Short thread: Challenges of FDI
You see, as a foreigner it's not easy to navigate the business terrain of Nigeria. Our terrain is filled with ditches, snares and land mines. Take inconsistent government policies for instance. The banning and unbanning of certain items by the CBN.
You see, as a foreigner it's not easy to navigate the business terrain of Nigeria. Our terrain is filled with ditches, snares and land mines. Take inconsistent government policies for instance. The banning and unbanning of certain items by the CBN.
Take the difficulties encountered by investors in repatriating profits in our ever scarce foreign exchange regime. Corrupt dealings by staff of our local monetary institutions and the effect it has on investors. The double taxation, the issue of infrastructure and lack of power.
The erratic regime of our foreign exchange market and effect on disposal income of the populace is also a challenge. It's one thing to boast about a huge market in the country due to burgeoning population, and quite another to consider the pauperizing effect of bad policies.
Above all corruption is a real and present issue in all this. How can you explain a foreign company that has a custom duty of say N100m to pay for a set of imports, and officials from customs who come to them and tell them to pay N50m instead and give them N20m?
Or in terms of taxation, the staff of Inland Revenue advising them to underpay tax in exchange for a tax discount and kickbacks that go with it? This isn't a familiar terrain for some folks coming from more ethically decent business climes. The fear on this is two fold.
1.If you underpay and 3 years down the line, an audit under a different leadership of the agency presents this fact and penalises the company, how would you defend it with the parent company abroad? How would you cope with the corporate backlash? The bash on corporate integrity?
2. If you refuse to cooperate with the corrupt system, even the process of paying the rightful amount would be met with a lot of frustration. Take the earlier example of duty for instance, the customs staff may unduly delay the issuance of clearing certificate and even throw the.
items into demurrage. The Nigerian business environment is tough. This is why understanding the local culture and ethics (or lack of it) is key to success. Some nationalities have come to grasp it, due to their many years of association with Nigeria or the fact that such is also
practiced to a lesser extent, in their home country. This is why a Chinese, Indian, Lebanese or Syrian businessman will do better in our terrain, than the American, European or even a South African businessman. It then becomes clearer why Shoprite, Mr Price etc are closing shops.
We must set out to improve on our ease of doing business index. We must put in place enduring policies that will attract FDI into our economy, instead of dispersing same. We must inculcate the discipline of dealing with them with our hands on the table instead of under the table.
We must have more stable business policies as against erratic ones. We must also combat poverty to boost the disposable income of the populace. A pauperized population, however large it is, will never be an attractive market to the foreign investor.
Infrastructural upgrade and stability of power which seems to be rocket science to Nigeria, is key to any country's economic development. A school of thought believes that if we can generate enough power, the spiralling effect on our GDP will be in geometric progressions.
FDI creates jobs. Lack of it contributes to growth in unemployment. I fear for the recent news about Shoprite. One can only imagine the loss of jobs directly or indirectly (supply/maintenance chain, ancillaries etc) this will cause. A stich in time as they say, saves nine.
End.
@threadreaderapp please unroll.
