The Nation Newspaper

Tag: FDIs

  • ‘New expatriate levy may undermine FDIs’

    ‘New expatriate levy may undermine FDIs’

    The introduction of the Expatriate Employment Levy (EEL) could have serious implications for foreign investment inflows and Nigerians in diaspora, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has said.

      He said while the policy objectives were laudable, the unintended consequences could outweigh envisaged benefits.

    He cautioned that the policy might trigger reciprocal actions from other countries and this might affect Nigerians in diaspora.

    There are  over 17 million Nigerians in various countries around the world doing extremely well in the fields of Education, Medicine, Health, Sports, Media and Entertainment, Leadership and Politics, Finance, Science and ICT, Transportation, Tourism, Industry and Agribusiness.

    Noting that these pool of Nigerians constitute very valuable external sector assets for the country, Yusuf said: “We have the largest diaspora population in Africa.  We also have the highest diaspora remittances on the continent, generally in excess of $20 billion. All of these could be at risk as a result of this policy. If the reciprocity policy is activated in any of their host countries, the effect on our diaspora citizens will be very devastating.’’

    He further argued that the EEL may also be inping on the African Continental Free Trade Area (AfCFTA) policy, which he noted, is already gaining traction, as it could be a major setback for the continental economic integration vision as the EEL does not make an exception for African countries and neighbours.

    The CPPE, while appealing to the Federal Government to review the policy, also noted that the timeline for compliance was too short, as it had barely four weeks for companies to comply, ading that the timeframe would be very disruptive for their businesses, plans and projections.

    According to Yusuf, for such a major policy shift, companies needed to be given minimum of six months.  “Some of the companies affected are major investors that have investment in billions of dollars and have been in Nigeria for decades.  This administration, being an investment friendly regime, should give companies more time.

    Read Also: Forex reforms attracting FDIs, says Cardoso

    “The country needs more direct investors than portfolio investors at this time. But ironically, both foreign direct investors and domestic direct investors would be more negatively impacted than portfolio investors.  The economy needs more investors in the real economy – oil and gas, manufacturing, infrastructure, mining, ICT, Healthcare – all of which require varying skills and competencies.  The truth is that major FDIs will typically come with some critical staff to oversee their investments. It is imperative to give some consideration to this class of investors, given the scale of their investments which could be in billions of dollars,” the CPPE boss noted.

    Yusuf disclosed that there already existed extant legislations and regulations with similar objectives. For instance, there is the expatriate quota which empowers the Nigeria Immigration Service to give approvals to companies for expatriate staff engagement only when there is no local capacity.  Companies currently pay $2, 000 per expatriate annually. This is an equivalent of about N3 million at current exchange rate, but the new EEL stipulates $10,000 for staff and $15,000 for directors, which translates to N15 million and N22.5 million respectively.

    Other instances noted by the CPPE include the National Content Act for the oil industry which offers tremendous opportunities for indigenous investors to offer services to oil and gas companies which has boosted indigenous capacity in the sector. There are presidential Executive Orders 3 and 5 which directed the MDAs to give first right of refusal to indigenous contractors, service providers  for procurement purposes.

    “The point to the point to stress is that implementation of these legislations and regulations has been very weak thus affecting the outcomes.  The problem is not lack of policies, but the institutional structure to deliver results,” Yusuf said.

  • Stanbic IBTC to attract FDIs

    Stanbic IBTC, a member of the   Standard Bank Group, has re-stated its commitment to exploiting its international connections to ensure an increased flow of foreign capital into the economy.

    Stanbic IBTC Holdings PLC Chief Executive Yinka Sanni made this known in Lagos at the Standard Bank West to East Africa Investors’ Conference.

    The four-day event was themed “Delivering on the promise of growth, the how and when.”

    The Lagos gathering, which included a presentation by a representative of the International Monetary Fund (IMF), brought together foreign investors, policymakers, regulators, government officials, private sector players, and thought leaders to engage and explore growth potential and opportunities in Nigeria, including.

