The hostile business environment imposed on Nigeria by insecurity continued to weigh on the country’s foreign trade.
Insecurity and the excessive bureaucratic bottleneck created by some government agencies and selfish local business activities have all resulted in a lack of significant improvement in Nigeria’s foreign trade.
In the oil and gas sector, for example, local and international operators had come to the conclusion that Nigeria’s operating environment is the most difficult among oil-producing countries.
The difficult operating environment led to a collapse in the country’s foreign trade, according to the government’s own statistics.
For example, Nigeria saw a 10.3% drop in foreign trade in 2020, according to the National Bureau of Statistics (NBS).
According to the report, the value of total imports in 2020 was 19.898 billion naira, 17.3 percent higher than the 16.96 billion naira recorded the previous year.
According to the report, total exports also fell by 34.8%, from 19.19 trillion naira in 2019 to 12.522 billion naira in 2020.
In 2020, Nigeria’s total foreign trade also fell 27.46% year-on-year in the second quarter of 2020, compared to the 8.61 trillion naira recorded in the corresponding quarter (Q2) of 2019.
According to the report, Nigeria’s total exports in the second quarter of 2020 fell 51.7% to 2.22 billion naira, a significant drop from 4.59 trillion naira. registered in the second quarter of 2019 and 4.08 trillion naira registered. in the second quarter of 2018.
The report also showed that Nigeria’s total foreign trade was down 27.3% from the 8.59 trillion naira recorded in the previous quarter (Q1 2020).
In September 2020, Nigeria recorded its lowest foreign trade with the United States since 2015, falling to 1.5 trillion naira in September 2020, from 2.1 trillion naira recorded in September 2019.
The challenges of the operating environment would have been compounded by the disruption caused by the COVID-19 pandemic.
Nigeria’s decline in international trade and the recent alarm raised by Nigerian Minister of Industry, Trade and Investment Otunba Niyi Adebayo that the volume of trade between Nigeria and South Korea has plummeted 74% in two years, should be an open eye to the Nigerian government and its agencies.
In a statement issued in Abuja, the minister specifically said that the volume of trade between the two countries had increased from $ 5 million in 2018 to $ 1.3 million in 2019.
The minister said Nigeria and South Korea share strong economic and investment ties with more than 20 Korean companies currently operating in Nigeria.
Adebayo named some of the companies to include: Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI).
He also called on foreign investors to take advantage of Nigeria’s involvement in the African Continental Free Trade Area (AfCFTZ) to invest in Nigeria so that they have access to the large market on the African continent.
Adebayo asked its visitors to encourage foreign investors to invest in the new special economic zones established by the ministry in each of the six geographic areas of the country.
Otunba Adebayo is one of the few ministers in President Muhammadu Buhari’s administration to have shown an unbridled passion for wooing foreign investors in accordance with President Buhari’s agenda.
But as Adebayo and his ilk make strenuous efforts to attract foreign direct investment (FDI), some other government officials and their aides among local investors have embarked on deliberate efforts to scare off foreign investors in an attempt to ‘escape the competition.
Foreign investors are not immune to the adverse effects of the activities of these predators, who use their local political contacts and connections to engender hostile government policies that not only destroy existing investments but drive out potential investors.
While other countries like Senegal and Cameroon have opened their doors to foreign investment and skills transfer to create quality jobs in their countries, some foreign companies in Nigeria are being strangled to death without any soothing words.
South Korea, for example, is well placed to help Nigeria build capacity, but sadly, the right environment has not been created.
The minister cited Samsung Heavy Industries (SHI) as one of the South Korean giants operating in Nigeria.
Indeed, since SHI arrived in Nigeria about ten years ago, it has demonstrated its ability to transform the Nigerian economy through the development of the local workforce, which could boost the gross domestic product. (GDP) of the country.
SHI has proven her courage and invested heavily to demonstrate that she is in Nigeria for the long term.
