Every country, developing or developed, wishes to have foreign investment, not because of its “foreigner” but, firstly, because of certain advantages attached to it and, secondly, no country can produce all that its citizens need or want to have. Even having foreign human beings in your country gives some recognition of the country’s existence. In the good old days, the number of foreign students in a higher institution like a university portrays the recognition that these institutions have outside the coasts of the country. But we had a large number of foreign students and staff at first generation Nigerian universities. Our universities were few in number, well funded and recognized for their good quality results. The lower levels of public institutions were also of good quality. Despite struggling to understand everything that was being said by some of these strangers among us, we (and them) were happy or enjoy the interactions. Let’s protect the discussion on this for the future. Memories can make this once beloved country cry.
Of course, there isn’t much wrong with foreign investment and so much is good if a country takes advantage of the potential benefits. However, the investment can be tangible or intangible; they can be direct or portfolio investments. Or, in a simpler statement, it could be an investment in factories or an investment in financial papers. If you can buy shares in foreign companies in the Republic of Benin or London, which can be done online nowadays, you are a foreign investor, just as if you could establish a bread factory in Ghana or At New York. The first makes you an investor in portfolio assets while the second qualifies as a direct investment and you are a real asset investor.
Foreign investment, direct or financial, is an important source of capital inflow into an economy and has an influence on the state of a country’s exchange rate and balance of payments, which is the state of transactions. of a country with the rest of the world. Definitely, people are more concerned about the exchange rate, especially in a country where importation has become the order of the day. There has been a decline in foreign direct investment in Africa in general, including Nigeria. EY’s 11th Africa Attractiveness Report shows that foreign direct investment in Africa fell 50% in 2020 as the continent experienced its worst recession in 50 years due to COVID-19. The services sector, including technology, financial services and consumption, attracted 72 percent of the continent’s FDI, the extractive sector around four percent and manufacturing, which is expected to offer far fewer opportunities for foreign direct investment. use.
In recent times, the news about the growth of foreign investment in Nigeria has not been encouraging and we need to promote FDI given the low level of domestic investment in the manufacturing sector of the economy. Foreign investors look at many important political and socio-economic factors in moving their businesses or funds overseas and these certainly do not include visits from presidents or state governors to build support. to foreign investments. These trips were only part of the waste of our resources through the airport code and plane tickets.
Some of the main determinants of foreign investment are access to domestic markets and market size, industrial and general government policy towards foreign investment, including incentives, cost of human capital and skills, tax structure and the stability of exchange rates that affect the return on investment and the transfer of those returns. Invariably, the issue of political risk and economic stability as well as the ease of starting and doing business have an important role to play in attracting investors.
When we think about the size of the market and look at our population relative to the size of the population of other African countries, with 200 million people (if the estimate is reliable), we welcome ourselves to be a strong candidate for foreign direct investment in Africa. But for international investors, the size of per capita income is, at least, as important as the size of the population. For a foreign investor, a population of 50 million people with high per capita income is much better than a population of 200 million people swimming in poverty. For the former, there would be effective demand for their products and high turnover, which is linked to high income, an important indicator of profitability. Thus, the designation of Nigeria’s “capital of poverty” is more important than business visits abroad. The government must improve the well-being of Nigerians against the intention to impose further economic hardship in the coming year. Nigerians should not be punished for the incompetence of leaders in tackling corruption and inefficiency.
Is the government’s industrial and general foreign investment policy up-to-date and available online? In the age of information technology with e-commerce, electronic finance, electronic data and others, the Nigerian user-friendly website must be up-to-date and accessible, containing all the necessary information for foreign investment, including incentives and tax policy. If it turns out that such information contains inaccuracies or is different from what is operating on the ground, it may damage the image of what is being sold and it will soon circulate to all potential investors to avoid the country.
I was not surprised when, in an interview, a managing director of one of the new foreign companies claimed that a major problem they faced when they moved to Nigeria, unlike some smaller African countries, was to find a skilled workforce. Labor is available, but skilled labor remains a scarce commodity. Are you surprised? With the hundreds of public and private polytechnics, more than 100 public and private universities and more than half of them providing technical and technological courses as well as technical schools in many states, all producing a hand – low, medium and high level labor, how can we speak of scarce skilled labor? This is where the question of the quantity and quality of education arises.
I had the opportunity to visit some technical schools in my state during a quality education research mission to Nigeria in 2018. Records show that no new buildings, carpentry, printing machinery or equipment was only built or installed after 1984 when the Second Republic was truncated and most buildings were constructed under the First Republic! In most labs and workshops at polytechnics and public universities across the country, you see the same decline. Archaic facilities and equipment that have been obsolete for many years are littered everywhere. It may even surprise you that when purchasing new equipment, neither teachers nor students can use them because current teachers never used such equipment in their time. Finally, we teach “theories of practice” and train graduates who are supposed to be practice oriented but know nothing about the practice. The claim that we lack a skilled workforce is real and cannot be dismissed.
The tax structure and the stability of exchange rates are very important to foreign investors. Among the advanced economies, the so-called G7, they play a lot with the issue of taxation by making sure that taxes are low among them to promote business expansion. We all know that paying personal income tax is what it is to businesses. Everyone tries to avoid paying tax if possible. High taxes on businesses in Africa are sometimes introduced in an attempt to increase revenue. Thus, foreign companies are interested in other incentives that would benefit them and reduce the effects of the tax. To attract FDI, the country will have to review its taxation, including multiple taxes in some states. This is necessary given the many infrastructure problems, electricity for example, and the resulting high production cost in the country.
As a Nigerian business overseas, you will get your return on investment in foreign currency which you can then convert into naira when you bring the returns back to Nigeria. With the naira depreciating in the forex market or being devalued by the central bank, you should be happy with your return on your investment when you take it home while a foreigner who has invested in Nigeria faces the opposite of this happiness which can give him the impression when leaving. Hopefully that’s not the case with MTN. This implies that the central bank must be aware of the damage caused to the attraction of foreign investors, whether portfolio or direct. In the last one or two years, many investors in the stock market or in the capital market have generally withdrawn their investments and this is not unrelated to the instability of the exchange rate and, consequently, the instability of the market. return on investment.
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