    Sanni, while welcoming participants, said they would showcase the investment potential in the country to foreign investors as well as provide a platform where participants can network and engage with key policymakers and business leaders in the country.

    According to him, “Stanbic IBTC is particularly pleased to note that there have been movements in key sectors of the economy in terms of investment activities.”

    Sanni said he expected to see further growth in the inflow of the much-needed capital from foreign investors into key sectors of the economy.

     

    The Minister of Finance, Mrs Kemi Adeosun, who was the special guest at the event, gave a presentation on government’s economic agenda and policy direction. The minister said there is a huge opportunity for growth and that government is determined to boost revenue generation to deliver on its growth promises.

    Using data to back up her claim, the minister said Nigeria is not an oil-based economy like the Middle East oil giants such as Saudi Arabia, Iran, or UAE and that to achieve the desired growth, it is imperative for the country to accept this and then properly benchmark its progress with similar economies like Argentina and other non-oil based economies. According to the minister, the government has adopted a project-based approach to development in key sectors and is therefore focused on growth drivers, driving non-oil revenue growth through appropriate taxation, fiscal discipline, and structural reforms in soft infrastructure such as enhancing the ease of doing business. She said government will also continue to encourage private capital through appropriate policies.

    Chief Executive, Stanbic IBTC Bank, Dr Demola Sogunle, thanked the minister for a brilliant presentation and participants for a robust engagement. He expressed the confidence that Stanbic IBTC, through its regular engagements with local and foreign investors, via the investors’ conference and other initiatives, would continue to lead in attracting capital inflows into the economy.

    A recent report by the National Bureau of Statistics showed that Stanbic IBTC facilitated a staggering $589.84 million capital inflow into the country in second quarter, ranking it first among financial institutions that imported capital into Nigeria.

     

  • NSIA secures $305m FDIs

    NSIA secures $305m FDIs

    The Nigerian Sovereign Investment Authority( NSIA) has secured Foreign Direct Investment commitments (FDIs) in excess of $305 million.

    NSIA Managing Director/ CEO Dr. Uche Orji, who broke the news,  said these Foreign Direct Investments (FDIs) had been sealed to provide financial investment in agriculture, infrastructure credit financing (infracredit) and estate development.

    Orji said the NSIA secured $105m for agriculture. “These are commitments people have signed, most of  them were signed and the money still held offshore. As we close transactions, the money will come in. For real estate, $100m has been secured; for  infra-credit another $100m of contingent credit secured. These are the ones that are handy today. There are still ones that would come but when they come, they come,” he said.

    Orji noted that the NSIA was in the process of allocating  $10 million to revamping the moribund Nigeria Commodity Exchange (NCX) for optimum operation  before its sale.

    On Commodity Exchange , Orji  noted that the injection of capital should not be misconstrued for halting privatisation, noting that the Exchange was being revived to attract value as against selling it as scrap.

    Orji spoke yesterday in Abuja at a press briefing on the NSIA’s Q3 2016 performance and outlook for 2017.

    On the much talked about Second Niger Bridge, Orji said it was abandoned because of paucity of funds, and the change of government. Some of the grey areas have been settled and the contractors have been mobilised back to site, he said.

    He was optimistic that the project would be completed in 2020 as scheduled but he would have better information on that after the National Economic Council (NEC) approves a new financing arrangement for it.

    “There was a pause, we went through a phase and we have resolved some of the issues; we are now working together. The contractors have been mobilised  to go back to work. There is a new financing strategy we are going to be discussing  with the Ministry of Works. If that is achieved, you see progress. There was a bit  of time lost , but we are back  on track but the financing structure will  change. Once it is approved,  it will move faster. Are we still looking up to completion date of 2020?  I think so . I will be able to give a definitive answer in another three months as soon as our financing plan is approved.”

