to rise to two billion by 2050 as a magnet for investment.PresidentDramani Mahama of Ghana weighed in, stating that while an enabling investment climate is crucial for growth and jobs creation, African governments must also enhance their capacities to efficiently distribute the fruits of economic growth to make growth sustainable. Africa was thus “on message” at Davos.
Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria, and a Co-Chair of the World Economic Forum Annual Meeting in 2014, pointed out that the majority of foreign investors are too cautious in the lead-up to elections.“Today there is no government that will be against business, so go ahead and invest,” he urged. Dangote added: “People always underestimate what Africa can be.
By 2050 we could have a united Africa with one common market. Can you imagine if we had sufficient power? Our GDP would be US$ 9 trillion by 2050. It can happen,” he quipped. Julian Roberts, Group Chief Executive, Old Mutual, United Kingdom, told participants that: “Africa is on the move and it is moving forward. But we need to ensure we have an enabling platform for business.” Roberts said the continent will not succeed unless there is a “handshake between government and the private sector”.
That handshake between government and the private sector is what the World Economic Forum for Africa, Abuja, 2014 will seek to strengthen. WEF on Africa, holding in Abuja between May 7 and 9, 2014 with the theme, “Forging Inclusive Growth, Creating Jobs” reflects the economic priorities and strategy of the Nigerian government. The forum will be co-chaired by chairman of the Dangote Group, Aliko Dangote, and the chairman of Bharti Enterprises, Sunil Bharti Mittal, who are major private sector players in Africa.
The Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo- Iweala used the showing in Davos to highlight the importance of the event coming to Nigeria for the very first time. This event is coming at a time when Nigeria is becoming more integrated into global capital markets and when the country’s aspirations to attract foreign investment into non-mineral sectors is becoming increasingly viable.
Hosting the World Economic Forum on Africa is like a coming party for Nigeria in the global investment circles. Dr. Nwanze Okidegbe, Chief Economic Adviser to the President, said recently in an interview: “Sometimes, when people think of Nigeria, they think of oil. But we have far more than oil. The non-oil sector is even growing much faster.
There are lots of investment opportunities in manufacturing, infrastructure, agriculture and so on. We are going to use the World Economic Forum on Africa to maximise the benefits by getting both international and Nigerian companies to get together, share information that will further showcase that Nigeria has a lot of opportunities”.
Perhaps, more effective is the boost that Nigeria received to its investment story in Davos from non-Nigerians. Michael Vincent, Director at Monitor Deloitte, bluntly told South African firms that if they want to “play outside South Africa you have to be in Nigeria”. According to Mr. Vincent, the Economist Intelligence Unit is busy rebasing its gross domestic product data on Nigeria, in part because the populous West African country beats other nations in Africa “hands down” when it comes to foreign direct investment, FDI. “I’m seeing a lot of global companies coming into Nigeria”.
There seem to be a general consensus that the Davos meeting has changed the tone of investors on the state of the global economy. There is a consensus that a durable recovery is on course. According to one participant: “Businesses and investors are expanding geographic horizons to break into new markets: research shows that while still focused on containing costs, they are migrating to second-tier cities to meet business demands and to take advantage of skills and new market opportunities”.
Nigeria’s big challenge is to build on the outing in Davos and the confidence expressed in its growth potential by investors. We are hosting the first World Economic Forum meeting after the most upbeat Davos meeting since the global financial crisis hit in 2008. The organization of the WEF on Africa in Abuja has to be splendid. Nothing should go wrong. And this is just a basic requirement.
More importantly is the need to ensure that Nigeria packages a powerful case for investment to the international investors attending. Nigeria must announce concrete plans to execute critical economic reforms which have either being ignored or lukewarmly pursued. And after the world has gone home from WEF on Africa Nigeria 2014, our political leaders must see that executing these reforms remains top priority. Can all this be achieved in an election period? We can take the interest of international investors in Nigeria for granted; Nigeria will achieve inclusive growth and create jobs when the investors can also take our comm
itment to pursuing important reforms for granted.
Kelechi Decca is a Lagos-based financial journalist