The federal government has a burden to correct the impression that it is anti-business. This sentiment has prevailed in some quarters of the business community in the last three and half years. In some cases, those who could not cope with the changed business environment have had to relocate from the country.
Experts cite as reasons for this impression the unfavourable tax policies, the continued delay in signing the Petroleum Industry Bill (PIB) into law to attract private investment into that sector, and punitive and anti-investor policies as reflected in recent cases involving government agencies and companies.
The implication of this perceived stance of the government, which does not support growth in both the services and real sectors of the economy, is that many companies and individuals have had to leave the country, and many more may leave, depending on what happens in the days and months ahead.
Besides the locals who are leaving the country, relocating their children and putting them in schools abroad, many expatriates, especially those working in oil and gas, telecoms and other service companies, are either returning to their home countries or relocating to other African countries.
The expectation is that these developments might increase in tempo if the status quo persists this new year and for real estate which is struggling at the moment, there are grave implications. The boom that this sector witnessed in the past was as a result of the good business climate in the country before now.
“Businesses leaving the country has implications for the property market; it means that the high vacancy situation in the market is going to worsen; more buildings will be empty and that will affect their market value,” Roland Igbinoba, President/CEO, Pison Housing Company, said in a telephone interview.
The real estate sector in Nigeria has been in negative growth territory for quite a while. Indeed, the sector has been in recession for 11 consecutive quarters, long after the wider economy exited recession in the second quarter of 2017.
By the last count, it was estimated that over 300,000 square metres commercial and 200,000 square metres residential real estate space are unoccupied and, according to Broll Property Services’ recent (Q3,2018) Viewpoint on the office market, about 40,000 square meters office space will be coming into the market this year.
Igbinoba stressed that there would be increased vacancy rate in the Grade A office market and his reason was that the expatriates who were leaving the country coupled with those who may leave in the aftermath of the general elections are the ones that rent such office space.
“The upper residential market will suffer the same fate because it is only the corporates and expatriates that rent houses in that segment of the market,” he said, adding that even retail would continue to struggle because of the drop in consumer purchasing power which is affecting that space.
However, what is happening or is going to happen, according to Igbinoba, is beyond election or Buhari as president. “What we are looking at here is political risk, but it goes beyond that. Macro-economic factors also play a major role and so focus should be more on them,” he posited.
MKO Balogun, CEO, Global Property and Facilities International Limited, agrees, arguing that if people and companies are leaving Nigeria, it is not because of Buhari as president or his government’s alleged anti-business stance or the likelihood of his return to power after the February elections.
“People are leaving the country because of our economy which is a rent-economy; the economy is not standing on a sustainable model, so people come from outside, make what they can make and move on. That is what is happening. The economy has a weak super structure,” he noted.
Balogun also believes that some of the companies reacting to the government’s stance on corruption. “Some of the companies that are leaving the country are running away from the anti-graft stance of the Buhari government which is making Nigeria uncomfortable for them.
In addition to Baolgun’s suggestion on the need for an all-inclusive government that will fix the economy, Igbinoba says that more attention should be paid the real estate sector like what is being done in agriculture. “Let there be an intervention fund for the sector; recapitalise the Federal Mortgage Bank of Nigeria (FMBN), and build infrastructure,” he advised.
CHUKA UROKO
