It is unfortunate that successive Nigerian administrations sometimes adopts contradictory policies that works against what they said they want. President Buhari has been jetting around the world since his inauguration to improve Nigerian image, conduct diplomacy and attract much needed foreign investment to Nigeria. The National Bureau of Statistics (NBS) disclosed recently that the nation’s unemployment rate rose to 8.2 percent from 7.50 percent rate recorded in the preceding quarter. Labor force population which consists of people willing, able and are actively looking for work increased to 74 million in the 2nd quarter from 73.4 million in 1st quarter. NBS further stated that the underemployed rate increased to 18.3 percent in the 2nd quarter of 2015 to 18.2 percent (13.5 million) from 16.6 percent (12.2 million).
In the face of the above figures, President Buhari’s administration decided to fire a shot heard around the world. The shot was the $5.2 billion fine imposed on MTN by the Nigeria Communications Commission (NCC), the number one cell company in Nigeria. The fine constitutes about 20 percent of the entire company’s worth. The government imposed the fine because they said that they discovered a lot of pre-registered SIM card in their network. MTN is not disputing NCC’s allegation. MTN originated from South Africa but it is now an integral part of Nigerian company that has employed thousands of Nigerians. Nigerian government can actually get away with this disproportionate fine because the company relies a lot on their Nigeria investment to generate revenue and profit for their shareholders.
However, this decision is going to cost Nigeria dearly in the long run. Foreign investors want to make profit, that is what drives them to take enormous chances of investing their money in tough, unstable and unpredictable countries around the world. A lot of investors in various parts of the world see a lot of opportunities in Nigeria due to the size of the population and the economy. Some are sitting on the sideline waiting to see more incentive, stability and predictability on the part of Nigerian government. Investors are known to be fickle and will prefer to invest in a stable and predictable country with less government interference.
The MTN fine has basically confirmed their fears that Nigerian government is unreliable and not a worthy partner to do business with. This fine is devastating to MTN bottom line and other foreign investors contemplating business venture in Nigeria. Even the confidence of Nigerians in diaspora was shaken by this reckless fine. This ill-advised action adds to the long list of disappointments by would-be Nigerian investors. Virgin Atlantic came into Nigerian airline market after the demise of the Nigerian Airways with high hope but had to leave Nigeria due to excessive government interference and regulations. Former president Obasanjo privatized Nigerian Telecommunication Company (NITEL), Kaduna and Port Harcourt refineries only to see his successor government of Late president Yar’Adua forcibly reacquire the companies and promised Nigerians that they will be back to full operation which never materialized
Recently privatized power companies by the previous administration are also experiencing unnecessary government interference. Recently, this government flatly rejected electricity prizes increase requested by recently privatized companies on the ground that they have not increased or stabilized the power supply. How do you expect the owners of these companies to borrow billions of dollars required to upgrade their facilities to a stage where they can provide uninterrupted power supply to Nigeria if they cannot cover their cost of production and make profit? Business has never been and will never be a charity. Privatized Nigerian companies need billions of dollars to buy new equipment and technical expertise. Most of these companies needs foreign partners that will be able to provide technical expertise and the capital required to turn around their facilities. Arbitrary government interference in private or semi- private businesses will hamper development of Nigeria in a big way.
Tight foreign exchange control is already hampering repatriation of foreign investments profit. Now the Nigerian government wants to fully implement Biometric Verification Number (BVN) on all accounts in Nigerian Banks. While this is a commendable effort, flexibility is needed so Nigerians at home and abroad and foreign investors can gradually enroll. Former president Jonathan did not fully implement the BVS system due to the economic disruption that was likely to follow. The banks which are already short of fund to loan to businesses and governments due to laudable Treasury Single Account(TSA) will experience another liquidity shortage from Nigerians in diaspora if federal government insists on fully implementing BVS. It must be recalled that money sent to Nigeria by Nigerians in diaspora is the second foreign currency earner for Nigeria after crude oil. Nigerians in diaspora that has account in Nigerian banks will not travel back to Nigeria for BVS or travel to another state in U.S or in other countries for BVS. Some are already moving their money out of their Nigerian bank accounts by having other Nigerians who wants to send dollar back home to give them the money and they will in turn give the Naira equivalent to their relatives. They want to move all the money out by January 31, 2016 which is the new dateline.
Investors and ordinary people do not gamble with their hard earned money. They will take their money and investment in a stable and predictable country. That is why United States remains the premier investment destination for investors and people around the world. Nigeria must create a favorable environment for business if they want to attract foreign and domestic investors. Cost of labor is already high in western countries and in some Asia countries so western investors are looking for countries such as Nigeria with low labor cost. Lost future investments as a result of this fine will quadruple in few years if common sense and reason do not prevail. Investors are fickle and can deal with market turns but not unreasonable or excessive government interference.