United States (U.S.) High Commission Consul-General F. John Bray has said $1.3billion American businesses in Nigeria are threatened.
The threats, according to him, are coming from instability in the exchange rate, policy inconsistency, poor electricity, dearth of infrastructure, regulatory and security issues.
He said American investors are into three specific sectors–consumer products, oil, and gas. Bray spoke in Lagos at the 2018 International Investment Conference with the home, Promoting Investment, Connecting Business.
The forum was organized by the Lagos Chamber of Commerce & Industry (LCCI).
Bray said though the Nigerian economy was not growing at 2.3 percent, unlike Cote d’Ivoire, which is growing at seven percent, it is still the toast of investors as a result of this country’s population.
He said American investors have issues with how policies are made and changed, noting that it has the capacity to discourage investors into the country. He cited regulatory issues, such as the one involving MTN, which had led to the directive for the telco to return cash allegedly ferried out of the country without recourse to laid down procedures.
The envoy said it has the capacity to discourage any investor as there seems not to be a clear-cut obedience to rule of law to protect investors.
He regretted that the country has an image problem which needed to be addressed urgently, stressing that though security concerns remain an issue, it is not enough to discourage genuine investors as what they need to do is just to take care of their personal or corporate existence.
On infrastructure, he encouraged the building of competitive infrastructure and stressed the need to connect cities and states for easy movement of goods and services.
Deputy High Commissioner, British High Commission, Ms. Laure Beaufils said out of the £400million United Kingdom investment in Africa, Nigeria has a large chunk of it but regretted that UK investors are sometimes confused as to the risks inherent in investing in the country and how to mitigate them.
She also criticized the policy somersaults in the country which is capable of discouraging any investor and cited the MTN issue with the regulatory authorities as an example. She noted that some regulatory decisions are not good for the development and growth of the economy, especially in job creation.
UPDATE:Access bank denies plan to acquire Diamond bank
The management of Access Bank has denied reports that it is in merger and acquisition talks with Diamond Bank Plc. The bank in a prompt disclosure sent to the Nigerian Stock Exchange, NSE, on Monday said it has not entered into any such discussion with Diamond Bank or any other institution.
The disclosure, signed by Sunday Ekwochi, Access Bank secretary, said the bank would not go ahead with such corporate action without appropriate disclosure to relevant authorities.
“As a publicly quoted company built on best practice, the bank is fully cognizant of its disclosure obligations in respect of any such corporate action and will always discharge its obligations in the most professional manner,” the disclosure said.
The bank, thereafter, urged the market and the Nigerian public to disregard any such information emanating from other sources other than the bank.
Earlier on Monday, Diamond Bank PLC had also denied that it is in ongoing discussions with Access Bank Plc over the possible acquisition. A statement sent by the spokesperson of the bank, Chioma Afe, described as rumor the purported ongoing discussions. The bank also made a prompt disclosure of the same denial to the NSE Monday morning.
A report in The Nation newspaper on Monday claimed Access Bank was on the verge of acquiring Diamond Bank to increase its assets portfolio.
Although the report made no formal attribution for the acquisition plan, it, however, said the merger plan might materialize latest by the first quarter of next year.
According to the report, apart from an agreement in broad terms reached on the acquisition plan by both banks, both parties would soon commence assets valuation to enable them to determine the level of compensation and systems’ integration.
Stakeholders’ interest in the development was heightened by the bank’s public records in recent months.
FG begins fresh negotiations for power plants
Access Bank is about to acquire Diamond bank
Access Bank is set to add Diamond Bank’s portfolio to its assets in the next few months. Talks on the acquisition are on, according to sources, who said the merger is set for the first quarter of next year.
IMF warns Nigeria over rising debt profile
The International Monetary Fund (IMF) has cautioned the Federal Government to be mindful of the country’s rising debt service to revenue ratio and take steps to mitigate the situation.
IMF Senior Resident Representative in Nigeria Mr. Amine Mati yesterday issued the warning in Abuja at the public presentation of the “Regional Economic outlook: Sub-Saharan Africa, Capital Flows and the Future of Work.”
He predicted that Nigeria’s economy will grow by 1.9 per cent this year, up from 0.8 per cent in 2017.
This, according to him, is due to fewer disruptions in oil production
Mati attributed the expected growth to some pick-up in the non-oil. According to him, “the recovery is expected to contribute about 0.7 percentage points to the region’s average growth in 2018 and lift activity in Nigeria’s trading partners through stronger remittances, financial spillovers and import demand.”
Mati lamented that public debt was diverting more resources towards interests payments, and cautioned that though Nigeria’s debt to GDP was quite low, over 50 per cent of the country’s revenue went into interest payments.
He suggested that increase in revenue was very important to bridge the gap in order to ensure that revenue to GDP was sufficient enough to pay up and service the debt profitably.
According to Mati, “Nigeria’s Debt /GDP ratio at between 20-25 per cent is quite low but debt servicing which takes about 50 per cent of revenue is certainly high”.
With regards to Sub-Sahara Africa, Mati said that the regional average was worse than the Nigerian scenario with Debt/GDP across Sub-Saharan Africa ranging between 35-57 in the past five years. He noted that “a lot more of the resources are going into paying interests and there is less to spend on capital expenditure.”
Going forward, the solution the IMF chief said was for massive revenue to be mobilized to address the challenge but African nations especially Nigeria were not doing enough in that regard. Sub-Sahara’s strategy he queried has been to cut expenditure, rather than mobilizing more revenue.
According to him though Nigeria has immense revenue potentials many of which have remained untapped, “adjustment has relied on spending compression rather than revenue mobilization.”
The IMF Senior Resident Representative noted that as the magnitude of capital flows to the region increased, so also the volatility increased. According to him, “portfolio inflows could be very volatile and more associated with consumption than investment in the real sectors of the economy.”
Mr Nnanna Okwu, Deputy Governor, Economic Policy of the Central Bank of Nigeria (CBN) who was represented by Mr Friday Ogwuche said capital inflows into Nigeria responds to both domestic and external shocks. He said Foreign Direct Investments (FDIs), inflows were becoming more diversified in response to the changing structure of the Nigerian economy.
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