Nigerian government do not seem to understand that the World keeps track of the events taking place in Nigeria especially in today’s interconnected world. Investors from Western European and other countries around the world do monitor economic activity around the world to find out where they can get the best return for their investment. Western European markets are nearly saturated, and their population are aging. These Investors are desperately looking for new market in developing countries. China and other Asian countries used to be their preferred destination, but cost of labor has increased, and consumption has slowed in Asia partly because some Asian countries are now manufacturing products they use to import and in some cases are now net exporters such as China and South Korea.
I wrote article on this website few years ago on the implications of Nigerian government policies and adverse effect of those policies on future foreign investment inflow into Nigeria. Title of the article was “Penny Wise, Pound Foolish”. The articles predicted that the result of the federal government unreasonable fine on MTN of South Africa in the amount of $5.2 billion would be that foreign investors will set up offices and manufacturing plants in neighboring countries, manufacture, assemble and ship their products to Nigeria. In-order words, Nigerians will not take part in the manufacturing or assembly face of the products but will be expected to consume those products when exported to Nigeria duty free. Thanks to ECOWAS and ACFTA treaty.
Foreign investors are businessmen and women who have no interest in taking unnecessary risk on their hard-earned money. When they see or perceive that a potential host government have no regard for private or corporate property, they will not even bother investing in such country. Federal government of Nigeria are known to arbitrary fine domestic and foreign companies unreasonable amount of money for minor infractions. They are also known to shut down or withdraw business licenses for foreign and domestic companies at will. Excessive regulations that burden businesses is a problem as well. Foreign investors knows that Nigeria will offer them higher return on their investment than any other African country due to the size of Nigerian economy and population.
The cumulative result of the misguided policies of the Nigerian government is in. Twitter just choose to establish their headquarter in Ghana not to target Ghanaian market but for Nigerian market. They cited lack of free speech in Nigeria since the federal government never hesitate to shut down or withdraw license of media companies that broadcast or write anything they do not like. Channel TV was just fined 5 million Naira yesterday, April 26th, 2021 for interviewing a member of the Indigenous People of Biafra (IPOB) and their license withdrawn. Nigerian Broadcasting Corporation which withdrew the license changed their story after massive backlash from Nigerian public and now claims that they only issued warning to Channel TV. Who will blame Twitter for setting up their African headquarter in Ghana where freedom of expression is observed and protected by the federal government.
Parade of companies setting up their headquarters in Ghana for Nigerian market is growing. Hyundai, Kia, Volkswagen, Nissan, Toyota, SinoTruk and Suzuki motors have decided to establish their assembly plants in Ghana for Nigerian and other African markets. These companies would not have established their assembly plants in Ghana if Nigerian government is practicing true democracy, respect private and corporate property right and is able to provide adequate security in the country. Nigerians have lost these job opportunities and tax revenue the country desperately needed. More companies will be locating their operations in Ghana. The missed opportunity is quite unfortunate for Nigeria since it is largely self-inflicted due to mala-administration by successive Nigerian government which has become the norm in Nigeria rather than the exception.
What should Nigerian government do? Even though these companies are locating in Ghana due to bad leadership in Nigeria, the government of Nigeria must take decisive action and send a clear message to foreign investors that Nigeria will not be a dumping ground. They must make it clear to foreign companies that they cannot locate their manufacturing plants in another country and ship products manufactured in those plants to Nigeria duty free. They need to place high import duties on those products coming from neighboring African countries. Make it clear to those companies that they cannot use Nigerian market if you do not invest in the country. China will not allow such practices in their country. Nigeria should pull out of ECOWAS and ACFTA if member states do not agree to only allow locally manufactured product not assembled product to member countries duty free. Only such policy will help Nigeria and other African’s countries. Allowing assembled products to be exported to member countries duty free will destroy local manufacturers. The solution for African economic problems is manufacturing within the continent.
Nigerian government must get their act together. Foreign investors are losing confidence in Nigeria. Unemployment is rampant. Insecurity is basically the last straw for would be investor. There can be no investment or any type of meaningful development without security. Collapse of Nigeria economy will lead to collapse of Nigerian state as we know it.