While nothing is wrong with inviting Foreign Direct Investors to come into Nigeria to help deepen the performance of the Nigerian economy, it is also important to advocate that the same level of encouragement should be extended to domestic investors.
When a government focuses too much on inviting Foreign Direct Investors (who come with relatively lower interest rate loans, a stronger currency and the advantage of a large-scale economy) to take advantage of the infrastructure provided by the local economy to the negligence of local economic players, the local economy suffers.
Even with the craving for and hoopla around FDI, Nigeria is not in the top 10 leading destinations in Africa. Egypt, geographically close to Europe, is leading by about $11bn. It is followed by South Africa, at the southernmost tip of Africa, with $9bn.
Tanzania, ninth in the line of African countries that receive FDI, got only $1.1bn. If Tanzania’s $1.1bn is higher than what Nigeria may have gotten in the same period, you can imagine the nadir that Nigeria has sunk to in the esteem of foreign investors.
In addition to reducing the capacity of Nigeria’s domestic merchant class, the importation of production machinery from the Organisation for Economic Cooperation and Development, in North America, (only Mexico) South America, Western Europe and Asian countries will stifle research and development of local production technologies.
OECD countries that use the market-based economic template to collaborate and develop OECD-centric policy standards to promote their own sustainable economic growth are not out to develop local production technologies of other geopolitical zones.
The high level of intimidation, the discouragement they experience through sundry taxation and levies, and the sheer weight of unnecessary regulations, discourage commercial enterprises of peripheral economies from prospering.
At her recent unofficial meeting with President Bola Tinubu in Aso Rock Villa in Abuja, the Director General of the World Trade Organisation, Dr Ngozi Okonjo-Iweala, expressed what seemed to be a good understanding of where the policymakers should be driving the conversation on local enterprises.
She disclosed that the WTO was looking for ways of helping Nigerian women engaged in agricultural and the textile catchment of small and medium-sized enterprises to package and sell their products in order to make good money in the international market.
The intervention of the WTO is timely, now that the National Export Promotion Council, charged with the responsibility of promoting non-oil export, diversifying the economy away from oil and building a formidable economy, doesn’t appear to be up to the task assigned to it anymore.
When local enterprises are small and weak, multinationals, owned by international monopoly capital, will be encouraged to come into the economy to take advantage of the business opportunities available.
And after having done well for themselves, the foreign multinationals end up remitting huge dividends back to their home economies. Ask any Nigerian who has been involved in running any of the multinationals in Nigeria, or any other peripheral economy of the world.
As far as multinationals that are owned by entrepreneurs of the metropolitan economies are concerned, the most important ace in their cross-border businesses is the ownership of capital. The biggest score of capitalism is the taking over of the ownership of the shareholding structure of commercial enterprises.
That is the trump card that international monopoly capital needs to always determine the destination of dividends, the origination of raw materials, machinery and spare parts, and the structure and character of the distributors of the products of the company. And that is a big deal.
While the dividends paid to out-of-country investors may not exactly be directly proportional to capital flight, they nonetheless mean that funds that could have been reinvested within the Nigerian economy will be remitted to other economies.
Remitted dividends will go to serve the economy of the foreign investors, who tenaciously hold on to (what you could describe as) the golden shares of the multinational corporations that have been set up to milk the Nigerian economy.
You could also add that because the dividends paid to shareholders outside Nigeria must be made in foreign exchange, the process certainly places a lot of pressure on the Naira that must be used to buy foreign exchange, like the US Dollar and the UK Pound Sterling, the preferred currencies of the foreign investors.
Also, the purchase of partly processed raw materials for manufacturing companies and sleeker finished products for marketing companies (at relatively cheaper costs) directly works against companies that would have been their local competitors.
The Minister of Solid Minerals, Dele Alake, who many thought would have been Minister of Information, just came out with the good news that a Nigerian solid minerals corporation would soon be set up by his ministry.
The corporation, he said, would embark on immediate intervention in the mining and exploitation of gold, coal, limestone, bitumen, lead, iron ore, baryte and any other mineral resources that may be lying within the earth of Nigeria. He hopes the revamped mining industry will contribute close to 50 per cent of Nigeria’s Gross Domestic Product.
Alake must not only ensure that the corporation “seek(s) and secure partnership investment agreements with multinational companies,” to use his words, he must also ensure, again in his words, that “the solid minerals corporation will provide support for Nigerian businessmen seeking funding abroad and help to authenticate their investment proposals, to speed up the commitment of their (foreign) partners to invest.”
By the way, the solid minerals corporation should not run in perpetuity, like the ageless Nigerian National Petroleum Corporation that transmuted to a limited liability company, still wholly owned by the federation.
The solid minerals corporation should quickly take itself out of the picture as a commercial enterprise, though it can still remain as an enabling regulatory agency for the solid minerals industry.
It is very good news that President Bola Tinubu is attending the G-20 Meeting in New Delhi, India, with a cast of delegates that will include 25 of Nigeria’s most prominent and achieving businessmen. But he needed to have expanded the team beyond the all-star cast of businessmen and included lesser known, not so rich, even aspiring businessmen in the team.
This would be a good way to deepen the number and exposure of Nigeria’s merchant class cadre. Let it not appear that the President is promoting crony capitalism of a close and select group of businessmen who are his friends.
President Tinubu’s economic policies and actions must emphasise the creation of a new and younger generation of entrepreneurs. The bar must be raised for mom-and-pop shops and artisanal enterprises to scale up to be able to increase their quota to the nation’s Gross Domestic Product and to create jobs.
Also, they would be able to pay higher taxes to the government and thus help eliminate the misfortune (and trauma) of paying more than 90 per cent of Nigeria’s revenue to service loans, the way the government of former President Muhammadu Buhari did.
In addition, those that the Nigerian state regards as rogue or illegal petroleum refineries should no longer be treated as outlaws but should be formed into legal cooperatives that should be helped by the state to run more “respectable” enterprises.
It goes without saying that enterprises owned by Nigerians will likely reinvest their returns locally.
