We need foreign investors, but they won’t take over the economy –Mustapha Bello, NIPC boss

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PETER AGBA  KALU

Mustapha Bello, the 1978 Shell award winner for distinction for the best Project and Thesis for Faculty of Engineering is a corporate member of The Nigerian Society of Engineers and Council of Registered Engineers of Nigeria. This former  Minister of the Federal Republic of Nigeria and non Executive Director of ESKOM Board of South Africa is currently the Executive Secretary of Nigerian Investment Promotion Commission. In this chat he gives an update on the activities of NIPC under his  leadership. Below are excerpts:

Is the NIPC living up to its statutory mandate?

Yes. The issues raised are the core mandates of the NIPC. From the time when the NIPC Act was enacted and the Commission established, all the policies, programmes and activities of the Commission were reviewed and reformed continuously to attain its goal. By way of reflecting back, the Commission had a structure and an organogram which captured the mandates of Investment Attraction, Servicing and Advocacy. As time went on, that structure was reviewed to align with trends of events and on-going international best practices. This dovetailed into the need to create a One Stop Investment Centre (OSIC) which closed the gap and fully supplemented the operations of the NIPC, hence, providing a full-fledged service and support to investors. As we speak, today, a new structure has just been approved by Management and is in the process of implementation. The new structure is more elaborate, robust and has a clearer outlook in tackling the challenges of investors while meeting the general expectations of the private sector.

The competition for capital among global economies remains fierce. With the state of insecurity in Nigeria today, what makes you think an investor will single out the country as  preferred investment destination?

Going by what is happening globally today, you will agree with me that insecurity is actually a global challenge and is driven or fuelled largely by a growing number of army of unemployed youths all over countries of the world. See what has suddenly become of Turkey, the 16th largest economy of the world that we all believed is stable. Almost every part of the world today has been hit by the monster. Interestingly however, investors consider so many other factors in taking decisions to locate their investment. We are truly in competition with every other country but most investors know that  Nigeria is a country to beat. Investors naturally select Nigeria as their preferred investment destination as a result of a variety of reasons among which include; availability of resources both human and natural, attractive incentives, support structure – NIPC/OSIC, highest return on investment (30-70%), liberalized economy, 100% ownership of businesses in most sectors and ease of capital repatriation, access to large market (Nigeria and West Africa) etc. In fact, many of the major Global economies that have been hit by the global financial crisis have not only adopted the “Going Global” strategy but also evolved a policy that specifically focuses on Africa and in particular, Nigeria, Ethiopia and Republic of South Africa.

One of the factors that attract investors into any country is the reduction of the cost of establishing new business, who does that work here ?

At the level of NIPC, we are in continuous review and reforms of our processes and procedures of doing business in Nigeria. The country rating by World Bank doing business and others keep us challenged.

The establishment of OSIC was a right step in the right direction towards creating a conducive business environment for investors. Both local and foreign investors heave a sigh of relief in terms of doing business in Nigeria. I am glad to state unequivocally, that with OSIC, investors can now register their business within 24hours and access the services of other agencies under one roof. At the NIPC level, our new structure is designed such that investors will be given absolute care and attention from the moment the investor indicates interest to invest in Nigeria.

We are also working with state governments to help them set up Investment Promotion Agencies/One Stop Shops so as to extend facilitation services seamlessly to investors nationwide. We have also advocated for policies with the government to ensure the revamping of some very strategic committees that will help investors. These are the Aftercare and Doing Business Committees with NIPC servicing as the Secretariat. These Committees meet fortnightly to address investors’ concerns beyond what NIPC can do for them.

 Importers of cheap  goods are dumping them in Nigeria. How do we protect our local manufacturers and attract others to come and invest?

Nigeria, especially with the creation of NIPC Act in 1995, has been one of the most liberalized economies in the world. This policy was deliberate because of the dire need for us to have investors in all sectors of the economy. This, we believe, was the system most advanced Countries used until such a time when they began to close their economies. Ours has been a land full of potentials in all sectors and yet they remain under developed due to lack of resources and capacity.

