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What Nigeria must do to attract more diaspora investment

More than two years after Somadina Iruegbu, a Nigerian UK-based businessman, acquired a large plot of land in one of the most sort-after axis of Lekki, Lagos State, intending to develop it for commercial purposes, he has been unsuccessful in getting a land title.

Even after asking his lawyer to take over the land registration from his brother who was stuck in the process, a year into it, Iruegbu said he was tired of the different payments his lawyer was requesting to ‘settle’ some officials at the land registration office, to help fasten the process.

“I am regretting the investment, if I had invested that money in the UK or even any other country, it would have at least yielded some kind of return by now,” Iruegbu lamented in a WhatsApp call with BusinessDay.

Like Iruegbu, a lot of diaspora Nigerians have had a fair share of the harsh business environment. Possibly, Iruegbu’s experience might even discourage others.

The bottlenecks associated with getting a land title is not peculiar to Nigerians in the diaspora or those with plans to develop lands for commercial use, it also affect a lot of the country’s residents who either do not know people in high offices or lack the funds to ‘settle’ their way out of the normal but long registration process.

Data by PwC show that about 97 percent of lands in Lagos are unregistered. This, according to analysts, makes it difficult for banks to validate claims to land or for land occupants to use their land to create wealth or to start a business.

While Nigeria moved 15 places to 131 in World Bank Doing Business ranking for 2020, it ranked 149 on the ease of obtaining Construction Permit and requires 17 procedures, 118 days, and 27.5 percent of property value, a factor PwC says would encourage more informal construction of properties and increase risks in the real estate sector.

“Whatever has been done has still not solved the problem of titling, forget the e-certificate. The people that will provide the e-certificate can be bottlenecks in the process,” Jide Ogunleye, CEO of Denaro Properties Limited, says, adding that officials won’t move land document file except they are paid.

The bureaucratic corruption, bribery, embezzlement and extortion in the different levels of government is not peculiar to the land titling office, it is the same for many government establishments.

From lack of motorable roads, unstable power supply, absence of modern agricultural processing infrastructure to policies inconsistency, the harsh operating environment in Nigeria, although witnessed some improvement, has kept not just foreign investors away but Nigerians in diaspora.

The total value of capital importation into Nigeria declined by 74 percent to $1.46 billion in the third quarter of 2020 from $5.63 billion in the corresponding period of 2019. While the impact of the COVID-19 pandemic can be easily blamed for the decline, BusinessDay survey shows that before the pandemic, the country was struggling to attract the much needed foreign direct investment. COVID-19 only made an already bad situation worst.

As companies continue to grapple with high production costs and low demand, with SMEs and critical businesses shedding jobs and many others folding up, analysts recommend the following things Nigeria must do to attract both diaspora and other investors to boost GDP and create employment for its young population.

Infrastructure

Investment in key infrastructure, particularly as it affects some of the import growth sectors of the Nigerian economy, is key if Africa’s most populous country must attract some of its citizens abroad and generally other investors.

For example, Yewande Sadiku, executive secretary/CEO, Nigerian Investment Promotion Commission (NIPC), said Nigeria stands a chance of becoming the largest source of food for Europe because of its arable lands and closeness to the continent.

“Nigerian stands a fantastic chance of becoming a veritable supplier of agricultural products to Europe, not just because of Nigerians in the diaspora but because of the universe of consumers of not only produce from Africa but food produce generally,” Sadiku said at the BusinessDay ‘Diaspora Today’ virtual event on Thursday with the theme ‘Gearing for Growth: Harnessing Diaspora Dynamism for Domestic Development’.

While Nigeria has the ninth largest stock of arable land in the world, its lack of modern agricultural processing infrastructure, good transport network and lack of storage facility lead to damages of the majority of its farm produce, one of the reasons it largely depends on importation to feed its people.

“So, we have the capacity from arable land perspective to feed the world but we need investment in food preservation in modern agricultural methods and ensuring that the quality of our food products meets what in desired in the export market,” Sadiku said.

Policies

Having policies that are sufficiently stable to support long-term investment is another thing analysts have recommended that Nigeria must do to attract long-term investment.

Investors’ uncertainty in Nigeria’s policy inconsistency is usually triggered by the fear that a new government, for example, is unlikely to retain the policy implemented by a past administration.

Like India has successfully done, Andrew S Nevin, partner/chief economist, PwC, Nigeria, said there was a need for Nigeria to engage its citizens abroad through the state governments.

“Nigeria needs to start from the state policy level and they need to engage more of its diasporas” through the use of some tools like “database and other social-technical help”.

Nevin believes many Nigerians in the diaspora want to support “their state or region and necessary the country as a whole.”

According to Abike Dabiri-Erewa, chairman/CEO, Nigerians in Diaspora Commission (NIDCOM), Nigerians in the diaspora want ease in being able to get their businesses done in Nigeria.

If most of the bottlenecks keeping Nigerians in the diaspora away from investing in Nigeria are fixed, the country will not only be attractive to its citizens abroad but to other investors. This, according to Sadiku, is because “the same things that Nigerians in the diaspora need to better invest in Nigeria are the things that investors generally need to better invest in Nigeria.”

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