PHOTO: WSJ
Rich oil and gas resources notwithstanding, foreign direct investment in the South-South has been at a low ebb, for reasons, which economic analysts said, were associated with insecurity, lack of good corporate governance and nonexistence of
knowledge-driven economy.
Between 2013 and first quarter of 2020, the region which once got huge chunk of Nigeria’s FDI inflows in the 1970s, barely received $474,133,792 million out of the $92,284,945,105.59 inflow.
Finicial experts told The Guardian that the decrease in FDI was because of community hostility, militancy, kidnappings,poor infrastructure and political instability, sea-piracy and failure to pass the Petroleum Industry Bill.
Analysts has also blamed overdependence on the 13 percent derivation from the federation account as another reason the South-South failed to secure good investments within the period, as states could not get FDI in huge mineral resources like silica, tar sand, clay, limestone, granite, quartz, marble and gold salt. Others are tin, basalt, quartzite, kaolin, sand and feldspar. There were also little or no investments in agribusiness, light manufacturing and tourism.
DATA on FDI from the National Bureau of Statistics (NBS) revealed that between 2013 and first quarter (Q1) of 2020, Akwa Ibom State received over 50 percent of the $474,133,792 million FDI inflow to the South-South. The state got $278,263,453 million, followed by Cross River State, which got $66,130,000 million. Delta State got $59,483,860 million, followed by Rivers State’s $49,212,960 million and Edo State’s $ 21,043,519 million. Bayelsa got zero investment within the period under review.
Despite efforts by some of the states to develop friendly policies and improve infrastructure to attract investors, activities of cult groups, kidnappers, militants continued to increase the risk perception of potential investors who are reluctant to make investments in the five littoral states of the region.
An expert in economic development, Professor Willy Okowa, said the steep decline of investments in the South-South was created by perceived difficult investment climate as a result of security concerns. He stressed that no investor would invest money in places where life would not be secure.
“Insecurity is a key factor. The South-South is largely the petroleum hub of the country. So, investment would have been done mostly on oil and its production, but because of insecurity, a lot of companies moved their headquarters to Lagos. To attract FDI, the first thing is to deal with the security issue (kidnapping). We need good governance too,” he said.
The Chairman, board of trustee of the South-South Chamber of Commerce, Mr Billy Harry, blamed lack of access to information and state governments’ indifference to encouraging proper spirit of enterprise.
“The governments in the South-South don’t interface with the organised private sector. They just feel that they are in government and forgetting that power will fizzle out in eight years. There is a need for governments of the South-South zone to interface aggressively with the private sector. We need to encourage proper growth of enterprise to take advantage of FDIs,” he said.
Onuchukwu agreed that the South-South had been unstable, but noted that things were beginning to stabilise as every state government was formulating policies to checkmate activities of militants and other deviant groups that have tainted the image of the region.
“Now, we have succeeded in ensuring that there is peace in the region, we need to try and raise the confidence of these investors to come in by doing a proper advocacy,” he added.
Director-General of the South-South regional integration bloc of Bayelsa, Rivers, Akwa Ibom, Cross River, Edo and Delta States (BRACED Commission), Ambassador Joseph Keshi, said concerted efforts must be made to create conducive environment to attract investment into the respective states. According to him, “capital goes to a place that is safe and where people can recoup their investment.
“Dangote took his N600 billion oil facility to Lagos and he is going to pump the oil from Niger Delta. That, in itself, tells a complete story. It does show you a complete failure on many things. Now, if Dangote felt that the Niger Delta was safe, secure and that he would not get problem from people coming and saying, ‘‘this is our land, you must give us this before you build,’’ and if there was a strong government backing, that facility would have been in the Niger Delta and it would have provided tremendous amount of jobs, and not to talk of the multiplying effect of having such a huge facility in that region,” he said.
The Vice President of the Trade Union Congress, Chika Onuegbu, said though decline in FDI could be easily attributed to insecurity, it was also pertinent to take into cognisance the non-passage of the PIB, which would have boosted investment in the oil sector, mainly domiciled in the South-South region.
“There has been studies that confirm that the motion without movement has denied the country over $300billion of investment, as investors continue to observe the situation. Nobody wants to invest in a place where he does not know the fiscal regime, the laws, taxation, and economic parameters that will enable him know whether his investment will be profitable or not. Government should encourage people to invest in refineries.
“And you can see the connection between the unemployment rate in Niger Delta and FDI. In places where there is FDI, unemployment rate is reduced; places where there is little or no FDI have high unemployment rate,” he added.
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