Category: Editorial

• If the environment is bad for local business, it’ll be bad for foreign investment as well

If there is any validation that the World Bank report of a dip in Nigeria’s Foreign Direct Investment (FDI) by 58.98 percent over the past 11 years, it is the long established correlation between sound domestic macro-economic policies and capital movements across national borders. Among its specific findings in its annual report tagged, ‘International Debt Report’, is that Nigeria’s FDI plumbed from $5.966bn in 2010 to $2.447bn in 2021. It also affirmed a trend that foreign investment inflows to Nigeria had been falling long before the pandemic. In fact, it showed that net inflows actually fell from about US$9 billion in 2012 to below US$1 billion in 2018. The most remarkable year of course was 2019 when it stood at a paltry $851 million, followed by a modest $930 million in 2020 – the year the corona virus broke.

Although the report could not be described somewhat outlandish, it is certainly instructive in a number of ways. It establishes that long-held truth that the nation’s economic salvation does not lie abroad, contrary to what has now become our officials’ perennial obsession with ‘foreign’ investment.

We must here, hasten to point out that the report, for whatever it is worth, rather conveniently left out an important element: the reverse movement of capital also within the period – something that would have made for a more nuanced appreciation of the overall dynamics of resource flows in an increasingly borderless world. When juxtaposed with the massive outflows and haemorrhaging through the instrumentalities of corruption and other ill-conceived domestic policies known to foster some of the most egregious capital transfers, usually at the behest of the so-called development partners, an immediate question provoked is whether a country like Nigeria wouldn’t have done far better to look strictly within her national borders for salvation.

The above, a preliminary caveat of sorts, far from discounting the place of foreign investment in the nation’s development matrix, merely seeks a more balanced context if only to enable citizens appreciate things the way they truly are.

For the nation’s economic managers, there are obviously some hard lessons to take from the trend as painted. The most obvious one is that the global investment community cannot love us better than we love ourselves. It happened during the 2007/8 global economic crises when the investors, rattled at the very first signs of the global financial meltdown, took to their heels without as much as giving a thought to the impact that their sudden exit would have on the local economy. If the current indications are anything to go by – and by this we refer to the COVID-19 and its aftermath, and the on-going war between Russia and Ukraine – it is that the trend is not about to change anytime now or in the foreseeable future.

In the circumstance, the real focus of our economic managers must be on the nation’s macro-economy in terms of growing and deepening its famed resilience. Most certainly, a lot has been said and written about the nation’s infrastructural challenges, the poor environment of doing business as indeed the countless stifling regulations all of which have rendered the business climate such a nightmare for our entrepreneurs. To the extent that these remain huge factors in global competitiveness, there certainly can be no understating them, let alone downplaying how much these have become disincentives to businesses – whether domestic or foreign.

For instance, the power sector has remained a huge albatross. While it remains a big shame that a regime of stable public electricity supply has remained something of a rocket science despite the billions of dollars spent to ameliorate the situation, it remains equally intriguing that something as basic as guaranteeing a seamless supply of fuel to power the private generators continues to pose daunting challenges. The less said about the transportation sector that has remained somewhat antediluvian and the ports system just as chaotic as ever; and all of these after years of reforms and pouring of money. These are the big issues begging for attention.

We do understand that much song has been made of the improvements in the ease of doing business, particularly in the reduction in the number of stifling domestic regulations. What the World Bank findings suggest is that the investors, over all, are neither impressed nor taken in by some of the touted successes. At least, not with relevant trade desks in various embassies on the spot to grant prospective investors all the information they need on our economy, information that are more often than not at variance with the glossy picture painted by our officials.

What serious countries do is harness their economic potential – and this involves tackling their myriad of challenges – after which they then showcase the fruits to the world. That is the lesson that a far less-endowed country, Singapore, with its first-class infrastructure and a leadership committed to the highest ideals of governance has taught the world; the same with India that has demonstrated that true greatness lies within and that the contributions of its vibrant Diaspora population are an important element in its greatness.

Nigeria with all its fame to being a continental giant is certainly not there yet. Across the board, the infrastructure remains pretty basic – inadequate and certainly below par for our status, size and ambitions. We spend billions of dollars annually on our children’s tuition abroad; funds that could otherwise be deployed to upscale and truly modernise the educational sector; same for health tourism that has remained a huge drain on our foreign exchange.

Clearly, if the World Bank report offers any guide, it is that the world knows better than pay attention to the avid consumers of other peoples’ products; rather, the global investment community is more interested in those with values to add and would not hesitate to offer partnerships whenever needed. This is even more so now that global venture capital is increasingly scarce.