Having come this far, we are beginning to see the negative effect of such a fully liberalized economy among which you have mentioned. Therefore we are currently working on limiting the current 100 per cent foreign participation in most sectors and allow Nigerians to have stakes. As I speak to you, this process is in advanced stage and a paper is being developed for the consideration of the Honorable Minster of Industry, Trade and Investment. Other sectors had already commenced the implementation of restriction in foreign participation. These include the Local Content Act in the –Oil and Gas Service Sector, the NIMASA Act among others. This however is being treated with caution so as not to scare genuine investors or infringe on the international Treaties and Obligations Nigeria has signed. We are similarly pushing very hard for the creation of a Nigerian Trade and Competitiveness Commission, an Agency that will be fully responsible for Weights and Measures, Anti-Dumping and unfair Trade practices, Consumer Protection and probably, Competition.

What basic step is your organization taking to attract high level investment that will create jobs and sustain the army of youths that are graduating from the universities?

This is the primary purpose of NIPC. Ours is to attract investors both local and foreign to establish businesses that will create employment for Nigerians. At NIPC, we have a number of strategies developed to attract high net-worth investors within and outside the Country. As you may be aware, we have routine outward and inward investment forums designed to attract investors in some select sectors where Nigeria has comparative advantage. We have also devised a ‘’Silent’’ but very proactive instrument of promotion where we identify and target investors to come and invest in Nigeria. A case in hand is the promotional drive we embarked recently in Saudi Arabia where we targeted and lured three very rich personalities in the country to roll-out investment in Nigeria. We have had several commitments from high net-worth investors in Europe, Asia and even here at home, Nigeria. We are similarly pushing government very hard to embrace and make country-wide the just closed World Bank- MSME Program that helped created jobs in three pilot states of Kaduna, Lagos and Abia through which we believe, the challenge of youth unemployment’s can be substantially addressed.

What level of capital investments do we need annually to fully help turn our economy around?

Nigeria is a huge country with dearth in infrastructure. I must say that the capital requirement runs in trillions. Every sector from power, transport, housing, mining, agriculture, manufacturing etc requires a huge capital outlay to be able to develop. That is what NIPC has been working on in partnership with several other MDAs. Our Sector Specific Investment Incentives Policy Document when passed by Government will go a long way in enhancing our ability to capture FDI, but a complete Power solution shall do the magic.

The tourism potentials available for development cut across every geographical zone of the nation. Is there any plan to turn them into number one tourism destination in Africa by inviting investors?

Not only tourism, our goal as a nation is to be the destination of choice in Africa. There is currently a tourism master plan being put in place, however, the growing investments in the Hotel and Hospitality sector is a clear indication of the potentials of the Tourism sectors when sufficient energy is available in the economy.

The abundant potentials available in the country will all be revamped and remodeled to serve as destination for most investors/tourists visiting Nigeria. The Ministry of culture and Tourism is working hard to package the abundant tourism opportunities and rebranding the nation. Our identity as a nation will be unveiled and known to all in line with our fascinating features that nature has endowed us with.

Is there any policy frame work on ground to attract Nigerian  professionals outside our shores to come home and invest?

There is no gainsaying the fact that Nigerians from all walks of life have distinguished themselves in different fields of human endeavors, especially in science and technology. Proudly to state that today, the Lead Designer of General Motors in the US is a young Nigerian called Jelani Aliyu from Sokoto State. Other Nigerians have distinguished themselves in areas of Medicine, Computing and other sectors of human endeavors, making us one of the leading countries in terms of human resource potentials.

Having said that, government is currently working through various government agencies to identify, target and attract these distinguished Nigerians to come back and invest and support with their knowledge and expertise towards the development of Nigeria. In fact, the Bill for the establishment of Diaspora Agency has passed three readings at the Lower House of the National Assembly. Once that Agency is created, we would now have a platform to synergize the efforts of other MDAs and attract these notable Nigerians to come home and partake in our development efforts.

How do you expect young entrepreneurs to flourish when they have no access to funds?

