By Esosa Omoregbe
IN February 2018, Vice President of Nigeria, Professor Yemi Osinbajo described MTN as a classic example of the many success stories of Foreign Direct Investments, FDIs, in Nigeria. Prof. Osinbajo noted this much during the launch of a policy laboratory aimed at accelerating the intervention of the Economic Recovery and Growth Plan, ERGP. The ERGP initiative is catalyst for the required $35 billion to bridge Nigeria’s massive infrastructure gap over a six to seven year period. The deficit in Nigeria’s infrastructure is the main reason it was listed as the country with the largest number of poor people in the world. As the pressure from a lack of resources in power, roads, education, healthcare and industrial capacity continue to erode the quality of life for an exploding population, our government officials – career civil servants and political appointees alike – play hard and fast with one of the most globally effective tried and tested mechanisms for bridging these gaps; public private partnerships, PPP, backed by foreign investment.
Anyone doing business in Nigeria runs up against what might be termed institutionalised gridlocks, with enormous political demands bordering on coercion and outright intimidation. A case in point is Dr. Wale Babalakin (SAN), chairman of the Resort Group, and a leading proponent of the PPP project. Dr. Babalakin has received some of the worst battle scars at the hands of government officials over his investments in critical sectors of the economy. Today, his ‘MMA2’ airport terminal is the first to be built in Nigeria with private funds under a Build, Operate and Transfer, BOT, agreement with the Federal Government. This same Federal Government through a parallel agency, daily violates the exclusivity terms of said agreement by running a domestic aviation terminal in direct competition with the privately funded one.
Apart from government pressure, one finds that PPPs are faced with a high degree of cynicism and public backlash from civil society and labour groups due to a perceived lack of transparency. These critics argue that privatising key public sector services violates the Nigerian constitution. Private investors who usually have a high degree of foreign debt often find themselves dealing with the multiple pressures of inconsistent and unfavourable government policy as well as a high degree of public opprobrium from vested interests and fifth columnists which further undermines investors’ confidence. Additionally, many foreign investors who are in a perennial battle to legitimise their existence in the eyes of the media, are frequently trying to explain to the people why their presence in the country is beneficial in the long term.
It’s probably impossible to analyse Nigeria’s complex mix of business, politics and cronyism. Venturing into these parts can be quite a risky business. UAE-based environmental utility group, Visionscape found itself in the eye of a socio-political storm when it became clear to all that embattled governor Akinwunmi Ambode had not adequately addressed the convoluted political patronage systems (designed at Bourdillon?) that were being supported by the previous ‘PSP’ system. One can only imagine calls held between Lagos and Dubai after Speaker of the Lagos State House of Assembly, Mr. Mudashiru Obasa, referred to the company as ‘a ghost not known to the state’! This disclaimer came on the heels of the foreign company emerging after a controversial tender process which saw a number of local and international firms compete for Lagos state’s domestic waste collection amid a liberalisation of the waste management industry which many have argued is tantamount to destroying local investment.
Krispy Kreme was recently faced with consumer backlash and jeopardy of their multi-million-dollar investment by the Babatunde Irukera-led Consumer Protection Council that chose to investigate allegations of the US doughnut franchise using expired mixes in a ‘trial by social media’. Subsequent investigation by NAFDAC- the relevant agency for food and beverage regulation – found that the goods were within legal limits and tests proved the food products were fit for consumption. In other climes, this admission would have been announced with the same fanfare as the criticism but alas, our officials are accountable to no one. Krispy Kreme is now left to clean up the mess and do its own explaining to an already skeptical public.
MTN also suffered a similar state in 2016 when a hefty $1bn fine was slammed on the telecom company over unregistered sims. The leading telecom which continues to weather the familar storms that characterises FDI’s in Nigeria was recently issued a $8.1 billion demand over concerns around repatriation of funds.
Our intentional undercutting of FDI in Nigeria did not begin with this government or even the last one. When billionaire Richard Branson launched Virgin Nigeria in 2005 , he was lauded by the then-government for launching an airline company. By 2008, he accused Nigerian officials of ‘mafioso’ style tactics and we all watched the ignominious pull out and subsequent loss of a Virgin national carrier. Eleven years later, the federal government ‘launched’ a phony intended as new national carrier with no technical partner, no known private investor and no aircraft which it suspended recently.
Countries like the United States of America and many in Europe provide strong protection for all investors, both foreign and domestic. This is why for decades, the US has remained the number one destination for FDI, followed closely by the United Kingdom and China. Both Brazil and India also have top 10 positions due to active reforms that encourage FDI. Nigeria will need to do the same, and our legislators and courts have a role to play. High level corruption on all levels will need to be addressed, as well as bureaucratic bottlenecks that make it nearly impossible to get anything done in a timely manner.
An administration led by a president who appears to drive economic and foreign policy through ‘body language’, is clearly unable to see the contradiction between multiple criss-crossing of the globe looking for ‘foreign investors’ while parastatals and other branches of government at the state and federal levels continue to harass, malign and misrepresent the ones that were intrepid enough to come here in the first place. Indeed, the recent assertion by HSBC that the Nigerian economy has “structural shortcomings,” and should not continue in the present direction rings true because the rise in oil prices have in recent months masked severe deficiencies in other areas, while we continue to clash with foreign investors, as if they are the source of our problems.