Rather than the perennial obsession with foreign investment, what should really bother the managers of the economy is how to make the economy work better and to make the environment generally safe for all. On the whole, the real question that our officials have rarely bothered to ask is why a business environment that has proven so utterly irresponsive to the yearnings and aspirations of local business could be expected to offer an elixir to its foreign counterparts? The logic should not be hard to decipher: If it is good enough for the indigenous business, it must also be for its foreign counterpart.

•Nigeria’s absence at Qatar 2022 should worry our governments and sports administrators

The much anticipated FIFA World Cup has come and gone but the memories would linger for a while. For one, the scandals about alleged bribery and deaths of hundreds of migrant workers became the blight of the country. However, humanity and the football world had a memorable one month fiesta in what many have termed the best ever FIFA World Cup. The climax was a riveting finale between France, the defending champions, and the Messi-led Argentine team.  The latter won. The competition which started on November 20 ended on December 18.

The Qatar World Cup organisers pulled off a beautiful and well-organised game. Despite the change in the timing from summer to the winter time in most of Europe and the disruption of the league seasons across the world, Qatar’s superb organisation made up for all the inconveniences the world had to contend with. Qatar proved that organisational ability has little or nothing to do with the football status of a nation or their population. The nation which had a population of merely about 2.931 million as at 2021 pulled all stops to give the mundiale the very best.

However, the absence of Africa’s most populous and football-loving nation, Nigeria, was  very conspicuous given the status she had achieved after her first appearance in FIFA World Cup in USA ’94. The performance of the country was so impressive that Nigeria was ranked 5th best in the world after the competition.

Nigeria’s football image had soared momentarily post-USA ’94 that they also qualified for the next one, France ’98 where they performed well also. It should be remembered that the Nigerian Supporters’ Club  won the most entertaining fans club in the world, given the very colourful and scintillating performance from the stands. Nigeria became the focus of football scouts and multinational sports marketing and manufacturing companies scrambled to have Nigeria as brand ambassadors. Many footballers of that era and beyond benefitted hugely from that performance in the game.

Then sadly, 28 years later, Nigeria is now ranked fifth in Africa and 34th in the world. These are known statistics. The undocumented losses are varied and huge and one of them is the absence of the nation at the just-concluded Qatar 2022 World Cup. This singular miss by Nigeria says a lot about the status of football in the country in particular and her management of sports and the country at large.

Morocco, the North African nation that surprised bookmakers at the Qatar games by becoming the first African nation to reach the semi-final game has leaped beyond Senegal, the African champions, to become the first in Africa and 11th in the world.  This was not a miracle. The country had in the last 10 years invested heavily in football infrastructure and management and that has started yielding huge economic dividends. They have just been awarded the hosting rights of the next FIFA Club World Cup. Their country is reaping both economic and socio-political gains that would go beyond the short term gains.

Appearance at the World Cup comes with huge political and socio-economic gains. The visibility countries get in such a global event comes with attention and diverse investments. Today, football has become a multi-billion dollar enterprise and you have to be involved to have a cut of the cake. Flying the flag of nations alone means a lot and focuses attention on the possibilities even beyond sports. As a global phenomenon, the attention of investors in all fields, economic, cultural, tourism and hospitality, entertainment, etc. is normally on countries participating.

Today, the football fans and players act as unofficial ambassadors that tell the world, ‘we too are at the table’. Nigeria by her inability to qualify says a lot about the status of football in the country. What went wrong? What is the status of the local league? What and how has the country invested in football? How is it that the entertainment industry with no direct government investment was able to give the organisers a Davido who performed at the closing ceremony? It must be noted that weak local league equals a weak national team, period.

We believe that the absence of Nigeria in Qatar is a huge loss not just to the country but to the continent and the global community. The most populous black nation in the world missing in the World Cup denied everyone the beauty and investment opportunities Nigeria creates at such competitions.

There was no opportunity to draw global attention to the country that is presently at the edge of the precipice economically. The socio-cultural benefits have equally eluded the country. We however, hope that this loss would provide the needed incentive for governments at state and federal levels to focus more attention on sports so as to gain from the diverse value chain that comes with that.

•IPOB must be made to understand that lawlessness does not pay

From all indications, the Indigenous People of Biafra (IPOB) has become a Frankenstein monster beyond the control of the people who created it. This makes the proscribed separatist group more dangerous. The group is fighting for an independent “Biafra land” made up of Nigeria’s five Southeast states, and parts of the South-south geo-political zone. Its methods are largely terroristic.

 There was strong evidence of divisions within the group as zealous enforcers in the country’s Southeast region violently implemented the controversial five-day sit-at-home order by a Finland-based Biafra campaigner, Simon Ekpa. He had told Southeast residents to stay at home from December 9 to 14.

