Global investment destination: Why Nigeria deserves a fresh look

….Time for licensing a new business at OGFZA now 14 days, down from 28; time for licence renewal, 48 hours from 14 days.

……Incorporation of businesses at CAC now a 24/7 online operation.

The World Free Zones Convention held last month in Doha, Qatar, provided a platform to focus on country attractiveness to investment capital based on the Ease of Doing Business index, a World Bank-created measurement for ease of market entry and operations on country by country basis. Nigeria has never fared well on the index.

Nigeria ranks 169 among 190 economies on the ease of doing business index, according to the World Bank 2016 ranking. The latest ranking represents an improvement from 170 in 2015. Over the years the country’s ranking had not been enviable.

The wrong perception of Nigeria, against the background of her classification by AIM Investment Report 2016 as one of the least competitive economies in the world, has led to outward flows of local capital to outside designations and inertia in the inflows of FDI.

It was with this perception problem in mind that the managing director of Nigeria’s Oil and Gas Free Zones Authority (OGFZA), Mr Umana Okon Umana, seized the moment when he had to present a paper at the Doha Convention to apprise the global investment community of the significant changes in investment indicators back home in Nigeria in the last two years as a result of the business-friendly policies of the Federal Government, that have made the subsisting perception about doing business in Nigeria an outdated mental picture of an environment that has evolved from stasis into brisk dynamism capable of responding to the global demand for speed and efficiency. It was a fitting occasion to let the world hear of the current realities in Nigeria. Chaired by Mr Graham Mather, chairman of the World Free Zones Convention and president, European Policy Forum, London and Brussels, the convention was fully represented by countries from all regions of the world. Nigeria, Mexico, India, USA, Tanzania, China, Thailand, Ghana, Uganda, United Arab Emirates and Australia were among the countries ably represented at the convention.

Umana addressed this distinguished audience in a presentation entitled, “Clusters and FDI Promotion Strategies—Nigeria in Perspective,” which showcased the true facts about Nigeria as an investment destination on the continent that cannot be ignored; a country where more than 92 million people or 48 per cent of the population has internet access; where mobile phone penetration as at 2016 was 216 million lines; a country with a population of about 180 million, representing huge market opportunities, a highly educated workforce and low labour cost; and a country that is rich both in hydrocarbon and non-hydrocarbon investment opportunities.

In an interaction with journalists on return from Doha, Umana explained that the case had to be made for the country that Nigeria is doing everything possible to get up to speed with the rest of the world with regard to starting a business and operating within the Nigeria business environment. The facts bear up his position.

Nigeria is currently pushing reforms to improve on her ranking in terms of the Ease of Dong Business. It has embarked on core infrastructure projects—roads, airports, railways—to spur up growth, aided by resurgent consumer confidence, and is seriously fighting corruption.

Umana noted that though globally the foreign operations of the top 100 Multinational Enterprises (MNEs) declined because of falling commodity prices, and MNEs especially in oil, gas and mining scaled down their operations abroad in terms of assets, sales and new investments, Nigeria should benefit from the current positive economic outlook because of the ongoing reforms and policy initiatives of the Buhari administration as well as the robust opportunities for FDIs in other areas such as railways, airports, financial services, power, telecoms and agriculture.

Other indicators that the old lethargic order is gradually giving way to a new dispensation of dispatch in business transaction is the strengthening of the regulatory framework for investment such as the reviews of the Petroleum Industry Bill and the OGFZA law. Yet other indicators are political stability, economic diversification policies, transparent and less bureaucratic policy environment.

In a step that shows new urgency reflecting the spirit of a business-friendly policy environment, the Corporate Affairs Commission (CAC) has upgraded its business incorporation processes into a 24/7 online operation, just as OGFZA has cut the turnaround time for the licensing of a new business in the free zones from 28 days to 14, and the time for licence renewal from 14 days to 48 hours.

Of special mention should be the Presidential Council on the Ease of Doing Business. The council advises the Federal Government on market reforms and other policy directions meant to make the local market environment more attractive to investors. Some of the reforms are already being implemented.

Proceeding from the same reform framework, the Minister of State in the Federal Ministry of Industry, Trade and Investment, Hajia Aisha Abubakar told a stakeholders’ forum organised by OGFZA in Onne, Rivers State last February that her ministry has developed a plan called the “FMITI Plan” (Ministry of Industry, Trade and Investment Plan) which rests on five pillars of 1) industrialization, 2) investment promotion, 3) trade facilitation, 4) creating enabling environment , and 5) promoting the growth and development of MSMEs. The target of the plan is inclusive economic growth and development.

Credit for driving the ongoing initiatives under the FMITI Plan to build enabling environment for FDI and grow the economy goes to the Honourable Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, who is also the vice chair of the Presidential Council on the Ease of Doing Business headed by the Vice President, Professor Yemi Osinbajo.

The FMITI Plan is itself a subset within the Federal Government global economic revival agenda called Economic Recovery and Growth Plan (ERGP), a four-year economic strategy that seeks coordination and collaboration among the nation’s federating units, eliminating bottlenecks and enhancing efficiency to accelerate economic progress.

Inspired by efforts at economic reform by the Federal Government, Umana said, OGFZA—a government agency for promoting, securing and sustaining investments into the nation’s oil and gas free zones—has set in motion its reform process signposted by automation, which has seen to the deployment of the Enterprise Resource Planning (ERP) software to optimize business processes in the free zones.

With regard to power, OGFZA is making a move to provide embedded power in the free zones to reduce cost of doing business. At present power is a major cost centre at the free zone in Onne, Nigeria’s largest free zone, because it is not linked to the national power infrastructure. Still on the cost of doing business, OGFZA has activated the process for tariff cut for free zone investors. The downward review of tariffs in the free zones has become necessary, Umana said, because the current regime of tariffs undermines incentives offered to investors by OGFZA. The tariff review move is among a bouquet of incentives offered to free zone investors by OGFZA, a full list of which is available on the agency’s website.

Other steps being taken by OGFZA to improve the business environment and attract more investments into the free zones include investment drive such as the recent executive pitch at the World Free Zones Convention in Doha. OGFZA is also partnering with state governments and private sector investors to develop more free zones in Akwa Ibom, Bayelsa, Delta and Lagos states and open up more opportunities for investment.

Worthy of critical note among the measures put in place to improve the business environment in the free zones is the security intervention that has driven down incidence of piracy and kidnapping around the Onne Free Zone. The security situation has so improved that investors recently hailed the Federal Government and the management of OGFZA for the return of safety along the shipping lanes and the free zones and its environ generally.

The good turn began with the initiative of the managing director of OGFZA, Mr Umana Okon Umana, who wrote a letter early in the year to the National Security Adviser, expressing serious concern at the deterioration of security around the free zone. The move led to security meetings between the management of OGFZA and heads of national security agencies in the area, and subsequently to the deployment of military hardware and personnel. The happy outcome is a safer business environment.

Among other measures that OGFZA is implementing to attract investment into the free zones are the one-stop-shop policy (which comes with accelerated customs and immigration services); reduced cost of project execution; efficient cargo handling; warehousing, fabrication and residential facilities as well as fiscal incentives.

There is no doubt that perception dies hard, but in the face of new information that contradicts wrongly held views, the world should realign their sights. Nigeria deserves a fresh look. Its business landscape is changing for the better, thanks to the policies of the Muhammadu Buhari administration.