The 2013 External Development Report by the Central Bank of Nigeria (CBN) that, Foreign Direct Investment (FDIs), declined over $7 billion in the third quarter of the fiscal year 2013, was certainly no complimentary news, given that Nigeria’s dream for transformation through large scale industrialization can hardly materialize without the huge capital and technological input from abroad. The apex bank revealed Tuesday that as much as $4.91 billion FDI inflow was lost while portfolio investments also declined by over $3 billion in the third quarter. These unedifying statistics should worry the federal government, especially the eccentric Minister of Trade and Investment, Olusegun Aganga; who misses no opportunity to pontificate about Nigeria’s economic prospects as a hub for foreign investment.
The report said: “At US$4.91 billion in Q3 2013, aggregate foreign capital inflow declined by 42.8% from $8.58 billion in Q2 2013 due to the decline in both direct investment and portfolio investment inflows. Direct investment inflow declined from $1.47 billion in Q2 2013 to $0.86 billion in the review period. Similarly, portfolio investment inflow declined by 52.3% from $6.52 billion in Q2 2013 to $3.11 billion in the review period. Outflows in the Q3 2013 increased by 5.6% to $13.36 billion as against $12.65 billion in Q2 2013. Consequently, a net inflow of $25.14 billion was recorded in Q3 2013 as against $25.51 billion in Q2 2013 indicating a decline of 1.5%. The CBN component of foreign exchange flows recorded a net outflow of US$0.81 billion during the review period in contrast to a net inflow of US$3.1 billion in Q2 2013. The apex bank stated that the stock of external reserves as at end-September 2013 stood at $44.11 billion as against 44.96 billion in the preceding quarter; indicating a depletion of US$0.85 billion
The embarrassing CBN report which is just another euphemism for Nigeria’s hostile investment climate speaks directly to the corruption and rotten politics that has become the signature trademark of the Jonathan administration. If anything, the report is another wake-up call for the government to re-draw not just Nigeria’s economic blueprint, but also how to implement it successfully. It highlights the obvious fact that the fundamental issues that makes a country investor-friendly – infrastructure, security, good roads, constant power supply and political stability are absent in Nigeria. These issues need to be put right first and foremost in order to attract investors. For any serious government, such a report ought to be an agenda for action and a basis for benchmarking improvements in government performance.
The CBN report on the health of the country’s economy is a matter of grave public concern. The rather self-comforting view always taken by Minister Aganga is unlikely to help in formulating policies to improve the economy. Equally worrisome is the fact that Aganga’s assertions have been unsupported by the preponderance of real economic indices facing the country. It is imperative, therefore, that the truth about the economy is unraveled in order to effect necessary improvement with utmost assiduity. To say the elusive quest for foreign investors has been disappointing would be an understatement; it is a crying shame that, with tons of money allocated to efforts to improve the investment climate, the gap between expectation and results is so wide as to come to the notice of the apex bank in the country.
Every year, teams of economists and development policy professionals in association with development organizations such as the World Bank, African Development Bank, the UNDP; produce reports which measure the extent to which countries are business-friendly. These investment climate reports are a quantification of the difficulties businesses face in different operating environments. They measure indicators like the time it takes to register a business, obtain official title to lands, protecting investors, paying taxes, getting credit, enforcing contracts, trading across borders, among others. The performance of assessed countries is compared to their peers. Report after report have catalogued how, Nigeria’s physical infrastructure does not provide sufficient support for new and growing firms; and that epileptic power supply across the country has resulted in backup generators forming a key part of any business’s assets, albeit at a significant additional operating expenses. These highlight the impact of Nigeria’s well-documented infrastructural challenges on new business owners. The clear assumption of these reports is that the longer it takes to secure key regulatory inputs or the costlier key services are, the more time it takes to make goods, the less profit will be made and the less income created.
It is a damning condemnation of the performance of the Trade and Investment Minister who has wasted public resources to woo foreign investors to Nigeria, yet has done absolutely nothing to ensure that those already in the country don’t divest their investments to other more enabling environments. Huge amounts of money have been spent in rebranding Nigeria’s image with nothing to show for in return. Jonathan himself has led several delegations abroad to showcase Nigeria’s investment potentials, but has come back empty-handed. Aganga and others charged with improving Nigeria’s investment climate are renowned for spending time quarrelling over money instead of doing what they were charged with. There is only one phrase to describe this betrayal of public trust: corruption that stinks to the high heavens.
If President Jonathan is disgusted as he ought to be with this latest CBN report of declining FDI, he should institute an enquiry into the under-performance at the Ministry of Trade and Investment. First, it just could be that, against the backdrop of its performance to date, the Ministry needs to be holistically assessed and reorganized. Second, given the quantum of money that has gone into rebranding Nigeria and improving its investment climate over the years, somebody must be held accountable. Third, this will effectively serve notice to any new Minister that it will not be business as usual. As Minister of Trade and Investment, Aganga should be assessed for measurable outputs such as the number of businesses that have been attracted to the country and the number of jobs thus created, under his watch; rather than phantom projects to build six modular refineries in two years; or tokenism in the pursuit of foreign investment such as issuance of 10-year visas and reduced cost of business registration.
The President himself has not developed any innovative ways of promoting public sector accountability which is a critical part of the ecology of democratic governance. Jonathan should sit up and address the multitude of deficiencies undermining Nigeria’s investment climate. This calls for the sacking of Aganga who has become an embarrassment to the administration. The government should work on improving the investment climate rather than waste millions of taxpayer’s money on needless seminars and empty public relations gimmicks such as the inspection tour of states by Ministers and PDP chieftains, to witness projects and measure the impact of Jonathan’s transformational agenda.