It is quite true that access to finance is a major set-back to businesses in Nigeria. However, government has come up with a lot of programmes to help Nigerian youth and entrepreneurs develop their skills and become employers of labour themselves.

The recently introduced YouWinProgramme of the Federal Government is yielding positive results as far as youth              employment is concerned. The World Bank MSME, through its 4-Components program has created Micro-Finance Institutions that can now lend with ease. Our entrepreneurial youths can benefit from cheaper access to finance facilities and build up enterprises based on several successful models and I believe massive campaigns should be embarked upon to enable these youths with fantastic ideas avail these good ideas to such Banks to support them develop.

What makes you think  an investor will come this way with  high interest rate charged by banks?

It is true that the interest rate in Nigeria by banks is one of the highest in the world. Again this raises the issue of long term investment versus short term gains. Due to inconsistency in our policies and lack of productivity, businesses, especially financial institutions would not like to take risk associated with long term investments. Interestingly however, due to high return on investment in Nigeria which can go as high as 45-70%, investors, bot h local and foreign still patronize the Nigeria banks and use such loans for their investment purposes. Other high net-worth investors use foreign bank loans to roll out their investments here in Nigeria.

Let me at this point also add that in the last few years, having successfully implemented the One Stop Shop as a service facility in the Commission and drafted the Sector Specific Investment Incentives Policy Document, we equally embarked on the development of several other Policy initiatives that either were started during my tenure as the Minister of Commerce of the Federal Republic of Nigeria (June 30th, 1999 – November 23rd, 2002), and we feel there is the need to make every effort to see that they mature or materialize, or are additional ideas evolving as a result of the global economics dynamics, through in-house Committees by way of additional policy initiatives we are now proposing to government. These initiatives which cut across different sectors or areas of the economy include but not limited to the following: Development of a Sector-Specific Investment Incentives Policy Document. This is an initiative that is home-grown and developed based on models that exist and have worked successfully in countries like India, Malaysia, Brazil. It basically looks at non-controversial areas that would add value to our economic growth process and enhance investor confidence as well as increase our ability to stimulate investments internally and attract more FDI from external sources.

The Document proposes additional special incentives to any investor as follows: Consistent with what the Nigerian Immigration Services has already introduced, the Document introduces a minimum automatic Expatriate Quota slot for every Quantum of Investment in a given sector;

This is a job creation, in which the Document ties approval of an expatriate quota to creating from 3-5 graduate jobs in such an industry per  expatriate;

It also provides for a minimum automatic Expatriate Technical skills under Temporary Work Permits to come in immediately for Machinery installations, testing, certification and commissioning, again consistent with what the NIS has in place already.

It seeks to expand the Corporate Tax Holiday years from the current across-the-board standard 5-years to up to a maximum of 15-years giving advantage to highly disadvantaged areas. In other words, the further an investment is away from serviced locations the more the number of corporate holiday years that investment attracts. We have charted all the Local Governments of the country with appropriate number of years.

The document introduces another special incentive to huge import-substitution industrial investments that would save the country expending resources to import, such as Heavy Steel Industrial Investments, Agriculture investments in Rice, Sugar, Wheat as well as a backward integration in cotton growing, farming, ginning and yarn production, Refineries and Petrochemicals, Automobiles manufacture, etc, with an Export Expansion Grant incentive in value equivalent to the value of the entire annual production for up to a maximum period of 5-years and renewable for another 5-years where the capacity of the plant is more than doubled.

The Document recommends special recognition incentive to wholly owned or substantially owned Nigerian company or Enterprise, in other words more than 70 per cent, by Nigerians where such a Company, Enterprise or Group reaches a minimum networth of USD$15Billion.

The special recognition incentives are that; Grant of State Enterprise Status, which accords such a company, enterprise or group; The President or Chairman of the Company shall be entitled to all the previledges extended to any Minister of the Federal Republic of Nigeria, The CEO of the Group shall be entitled to all the priviledges extended to a Diplomatic Passport Holder; The Executive Directors of the Company or Group shall be entitled to all the priviledges extended to an Official Passport holder.

