Tag: Sambo

100 percent profit repatriation not enough to entice foreign investors

PENULTIMATE week, Vice-President Namadi Sambo was on hand to offer a cocktail of sweeteners for foreign investors seeking a piece of the Nigerian action. Prospective investors, he declared at the ground-breaking ceremony of Idu Industrial Park in Abuja on May 23, would be allowed to repatriate their profits 100 percent.

He also restated some of the existing incentives such as the 140 percent capital allowance in research development, 20 percent capital allowance for five years on local raw materials utilisation, as well as 30 percent tax relief and expenditure on public infrastructure.

Given the fetish that the Jonathan administration has made of foreign investment in the last two years, it is at once tempting to see the recycled incentives as new. The truth however is that none of the measures outlined by the Vice-President can be said to be outside the provisions of the Nigerian Investment Promotion Commission Act No. 16, 1995 and the Foreign Exchange Monitoring & Miscellaneous Provisions Act No. 17 of 1995.

Indeed, both legislations, now in their 18th year, have remained the fulcrum of the foreign investment quest. They guarantee foreign investors unrestricted remittance of dividends or profits from their investment in Nigeria, subject as it were, to evidence of capital importation issued by the banks on behalf of the Central Bank of Nigeria; they also contain provisions for repatriation of capital in the event of liquidation, in addition to a cocktail of other incentives.

Debatable still, is the effectiveness of the provisions in attracting the much-desired foreign investment.

That is not to take anything from the administration’s efforts to ramp up the drive for investment. No one denies that the economy needs all the help it can get to energise it. Indeed, foreign investment would seem the best bet to fast-track the sorely needed technology transfer and to boost employment.

However, as the Federal Government may have found out by now, it is one thing to roll out incentives; it is another to secure buy-in by prospective foreign investors. We must say here that as far as the quest to attract foreign investment in the last 18 years goes, the result, even with the best of efforts, has been a mixed grill of sorts.

First, we know enough of the profoundly loose, laissez faire environment where just about anything can pass for ‘foreign investment’ not to appreciate the challenge of sifting the wheat from the chaff from the hordes said to be scrambling in. Second, a number of so-called investors see Nigeria as a country where anything goes; the latter explains the ease with which foreign companies flout our regulations – and this can range from abuse of expatriate quotas designed to regulate the influx of foreign personnel, to other sundry practices which border on economic sabotage.

The question is – where are the safeguards to ensure that genuine investors as against the flight-by-night investors are the ones coming in? Have appropriate lessons been learnt from the collapse of the nation’s capital market, when the exit of foreign portfolio investors at the onset of the global credit crisis brought the roof down?

Rather than dissipate all the energies in futile pursuit of foreign investors, the Federal Government could do a better job of creating the enabling environment that would not only foster the growth of businesses but also make local ones truly competitive. It seems about time our charity began at home.

We have no doubt that much of the current efforts to market the so-called incentives would have been pointless were the appropriate infrastructure to be in place. True investors obviously need very little persuasion. What stands them apart is their ability to sniff opportunities wherever and whenever they may be found.

That, apparently seems lost to our officials.