‘Nigeria can prosper through FDI if local businesses are diligent’

 

A recent report on the attractiveness of Nigerian businesses shows that countries like Ghana and others with about half the size of Nigeria’s economy are getting a better share of foreign direct investments. The recent trend in the conflict between some Nigerian business owners and foreign private equity investors and venture capitalists further indicates a major crack in what is expected to be a profitable endeavour for both parties. In this interview with JIDEOFOR CHIJIOKE, Barrister Jide Ologun, the former Chairman of the Nigerian Institute of Public Relations, Lagos Chapter, and a Certified Corporate Consultant with the Corporate Affairs Commission, who worked in the Legal Unit of the Central Bank of Nigeria (CBN), called on Nigerian businesses to do more regarding due diligence around the contractual and legal framework that set up their partnerships to ensure a win-win situation.

In recent times, Nigerian business owners have struggled with raising funds for their businesses, what do you think has been responsible for this development?
We have to start by examining what the business environment looks like because creating funds for a business means that money must go into business. In public relations, we talk about the five pillars of business which are the growth, the survival, the profitability, the employee satisfaction, and the corporate social responsibility, otherwise known as the social investment. So, profitability may appear to drive all the other elements because, without profit, a business cannot grow; without profit how can you survive? Without profit, how can you satisfy your employees? Without profit how can you engage in social investment?

The operational characteristics of the Nigerian business environment are tedious; there is a case of high tariffs in the power sector and the recent increase in the pump price of petrol. In the power sector, despite what investors pay, the services are hardly available alongside the multiple level taxation that we have in the country. Recently, the value-added tax was increased from 5 per cent to 7.5 per cent and several border issues are making it difficult to do business in Nigeria.

Rather than bringing in their resources here, even organisations that were doing business in Nigeria, have had to relocate to other countries because of the better business environment. If we want to attract foreign direct investment, the environment must be right for it because it is not easy to get money, coupled with the fact that we do not have a single-digit interest and inflation rates. Several other issues are making it unattractive for investors to bring in their money here because at the end of the day, as they say in the business community, it is all about the bottom line.

Talking about FDI (Foreign Direct Investment), the flow into Nigeria plunged to US$1.29 billion in the second quarter of 2020 and that is raising some concerns. Do you see the situation improving anytime soon?
The situation can improve if government policy implementation improves the environment because you cannot take the environment away from business operations. For example, we mentioned proper business procedures, assuming all other things are equal. But, right in the same system, you have incidences of kidnapping, banditry and other levels of crime. There is a serious level of anxiety, but investors need peace to invest.

For instance, with the present business environment in Nigeria, if I am a foreign investor, why won’t I go and invest in Rwanda where I can be assured that I can make my estimations and projections in the next seven years at a lower level of risk? Unfortunately, daily in Nigeria, the headlines are traumatic and these are issues.

Based on the constitution of Nigeria, the government has a lot to do. For instance, Section 14, sub-section 2 of the 1999 constitution, as amended, says that the security and the welfare of the people shall be the primary purpose of the government. So, if the environment is secured, many people will come in here to invest. The investment will match with the local investment and then, we can generate prosperity to embark on the welfare of the citizens.
However, in a situation where many stakeholders are asking for breakup or restructuring, where our country is branded as the capital of poverty, where we have allegations of nepotism and injustice, it is not encouraging for investors to come and invest. If we deliberately begin to change the narrative of the fundamental environmental sanity that is required, then we can change the symptoms and the consequences that we have on the ground.