 Nnamdi Kanu, who is known as the group’s leader, is in detention and facing trial for alleged treason and terrorism. He had disowned those who declared the five-day sit-at-home, in a message delivered by his lawyer, Ifeanyi Ejiofor, who visited him at the Department of State Services (DSS) detention facility, Abuja.

The lawyer’s statement had described the sit-at-home declaration and any attempt to enforce it as “criminal acts,” adding that Kanu “unequivocally stated that he has not ordered any sit-at-home.” He directed that the people “should go about their normal life and businesses without let or hindrance.”

It was convenient for Kanu to distance himself from the five-day sit-at-home. But IPOB under him had declared sit-at-home several times leading to a standstill in many parts of the Southeast as people obeyed the order largely out of fear of the enforcers.  

For instance, in May, the group under Kanu had ordered a sit-at-home in the Southeast, saying “the only sit-at-home order emanating and announced by IPOB leadership are the 18th and 26th of May, 2022 being the dates our leader Mazi Nnamdi Kanu will appear in court.”

This suggests that IPOB under Kanu had disclaimed the five-day sit-at-home because it was not its own idea. But IPOB, whether under Kanu or not, has no business issuing sit-at-home orders in the first place. The group, whether under Kanu or not, is operating unlawfully, and its activities are unlawful. 

 Despite Kanu’s disclaimer, unidentified gunmen enforced the five-day sit-at-home in a series of destructive actions in the region. They killed six people in Imo and Enugu states, disrupted businesses in Ebonyi State, and kidnapped some expatriate staff of a German construction company involved in an ongoing road construction in Imo State, among other crimes.

The apex Igbo socio-cultural organisation, Ohanaeze, in a statement, said Ekpa was responsible for the destruction, adding that it would pursue his extradition to Nigeria “to face prosecution and trials over killings of South easterners, burning of public properties, and disturbances of public peace.”

Also, Kanu’s lawyer announced that they had formally commenced a legal action against Ekpa before the High Court in Abuja, “founded on a plethora of grave infractions arising from his violent, disturbing and false declarations.”

Ekpa, who described himself as Kanu’s “disciple on Biafra restoration,” said the five-day sit-at-home was “historic and successful.” This could encourage a repeat. The latest sit-at-home was a continuation of a practice introduced by the Kanu-led IPOB.  Ekpa’s version of sit-at-home suggests that Biafra campaigners consider the method useful. Indeed, it can be said that the approach has become an obsession.

This is why the authorities must urgently tackle the group’s lawlessness. The Kanu-led IPOB described Ekpa as a “paid agent” sponsored to give the group a bad name.

It is nonetheless puzzling that IPOB has been allowed to continue operating despite its proscription. The authorities must stop accommodating the group. There are consequences for lawlessness, and those committing crimes using the group’s name should be arrested and prosecuted.

• We welcome Reps’ probe into N4.14trn unpaid electricity bills by our international customers

It is quite understandable and indeed logical that the Public Accounts Committee (PAC) of the House of Representatives views with utmost seriousness the report that International Electricity Consumers, specifically Benin Republic, Niger Republic and the Republic of Togo owe Nigeria electricity bills to the tune of N4.14 trillion. Consequently, the committee, through its chairman, Wole Oke (PDP, Osun), has taken steps to investigate this alleged anomaly by mandating the Managing Director of the Nigeria Bulk Electricity Trading (NBET) Plc, Dr Nnaemeka Eweluka, to appear before it with all relevant documents on the company’s financial transactions on its international debt profile and other matters. The NBET boss was directed to appear in person before the committee along with Dr Marilyn Amoh who served as Managing Director of NBET between 2016 and 2020.

For a country like Nigeria with a protracted record of inadequate power supply, it is scandalous that it could supply electricity to neighbouring countries for prolonged periods without demanding and obtaining payment. It is not impossible that this situation had its roots in a more affluent period of the country’s history when she projected herself as the giant of Africa and a big brother on the continent that readily bore her neighbour’s responsibilities. Given the dire economic straits currently experienced in the country, this prodigal proclivity can no longer be indulged. Even if we feel obliged to supply power to neighbouring countries, it should be a purely commercial venture with services rendered in this regard promptly paid for.

The action of the PAC of the House was prompted by the External Audit Report of the Office of the Auditor-General of the Federation which indicated that these countries were owing NBET this humongous amount in unpaid electricity bills. According to the report, before the Ministry of Power directed NBET to take over the administration of these international electricity debts in March 2016, the responsibility was carried out by the Transition Company of Nigeria (TCN) prior to the electricity transition agreement. As part of its investigation into this matter, the PAC must endeavour to uncover the nature of the reported bilateral agreement on energy delivery and sales to the three countries that allowed for the accumulation of such huge arrears of debts.

