By Tope Templer Olaiya
GOING by facts and figures, Nigeria’s economy is in dire strait. The picture of a robust economy painted which rated the country as Africa’s largest economy with about $510 billion yearly Gross Domestic Product (GDP), appears to be cloudy, because reality checks and outlook have proved otherwise. There are cogent reasons to be worried. Reason: The exchange rate is today N228 to US$1; statutory allocation to federating units has plunged by about 50 percent, leading to delay in salary payments by state governments; and loss of over N4 trillion in foreign direct investment.
Nigerians were jolted to reality when last December, thousands of federal civil servants celebrated yuletide without payment of their salaries. This brought to the fore the burgeoning list of state governments owing salary arrears for several months and still counting.
The sliding fortunes of the economy was exacerbated by huge losses recorded recently in the capital market, where over N4.5 trillion portfolio investments evaporated in a couple of months. Indeed, economy watchers needed no rocket science to know that the rebasing testimonial of being the biggest economy in Africa was, perhaps a ruse.
Economic analysts have blamed this spiral downward trend on the devaluation of the Naira, which was government’s kneejerk approach to the crash in oil prices.
Managing Director/CEO of Juhel Nigeria and President, Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), Dr. Ifeanyi Okoye, said the nucleus of the problem is the fact that Nigeria, despite its much-touted size, still operates a mono-economy, depending solely on oil.
“As the price of oil started coming down, our Naira started tumbling. This impacted the economy, as people have to re-strategise. As far as the pharmaceutical sector is concerned, more than 98 percent of raw materials used are imported. This has affected the prices of goods in the country. So, the prices of drugs will definitely go up a little bit. However, we believe it’s going to stabilise.
“Given the mono-economy nature of Nigeria, the government’s effort to decentralise the economy will definitely take care of the problem. By the time this goes full circle, the economy will become stronger. Nigeria, of course, has been trying to ensure that agriculture is not just about feeding ourselves but also exporting our products. The strategy of trying to make manufacturers stronger by making funds available at affordable cost is good; but we have to encourage the government to go ahead with that and make it permanent, not bringing it as an intervention.” he said.
Amidst the hot air and tension that have characterized the run-up to the decisive general elections later in the month comes the window of opportunity for businessmen and investors to make a strong head start in 2015.
Despite drawbacks to business activities since the beginning of the year, which is not unconnected to the election fervor, the United Kingdom-Nigeria Economic Forum, billed for London in July 29, will set the tone for a fresh direction, weeks after a new administration would have been inaugurated in May 29.
The fourth in the series of the trade, investment and business conference held in London by the Nigerian London Business Forum, UK (NILOBF), is coming on the heels of a hugely successful Greater London Business Conference on Nigeria held in September last year.
NILOBF is the official business chamber and trade association, comprising Nigerian, British and non-British companies doing business with Nigeria and UK, including subsidiaries of Nigerian companies and institutions doing business in the UK. Investors, trading partners from around the world who are desirous of meeting Nigerian business leaders in London with a view to doing business in Nigeria forms a large chunk of the conference participants.
The NILOBF’s key objective is promoting and attracting bilateral trade and investment relations between the two countries by bringing together business people from Nigeria and the UK, who seeks new investment opportunities, develop long-term business relationships and finalise existing business deals.
Running with the epithet ‘Meet in London, do business in Nigeria’, the event seeks to provide the platform for serious networking with potential Nigerian, British, and global business partners and investors.
According to the country director of the forum in Nigeria, who is also the Registrar/Chief Executive Officer of the Institute of Credit Administration (ICA), Prof. Chris Onalo, “organisations that oil the wheels of the economy in areas of commerce and industry, trade and investment, such as export credit guarantee agencies, major project funders and loan providers, high-profile agencies responsible for growing and connecting businesses to top commercial opportunities are among the prime business entities NILOBF is bringing together for the July 29 event.”
A cheery development, which would be explored at the conference, is the promise by the Nigerian-British Chamber of Commerce (NBCC) and UK Trade and Investment (UKTI) to work together to attract more investments into Nigeria. This was made known recently during a send-forth luncheon organised by NBCC in honour of the outgoing Director of UK Trade and Investment (UKTI), Mr. Mike Purves in Lagos.
President of NBCC, Adeyemi Adefulu, said the relationship between NBCC and UKTl had evolved, adding that the two bodies were committed to attracting more British companies into Nigeria. He noted that Nigeria has image problem and that Purves, through UKTI, had worked with the chamber in promoting business opportunities in Nigeria by encouraging UK companies to look beyond the challenges in the country.
Purves described Nigeria as one of the best destinations for business with its position as the biggest economy in Africa. He said Nigeria’s major resources are not oil and gas but its human resource and diversity.
Nigeria’s relation with its trading partners across the world is a mixed bag of risks and opportunity. Often touted as Africa’s biggest economy, though ranked 26th in the world in terms of Gross Domestic Product (GDP) after rebasing, and with an over 167 million population, the country still remains an investor’s delight in spite of seemingly unfavourable business climate like insecurity and infrastructure deficit.
Nigeria is a middle-income, mixed economy and emerging market, with expanding financial, service, communications and entertainment sectors with eyes set on potentially becoming one of the 20 largest economies in the world by 2020.
Its re-emergent, though currently under-performing, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African region. As a result, it is a busy hub for business activities.
One of its biggest trading partners is the United Kingdom. Presently, Nigeria is UK’s second largest trading partner in Africa after South Africa. The drive for improved trade and economic relations was the kernel of discourse at the Greater London Business Conference on Nigeria last year, the epic event that was put together by the prestigious Nigerian London Business Forum in UK.
With the theme ‘Nigeria in the MINT’, the conference had in attendance government agencies and Nigerian companies drawn from various local chambers of commerce. The term, MINT – Mexico, Indonesia, Nigeria and Turkey – was originally coined by Fidelity Investments, a Boston-based asset management firm and popularized by Jim O’Neill of Goldman Sachs, who predicted the MINT countries as the next most powerful economic bloc.
Onalo, the renowned professor of credit management in his presentation at the conference, urged the Nigerian government to work closely and pragmatically through its relevant agencies with the British government with a view to creating further improvement on efforts to remove needless obstacles perceived to be seriously hindering a robust business, trade and investment engagements of business people of the two countries.
There is need for the government of the two countries to make less stringent, special requirements to be met by business people for business visa applications so that the people in the two countries can easily and frequently meet and interact with each other in order to encourage appreciable economic, trade and investment expansions between the two countries.
For instance, conscious, stimulating and industrious effort was made by the Late Peter Carter, British Deputy High Commissioner to Nigeria in a meeting which was co-ordinated by the Nigerian London Business Forum (NILOBF) at the British Residence in Kaduna (Lord Lugard’s House) in 2014 to re-lunch bilateral relations between the British High Commission in Nigeria and the chambers of commerce of both Kaduna and Kano states.
The incidence of Visa Denial of members of the chambers of commerce of both states by the British High Commission and to avert a possible reoccurrence in the future was a critical part of the agenda of that meeting. He expressed regret at the experience of those members of the Chambers of Commerce (from both Kaduna and Kano States), who were denied visa to attend the last Nigerian London Business Forum (NILOBF) trade and investment conference in London, United Kingdom, and apologized on behalf of the British government.