For 64 years, Nigeria has awarded ghost contracts to several non-existing companies or even existing firms with little or no capacity to execute them.
A 2023 report claimed that the Nigerian government awarded contracts to 14 non-existing and inactive companies for the execution of a $1 billion project in a Niger Delta community. Three firms did not have prerequisite experience and one project site never existed, even though money was voted for it.
Due to lack of funding or corruption, some of the infrastructure contracts in Nigeria have been forced to stop midway or not executed at all.
The Nigerian Institute of Quantity Surveyors said there were about 56,000 abandoned projects valued at N12 trillion in Nigeria as of 2021.
As of August 2021 when the estimate was made, Nigeria’s headline inflation stood at 17.01 percent. In August 2024, inflation was 32.2 percent, showing that the cost of the abandoned projects could have been doubled in three years.
From federal to states, government officials award contracts to their own companies or those of friends and families without compunction and monitoring.
Read also: 33% of Nigerians embarrassed by economic hardship – NOIPolls
Where are the metrics?
Some contracts are awarded without well-defined targets.
Issues like time of delivery, proration of payment, types of services, budgets for projects and other important goals set out in these contracts are often neglected, especially at state and local government levels.
“Most projects have failed in Nigeria due to lack of precise estimates required before embarking on construction in an era of price fluctuation,” Abba Tor, president of Nigerian Institute of Quantity Surveyors, said while explaining why projects have consistently failed in Nigeria.
Investment noise
Following phantom contracts is the high level of investment noise being made by Nigerian politicians.
Former President Muhammadu Buhari travelled 85 times to countries from Saudi Arabia to Japan between 2025 and 2023. In each of those trips, promises were made regarding how much would be invested in Nigeria but none materialised.
President Tinubu travelled 19 times in 16 months but no investment came with those trips, according to a a report by Economy Post.
Atiku Abubakar, former vice president and a serial contestant for Nigeria’s presidential seat, had opposed Tinubu’s constant foreign trips in search of investment for Africa’s largest economy. Atiku said that Nigeria does not need a ‘tourist-in-chief.’
According to Rand Merchant Bank, which assessed 31 nations in Africa, Nigeria fell from 0.15 last year to 0.163 in the investability scorecard in 2024, beneath peers like Egypt and South Africa who were ranked third and fourth with 0.49 and 0.33 scores respectively.
Investors coming to the continent find Seychelles and Mauritius’ markets most attractive, the report said. The two Indian Ocean Island nations outperformed the continent when measured by a combination of their economic performance, market accessibility, investment climate and social and human development.
A report by BBC on William Ruto and Bola Tinubu had acknowledged that some trips were necessary but others were undoubtedly ‘wasteful.’
“You have presidents who love to be in the air… Some of these trips are personal glorifications, not so much for the country,” Macharia Munene, Kenyan foreign policy analyst, had told the BBC.
For the government to allow foreign investments into the country, it must prioritise many things that are attractive to investors. Some factors that currently affect investment in Nigeria are security, inflation rate, interest rates, foreign exchange rates, governance and judiciary, analysts say.
They add that the management of the economy must ensure that the nation has a workable strategy for attracting investment. The priority sectors for the governments at the federal and state levels must also be clear to investors.
The quality of the government structure for domestic and foreign investments must also be clear.
“While Nigeria has some qualities that should naturally have made it a desirable investment destination, attracting investment will remain challenging if public governance is not addressed,” the Nigerian Economic Summit Group 2023 report said.
“Nigeria has a large market size of over 200 million people with a vibrant and youthful workforce endowed with demonstrable creativity and innovation capabilities. Nigeria is also rich in natural endowments, vast agricultural resources and cultivable landmass, diverse solid minerals, petroleum, and a large body of water, among others. However, concerns about the country’s worsening macroeconomic conditions, regulatory inefficiencies, elevated political risks and heightened insecurity are undermining its appeal to investors,” the report further said.
The report noted that there is a need to reposition public governance in Nigeria, given its role in promoting social, economic and political stability, which are critical for improving investor confidence and the country’s competitiveness.
Read also: 6 investment strategies that are paying off big in Nigeria in 2024
The positives
The Nigerian Investment Promotion Commission (NIPC) has done a good job in recent years despite a difficult macroeconomic environment.
Despite the early stages of the security challenges from terrorism, the Central Bank of Nigeria’s far-reaching reforms in the banking and financial sector, which stabilised the sector after the global financial crisis of 2008, also contributed to marked increases in FDI into Nigeria from 2009-2014.
These reforms led to improved ratings of Nigeria by agencies such as Standard and Poor’s, Fitch, as well as the inclusion of Nigeria in the JP Morgan Africa Emerging Market Bond Index alongside South Africa, previously the only sub-Saharan African country on the index.
Earlier this year, President Bola Ahmed Tinubu had signed three executive orders as part of the Federal Government of Nigeria’s (FGN) commitment to improving the investment climate and positioning Nigeria as the preferred investment destination for the petroleum sector in Africa.
The executive orders, which became effective on February 28, 2024, are as follows: Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024: This introduces tax incentives for various sectors of the gas industry, and it’s divided into four (4) major parts: Non-Associated Gas (NAG) Greenfield Development Incentives, Midstream Capital and Gas Utilisation Investment Allowance, Incentives for Deep Water Oil and Gas Projects and Miscellaneous.
There is also the Local Content Directive (LCD), which was issued pursuant to Section 100 of the Nigerian Oil and Gas Industry Content Development Act (NOGICDA) 2010. The objective of the LCD is to address the issue of significant reduction in investment in the Nigerian oil and gas industry caused, amongst others.
“Nigeria needs to have steady power supply, judiciary that settles disputes quickly, quality infrastructure, working system that reduces the number of taxes paid by corporates, stable petrol sector, working government ministries, Customs that aims to promote business rather than generate more and more revenue, and sincere governments at different levels,” said Ike Ibeabuhi, an Abuja-based market analyst.
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