Citizenship by Investment: An Eroding Economic Impact on a Nation and its Benefits to a Country

Somadina Eugene Okorie

Published By: Kazeem Ugbodaga

By Somadina Eugene-Okorie

The first part of this article, published a few weeks ago, discussed the background of Citizenship by Investment (CBI), the program’s benefits for participants, and the principles upon which it was founded. In the second part of the article, I want to build on the numerous opportunities that the CBI program presents for our country Nigeria, as well as how it can help strengthen our ties with the global community.

5.0 The Economic Benefits of a Citizenship by Investment Program

a) Attracting Foreign Direct Investment (FDI): As already established ab initio, a CBI program allows individuals to invest in a country’s economy in exchange for citizenship.

For Nigeria, this could mean attracting significant foreign capital into strategic sectors such as real estate, infrastructure, manufacturing, and technology.

Given Nigeria’s challenges with infrastructure, a CBI program could be an effective tool to attract investment in building essential projects such as roads, bridges, energy/power plants, and modern housing developments.

The foreign investors who participate in such programs typically invest in long-term projects that create jobs, stimulate local businesses, and contribute to public funding through taxes.

By securing large-scale investments in critical sectors, Nigeria would benefit from an infusion of capital that could help alleviate its infrastructure deficit.

Additionally, foreign investors could bring new technologies and expertise that would benefit Nigeria’s manufacturing and services sectors, potentially leading to increased productivity and enhanced global competitiveness.

b) Strengthening the Naira and Enhancing Foreign Currency Reserves: One of the direct benefits of CBI programs is the inflow of foreign currency. Many CBI programs require applicants to make their investments in foreign currencies such as the U.S. dollar, the Euro, or the British pound. These currencies would flow into Nigeria’s economy, directly boosting the country’s foreign exchange reserves and stabilizing the value of the Naira.

By investing in sectors that generate foreign income, such as tourism, technology, and export-oriented industries, Nigeria could also build a sustainable stream of foreign currency. This would help mitigate the volatility of oil prices, which has historically had a significant impact on the value of the Naira. The diversification of foreign currency sources could also protect Nigeria from global economic shocks, ensuring greater financial stability.

c) Job Creation and Skill Development: CBI programs typically encourage investments in high-value projects that create jobs and provide training opportunities. In Nigeria, this could mean the development of new industries, particularly in sectors like tourism, real estate, and technology.

As investors contribute capital, they would also create employment opportunities, from construction jobs in real estate developments to high-skilled positions in technology firms, boosting overall job creation.

Furthermore, foreign investors often bring with them valuable business acumen, knowledge, and international best practices. These skills could be transferred to the Nigerian workforce, facilitating long-term capacity building and improving the overall quality of human capital in the country.

This would not only increase Nigeria’s competitiveness on the global stage but also help address the country’s youth unemployment crisis.

d) Maximizing Resources and Benefits through Strategic Incentives: One of the unique aspects of a CBI program is the ability to offer targeted incentives to attract high-quality investments. By providing a combination of tax breaks, investment guarantees, and other economic incentives, Nigeria could ensure that investments made through the CBI program benefit both foreign investors and the local population.

For example, Nigeria could offer tax incentives for investors who commit to reinvesting their returns into the local economy, such as by funding education, healthcare, or public services. Similarly, Nigeria could encourage investors to partner with local businesses, ensuring that a portion of the capital stays within the country’s economy.

In addition to fiscal incentives, Nigeria could offer residency and citizenship benefits that allow investors to benefit from favourable trade agreements and access to global markets. This would make Nigeria an attractive destination for international investors, as it would not only offer citizenship but also enhance their global mobility and access to regional economic hubs within Africa and beyond.

5.1 Raising Awareness and Building Trust in Nigeria Through a Possible Citizenship by Investment Program

The success of a CBI program hinges on effective marketing and awareness-building efforts. Nigeria must develop a comprehensive strategy to promote the benefits of its program both domestically and internationally.

a) International Campaigns and Partnerships: To attract international investors, Nigeria needs to develop an outreach strategy that targets high-net-worth individuals (HNWIs) and wealthy investors across the globe. This could involve partnerships with global financial institutions, wealth management firms, and international law firms that specialise in immigration and investment.

Engaging in targeted marketing campaigns at global investment conferences, real estate expos, and trade events would help increase Nigeria’s visibility and credibility as a destination for investment.

b) Building Investor Confidence: Potential investors are likely to be cautious about any new program. To build trust, the Nigerian government would need to ensure that the CBI program is backed by a transparent, secure, and well-regulated framework.

By establishing clear guidelines, monitoring systems, and strong anti-corruption measures, the government could allay concerns about the misuse of funds or the risk of money laundering. Additionally, offering a simple and predictable process for acquiring citizenship or residency would make the program more attractive to investors.

Clear communication, efficient processing times, and the ability to quickly and easily access information about the program would foster a sense of security for potential investors.

c) Public Engagement and Education: Educating the Nigerian public about the benefits of a CBI program is also crucial. Many Nigerians may initially view such a program with scepticism, particularly considering concerns about social inequality or the concentration of wealth.

The government could launch public information campaigns explaining how the funds from the CBI program will be used to benefit the country’s economy, improve infrastructure, create jobs, and foster economic diversification.

Local businesses, entrepreneurs, and the public could be encouraged to engage with the opportunities created by foreign investments. By demonstrating the direct and long-term benefits of the program, the government can build broad support for CBI initiatives.

6.1 The Negative Impact of Lack of Citizenship by Investment on Nigeria’s Present Economy

In recent years, Citizenship by Investment (CBI) programs have emerged as a powerful tool for major economic growth, offering foreign nationals the opportunity to acquire citizenship in exchange for significant investments in a country’s economy.

While many countries, especially small island nations in the Caribbean, have used CBI programs to boost their economies, Nigeria, with its vast resources and potential, has yet to fully explore this lucrative option.

It is submitted that if not introduced, Nigeria will certainly continue to suffer from loss of huge capital investment to foreign nations. The potential economic gains, such as the importance of foreign currency inflows, will continue to erode the country.

Conclusion

A Citizenship by Investment program has the potential to bring substantial economic benefits to Nigeria. By attracting foreign capital, increasing foreign currency reserves, creating jobs, and building a more diversified economy, Nigeria could harness the power of global investment to strengthen its position in the global economy.

The success of such a program, however, will depend on how effectively it is marketed, implemented, and integrated with the country’s long-term development goals. Through strategic incentives, transparent processes, and a focus on building investor confidence, Nigeria could turn CBI into a key pillar of its economic growth, unlocking new opportunities for prosperity and global influence.

Recommendations:

• Nigeria should, as a follow-up plan, develop a strategy on the CBI program that will bring back her lost investments and encourage foreign investment participation.
• There is a need for an amendment of the present Constitution of the Federal Republic of Nigeria 1999 to include CBI.

-Somadina Eugene-Okorie, a Business solicitor, writes from Lekki, Lagos, Nigeria.