From the auditor-general’s report, it could be surmised that complications in the payment arrangements between the TCN and NBEC could have contributed to the compounding of the debt and delayed payment. According to the report, while 24% of the payment received from international customers was deducted for administrative charges by the TCN, the balance of 76% was passed to NBET for the payment of generating companies’ capacity and energy bill. Consequently, the invoices issued to international electricity consumers amounted to N30.7 billion and N20.7 billion in 2018 and 2019, respectively. Perhaps efforts should be made to ease the bureaucracy involved in these transactions for greater efficiency and enhanced transparency.

In 2017, the then Minister of Power, Works and Housing, Mr Babatunde Fashola, announced that the Federal Government had received over $64.63 million electricity debts owed by international customers in Benin Republic and Niger Republic and that NBET would work out the modalities for distribution of the funds. It is difficult to understand why the debt was allowed to accumulate once again since then.

But even more seriously, the PAC sought explanation and information from the NBET on why the agency had non-rendition of its audited accounts for 2014, 2015, 2016, 2017, 2018 and 2019. Surely, such an unhealthy situation encourages opacity in financial management as well as complacency in handling such issues as debt collection as seems to be the case in this instance. It is partly because of the consequent absence of the requisite documents and information that the PAC is requesting for details of the indebtedness of these international electricity consumers to the TCN and NBET between 2018 and 2019.

Among the information requested by the PAC to facilitate the discharge of their legislative oversight mandate in this regard are the production of “a schedule showing the value of invoices raised by generating companies from 2016 to 2022, the amount paid by NBET as well as the outstanding balance till date” and “a schedule showing the value of invoices issued to distribution companies from 2016 to 2022, the amount paid by them and the outstanding balance”. The committee has also requested detailed accounting of such transactions as the sum of N7.5 million reported proceeds realised from the disposal of property, plant and equipment as well as disposal of motor vehicles with a value estimated at N79.9 million. Ordinarily, these critical records should have been readily available for the scrutiny of the House as a matter of routine had the mandatory audit processes been carried out.

No less disturbing is the auditor-general’s report that, even while being tardy in pursuing the payment of debts owed the country, NBET survived to a large extent on loan facilities advanced to it by the Federal Government. The agency was reportedly granted a loan facility to the tune of N701 billion in 2019 and an additional facility of N600 billion. The PAC is thus rightly seeking to investigate the utilisation of these loans. Noting that the company’s borrowing stood at N772 billion as at December 31, 2019, the PAC stressed that its ability to meet its obligations is dependent on continuous support from the Federal Government, a practice that is unsustainable. While we hope that the inquiry into the finances of the agency will be thorough and result in reforms that will enhance its efficiency and transparency with positive impact on the power sector, the point must also be made that had the House been more alive to its oversight role, the situation might have been prevented from degenerating this badly much earlier.

• Asking power consumers not to pay for poles, transformers, etc. can’t work in our circumstance where they are left to their own device

 

The Nigerian Electricity Regulation Commission (NERC) was created to function based on the guidelines as stipulated in the Electric Power Sector Reform Act 2005. It is supposed to be responsible for the monitoring and regulation of the electricity sector, issuance of licenses to market operators and ensuring compliance with market rules and operating guidelines of the sector.

However, in a country with one of the most abysmal performance of successive governments in the power and energy sectors, the regulating agency seems as good as the system that created it. The electricity consumers that the NERC was created to protect cannot boast of having satisfactorily enjoyed the commission’s protection.  There seems to be that lack of responsiveness that ought to have kept operators on their toes and compel consumers to do their part of the social contract, which is to pay their bills promptly.

It appears that only a few elites are aware of the existence of NERC as a regulation agency on paper. Most electricity consumers are unaware of its existence. The agency seems to have figuratively fed the electricity consumers to the industry operators as the latter seem to consistently get away with blue murder. Consumers across the country are often forced to buy transformers, wires/cables, poles, meters and literally any item of value that can facilitate their use of electricity when it is available.

Bizarre as this aberration in the sector is, and as devastating as it is to development, it seems to go on forever and we begin to wonder the value of NERC.

It was therefore a pleasant surprise to hear the NERC Commissioner-in-charge of Consumer Affairs, Aisha Mahmud, speaking during a three-day NERC/Abuja Electricity Distribution (AEDC) Customer Complaints Resolution meeting with consumers, that it remains the responsibility of electricity distribution companies (DisCos) to provide all the items needed for their business, and in cases where consumers buy such, they must sign a refund agreement first. This she said is because the electricity charges already incorporated such items.

