One rather unpalatable takeaway from Obasanjo’s Presidency (1999-2007) is the amount of resources spent in globetrotting to try and ‘woo investors to come and invest’ in Nigeria without commensurate results.Â
It was actually a frenzy by former President Obasanjo that no sooner was he sworn in on 29th May 1999 at the dawn of Nigeria’s reentry as a democracy, than he thought that the best way to start his Presidency was to go on globetrotting in the name of ‘reassuring and attracting investors’ that Nigeria is ‘safe’ for investment. These trips gulp huge amount of taxpayers funds and were simply not worth the time.
If the trips were meant to repair the nation’s image, you actually don’t need to travel abroad to repair your country’s image, just fix the home front and do what is right. Attracting investors goes beyond meetings and talk shows. Investors want to see a secured and conduct environment. They want to be sure of where they are investing their money.
Available records revealed that Obasanjo visited 97 countries during his two – term tenure as President (1999-2007) in the name of ‘attracting foreign direct investment (FDI). Indeed, the results were not commensurate with expectations as the nation didn’t witness any boom in FDI at the time.
Albeit Nigeria’s GDP rose sharply from $36bn in 1999 when Obasanjo took over to $166.4bn in 2007 when he left office, most of this rise in GDP was due to the deregulation of the telecommunications sector not really from Obasanjo’s foreign trips to ‘attract foreign investment’. There was never a link between Obasanjo’s trips abroad and the rise in GDP during his tenure as President.
President Buhari was another case study in ‘foreign trips’ to attract investors as he visited 43 countries during his tenure in search of foreign investment but the results show that these trips do not translate to FDI. During Buhari’s tenure as President and despite his trips to ‘attract foreign direct investment, Nigeria’s GDP declined from $493bn when he took office in 2015 to $440.8bn when he left office in 2023. A loss of $52.2bn.
FDI under Buhari plummeted from $1.45bn in 2015 to $468.91m in 2023 which translates to a 213% decrease. This further goes to show that indeed, Presidential foreign trips to attract investors and the nation’s foreign direct investment (FDI) portfolio are not mutually exclusive.
Indeed, foreign trips by the President to ‘attract investors’ are not the basis for the investors to decide whether or not they want to fly into Nigeria and invest. What will instil investors confidence is actually an enabling environment for investment to thrive and of course, the opportunities.
Amongst the critical factors that are sine qua non to creating an enabling environment for investment is security. With the current state of insecurity that is very close to overwhelming the whole country, it will take the camel to pass through the eye of the needle to convince any foreign investor to come to and invest his money in Nigeria. To that extent, what the Tinubu administration needs to do is to direct its energy at the home front and build a very attractive destination for investors where security of life and property is guaranteed. Where people can move freely to transact their businesses. Where kidnapping is the exception rather than the norm and where everyone can sleep with their two eyes closed. The financial system in Nigeria needs to be reformed to instil investors confidence. A situation whereby a foreign investor cannot freely access his funds in Nigeria can only serve as a red flag to potential investors.
President Tinubu has started with great passion towards attracting FDI to Nigeria. This is moreso when juxtaposed with the President’s recent trip to India where he made contacts with some key investors and his address at the 78th United Nations (UN) general assembly in the U.S where he showcased Nigeria’s potentials as an investment destination including several business roundtables and meetings he held with potential investors on the sidelines of the general assembly. As a matter of fact, that is a good start but the Tinubu administration should try to avoid the pitfalls of the Obasanjo and Buhari administrations both of whom spent too much time and resources on foreign trips instead of focussing and investing in-house to create the enabling environment to attract foreign investment. If Obasanjo had devoted the time he spent travelling abroad to ‘attract foreign investment’ into creating the enabling environment in Nigeria, the story would have been different.
For sure, the foreign investor is not a philanthropist, he is not a charity. He wants very clear and verifiable evidence that investing in Nigeria ‘is worth it’ rather than taking avoidable risks. An investor always runs away from risks until he bumps into a risk he cannot avoid. Risk taking is part of investment but in real sense, the investor remains shy of risks.
If the signs for investment are negative (as most of them are today in Nigeria), the investor will not come. He can only give an empty promise ‘I will come and invest in Nigeria at the right time’
For example, the trapped funds of foreign airlines in Nigeria stood at $783 million in August 2023. The international air transport authority (IATA) is neck deep in trying to get the Nigerian government to repatriate the trapped funds. These airlines are owned by investors who decided to invest and operate flights into Nigeria but were caught in the uncertain Nigerian economic cycle leading to the trapping of their funds. As a matter of fact, some of the airlines had to suspend operations into Nigeria at some point owing to the trapped funds.
The international flight ticket fare ex-Nigeria is exorbitant nay a rip-off and is linked to these trapped funds. International flights out of Nigeria cost almost 350% higher when compared to other destinations around the world. Now the question is ‘which investor will be aware of an uncertainty such as the airlines trapped funds and still want to invest in Nigeria?
Quite frankly, some business-liberal countries such as India, China and a few Asian countries may be less averse to the risk of investing in Nigeria than western countries. While India and China may take measured risks and invest in Nigeria, there is almost a zero chance that western countries particularly the U.S and U.K will make any new investment in Nigeria going by the current rate of insecurity and uncertainty in the land. The latter may strive to manage their existing investment in Nigeria and avoid any new ones.
Sufficing to state that a few Nigerians are destroying Nigeria’s image abroad which also contributes to making investors averse to investing in Nigeria. The UAE/Dubai has placed a visa ban on Nigerians. Is this not humiliating enough? Can you blame Dubai? No, you can’t for obvious reasons but has Nigeria retaliated by sending a message to Dubai through a visa ban or expelling a UAE diplomat as Canada did to India recently even if to use it as a bargaining chip?
The high level corruption at literally all levels of government and sectors in Nigeria is another factor that demotivates investors from coming to Nigeria to invest. Corruption increases the level of uncertainty in the financial system which again raises the red flag to investors.
Without doubt, Nigeria is a great nation in all ramifications but the government and the citizens must work together to realise Nigeria’s untapped potentials. We must work to consummate Nigeria’s greatness: the government and the citizens must do their bits but the onus rests with the government to lead the way to Nigeria’s greatness.
The gold deposits in Zamfara state alone are enough to diversify Nigeria’s economy if properly harnessed but which foreign investor will go to Zamfara to invest when kidnappers and bandits have literally taken over the state? When the locals across the state say their last prayers before they go to farms?
The Tinubu administration should focus more on making the home front safer and conducive for investors to come to Nigeria and invest. A situation where by government officials -at both state and federal levels- globetrot around the world to literally and forcefully drag investors to Nigeria will not achieve the desired results. What will work is provision of the right ingredients to attract investors: security, power and a reliable exchange rate regime are some of these Ingredients.
If Nigeria can put in place some of these ingredients that promote a favourable and friendly environment for investment, investors will queue up to come to Nigeria and invest rather than wait to be invited.
