We believe many countries would be manufacturing a number of those things. If they cannot do it themselves, they would try to domesticate a part of the value chain, so that they are placed in a situation where they would not be left exposed.
PT: In one of your recent briefings this year, you said the quantum of investment flows reduced by over 204 percent in 2019 than was recorded in 2018. But, curiously, there was no COVID-19 in the two years. What can we blame for such significant drop in investments during the period in reference?Investment inflow to Nigeria has been under pressure for a few years, even prior to COVID-19.
A lot of the sale of the power assets to DISCOs and GENCOs were funded largely by Nigerian principals who borrowed from the domestic market with minimal foreign participation. Those transactions did not really give FDIs the opportunity to come into the country. FDI is almost the most reliable source of investment in most countries.
An important factor investors point to is the stability of government policies, not only when they change with some frequency, but the application of those polices is almost immediate in most instances. Meaning that they don’t have the capacity to react to them. PT: What would you say are NIPC’s contributions to the effort to raise the level of FDIs in Nigeria since you assumed office?Investment generation is not a sprint. It’s a marathon. In my previous life in investment banking, it could take 10 years to get a right mandate. After a two years period, you will only have evidence of an engagement with the person on a regular basis, not a mandate yet. But, you know that the mandate is coming. So, that sort of strategic planning is considered important.
So, a lot of work I have done since I joined the NIPC have been focused on building the foundation for investment. Like I said, the bulk of investments that many countries chase are foreign investments. That means building a certain kind of relationship with foreign investors that these would come from.
The first thing one needs is what they call in banking a hook. Then you cast that hook in to engage an investor. We identified 20 countries. We tried to do a deep dive to understand their trade and investment relationships with Nigeria and the kind of things they invest in across the world, so that we know, when we are engaging with them, what hook to use in those engagements.
So, we combined and pulled the incentives together and put them in a compendium and make available to prospective investors. We also publish a variety of reports now that we never did before. Since 2018, we started publishing the report of investment announcements in Nigeria. We have so far published in 2018, 2019 and the first half of 2020. That report gives us an indication of investors’ interest in Nigeria.
A certain quantum of financial capacity is needed to meet the nameplate capacity and expand it. That would have meant that we may have had to do the reforms differently from the way it was done. But, it is the follow on actions; the things they needed to do to expand the capacity of the sector that probably did not follow the time they should have.It is a chapter in Nigeria investment promotion Bible . But, talking seriously, I told you earlier about building blocks and the need for building the foundation of a building. The “Book of States” will feed into a digital database the NIPC is doing.
But, once you reduce what you know about the states to a document like the “Book of States”, and feed it into a database, if an investor says he is interested in a certain commodity, when the name of the commodity is entered in the database, it will tell you the states that have the strongest prospects for that commodity.
It tells you how land, labour, taxes, and the cost of certain items in Nigeria impact on investment. It is useful for domestic investors as well, because not all investors understand how those matters work, especially if one is not an active practitioner. The fact that Nigeria is ranked 131 does not change that it is out of 190. There is still a long way to go. The target for Nigeria was to be within the top 70, originally top 100. So, we recognise there is still work to be done.
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