Here they go again. The Federal Government of Nigeria through the Central Bank of Nigeria (CBN) under the leadership of the Mr. Emefiele has again setback the foreign investment drive Nigerian government said they are interested in attracting. The Central Bank governor just sanctioned four Nigerian banks by fining them a total of $16 million and asked a premier and successful foreign own company, MTN Nigeria that has provided lot of jobs to Nigerians to repatriate $8.1 billion to Nigeria. CBN governor alleged that the money was repatriated to the company’s parent company in South Africa illegally which they alleged happened within 8 years through 2015. The amount CBN is asking MTN to refund is substantial part of total capitalization of the global asset of MTN, not just their Nigerian operation.
CBN claimed that MTN made remittance of foreign exchange with irregular certificates of capital importation issued on behalf of some offshore investors of MTN Nigeria. That the fake certificates of capital importation were used to fraudulently convert investor’s loan to preference shares and render false return to the CBN. One can recall that the same company (MTN) was fined $5.2 billion by the Federal Government of Nigeria through the Nigerian Communications Commission (NCC) for not meeting the dateline for disconnecting subscriber’s identification module with improper registration that was setup by the Mobile Network Operators. The fine was later reduced to about $1 billion. MTN is still paying the fine. As soon as CBN announced the demand to return $8.1, global MTN stock fail by more than 20%.
Federal government of Nigeria and CBN may not comprehend the destructive effect of their action to the Nigerian economy and the negative prospect for future foreign investment to Nigeria. The federal government implemented expedited visa issuance to foreigners who want to visit Nigeria especially potential investors. They have even taken commendable step of issuing visa on the spot to foreigner visiting Nigeria at the Nigerian airport. They said that the reason for doing so is to reduce time and regulatory barriers, so it will be easier for foreigners to do business in Nigeria.
However, whatever Nigerian government may have achieved by reducing time and regulatory barriers for foreign investors has been wiped out by ill-advised and heavy-handed fines the federal government through various regulatory bodies are imposing on companies especially foreign companies doing business in Nigeria. Foreign companies should be penalized when they violate the law of Nigeria, but the fines should be reasonable. Heavy handed approach Nigerian government has been using sends loud message to foreign investors that investing in Nigeria is risky, that Nigerian government will not respect their property right. Foreign investors want stability and assurance that their property right will be respected. How will Nigerian government and Nigerians feel if foreign investment by Nigerians in Ghana or any other country are treated the same way MTN are treated in Nigeria. Nigerian government are in effect working against what they said they want which is foreign investment.
The federal government should reverse the decision of the CBN governor and fine MTN reasonable amount of money if it is proven that they committed the offense leveled against them. By the way, why shouldn’t foreign investors repatriate their profit from any country anytime they want. Why would anybody or corporation take the risk of investing in Nigeria if there is no assurance that they can repatriate their profit any time they want. If stock valuation of foreign companies and allocation of shares presents a problem, Nigeria government should address it through proper legislation.
Nigerian government may not realize that there is an economic realignment going on around the world as we speak. What is driving this realignment is the current posture of the United States President, Donald Trump who is imposing tariffs on goods European countries, Canada and other countries are importing into United States, and at the same time demanding renegotiation of existing trade treaties. European countries other worries are the actions of China on the African continent. China’s inroad in various African countries is unnerving European countries. China is investing heavily in Africa especially in Nigeria. Nigerian trade with China has tripled and continues to grow. Recently, the the two countries did currency swap between Nigeria Central bank and China’s Central bank to make treading between the two countries easier. As Nigerian trade with China grows, their trade with Europe will inevitably decrease.
United States posture on trade and tariff is presently forcing European countries to look for other markets for their products and goods. It is not an accident that French President, Emmanuel Macron, British Prime Minister, Theresa May and German Chancellor, Angela Merkel visited Nigeria and other African countries within a space of two months. Each of these leaders visited each of the country with large delegation of business men from their countries. They are all looking for new market to make up for possible losses from U.S. markets. They no longer think they can rely on U.S. Transatlantic trade. European countries have been trading with African countries for centuries, but they are looking for ways to expand their trade relationship with major African countries such as Nigeria, South Africa etc. It is not due to the government in power in any of the African countries at any particular time but they prefer to deal with democratic governments. Africa is like a virgin forest in terms of natural resources and economic opportunities. United States and European economy are at saturation point. This can be seen from low economic growth of less than 5 percent within the past couple of years. Some Asian countries are unstable and undemocratic, and some are at mid saturation -point in terms of economic development and opportunities which lessen interest in those countries.
Nigeria should not blow this opportunity to attract substantial foreign investment by engaging in reckless hostility towards foreign and indigenous companies in Nigeria. Private property right including right of corporation’s assets and repatriation of profits must be respected by various levels of Nigerian governments and the courts. It is that simple. Creating conducive environment for business is critical for any country that truly want to progress and create economic opportunities and better standard of living for their population. No government in the world will ever be able to create enough job for the citizens of their population. Such feat can only be achieved by businesses leading the way and government complimenting the private sector.