But despite his record achievement in the development of the Egina oil field, uncertainty in the Nigerian oil and gas industry has discouraged investors from launching more projects that could use SHI’s expertise.
Foreign investors operating in some of the country’s free trade zones are most affected by the activities of these local operators who collude with some corrupt government agencies to seize investors.
Free Trade Zones are areas in which businesses are exempt from the normal Nigerian tax regime.
In return, the federal government expects these companies to stimulate domestic exports, create jobs and help diversify the country’s economy by introducing new activities.
But companies operating in the LADOL free zone in Lagos are suffocated by excessive charges and other acts of hostility from free zone managers
For example, an American pipe coating company, Africacoat was forced out of Nigeria by LADOL operators.
While other free zones in the country are championing the fight to court investors, LADOL has for seven years engaged its tenants in long disputes, leaving investments to suffer.
The operational environment of the zone is characterized by open hostility against investors.
This open hostility against Korean investors peaked in April 2019 when a Nigerian Civil Defense and Security Corps (NSCDC) officer Mr. Innocent Oshemi guarding LADOL shot and killed a colleague and injured a staff Korean, working at the manufacturing and integration site of SHIN located in the free zone.
The armed LADOL security guard is said to have gone berserk in the SHI-MCI construction site, killing his colleague in an argument and shooting a Korean employee of the SHI-MCI operating a crane in the construction site at the time.
This type of incident was capable of scaring any real or potential investor from any operating environment.
The incident, without a doubt, must have dealt a heavy blow to trade between Nigeria and South Korea as no investor would like to invest in a dangerous environment.
It is no surprise that the collapse in trade between South Korea and Nigeria occurred in 2018/2019, exactly when the terrible incident occurred.
The decrease in trade between Nigeria and South Korea also occurred during the period when LADOL locked down one of the zone’s main investors, denying him access to its investments in the zone.
It took the intervention of government agencies and courts for LADOL to lift the blockade and allow investors access to their facilities in the free zone.
In today’s internet world, other international companies have read all these negative reports of LADOL’s open display of brazen hostility against its partners, which has portrayed Nigeria in a bad light and made it a bad destination. for Korean companies during the period.
In addition to the hostile posture of groups like LADOL, the commercial activities of Apapa’s ports in Lagos, which account for 70% of international trade in this corridor, are also affected by traffic congestion.
This stalemate has also affected multilateral trade between Nigeria and other countries, including South Korea.
Insecurity is also increasingly affecting investor appetite for Nigeria’s operating environment.
Government policies are another area of ââgreat concern to investors.
The government should be sensitive to the operating environment and refrain from developing policies that could hinder investment.
All policies should be aimed at improving the country’s ease of doing business.
An operating environment characterized by policy inconsistencies, political interference and policy somersaults is not a preferred destination for investment.
Investors in Nigeria’s Free Trade Zones (FTZs) recently threatened to disengage from the zones due to a reform proposal from the Federal Ministry of Industry, Trade and Investment (FMITI).
A recent statement signed by the director of the Snake Island, Lagos integrated free zone, Yusufu Abdullahi, on behalf of the investors, alleged that the ministry had concluded plans to transfer the supervision of the free zones from the Nigerian Free Zones Authority. export (NEPZA) to the Oil and Gas Free Zone Authority (OGFZA) located at the port of Onne in Rivers State.
Investors are wary of the government’s decision, describing the proposed reform as “a ploy to destroy multi-million naira private investments in free zones.”
They alleged that FMITI ordered NEPZA to transfer five selected free zones (Dangote Industries Free Zone, LADOL Free Zone, Snake Island Integrated Free Zone, Tomato Industrial Park and Olokola Oil and Gas Free Trade Zone) regulated by the authority to OGFZA .
It is not known why the investors made the threat, but it is up to the government to restore the confidence of these investors in its activities.
Although NEPZA has not implemented this directive, it is imperative that the government brings all parties to a negotiating table for the sake of investment protection.
*** John, an analyst, writes from Abuja
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