SIMONKOLAWOLELIVE! on thisday online news

Today, I continue with my proposals on the “low-hanging fruits” Buhari can pluck to turn around Nigeria’s economy as oil revenue dwindles. In the first instalment of the series published on December 20, 2015, I argued that Nigeria as an import-dependent country can reap much more revenue from imports: all we need do is thoroughly clean up the ports and watch the coffers balloon with trillions of naira yearly. On January 10, 2016, I made a second suggestion: tax amnesty. I projected that by giving tax evaders a clean sheet to bring them into the tax net, we could see a quantum leap in voluntary compliance — and an astronomical increase in public revenue.

I will now present my third suggestion to Buhari: make life easier for investors. Make investing in Nigeria a pleasure. Investors on ground are already groaning, so we have to swim across the deepest ocean to “toast” new ones. How do we get investors to revive our textile industry? How do we get investors to set up juice-making factories, as millions of mangoes and oranges rot away in Adamawa and Taraba? How do we reduce the distance between Lagos and Kano to four hours by rail — so that export products can get to the ports on time? How do we move goods from Kaiama to Kontagora without police checkpoints obstructing lorries every 100 metres on the highway?
There are, indeed, several investors out there with billions of dollars to play with. The advanced economies do not have a big room for fresh investments.

They have matured. The return on investment is relatively low. Their companies and entrepreneurs are looking for fallow grounds to cultivate. There is competition for their attention in several countries, so what are we going to do to get them to pick us as investment destination choice? Furthermore, there are Nigerian entrepreneurs who would love to invest at home, but they are being discouraged or forced to look outside because of the investment climate. How do we address this?

If I was a Qatari businessman, I would be asking myself many questions as Buhari spoke. To start with, getting Nigerian visa is war, no matter how genuine you are. In my little corner, I have had to intervene on several occasions for foreigners who were being frustrated by our embassies. Services at most Nigerian embassies are appalling. Phone calls are unpicked, emails ignored. Yet this is where many foreigners would form their impressions of Nigeria. They arrive at the Murtala Muhammed International Airport, Lagos, and find it hard to know what carousel to go to pick their luggage, as the screen never displays that simple information.

As a potential investor, I would be asking myself about the business registration process in Nigeria. If you want to register a business in the UK, for instance, it takes you 10 seconds to do a name search. Just go to the website of the Company House, type in the proposed name of your business and press “enter”. There you have it. The whole registration process takes an average of 24 hours. You can do everything online. In Nigeria, it used to take a month to do name search and another month to complete the registration — except you were ready to “play ball”. But I understand things are now changing at the Corporate Affairs Commission (CAC). I pray it is for real.

I would also want to know how long it will take me to get the necessary approvals to get my business going. In Nigeria, it could take forever to complete documentation. For instance, the governors hardly want to issue the certificate of occupancy (C of O), thus the capital that could be accessed by businesses are tied down because banks need these documents as collateral for loans. Building permits are not readily issued, and you have all kinds of agencies slowing down the process in the name of regulation — even though we know what most of them are looking for. It could be very frustrating. It kills the spirit. It kills entrepreneurship. It kills the economy.
Buhari assured the Qataris on security — but security is not just about defeating Boko Haram.

That is just an aspect. In Nigeria, people are easily kidnapped. Miscreants, in the name of “omo onile”, hold construction workers and investors to ransom so brazenly. A few years ago, a friend was setting up a factory. He bought a transformer (an unnecessary expense) but the miscreants said he must pay them N500,000 “settlement” before they would allow him to install it. This is a complete breakdown of law and order. No civilised society runs like that. Communities and their youths have become a hindrance to investment in many parts of the country.

I would be asking myself more questions as a potential investor: if I have a contractual dispute or trade issue, how quickly can this be resolved? Cases can be in Nigerian courts for years. Adjournment upon adjournment. Some land cases have been at the Supreme Court for 30 years, someone told me recently. I hope it is a lie. I would not be too eager to invest in such a country. I would also be asking myself about the tax system. Is it simplified? Is it reasonable? Would I get incentives? Would I get compensated for generating electricity myself, building my own road and providing my own water? Life could be far easier for investors in Nigeria.

