The investment environment in Nigeria is not attractive enough, a panel of experts said on Monday.
The experts spoke during a session under the theme “Corrosive and constructive capital inflows in Africa: regulatory framework and governance gaps” at the ongoing Media and Development Conference organized by the Center for Journalism, Innovation and Development (CJID) in Abuja on Monday.
Experts explained that instability and uncertainty, among other factors, have made the country’s economy too risky for investments.
Lola Adekanye, Africa program director at the Center for International Private Enterprise, said on Monday that these issues are affecting the country’s ability to attract needed investments, adding that chief among them is the environment for investment and growth.
“You will always hear that investors like stability, that you need to be trustworthy in the business sector and that translates into this: if I invest my money in any business, I want to be sure that the return on my investment is guaranteed. . I want to be sure because I don’t want to invest N20,000 in a business and earn less than N15,000 from it. Especially when there is investment competition for that capital for the same investment in many other regions.
“Therefore, the investment environment in Nigeria is not attractive enough. Because investors now worry about different types of risks and political risk is one of them,” he said.
“For example, we talked about the investment in the Abuja-Kaduna railway and then came the attack of insecurity. I’m not sure what insurance we have to recover the loss we suffered or still suffer due to that railway project that is not working optimally at the moment. And so, investors, before investing, look at the history of other investments that have been before in the country and when they see that the return on investment is not so guaranteed, it is reducing and there are too many unstable indicators, they won. I won’t be attracted to investing.
“And unfortunately, capital goes where there is stability and there are other places where there is trust and stability and where the return on investment is guaranteed. Basically, Nigeria remains a very risky market,” he added.
He explained that it is necessary for the government to promote the stability of the economy through effective fiscal policies and promote opportunities for private sector growth.
However, he condemned the misuse of the country’s borrowed funds, which are spent on recurrent expenditure rather than capital expenditure. He explained that spending funds on capital expenditures can be converted into economic value over time.
“The government goes into debt to cover recurring expenses, the government goes into debt to offer palliatives that do not demonstrate sufficient confidence that the return on investment will be guaranteed. And these are things that the government has to work on,” he noted.
“It is not an easy process. “It is a difficult, methodical and strategic process that the government has to follow, but it is important, very important,” he added.
Also speaking, the executive director of the Center for Fiscal Transparency and Integrity Monitoring, Umar Yakubu, explained that the country currently has an infrastructure deficit that can be covered through investments.
He noted that the country is lagging behind in terms of due diligence when it comes to the use of borrowed funds.
“Our level of due diligence is very low. We sign contracts without properly understanding what we are supposed to do. Even if we understand them, sometimes we do not sign them for reasons of national interest and security,” he said.
“That’s why you see that you are going to fall into a lot of problems when the money has been collected, and when it comes to paying you will not see the value for money.
“We also have to strengthen our internal systems; when you borrow money, you know that future generations are going to pay back, so you need to make sure the money is used appropriately.”
Meanwhile, he explained, there needs to be more transparency in the management of investment funds.
“As I said before, Nigeria has a debt of 250 billion dollars. If you ask about the components of those loans, you will see how we borrow them.
“But were citizens involved, were the media invited, were people invited to see and probably examine how we use the money we borrowed?
“You find out they weren’t there. I think we just need to add due diligence, transparency and accountability to accompany what is being borrowed for effectiveness,” she said.
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In his comment, Akintunde Babatunde, director of programs at CJID, stated that bilateral relations with foreign countries have not yielded the expected results in investments in the country.
He explained that the conference aimed to highlight some of the problems impeding development in the country and provide solutions to address them.
“The conference is the first of its kind. At CJID we try to bring together our portfolio projects on sustainable development and have a call that helps make visible some of the issues that are imagined in each of the clusters,” he said.
“At CJID, we have invested over the years in helping to build the capacity of journalists in health reporting, climate change reporting, conflict reporting, anti-corruption and all other sectors. “That’s why we held the media development conference and are excited by the quality of the conversation and the intentional approach of some innovators and problem solvers.”