We find it curious that the commissioner had to wait for such a meeting to advise consumers on their rights when they are aware that desperate electricity consumers across the country have been coerced and often bullied into buying those items by the DisCos at very high costs, even when they regularly pay more than necessary because the DisCos dubiously deny them of meters and charge them based on estimates. This has gone on for so long that we wonder what the commission assumes to be its duties in the first place.

We believe that while the reality is very telling of the performance of NERC, its ineffectual performance has had very dire effects on electricity consumers and, by implication, the economy that is almost comatose due to poor energy supply. While we understand NERC’s limitations, we believe that a more stringent and conscious application of the law by it would have made all the difference. It seems to be the proverbial dog that barks without biting.

It is the duty of NERC to enforce the laws and protect consumers and operators but the scale tips down the consumers’ side as they are forced, across the country to spend money that ought to be spent by the operators. Communities, individuals, companies and governments have been saddled with providing those items the commissioner is now advising consumers not to supply. The fact is; they do not do that out of choice, they do it in desperation in a twenty-first century world that most things require the use of electricity.

We believe that NERC can do better. It must jump the lethargic hurdle of bureaucracy and rein in errant operators while ensuring that consumers do their own part too. Government’s failure in policy choices and execution coupled with the very ineffective running of the electricity sector, given the very low megawatt supply in a country as big as Nigeria is a very huge part of the low productivity level in the country, at a time alternative energy sources are being taken advantage of globally. NERC must wield the big stick and whip operators into better service delivery.

• We can only hope N500bn target for banks is not another CBN largesse

 

At the 13th Bankers Committee retreat in Lagos, last week, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele, directed banks to lend at least N500 billion every year to non-oil export-oriented companies to boost the productive sector, and support the inflow of dollars to the economy. As laudable as the motive for the directive maybe, we wonder whether it is within the remit of the CBN to manage the fiscal policy of the nation’s economy, when its primary responsibility is monetary policy.

No doubt, Nigeria needs all the foreign exchange inflow it can gain from the non-oil export economy, but what happened to previous interventions even before the present republic. Indeed, the Nigeria Import-Export bank was created in 1991 primarily to strengthen the non-oil export. Its major function is to provide short and medium-term loans to Nigerian exporters. It also provides short-term guarantees for loans granted by Nigerian banks to exporters as well as credit insurance against political and commercial risks in the event of non-payment by foreign buyers.

So, it may be appropriate to ask in what manner does the CBN governor want the commercial banks to intervene to the tune of N500 billion? Is the apex bank hoping to guarantee the loans it is asking the commercial banks to give? If it will, does it have the capacity to process the loan application to determine the viability of the requests from applicants? Our concern is whether the CBN is pushing the commercial banks without requisite expertise to throw money at a problem, and where it fails, the CBN would use tax-payers money to bear the brunt?

Obviously, under Emefiele’s leadership, the CBN has become an activist apex bank. It has intervened in many sectors, and there are no independent statistics to show that those interventions have achieved the desired results. A case in point is the Anchor Borrowers Scheme, under which farmers got billions of Naira  under the direction of the CBN. While there has been increase in the local production of rice, for instance, the market prices have not reflected the increase, as the cost remains exorbitant for the average Nigerian.

There is also no available statistics to determine the performance of the loan facilities granted the borrowers? While the CBN has been celebrating the increase in productivity, it has not told the nation the impact of the loans on the inflation that has made mincemeat of the income generated by farmers. So, it is important for a dispassionate assessment of the various intervention policies of the apex bank, to know whether we have been throwing money at the problems, instead of dealing with the fiscal challenges of our economy.

Unfortunately, the finance ministry and other economic advisers of the president appear to have been cowed by the exuberance and activism of the governor of the apex bank. The last time the Minister of Finance raised her voice about the redesigning of the Naira, Emefiele literally shouted her down, yet he dishes out fiscal policies as if he is the supervising authority of the nation’s fiscal and monetary policies. While we do not encourage a quarrel between the important officials, we expert consultations and synergy for the greater good of the nation’s economy.

Nigerians will want to know the impact of the N9.714 trillion credit which the Director, Development Finance Department of the CBN, Mr. Yusuf Yila, disclosed has been injected into the economy by the CBN, in the last three years. Again, what will the further injection of N500 billion credit to non-oil export-oriented companies contribute to the nation’s economy? We hope economic experts would speak up on the advantages and disadvantages of the CBN engaging in quasi-commercial banking activities.