    According to Orji, “the agency recently submitted its report to the governing Council at the 74th session of the National Economic Council which approved $250 million additional capital to it (second Niger Bridge)”

    To Orji, 2017 will be a year of harvests.

    He said: The organisation planned to increase its domestic infrastructure investment, adding: “There are compelling opportunities  in today’s environment. We have to focus on social infrastructure, such as affordable housing”.

    He said NSIA had $255 million in the stabilisation account which the government is at the liberty to borrow whenever it deems fit. Of the amount, 20 % is always in liquid as required by law so that the equity holding governments can draw from it.

    “The way stabilisation fund is structured, we make sure the fund is not put in a long term investment which take years to mature.  Right now, we have $255 million in Stabilisation Fund, so if the government needs it will go through the National Economic  Council.  That money is available.”

    Orji added: “We are required by law to keep 20% of our fund in stabilisation  account. Obviously, we are not there yet because government is injecting capital into NSIA. The option is left for the government to take. The law requires the Minister of finance to put it into writing, “we need x y z amount” and take it to NEC for approval and we are under mandate to honour it.”

  • Aviation workers back sector’s master plan

    Aviation workers back sector’s master plan

    Aviation workers endorsed yesterday the “sector‘s Master Plan and Implementation Road Map” by a team of consultants.

    The implementation of the master plan, according to its proponents, has prospects to unlock the potential for foreign direct investments (FDIs), create jobs and bring about massive upgrade of airport infrastructure.

    The workers, through their spokesman, Emmanuel Chukwu, chairman of Aviation Associates, spoke at a forum in Lagos.

    Chukwu assured that aviation workers were committed to the implementation of the master plan, a key document expected to transform the sector.

    An effective implementation of the master plan is expected to increase the contribution of the sector to over N110 billion to the Gross Domestic Product (GDP) in the next few years.

    Besides increasing the sector’s contribution to the economy, the master plan is also expected to yield more revenue for the development of the sector.

    The plan will also boost human capacity development, investment in infrastructure and welfare of workers.

    At an “Aviation Workers’ Buy-In” into the master plan forum in Lagos, Aviation Minister Princess Stella Oduah said the plan has inherent benefits for aviation workers.

    The minister stressed that the sector’s workers are expected to drive the implementation of the master plan.

    At the forum were workers of Nigeria Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN), Nigeria Airspace Management Agency (NAMA), Nigeria College of Aviation Technology (NCAT), Accident Investigation Bureau (AIB), among others.

    Ms Oduah said the implementation of the master plan had led to the transformation of 22 airports to world-class standards.

    She said: “The master plan is a compass that guides our path to the true, real and sustainable development of the Aviation sector. It caters for the infrastructure, safety and security needs of the sector.

    “It has the potential to attract the much-needed foreign direct investments into the sector to help grow the economy. It also provides the surest path to the self-sustainability of the sector. It will ultimately lead to better conditions and standard of living for workers.

     

    “Already, through the guided implementation of the master plan, we have rehabilitated and remodelled 22 airports.

    “We shall have more revenue to contribute to the federal coffers and retain a reasonable percentage for our welfare and well-being.

    “With more investment and more money , we will initiate schemes to take care of workers’ holidays, improve access to medicare, enhanced salary and allowances, create greater access to local and international capacity building and have a improve conditions for the the average worker.

    “…The foregoing is a snippet of the huge promise which the master plan holds for the sector, for the nation and for our individual and collective interests.

    “There is no reason an aviation worker cannot have the same standard of living as his counterparts in the Central Bank of Nigeria (CBN), Nigeria National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS) or other ‘glamorous’ Federal Government corporations!

    “The difference lies in the choice or choices we make, starting from this moment. Our destiny is in our hands as our fortunes are; as Siamese twins, intrinsically tied to the fortunes of the sector. So, why don’t we take a decision today to improve the sector to guarantee a higher standard of living for ourselves?”

