By Lawrence Njoku, Southeast Bureau Chief Despite relative peace in the region, the Southeast zone has remained unattractive to in...
By Lawrence Njoku,
Southeast Bureau Chief
Despite relative peace in the region, the Southeast zone has
remained unattractive to investors, a situation analysts ascribe to unfriendly
tax regimes, poor quality of infrastructure and low return on investment.
Of Nigeria’s $93,284,945,10559 billion foreign direct
investments (FDI) between 2013 and first quarter of 2020, the Southeast got the
least, amounting to a paltry $203,898,690 million and representing just less
than one percent (0.22%) of the total investments.
A breakdown of Southeast figures from the National Bureau of
Statistics (NBS) within a seven-year threshold showed Abia State as having a
total of $9,710,000 million in foreign direct investments between 2013 and
2014; Anambra State hosted $38,091,000 million within the same period; while
Ebonyi had none of such investments at all. With figures put at $151,490,000
(2014), Enugu State was reported to have garnered the most investments within
the period. Imo State had a total foreign direct investments of $3,500,000
between 2015 and 2019.
Stakeholders in the zone said the reason for the relatively
low investments was because political leaders of the area had not paid
attention to the economic frontiers of the region with a view to making it an
industrial hub, as was the case in Southwest states of Lagos and Ogun. The
Zone, they said, would, in the medium to long-term, borrow to sustain its
socio-political operations as well as witness continuous workforce emigration
in search of employment in other zones.
Although foreign investments in other zones (Southwest,
South South, North Central, Northeast and Northwest), remain normal, Southwest
has the largest chunk of the FDI. Some states in some of the zones have also
managed to have industrial and mini-industrial hubs that are attractive to
investors.
Comparative figures, as gleaned from NBS estimates, indicate
that within the same period (2013 – 2020), other zones of the country received
the following capital importation: Southwest $81,808,183,342.05 (87.70%;);
South-South, $470,688,204.67 (0.50%); North Central, $10,732,800,098.87
(11.51%); North east, $ 39,414,980.00 (0.04%); and Northwest, $29,959,790
(0.03%).
Reacting to the observation that regions in the northern
part of the country also had low investments during the period, Development
Expert, Dr Chiwuike Uba, insisted that figures on Southeast investments was
abysmally low, especially as most donors and multilateral agency programme
interventions were focused on the northern region, which made up for low
investments in the area.
He also stated that low investment in Southeast states was a
reflection of unpreparedness, lack of commitment to industrialisation, and poor
business environment prevalent in the region.
Citing data from the Manufacturers Association of Nigeria
(MAN), Uba stated that Ogun State had become home to manufacturing and
agro-processing investments, with over 70 percent share of manufacturing
investments in Nigeria between 2014 and 2017.
“The data reveals that 74.42 percent of manufacturers’
investment of N691.77 billion in 2014 went to Ogun State. This trend continued
in 2015 and 2016 with the State having over 70% of the investments, while other
zones shared the remaining investments, with Apapa and Ikeja having the bigger
share of the investment. Evidently, from the available data, in 2017, Ogun and
Lagos (Apapa and Ikeja) attracted 32.9ercent and 48.8 percent of the
investments”
Given further reasons for the development, the Economist explained
that manufacturers and other investors would often appreciate incentives
because they were key enablers of investments. Ogun State had specifically
offered tax and land rebates, as well as seamless issuance of certificate of
occupancy, which lowered production costs. As part of the investment promotion
and protection mechanisms, a one-stop-shop was established to facilitate easy
and single point of contact for investors dealings with various ministries,
departments, and agencies of the state.
On what the southeast region should do to change the ugly
trend, Uba advised that the region needed to improve the business environment.
“Currently, the region is not ranked well on the World Bank’s Sub-national Ease
of Doing Business and on the AfriHeritage’s Business Environment and
Competitiveness across Nigerian States (BECANS),” he said. “No real investor
will invest in an environment or economy that does not support or grow his
investment.
“South East does not have a functioning and operational
industrial cluster. Unfortunately, most of the industrial layouts have been
converted to estates. While the DAWN Commission in the South West has done so
well for the region in promoting investments, our own South East Governors’
Forum Secretariat, which ultimately should serve as the think-tank, seems to be
more political than it should be.
“Clearly, the region lacks strategic direction for
industrialization and mobilization of investments. There is urgent need to
create the right incentives to attract the right investments. We must rethink
our strategy, model, and policies”
He added, however, that, while the Southeast battles with
the internally induced constraints inhibiting investments, it was important to
observe some of the external factors, including nearness to seaport and dry
ports, among other advantages enjoyed by the South West that were not in the
Southeast.
“While the region develops the dry ports and the free
economic zones approved by the Federal Government, the dredging of River Niger
to allow ferrying of goods with smaller ships would be of great importance to
the economy of the region, as well. The zone needs to develop an
industrialization plan, while it works to improve business environment. How
many of the states in the South East have the States investment opportunities
well defined and posted on the State’s website? In fact, with the exception of
Anambra, almost all the states in the region have no dedicated agency for
investment promotion and protection. For the states that have established one,
it is operated like the typical political office with all the bureaucracy and
managed by a politician,” he said.
He observed that the Southeast appeared to give more
preference to foreign investors than to local investors. Foreign and domestic
investors, he said, should be treated equally, in open, transparent, and
dependable conditions.
“The region should provide basic infrastructures (school,
good roads, hospitals, etc) needed to drive businesses. Investment positioning
is very important. Kwara State showed what positioning can achieve when it
created a positive business climate leading to the establishment of Songhai
Farms public private venture.”
