They left with their cheque books intact, the investors


By Clement T. Ofuani    

MON, AUGUST 28 2017-I was later told that the delegation had been highly impressed with my presentation but the curious thing was that they left with their cheque books intact. I had received a delegation of about eight portfolio investors from the United States of America in my office and had arranged for them to see the Vice Chairman/Minister, National Planning Commission as well as the Executive Secretary. They were in Nigeria as part of their exploratory trip to Africa to evaluate investment potentials. They represented various Funds including University Endowment, Foundations, Corporate Pensions and a Sovereign Wealth Fund. Between them, they controlled investment portfolio of over US$200 billion officially and believed to be well over US$300 billion unofficially. Their mission was driven by declining investment yields in the US and Europe and concerns over their ability to meet their pension and other obligations. Hence, the exploration of emerging markets for growth opportunities and Nigeria holds all the potentials for such growth and high returns.

They were not disappointed either by the presentations we made or the meetings they had with other critical actors both in the public and private sectors. I had taken them through the governance system and rule of law in Nigeria and the vastness of Nigeria’s domestic market, the massive infrastructure deficit particularly in power supply, transportation, housing and of course the financial sector and capped it with the exponential growth story of the telecommunications sector. On the political scene, I demonstrated to them a certain assurance that the 2011 general elections would be largely free and fair and would further consolidate Nigeria’s democratic standing.

After their departure, we exchanged emails for a while but there really was no traction in terms of getting them to invest their billions of dollars in our country.  This was the second of such delegations that I had received and it had largely had the same result. So, I began to wonder what was wrong. How could they admit that our presentations were brilliant, admit that there are vast untapped opportunities for high yield investments and growth in Nigeria and still return with their funds to the markets that they admitted were yielding marginal returns to them?

I ruminated over the number of trade delegations from Nigeria on foreign investment drives all over the world especially since the return of democratic governance in 1999 and how much resources the nation had put into the efforts, yet, aside from the financial sector, oil and gas and the telecommunications sector there was practically no positive growth in foreign direct investments in any other sector of the Nigerian economy.

I was quite agitated and started asking questions. As I reflected on the interactions with the foreign investment delegations, it struck me rather forcefully that despite our much vaunted investment opportunities, the potential investors did not find appropriate investment vehicles to access those opportunities.  On further enquiry, I realized that, essentially, they were interested in investing in financial assets. Financial assets are claims against real assets and earnings of enterprises and institutions. This means that the first task in attracting foreign investments should be the creation of the enterprises or institutions that will issue the financial assets as appropriate investment instruments. Despite all the sophistication in the global capital market and the pretensions of the technical or chartist school of thought in investment valuation, no one denies that financial assets are intrinsically linked to the basic financial fundamentals of an enterprise as espoused by the fundamentalist school of thought.

What this tells me is that we need a pool of capable entrepreneurs in Nigeria who can put together good business plans and other basic requirements for corporate startups, such as business registration and licensing to meet local regulatory requirements, acquisition of land in appropriate locations and securing of necessary titles. These can form the basis for the search for foreign capital which can be packaged in various forms such as equity, preferred stocks, debt instruments and leases and so on. These are the investment vehicles that the foreign investors require to penetrate our economy. While this does not provide full guarantee of success, it does provide a firm basis for positive evaluation and engagement.

Entrepreneurial skill is something that needs to be developed and we urgently require its inclusion in our higher educational curricula in the long term. In the short term, efforts should be directed at targeting Diaspora Nigerians with appropriate incentives. In addition to the skills they have acquired which we need direly in Nigeria, they can act as a bridge between local businessmen and foreigners to moderate their risk perception of Nigeria.

My experience with such a model has demonstrated to me the efficacy of the above prescription. I am currently involved in one such effort to provide affordable, modern and efficient intra-city transportation in Enugu City through the building and operation of a mono rail system developed through a concession to a private Canadian company led by a diaspora Nigerian. I am convinced that the success of this initiative is going to open a flood gate for the inflow of badly needed foreign direct investments into Nigeria in addition to the other collateral benefits of job creation and technology transfer. My conviction stems from the fact that based on the conceptual business plan and concession alone, the AfricaInvestor Magazine listed the Enugu Monorail as one of the 100 bankable infrastructure projects in Africa in its September – October 2011 issue. This positive reference has been exceedingly useful in raising the desired foreign capital for the implementation of the project.

Governments at both national and subnational levels need to encourage this model of development and I daresay that resources deployed to train Nigerians in entrepreneurial skill acquisition including attracting back skilled diaspora Nigerian entrepreneurs will be tax payers’ money optimally spent.

This article was written in 2012 and first published by theG&BJournal.



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