There are several other important issues in the mix, especially for the foreign investors. One is the exchange rate. When you know your $1 billion will only get you $197 billion from the official channel instead of N300 billion from the open market, you will hesitate, especially as the local components of your cost are priced at N300 to a dollar. But I take it that eventually, Buhari will exercise some flexibility as the CBN evaluates the current FX regime. All said, we can’t deny the fact that this economy can use extra billions of investors’ dollars if it is to bounce back to life. A colossal low-hanging fruit is: make life easier for businesses.

QUOTE
“For a country that consistently ranks poorly on World Bank’s Ease of Doing Business Index, Nigeria has to do a lot of homework before investors can come rushing in. The global competition for capital is fierce. This is not about sentiments”

https://ibadanelite./2016/03/06/the-low-hanging-fruits-buhari-can-pluck-to-rescue-the-dwindling-economy/

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Once a dullard always a dullard

I had posted something related to this on answer to a question by a nairalander. It's here below and hope it helps on this topic.
Firms make foreign direct investment decisions based on certain factors. These could be firm specific factors ranging from revenue drive, following a competitor to a new market in another country, the strain of the liability of foreigness which includes distance language culture and country specific advantages, identification of a viable and vibrant market in terms of size and economy of the target demographics.
There are certain factors that make a country attractive to FDI. These include legal issues, investment laws that bother on allowed ownership structures, tax holidays if any, are it's laws similar in style from country of origin of the FDI etc. Security is another consideration. Infrastructure.... Power roads transport Internet ports banking etc. Then institutions...... Police judiciary arbitration panels customs immigration etc... Are they operating at best practice levels. Furthermore the foreign exchange regime.... Can I get my profit out without stress. Another consideration is polilitical... Is it a democracy? Is there a possibility that the government and governance is unstable and so will translate to unstable policies.
All the issues raised above are major considerations for FDI and no one wants to take their funds to invest in a country where the outlook for these factors are either vague or unhealthy. As I type this Nigeria does not look good. There's a competition out there for this FDI and countries that know the implications are doing all that they can to put these issues which form country specific advantages in the right position. Any one of these not put in place is a risk and nobody likes taking risks or at least let the risk be minimal. For Nigeria to attract FDI I've identified 3 areas that must be tackled.... Security, infrastructure and institutions.
If I may discuss further.
Security: It's a no brainer what the book haram issue has meant to the business climate. The firm I work with had a couple of opportunities in the outgoing year in the north east of Nigeria. We turned them down. How do you feel foreigners who have security alerts from their various countries and embassies will feel. I've seen expertriates riding with armed guards all over the place and I tell you non is happy about it. Some firms even pay special hazards allowances for staff deployed to Nigeria. This adds to the cost of doing business generally and it's not attractive. This is not to say that security is perfect even at the countries of origin of FDI but it should be minimal and seen as controllable and manageable. Can we recall the spate of kidnappings for ransom etc. I can see why the current zero tolerance for any uprising is quashed with albeit in overkill I must admit. Business and I dare FDI thrives in an atmosphere of peace and tranquility.
INSTITUTIONS: We must be quite familiar with some unwholesome acts going on at the ports. Under hand deals, blatant request for bribes from all quarters even for people to carry out their paid jobs. Scandals from the judiciary, customs, immigration police. All operating below part in terms of ethics. The civil service filled with tin gods that see your legitimate request on their table as am opportunity to shake you down not minding the effects of this behaviour on the long run. The culture of nothing moves unless someone's palm is greased has to stop. There has to be an integrity in the system to promote trust that if we bring our business to Nigeria things will be done properly in good time without any hassles. I'll add here that a lot of people did not understand what the South African govt was doing when they decided to broadcast live the high profile case involving the blade runner Oscar Pistorious murder trial to the whole world. They wanted to show the world that our judiciary can be trusted to fair and firm. That we are transparent and even prompt. On that back drop imagine the rigmarole and opaque system in Nigeria. The world is watching. The people that are in a position to know these things behave like children unfortunately.
INFRASTRUCTURE : have you wondered that the largest economy in Africa is operating on about 5000 watts of power. Even smaller SA is operating on four times that amount. It is laughable really. So generating your own power is a consideration to be made by an FDI aspirant. It cost loads to generate private power. Weak transport outlay is not beneficial to consideration too as the movement of people goods and services is a key factor in ensuring success.

Finally you may say but other foreign companies are still operating in Nigeria. Yes they are... The high population is so so attractive but you may also be aware that they are outsourcing some of the aspects of their businesses to Benin and Ghana for ease.