On the issue of development of Policies on Free Zones, Free Ports and Special Economic Zones what’s your take?

This is one of those areas I left to my predecessors to develop but unfortunately the attention deserved was never given. The intent of this policy initiative is to provide operators in the Free Zones, Free Ports and subsequently, Special Economic Zones  clearly defined Policies that guide their investment decision making processes. As at where we are today it appears that such Policies do not exist and that has hindered our ability as NIPC to attract a lot more investments into these specialized business enclaves.  The outcome of this exercise will provide a very robust and investor friendly policy that will make the zones very attractive to investors which ultimately improves on both LDI and FDI.

What do you have to say about the establishment of the Nigerian Trade and Competitiveness Commission?

The fact remains that the Trade sector in Nigeria remains the least regulated. This prompted the advocacy of this process of establishment of the NTCC again during my tenure as Minister of Commerce, which when established would have the responsibility for the formulation of measure to increase market transparency, ensure competitive market environment and control misleading, unfair, deceptive and other unfair trading and business practices. The NTCC will bring together the Consumer Protection, Anti-Dumping and Countervailing Duties issues, Weights and Measures as well as Competitiveness into one single Agency that will Regulate all these activities and ensure that the local economy is protected. The four above all have one responsibility in common:- CONSUMER PROTECTION. Generally, the product will promote employment and advance the social and economic welfare of Nigerians. It will also ensure that Small and Medium Enterprises have an equitable opportunity to participate in the Nigerian economy while protecting Enterprises generally from unfair trade practices.

The other issue is the Policy on Entrepreneurial Development and Job creation.( Enhancing the capacity of Micro, Small and Medium Enterprises to create formal jobs and reduce unemployment in the country.)?

This policy initiative seeks to advocate for expansion of the just concluded World Bank Micro, Small and Medium Enterprises pilot Program from the just 3 States of Lagos, Kaduna and Abia to cover the entire Country given the success it recorded in creating Millions of Jobs largely through its 4-Main Components, namely; Access to Finance, as a result of which we see the birth of Micro finance Banks, that have now benefitted many small businesses, Investment Climate, through which  the project reviewed several hurdles to doing business by Micro Enterprises that by extension affect every other enterprise, Business Development Services; that helped Build Capacity of Businesses directly through first building or enhancing the Capacity of the Business Development Services Providers as Consultants and Public-Private-Sector Partnership through which there was direct engagement with the Private Sector, the ultimate beneficiary. When expanded, the project will cover the entire states of the federation and create massive employment opportunities       for the teeming youths building upon the experience already generated in the pilot program.

What of the all important issue Domestication of all Bilateral Trade, IPPA and DTAs,    Multilateral and Plurilateral Agreements?

This policy initiative seeks to pursue, to a productive conclusion, the urgent need to domesticate all existing Bilateral, Multi-lateral as well as Plurilateral agreements Nigeria has entered into with our Trading Partner Countries to enable us as a country be compliant with our International obligations as well as enable us access some of the Private Sector Investment Capital that by virtue of such agreements are at the disposal of our Private Sector or Government or both and can only be accessed when the appropriate legal framework is put in place.

That brings me to the X-Ray of Policy on 100 per cent foreign participation or ownership of businesses in Nigeria?

This initiative seeks to critically look at the implications of 100 per cent ownership as well as 100 per cent repatriation of dividend to our economy placed against the background of experiences of other countries that offer equal or less and advise government on possible measure to put in place should the shocks rippling the world continue.

One other critical issue that we mustn’t forget is the issue of Enhancing International Business Community Relations.

This policy initiative seeks to develop and promote a sustainable process that will enable the Commission proactively engage and relate with the broader international business community doing business in Nigeria and Commercial Attaches of the various Embassies and High Commissions in Nigeria. The intended benefit of a thriving International Business Community Relations in Nigeria is to build a robust interface between NIPC (Nigeria) and foreign investors, their Embassies, large business associations and engender positive practices relevant to attracting, nurturing and sustaining FDI/LDI in Nigeria.

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