Frequent policy changes often without consultation with the private sector is one reason why local and foreign investors are not finding Nigeria attractive, says the new EU ambassador to Nigeria at a conference in Lagos recently.
Samuela Isopi, the European Union (EU) Ambassador to Nigeria and Economic Community of West African States (ECOWAS), said this is a burden not only for European businesses but for all actors in the Nigerian economy.
“In our consultation with the industry, one of the main concerns relates to predictability. Companies need a stable environment in which they can conduct business, particularly with regard to the regulations affecting their operations.”
Isopi said the introduction of new rules that apparently contradict existing practices or even simply being faced with a different interpretation of the same rules has a profound impact on legitimate companies acting in good faith.
She noted that a consultative mechanism bringing the administration together with the private sector might contribute to identifying positive solutions to the problem.
“I am personally strongly committed to strengthening bilateral ties between Nigeria and the European Union on trade and investments.
“In this context, one of the main tasks of the EU delegation, as an institution representing the 27 member-states, is to promote the opportunities, but also to address the concerns and the challenges faced by EU businesses, which hinder the development of trade and investments,” she said.
She highlighted difficulties encountered by European companies at the ports marked by high shipping cost and delays which also affects Nigerian businesses.
Isopi said improvements to infrastructure such as power, though costly, are necessary for attracting the investment in providing goods and services that create jobs for Nigerians.
The World Bank estimates that poor power supply cost Nigeria about $28 billion, equivalent to 2 percent of its Gross Domestic Product (GDP) in lost economic growth every year. Nigeria requires an investment of $40 billion dollars to close the gap between current levels of power supply and demand.
Nigeria has embarked on reforms including a Siemens deal to modernize the grid and raise tariffs but the sector is bogged by big challenges including technical and commercial constraints.
Isopi also identified the lack of liquidity in Nigeria’s foreign exchange market, as “a complex issue with no easy solution” that impacts a company’s operations. “When a company is unable to source enough foreign exchange to complete a transaction, business suffers,” she said.
However, Nigeria remains a very attractive destination for European investors, she said, citing ongoing construction of a new deep-sea port in Lagos, which exemplifies public-private partnership.
In his remarks, Cécile Tassin-Pelzer, Head of Unit and Cooperation, EU Delegation to Nigeria and ECOWAS, said the European Union has committed almost £200 million to the development of legal and policy framework for renewable energy in Nigeria.