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Lack Of Preparation And Wobbled Search For FDIs In Nigeria

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This report by MARK ITSIBOR underscores the reasons government and Nigeria-based companies often lost opportunities to attract Foreign Direct Investments (FDIs) at international business fora

For decades, government delegations from Nigeria to investment opportunities-packed fora – business or political – either failed to return home with quality contractual deals or a handful of closed deals, whose lifespan more often than not, end up at committee levels. Ironically, when such international conferences or forums are held, Nigeria usually emerges as the country with the most expanded delegation – with participants drawn from both public and the private sectors.

Events over the years have shown that the situation is due to failure of government delegations to arm themselves with attractive and well prepared project proposals amidst absence of articulate project choices to connect, engage and close high-impact deals with foreign investors. Experiences have shown that Nigerian delegations go to such epoch meetings with handouts that are devoid of realisable ways to secure investors’ confidence for Public Private Partnership on infrastructure funding to build a competitive economy for the nation.

At the same time, fewer deals closed and even smaller rate of actual patronage meant lack of proper preparation for international events, including continental investment forum, annual International Monetary Fund/World Bank spring meetings, among others. The implication is always that public funds are squandered and huge time wasted on frivolous meetings, while estacodes are collected without impactful outcomes.

That explains why present and former government officials and members of the private sector are now calling on Ministries, Departments and Agencies of government to ensure proper preparations that include holding of roadshows that provide platform for wider consultations and imputes as part of preparations for fora with the potentials to assemble Foreign Direct Investors and portfolio investments.

Ahead of this year’s Africa Investment Forum (AIF) in South Africa, industry experts say Nigeria must strive to improve on the quality and quantity of deals closed, with a focus on attracting serious investments at the forum. Aside that, there is also the need for Nigeria to endeavor to initiate a study of the changing demand for skills brought about by technological innovation, so as to internalize the need to build the right pipeline of talent and to more closely align the demand and supply of skills, as the World Bank had urged.

Nigeria has a total infrastructure stock (roads, power, airports, rails, seaports, airports, etc.) valued at 35 per cent of its annual Gross Domestic Product (GDP). What that means is that the country has huge infrastructure financing gap. An estimated $100 billion is required annually to finance infrastructure development in Nigeria to close the country’s infrastructure deficit. The way out?

The country has to leverage on private sector partnership for infrastructure financing.

Those who were at the Nigeria Roadshow of the Africa Investment Forum in Abuja recently think high level leadership, bankable projects and proper preparations of project documents are absolutely critical to attracting Foreign Direct Investments (FDIs) into Nigeria.

The discussants say ahead of the 2019 edition of Africa Investment Forum, Nigeria and Nigeria-based companies need to get their priorities right and strategise on how best to consummate and secure workable investment deals with investors that would converge on Johannesburg, South Africa in November.

Ekiti State’s Governor Kayode Fayemi believes if Nigeria puts her foots forward, she will receive significant funding commitment from investors at the event. For him, the roadshow offers Nigeria the chance to prepare for how to present bankable projects in the November 11-13 forum. “It’s the project we have to put forward; that is the problem, not the funding. We must present our investment opportunities in a manner that appeal to investors,” he stated.

Former Minister of Finance, Mrs. Zainab Ahmed who lamented the usual non-preparation of government agencies for international business and investment conferences, could not agree less with Dr. Fayemi. One major thing that annoys her is the wobbled search for investors without well thought out plans ahead of the international meetings.

The old saying that “he who fails to plan, plans to fail” is well manifested in Nigeria where most participants in those continental and global fora are not worried by the lack of preparation to attend; unlike their foreign counterparts. Even with impressive Central Bank of Nigeria (CBN) reserve of about $45 billion and a pension fund of over N8 trillion, Nigeria will need a considerable amount of private finance to bridge its cumulative infrastructural needs of about $3 trillion by 2024.

That is why Mrs. Ahmed adviced that “there should be preparations on the side of government. Preparation is really important for every forum we have to go to. We go to Davos every year without preparation. Everyone just gets up and go without preparation,” adding that government has to support companies for the forum.

Senior Director, Nigeria Country Department at African Development Bank (AfDB), Ebrima Faal is among those who believe Nigeria can hugely benefit from the investment forum which offers a unique opportunity to exhaust numerous options for sound, innovative and economically viable growth for the continent and especially for Nigeria. He observed that Nigeria will need a considerable amount of private finance to bridge its cumulative infrastructural needs of about $3 trillion by 2024,” stating that “The time for bridging this gap is now.”

At the maiden forum held in South Africa last year, deals worth a total of $46.9 billion were discussed with 49 deals valued at $38.7 billion secured. Out of the 63 boardroom deals presented at the forum, Nigeria had only five deals worth $7 billion. This represents 14 per cent of the total deals accounted for the continent, and 43 per cent of the deals accounted for West Africa.

Unfortunately, there are no indications as to whether any of the investors who closed deals with the Nigerian delegation eventually came in to establish businesses in Nigeria.

Like Faal, former special adviser to President Buhari on ERGP, Mr. Folarin Layande of the view that “cogent preparation is extremely very important. And all the documents should be ready” as requisite demand for high level of standard.

Speaking along the same line, CEO, Nigeria Export Processing Council, Segun Awolowo said “let’s prepare properly get your programmes right. Make sure you have projects that can attract investment or funding. If we are prepared, our companies are going to benefit from it.”

Faal captured it all when he reminded all at the Nigerian roadshow that “…Nigeria is ready; the investment landscape is promising, and it is time to put our money where our mouth is.” As he rightly put it, all that Nigeria needs now is a clear-cut process of attracting foreign investment into the country.

Elsewhere, organisers of the Second Intra-African Trade Fair (IATF2020) expect it to surpass the achievements of the inaugural trade fair held in Cairo in 2018 by attracting 10,000 participants and generating intra-African trade and investment deals worth more than $40 billion, Prof. Benedict Oramah, President of the African Export-Import Bank (Afreximbank), has said.

The expectation is that countries like Nigeria with dwindled revenue base would strategise and put her first eleven forward for the summit that is expected to present opportunities for economic benefits.

Prof. Oramah was speaking recently at the formal launch of IATF2020 during the African Continental Free Trade Area (AfCFTA) Business Forum 2019 held on the sidelines of the 12th Extraordinary Summit of African Union (AU) Heads of State in Niamey. He told guests that the trade fair, scheduled for Kigali from 1 to 7 September 2020, would attract more than 1,100 exhibitors from over 55 countries.

“Working with our esteemed partners, we will exceed the achievements of 2018,” he said, describing IATF2018 as a resounding success, not in the colourful displays exhibited, but in the showcasing of diversity of tradable goods by about 1,100 exhibitors from 45 countries and in the execution of deals worth about $32 billion.

That trade fair resulted in a Nigerian technology company winning a $100-million contract to provide technology-based solutions to the South Sudanese government; an Egyptian company winning contracts in many African countries to supply and install energy generation and distribution equipment worth close to $1 billion; Egyptian and Tunisian companies signing a $50-million partnership deal to create a joint venture for assembling home appliances; and the signing of a $3-billion energy generation project between an Egyptian company and an African government, the largest-ever intra-African project executed exclusively by African entities, including financial institutions, he noted.

“The momentum created by the maiden IATF and the historic launch of the African Continental Free Trade Area (AfCFTA) will sustain the growth of cross-border trade and investments,” he affirmed.

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