The latest report on the Nigerian investment climate indicting government for its failure to provide a conducive environment for economic development is hardly surprising. It confirms the degeneration that has permeated governance and puts paid to the spurious lies and wishful thinking by Nigerian government officials, including the overzealous and eccentric Minister of Trade and Investment, Dr. Olusegun Aganga, who has been hallucinating about Nigeria’s economic prospects as a hub for foreign investment. If anything, the report is another wake-up call for the Jonathan administration to re-draw not just Nigeria’s economic blueprint, but also how to implement it successfully.
The report of a survey by the South African-based Omidyar Network Africa in partnership with Monitor Group, ranked Nigeria as the most difficult business environment in Sub-Saharan Africa. The report, which was presented to investors and government officials in Lagos last Tuesday, listed inadequate electricity supply, access to finance and infrastructural deficiency as some of the challenges militating against entrepreneurs in the country. This latest assessment of Nigeria’s investment climate is an embarrassing report card which is just another euphemism for corrupt government and rotten politics.
Every year, teams of economists and development policy professionals produce reports which measure the extent to which countries are business-friendly. These investment climate reports, often written in association with other development organizations such as the World Bank, African Development Bank, the UNDP; 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.
Instructively, this latest survey, which was carried out in Nigeria, Ghana, Kenya, Tanzania, Ethiopia and South Africa, showed that Nigerian banks demand higher collateral from investors than every other country in the Sub-Saharan Africa. “The cost of capital charged by banks and investors is often so high that it impedes the entrepreneur’s profitability. In the same cases, banks require 150 per cent of the borrowed amount in collateral, thereby automatically disqualifying many from funding eligibility.”
According to the report, Nigeria’s physical infrastructure does not provide sufficient support for new and growing firms; the most negative result amongst benchmarked countries. The report noted 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. “In fact, only 12 per cent of respondents believe that new and growing firms can afford the costs of using the physical infrastructure available in the country. These findings highlight the impact of Nigeria’s well-documented infrastructural challenges on new business owners”, it added.
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. Why should an investor cite a company in Nigeria if his competitor would have completed the same business in Ghana by the time he finally secures company registration, land title and required regulatory permits for production?
For any serious government, these reports ought to be an agenda for action and a basis for benchmarking improvements in government performance. Importantly, the assessment is also more concerned with the quality of the environment governments build for local businesses to thrive and how this environment impact foreign investors. Sadly, there is no evidence that government officials even read, let alone elaborate programs of action based on these annual reports.
The Minister of Trade and Investment ought to set targets on the report’s indicators of investment friendliness. Poor investment climate is only a euphemism for corrupt government and rotten politics. It is sad that political leaders across party divides are largely interested in helping themselves and their friends. The promises they make to voters during elections are uninspiring, unimaginative, pedestrian and patronizing. But governance has to go beyond promising to build schools, roads or hospitals, more so when the contracts for these projects often serve more to enrich public officials and their contractor cohorts than benefit the public.
Reports based on credible research provide a model to quantify political promises and promote accountability. As Minister of Trade and Investment, Dr. 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. The President himself has not put forth any new ideas on how to meet the challenges of power shortage in the country; nor has he developed any innovative ways of promoting public sector transparency and accountability.
An essential part of the ecology of democratic governance are think-tanks and civil society organizations, which monitor and shed light on government performance in many sectors of the economy. Curiously, the Nigerian business community has allowed the government to develop pseudo accountability initiatives while businesses have been largely content to pay bribes to rent-seeking and obstructive public officials, such as the pathological lying Trade and Investment Minister.
President Goodluck Jonathan should sit up and address the multitude of deficiencies highlighted in this latest report. This calls first, for sacking of the Trade and Investment Minister who has become an embarrassment to the administration. Secondly, the bureaucracy should be reformed and much better paid. Only then will civil servants understand that their role is to facilitate job creation; not demand bribes from those who flout regulations. Public officials should work on improving the investment climate rather than waste millions of taxpayer’s money on needless seminars and empty public relations grand-standing as was the case with the recent inspection tour by Ministers and PDP chieftains, to witness projects and measure the impact of President Jonathan’s transformational agenda.
Huhuonline.com Editorial
