The experts spoke during a session themed "Corrosive and Constructive Capital Inflow in Africa: Regulatory Framework and Governance Gaps" at the ongoing Media and Development Conference
The investment environment in Nigeria is not attractive enough, a panel of experts said on Monday.
The experts spoke during a session themed "Corrosive and Constructive Capital Inflow in Africa: Regulatory Framework and Governance Gaps" at the ongoing Media and Development Conference organised by the Centre for Journalism, Innovation and Development (CJID) in Abuja on Monday.
The experts explained that instability and uncertainty among other factors have made the nation's economy too risky for investments.
Speaking on Monday, Lola Adekanye, African program director of the Centre for International Private Enterprise, these issues are affecting the nation's ability to attract the needed investment, adding that the primary one among them is the environment for investment and growth.
"You will always hear that investors like stability, there is a need to be trustworthy in the business sector and what that translates to is this, if I put my money in any business, I want to be sure that my return on investment is guaranteed. I want to be sure because I don't want to put N20,000 into a business and earn less than N15,000 from it. Especially when there is investment competition for that capital for the same investment in many other regions.
"So the environment for investment in Nigeria is not attractive enough. Because investors now worry about different kinds of risks and political risk is one," she said.
"For instance, we talked about the investment in the Abuja-Kaduna rail, and then there was the insecurity attack. I am not sure what insurance we have to recover the loss that we experienced or still incurring from that rail project that is not working optimally right now. And so, investors, before they invest, look at the track record of other investments that have been in the country before and when they see that the return on investment is not as guaranteed, it's reducing and there are too many unstable indicators, they won't be attracted to invest.
"And unfortunately, capital goes where there is stability and there are other places where there is trust and stability and where the return of investment is guaranteed. So basically, it's still a very risky market in Nigeria," she added.
She explained that there is a need for the government to promote stability in the economy through effective fiscal policies, and to boost opportunities for private sector growth.
She, however, condemned the misuse of the country-borrowed funds, which are spent on recurrent expenditure rather than capital expenditure. She explained that spending funds on capital expenditure can be turned into economic value over time.
"Government is borrowing to service recurring expenditure, government is borrowing to give out palliatives that do not demonstrate enough trust that the return on investment will be guaranteed. And so these are things that the government has to work on," she noted.
"It's not an easy process. It's a difficult, methodical and strategic process that the government has to follow, but it is an important, very important one to do," she added.
Also speaking, the Executive Director of the Centre for Fiscal Transparency and Integrity Watch, Umar Yakubu, explained that the country currently has an infrastructure deficit which can be met through investments.
He noted that the country is lagging in terms of due diligence when it comes to the use of borrowed funds.
"Our level of due diligence is very low. We sign contracts without properly understanding what we're supposed to do. Even if we do understand them, we do not sometimes sign them for national interest and national security purposes," he said.
"That is why you see that you will fall into a lot of problems when the monies have been collected, and when it comes to paying you will not see the value for money.
"We have to also strengthen our internal systems, when you borrow money, you know that the future generations are going to pay so you have to ensure that the money is properly utilised."
Meanwhile, she explained, there needs to be more transparency in the management of investment funds.
"Like I said earlier Nigeria is indebted to $250 billion. If you ask for the components of those loans, you will see how we borrow them.
"But were the citizens engaged, were the media invited, were people invited to see and probably scrutinise how we use the money we borrowed?
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"You find out that they were not there. I think we just need to add due diligence, transparency and accountability to go with what is being borrowed for effectiveness," he said.
In his remark, Akintunde Babatunde, director of programs at CJID, said bilateral relationships with foreign countries have not yielded the expected investments in the country.
He explained that the conference aimed to spotlight some of the issues impeding development in the country and provide solutions to address them.
"The conference is the first of its kind. At CJID we attempt to bring together our portfolio projects on sustainable development and have a convening that helps to spotlight some of the issues that are imagined in each of the clusters," he said.
"At CJID, we have over the years invested in helping to build the capacity of journalists in health reporting, climate change reporting, conflicts reporting, anti-corruption and every other sector. That is why we are having the media development conference and we are excited about the quality of the conversation, and intentional approach by some problem solvers and innovators."
