By Chukwuma Umeorah
The Institute of Chartered Accountants of Nigeria (ICAN) has expressed concern over the decline in Foreign Direct Investments (FDIs) in Nigeria due to a challenging business environment plagued by insecurity, infrastructural decay, corruption, regulatory constraints and policy inconsistency.
The Institute noted that a notable gap in infrastructure, particularly in critical areas such as power, transportation, human capital including technical human resources, and technology amplify operational challenges for businesses forcing multinationals to shut down and deterring potential foreign investors translating to declining FDIs for the nation.
The 59th President of ICAN, Innocent Iweka Okwuosa, in a recent publication titled “ICAN Position Paper: Attracting Foreign Direct Investment,” pointed out that that despite the launch of the Presidential Enabling Business Environment Council (PEBEC) in 2016, other government interventions and numerous presidential globetrotting in the name of searching for FDIs, Nigeria still recorded steep declines in FDIs inflow of 69 per cent and 44 per cent in the first and third quarters of 2023 respectively.
“Data from the Nigerian Bureau of Statistics (NBS) showed that “on a year-on-year comparison, there was a substantial 69 per cent decrease, as FDI fell from $155 million in Q1 2022 to a paltry $48 million in Q1 2023.”
He added that “the lack of reliable power is a significant constraint for citizens and businesses, resulting on annual economic losses estimated at $26.2 billion (about ₦10.1 trillion). Additionally, the specter of corruption and transparency issues looms large, potentially eroding investor confidence, especially if a foreign investor will have to pay his way through in order to be granted access to do business in the country. Foreign exchange volatility, marked by fluctuations in the value of the naira, introduces financial uncertainty, while limited access to finance, especially for Small and Medium Enterprises, restricts economic growth.”
Addressing the issues and charting a way forward, the Institute called on the Federal Government to embark on swift policy review to address these challenges in order to foster an environment that would not only attract but retain FDIs and arrest the downward trend in foreign investments inflow into the country.
Okuwosa stated, the government should create an enabling environment that could attract private sector investment in infrastructural development. “Therefore, the Infrastructure Concession Regulatory Commission (ICRC), Nigeria’s main Public Private Partnership (PPP) unit with a key objective of fostering investment in the country’s national infrastructure through private sector funding should be made more active. While we welcome the Road Infrastructure Tax Credit Scheme, which is a form of PPP, we call for better accountability and transparency in project execution. This is where the skills of chartered accountants are required.”
He added that “The government should be more proactive in addressing the security challenges facing the country, including identifying and visiting the full weight of the law on individuals and institutions involved in and sponsoring oil theft, illegal mining and insurgency in order to create an atmosphere of peace and order that will attract both local and foreign investors.”
Other policy initiatives that were recommended by ICAN included legal, regulatory, tax and port reforms, transparency in foreign exchange market management, zero tolerance for bribery and corruption, the establishment of anti-corruption courts in all states of the federation to expeditiously try cases of bribery and corruption, the re-organization of the major anticorruption institutions such as the Independent Corrupt Practices and Other Related Offences Commission (ICPC), the Economic and Financial Crimes Commission-(EFCC), the Code of Conduct Bureau (CCB) and the Bureau of Public Procurement (BPP) to make them more relevant in modern Nigerian business environment.