But a former Director at the Central Bank of Nigeria (CBN),
explained that investment in Nigeria had generally been low, pointing out that
the Gross Fixed Capital Formation (GFCF), which included land development and
production facilities, as a percentage of Gross Domestic Product (GDP),
declined from 89.386 percent in 1981 to 19.018 percent in 2018.
He argued that investments, especially around third world
countries, have been made to develop natural resources, like crude oil, coal
and timber and by putting in place production and infrastructure facilities,
stressing however that the southeast was naturally resource-poor and does not
attract investment in that respect.
“The coal deposit in Enugu State, the oil and gas resources
in Abia, Anambra and Imo states and the rock and metallic minerals in Ebonyi
State are not being actively developed because they cannot be easily linked to
the local economy or the export market. This is so because the region lacks
economic infrastructure such as railways, waterways, roads, power, gas, water
dams and ports. Without economic infrastructure, investment in production of
made-goods and services, such as manufacturing, is difficult.
“Besides, fiscal policy of government makes manufacturing in
the zone noncompetitive. Imports of a number of manufacturing inputs is
restricted to Lagos, where there is an import inspection facility, making
plants outside the Lagos area doubly noncompetitive against foreign and
domestic producers. This explains why a number of manufacturers from the
Southeast zone have large investments in pharmaceuticals, electrical goods and
food manufacturing in the Lagos area, while their zone is deprived.”
He, however, expressed the hope that the Federal Government
could remedy the investment gap by intentionally, investing in economic
infrastructure in the Southeast.
“Economically, it will increase economic output and labour
employment in the zone and in the country at large. Socially, it will foster
community peace because the default internal emigration of economically active
people from the Southeast zone is creating colonies in other zones that in the
long-term will create disharmony by raising fear of dominance and exclusion.
People from the zone can also be more intentional in their investment behaviour
by limiting their investment outside the zone. This is important, not only for
safety of the investment portfolio but also to attract economic infrastructure
and foreign investments,” he suggested.
Aligning with Uba however, an Investor, Henry Chibuzo,
observed that lack of political will, security threats, lack of coordination
among governors of the zone and poor infrastructure had continued to discourage
investment in the southeast region. He stated that ease of doing business in
the zone had remained cumbersome, stressing that, even when an investor decided
to live with it, low patronage from governments could cause an exit.
“I have also noticed that many states in the Southeast have
Investment Promotion agencies but these agencies are not properly funded. There
is no cohesion among them in terms of driving the southeast investment
programme; everybody is pursuing investment at individual level. There ought to
be strategic collaboration. The governors ought to come together. There is no
strategic effort that can trickle down to investment attraction in the zone.”
He added that security threats had threatened investment in
agriculture, especially since the rise in farmer/herder issues in the zone,
stressing that certain investors that came into the zone and invested in
agriculture in the Uzouwani area of Enugu State had their crops destroyed.
“Moving through the southeast, there are several checkpoints
and the policemen on the road care less about who is coming. They are only
there to exploit the people. Any investor, who probably was in the southwest,
south-south and on coming into the southeast to discover this level of security
checkpoints, will certainly not want to have any business to do here.”
An Estate Management Expert, Obichukwu Umeh, stated that
governments of the zone had not given enough encouragement to Igbo Investors to
deepen investment in the zone
Using what happens in the sector as a case study, he stated
that only a few of his colleagues could invest in housing in the Southeast, as,
according to him, “you are subjected to all manner of levies by community and
government officials, even when you have paid exorbitantly to procure land. You
pay to fence your land; you pay neighborhood security; you pay more than 20
percent of what you bought the land to get approval for your drawing, among
others. It is not easy. That is why the cost of acquiring accommodation is too
high in the zone compared to other zones of the country. That aside, provision
of road, electricity and water among other facilities that could make the place
habitable is also on the investor. These are the challenges.”
Citing a housing project he did in Asaba Delta State, he
stated that when he indicated interest to do a low-cost housing on the land he
provided, “the state government freely did the access road and extended
electricity to the area. For the boreholes we sunk in the process of
construction, the government also helped us to ensure that the water was
reticulated, which actually helped to reduce cost on the occupants. So we
really need to look inwards and encourage investment in this zone.”
The Southeast governors however stated that they had
supported investors in the zone and had continued to provide platforms for
interaction and make their businesses thrive in the area.
Director of Communications, Southeast Governors Forum, Mr
Mike Udah, told The Guardian that the governors “are in frequent contact with
Southeast Chamber of Commerce and other stakeholders with a view to boosting
investment in the region.”
He added: “On a yearly basis, they organised the Southeast
Economic Summit. The taxation regime in the Southeast is as friendly as ever.
Recently, following the outbreak of COVID-19, the governors of the Southeast,
went a step further to stop outright some levies and in some cases, reduce them
in effort to ensure that investors and ordinary citizens do not suffer.”
As an interventionist plan, the Ohanaeze Ndigbo had recently
set up the Alaigbo Stabilization Fund, in partnership with governors of the
zone, to cure the infrastructural deficit of the Southeast and boost investments.
President General of Ohanaeze Ndigbo, Chief Nnia Nwodo had
said, while inaugurating the 54-member Steering Committee for the Fund, that it
was envisioned as key instrument to articulate strategies, mobilize resources
and coordinate policies to assuage the deep yearnings of Ndigbo for prosperous
development and happy home.
Nwodo explained during the inauguration that Igbo nation had
resolved to urgently address the total neglect of the area by the Federal
Government since after the civil war to build an industrialised homeland having
modern world-class physical and social infrastructure, competitive, attractive
for investments and generating employment for the teaming youthful population.
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