Of Dodgy Promissory Notes and MoUs - Behind The Figures

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Monday, November 04, 2019  /  04:57PM  /   OpEd By Ijeoma Nwogwugwu   /   Header Image Credit: Naija247news

 

In June 2016 the immediate past Minister of State for Petroleum Resources, Dr. Ibe Kachikwu embarked on a visit to China. Ostensibly, this trip was the one of many roadshows targeted at attracting investments to support Nigeria's oil and gas infrastructure development plans. On that visit, Kachikwu, who at the time doubled as Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), took along with him a retinue of aides, officials of the NNPC and some private sector individuals, chief among whom was the Chairman of Seplat Petroleum Development Company Plc, Dr. ABC Orjiako.

 

Within days of landing in China, Kachikwu eagerly called THISDAY to inform us that he had signed memorandums of understanding (MoUs) with several Chinese firms to the tune of $80 billion for new investments, spanning five years, in the oil and gas industry. The deals covered pledges to invest in refineries, pipeline infrastructure, gas and power projects, facility refurbishments and upstream developments.

 

As I went through that story after it had been sent to my desk, I chuckled at Kachikwu's bravado. He had held both posts of minister and head of NNPC for a little under a year, but had acquired a reputation for lofty and over-ambitious schemes that were not worth more than the words coming out from his mouth. True to form, nothing more was heard of those empty pledges that he secured from the Chinese and the whirlwind publicity that accompanied that trip.

 

Kachikwu is just one of many examples of government officials, ranging from ministers and governors to the president, who love to embark on pointless overseas trips in search of foreign investors. At the end of these trips, all they bring back to Nigeria are baskets full of promissory notes and MoUs that don't create employment opportunities or put food on the tables of hungry Nigerians.

 

Instructively, the Punch newspaper, a few days ago, wrote a scathing editorial criticizing President Muhammadu Buhari for his penchant for "abandoning his duty post in preference for foreign trips of dubious value". The editorial, notwithstanding, Buhari, who at the time of its publication was in Sochi, Russia, where he had attended the Russia-Africa Summit, embarked on yet another trip to Riyadh, Saudi Arabia for the "Davos in the Desert" Summit.

 

It is instructive also that very few, if any, renowned world leader has visited Nigeria in the last year or two on a proper state visit to discuss bilateral ties or areas of common interest. Save for President Emmanuel Macron of France who stopped over for a few hours in Abuja last year, no president of reckoning has bothered with Nigeria. Even when the opportunity presented itself to Buhari to invite South Africa's Cyril Ramaphosa to Nigeria last September, following the xenophobic attacks, the Nigerian president blew it by visiting the Southern African country instead. As though that wasn't bad enough, the South Africans added insult to injury by hoisting the Nigerian flag the wrong way around during Buhari's visit.

 

That world leaders are pointedly ignoring Nigeria and refusing to visit, goes to prove how irrelevant we have become in the global arena. Instead, it's Nigerian leaders that keep showing up in places where they have nothing of consequence to offer to the rest of the world other than an oil sector that is characterised by dated fiscal regimes and policies and faces a clear and existential threat 10 to 20 years from now. If it's not the oil sector, Nigeria's other selling point to the rest of the world is subsistence agriculture stretching back to the stone age.

 

To be fair, Buhari is not the only president Nigeria has had that's been dazzled by the five-star treatment that he receives on his foreign travels. Former President Olusegun Obasanjo, before him, also loved to junket around the world and was at some point derisively called the de facto foreign affairs minister because of the inordinate number of trips he took overseas while in office. But the question to ask Buhari and others before him is what Nigeria has stood to gain from all these overseas visits. The exorbitant nature of the visits aside, they make us the laughingstock of the world because all we get from them are platitudes and empty promises of investments that never materialise.

 

If Buhari would care to listen, the focus should be on fixing the home front first before going cap in hand to beg foreigners to invest in Nigeria. As we speak, the country's investment climate is extremely hostile and unattractive to investors - foreign and local alike. This was confirmed in the Second Quarter 2019 Capital Importation Report released by the National Bureau of Statistics (NBS). The report showed that capital importation fell by 31.4% from the previous quarter to N$5.82 billion in Q2 2019.

 

The largest amount of capital importation by type was received through portfolio investment, which accounted for 73.76% ($4.3 billion) of total capital importation, followed by other investments, accounting for 22.41% ($1.3 billion) of total capital imported and Foreign Direct Investment (FDI), accounting for 3.83% ($222.89m) of total capital imported in Q2 2019.

 

What the information provided by the NBS tells us is that not only has Nigeria ceased to be one of the most attractive investment destinations on the African continent, but that the only form of significant capital importation it is attracting is hot money - that is, funds that are invested in high yielding government securities, which can be liquidated with ease and taken out of the economy at the slightest drop of a hat. Meanwhile, FDIs that are more impactful and can lead to the creation of thousands of direct and indirect jobs have trickled down to a paltry $222.89 million.

 

The reasons for this are not far-fetched: The country is terribly insecure and there is no sign that the federal government and its security agencies have shown capacity to end the insurgency in the Northeast or banditry and kidnappings nationwide. But even if investors elected to steer clear of insecure hotspots in the country and focused solely on seemingly safe regions, the cost of doing business is prohibitive due to the absence of electricity and other infrastructure.

 

Besides the absence of infrastructure, investors have to contend with an environment where corruption remains rife, multiplicity of taxes are strangulating, excessive government bureaucracy stifling, and knee-jerk policies and non-adherence to sanctity of contracts and the rule of law prevalent. Add to these a bunch of regulators, ranging from the Nigerian Customs Service (NCS) to the Central Bank of Nigeria (CBN), that have completely gone rogue.

 

I may be expecting too much, but if Buhari's handlers can manage to refocus the president on fixing these problems that make Nigeria unattractive and uncompetitive, as well as instituting long overdue reforms in the public sector, he would not have to beg any foreign investor or come back home from one of his junkets with dodgy promissory notes and MoUs.

 

Nor will he have to resort to the daft border closure that stifles trade and renders thousands in the informal and formal sectors jobless. Nigeria is already ripe for the picking. It has a large, young population and a readymade market eager and willing to consume goods and services. All it requires are the right kind of policies, customs and border reforms, and private sector led investment in infrastructure for businesses to thrive.


 

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Credits

The post Dodgy Promissory Notes and MoUs  under author's permission first appeared in Thisday Backpage on Monday, 04 November 2019.   

 

 

About the Author

'Ijeoma Nwogwugwu can be contacted via email: Ijeoma.Nwogwugwu@thisdaylive.com


 

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