Starting a business in Nigeria is now so much easier and faster than ever before.
Registering a company now—in the year 2018—can take anywhere from 24 hours to one week and securing an export licence afterwards from the Nigerian Export Promotion Council (NEPC) takes anywhere from 24 hours to 72 hours, all things being equal.
The best part of the two mentioned above is everything can now be done from the comfort of the internet, and the phone lines to the respective agencies now actually connect!
But then, the ease of starting and doing business is still a very small step towards driving the interests of global prospects to invest in any country.
While this is literally a great improvement by the Nigerian government in comparison to how complicated and time-wasting things used to be, accelerating efforts towards ensuring security of investment is another key benchmark the nation needs to achieve, as this will cause an accelerated in-flow of investments.
Security of investment builds confidence in both foreign and local investors, as it gives a degree of comfort to the act of investing money in any country irrespective of how lucrative the returns on investment may be. When there is no “true” security of investment in any nation, people get wary of bringing in their money, and even locals go on to invest their money abroad, in a bid to financially protect themselves in the event that their worst fears come to light.
For the Nigerian government or any other nation to provide and guarantee security of investment to foreign investors, which would inherently drive growth and development for the nation, here are somethings that must be done:
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1). Ensure Contracts Are Fully Enforceable Without Any Corrupt Intervention:
This is one problem that plagues the underdeveloped countries around the world, including Nigeria. When a contract or legal action is to be enforced on a person with strong political connections, all efforts for justice go to waste, and the party trying to enforce a contract or attempting to take legal action realise they have just, unfortunately, hit a wall.
This being a major issue, international investors around the world choose to rather stay away because they’ve heard so many stories of how these series of events turn out, and would rather choose to not be the next unfortunate story.
To ensure contracts are enforceable no matter who is going to be affected is to build better confidence in global investors who are willing to take the risk of expanding their operations to Nigeria in partnership with local companies who have a strong ability to deliver as key partners.
2). Create Political Stability And Security:
Political instability and security challenges are one of the most critical elements that are considered by foreign investors before they choose to invest in any nation. Any country with high levels of political risk and security issues like terrorism, kidnappings, robberies, and much more are mostly no-go areas for international investors.
Creating security of investment is to ensure the environment itself is also secure and safe enough for anyone to invest in.
If the Nigerian government and many other developing nations around the world are to build a higher level of confidence in international investors with respect to guaranteeing security of their investments in the country, the leaders would have to pass and enforce laws that ensure political stability to a great extent, and must implement measures that greatly drive down the activities of terrorists, gangs, armed robbers, kidnappers, and much more.
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3). Ensure Macroeconomic Stability and Favourable Exchange Rates:
Poorly managed fiscal and monetary policies could make or mar any country’s economic targets, and could in the process, set off a chain of uncontrollable events that would drive the nation into a recession, while causing unprecedented inflation in the local currency exchange rates.
Unstable economies are a large turnoff for international investors because if they invest $1 million dollars in such a country, they could double their local investment, but have a lower value on the international market. What’s even worse is getting their money out of the country becomes an even larger problem because inflation causes countries to cut the flow of dollars in the economy, making it difficult for them to repatriate their investment.
Creating and implementing better and well-managed policies won’t just grow the economy, but would build investor’s confidence in the country.
4). Increase The Availability Of Talent And Skilled Labour:
While investors may want to invest in your country, they have no plans to transport thousands of staff members half-way across the world to Nigeria or any other developing nation for employment basis. They want to be able to appoint their expatriates in the key managerial positions, while they hire skilled locals to handle the other operations.
If foreign investors realise they need to bring down all the right employees, meaning they’d incur more costs in employee-related expenses, they’d be discouraged to proceed.
The Nigerian government and similar countries could inculcate a lifetime of high-quality vocational training programs into the core education curriculum of the country, which would in the process churn out highly skilled workers every year, whom would go on to work for local and international investors who have interests in building multi-million and billion-dollar businesses in Nigeria.
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5). Provide Good Physical Infrastructures:
If the institutions and physical infrastructures required to ease business operations in a country are absent, foreign investors would tend to shy away from making direct local investments in the country, because it would mean higher costs on transportation, electricity, and even equipment maintenance.
By providing good road networks, unlimited access to electricity for businesses operating in certain sectors of the economy, and facilities that ease the entire supply chain for every industry, more investors would be interested in investing into the Nigerian economy or any other similar economy.
6). Lower Tax Rates:
While every other factor may not be perfectly met, providing tax incentives to foreign investors who meet certain criteria can help facilitate accelerated investments.
But lowering or eliminating taxes is not enough to convince foreign investors into bringing in their hard-earned money. The Nigerian government and other developing nations need to cover at least 85% of the previously mentioned points for a lobby for global investment to spark any real interest in the minds of capable organisations.
See Also: Why African Nations Are Poor, And Others Are Wealthy
To Sum It Up
Getting a reasonable number of global investors to make a bet in a nation with a long history of mismanaged practices, corruption, insurgency, poor institutions, and much more can be like trying to find a needle in a haystack. But by implementing the right actions that would create an enabling environment which provides security of investment for businesses to thrive on, accelerated economic development would undoubtedly be within view in a short period of time.
About The Article
This is an opinion and analysis posted by Stan Edom, a Nigerian citizen and Editor In Chief of Startuptipsdaily.com.
The Opinion and Analysis section is committed to nation building efforts through empowering expert writers to air their views on the best ways to solve national issues and move nations forward.
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What are your thoughts on how the Nigerian government can provide security of investment to international investors? Let me know by leaving a comment below.
Thank You For This Enlightening Post. You Are Wonderful. Remain Blessed In Jesus Name.
Thank you for reading, Moses.
Stan Edom,thanks for the article post.Really thank you! Great.
Thank you for the comment, Lazaro.
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