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Security and the rule of law for nigerian enterprise development for entrepreneurial revolution — Part 2

By Peter Osalor
The Nigerian Federal Government suffered and estimated $20 billion in Oil production and export shortfall losses in 2008 due to militant violence in the Niger Delta region.

While this is a considerable amount, it pales in comparison with the billions more it loses annually to aborted contracts, production delays and business closures because of security issues. Even more significant are the repercussions on latent economic sectors like tourism.

The Nigerian government admits the possibility of earning more revenue from tourism than it does from oil, and has been involved of late in developing a tourism profile to attract international travellers.

Between 2000 and 2004, international  air arrivals jumped from 12,000 to 190,000 while the hotel and restaurant sector’s contribution to GDP grew from N4.9 billion to N6 billion . Going by such indicators, the Nigerian Tourism Development Corporation is understandably confident of developing the country as a world-class circuit of important monuments, landmarks, nature retreats and heritage sites.

Yet, tourism, as a profitable economic activity, is virtually nonexistent in this corner of sub-Saharan Africa; hardly surprising considering the long list of nations that have stern advisories against travelling to Nigeria unless absolutely essential.

A similar dictum seems to guide investments flowing into the country. Foreign Direct Investment (FDI) in Nigeria was over $62 billion in 2007 , well under desirable levels considering that most of the funds were concentrated on the oil industry. The security situation is largely to blame for a very small fraction of FDI reaching other sectors, as it is for keeping away expatriate Nigerians from investing in their country of origin.

The spectre of violence and lawlessness has proved a strong deterrent against business ventures by the Nigeria Diaspora, a critical failing that keeps away billions of dollars in potential investment. Where countries like India and China have reaped huge benefits from expatriate investment, Nigeria has been far less fortunate because the risks involved in doing business in the country are too large.

The following are some of the broad and specific measures the government needs to be looking at in order to convincingly resolve the situation:

“Correcting the deficit in administrative legitimacy by addressing core issues that feed violence and organised crime. Genuine grievances and concerns must be effectively addressed to soothe popular discontent.

“Using economic growth and prosperity at ground levels as a weapon to isolate extremist and criminal elements, effectively denying them the public support and collaboration their operations rely on.

“Enhancing effectiveness of security operations in sensitive areas through better strategy, increased vigilance along industrial clusters and improved cooperation between state and federal law enforcement agencies.

“Re_evaluation of centralised policing in favour of devolved powers for control and deployment of police forces. Nigeria’s federal structure and complex state laws make a strong argument in favour of a decentralised police force.

“Maintaining the authority of democratic institutions and the rule of law by increasing transparency in governance; initiating effective measures against corruption and bureaucratic red tape.

Economic expansion in Nigeria is critically linked to internal security and the effective rule of law. The country’s high crime rate, frequent communal violence and deep_rooted ethnic divides are severely detrimental to both business development and sustainable growth. Nigeria must be able to reposition itself firmly as a safe destination, for tourists and investment alike, if it is to achieve these goals.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.