    Oduah added: “It makes adequate provision for a programmed development of critical infrastructure in the industry, caters to its safety and security needs as well as welfare and capacity needs of staff.

    “It has potential to attract direct foreign investments and help grow the economy.

    “Above all, the master plan provides the path to self-sustainability, leading to better conditions for workers.”

    The minister also dwelt on challenges the sector might face in implementing the master plan.

    She said: “Needless to say that in the course of our intervention efforts to reposition the sector, we may have stepped on some toes. Obviously, our modest effort to have a paradigm shift in the way the sector was managed has unsettled persons who have ever since vowed to distract us from our objectives. But we have a message for them: we refuse to be intimidated, distracted or derailed.

    “Let me reassure you that as co-drivers on the transformation train, we would not lose sight of our destination. With you (stakeholders) on our side, we are convinced that those who desire to drag us back to the sordid past will not have their way.”

     

  • Where are the FDIs?

    Where are the FDIs?

    THE National Association for Small Scale Industrialists (NASSI) recently came hard on the Jonathan administration for making a fetish of Foreign Direct Investment (FDI). Piqued by the strident but clearly exaggerated claims of inflow of foreign investment by hierarchs of the administration, the most notable being the claim by President Goodluck Jonathan during the occasion of the nation’s 52nd independence anniversary that his administration attracted N6.8 trillion foreign investments in nine months – the body insisted that the reality is a far cry from the picture painted by the Federal Government.

    Like the tawdry tale of outlandish growth of the decade that has neither lifted any appreciable segment of the population from poverty nor deepened the economy, this newspaper has had much trouble reconciling the image of foreign investors said to be scampering to have a piece of the Nigerian action painted by government, with the roller-coaster wave of de-industrialisation in the Main Street, a trend that has been rather pronounced also in the last decade.

    Given the spate of factory closures that have gone un-arrested, government’s claim to have attracted any investment at all, would ordinarily be contestable.

    Even then, we cannot make the point enough that the current obsession for FDI in an environment that is patently anti-business is misguided and flawed. A lot more would certainly be gained by conserving the energy expended on the annual road shows in search of FDIs for the more productive activity of fixing the basic infrastructure and generally improving the environment for doing business.

    As it is, it is not only NASSI that sees everything wrong with the current approach which smacks of a misplacement of priorities. Indeed, no less a body than the United Nations Industrial Development Organisation, UNIDO, shares the view that the current strategy is flawed. The point was well canvassed by UNIDO’s representative in Nigeria, Dr. Patrick Kormawa, at a forum in Lagos. He lamented that little is being done in formulating policies to support the growth of local manufacturing just as he bemoaned the undue attention being paid to foreign direct investment.

    In the words of the UNIDO chief: “If the desire to see manufacturing as the main driver for unlocking sustainable wealth creation and prosperity would be achieved, Nigeria would require a major paradigm shift from the current calculus in the sector…”.

    “For this to happen”, he further noted, “the industrial vision should be developing and sustaining robust, technologically-driven and globally cost competitive domestic manufacturing that supports rapid economic growth and employment generation with due cognisance of environmental sustainability and with the ultimate aim of benefitting the average Nigerian, the communities and states where the industries are located.”

    Of course, the issue is that the quest for FDI would remain futile in the absence of enablers of the real sector. Government should be seen as focusing more on policies and critical infrastructure needed to guarantee industrial competitiveness. The combination of the policies and infrastructure, in our view, is what best guarantees that investors –foreign or indigenous –will open shop.

    Or, is government suggesting that foreign investors will thrive better were they to be exposed to the same set of circumstances under which our local manufacturers operate? Surely, the point cannot be lost on the government that the factors which underlie the reluctance of foreign investors to come to Nigeria also serve to explain why local businesses are endangered. Removing the bottlenecks hampering business competitiveness is evidently a surer strategy to industrial development than current obsessions with FDI.