• Why investors shun region
• Low returns, poor infrastructure trigger apathy
• Investors attack governors
• We’re doing our best, govs’ forum insists
Despite relative peace in the region, the Southeast zone has remained unattractive to investors, a situation analysts ascribe to unfriendly tax regimes, poor quality of infrastructure and low return on investment.
Of Nigeria’s $93,284,945,10559 billion foreign direct investments (FDI) between 2013 and first quarter of 2020, the Southeast got the least, amounting to a paltry $203,898,690 million and representing just less than one percent (0.22%) of the total investments.
A breakdown of Southeast figures from the National Bureau of Statistics (NBS) within a seven-year threshold showed Abia State as having a total of $9,710,000 million in foreign direct investments between 2013 and 2014; Anambra State hosted $38,091,000 million within the same period; while Ebonyi had none of such investments at all. With figures put at $152,688,690 million (2013) and $151,490,000 (2014), amounting to some $304,178690 million, Enugu State was reported to have garnered the most investments within the period. Imo State had a total foreign direct investments of $3,500,000 between 2015 and 2019.
Stakeholders in the zone said the reason for the relatively low investments was because political leaders of the area had not paid attention to the economic frontiers of the region with a view to making it an industrial hub, as was the case in Southwest states of Lagos and Ogun. The Zone, they said, would, in the medium to long-term, borrow to sustain its socio-political operations as well as witness continuous workforce emigration in search of employment in other zones.
Although foreign investments in other zones (Southwest, South South, North Central, Northeast and Northwest), remain normal, Southwest has the largest chunk of the FDI. Some states in some of the zones have also managed to have industrial and mini-industrial hubs that are attractive to investors.
Comparative figures, as gleaned from NBS estimates, indicate that within the same period (2013 – 2020), other zones of the country received the following capital importation: Southwest $81,808,183,342.05 (87.70%;); South-South, $470,688,204.67 (0.50%); North Central, $10,732,800,098.87 (11.51%); North east, $ 39,414,980.00 (0.04%); and Northwest, $29,959,790 (0.03%).
Reacting to the observation that regions in the northern part of the country also had low investments during the period, Development Expert, Dr Chiwuike Uba, insisted that figures on Southeast investments was abysmally low, especially as most donors and multilateral agency programme interventions were focused on the northern region, which made up for low investments in the area.
He also stated that low investment in Southeast states was a reflection of unpreparedness, lack of commitment to industrialisation, and poor business environment prevalent in the region.
Citing data from the Manufacturers Association of Nigeria (MAN), Uba stated that Ogun State had become home to manufacturing and agro-processing investments, with over 70 percent share of manufacturing investments in Nigeria between 2014 and 2017.
“The data reveals that 74.42 percent of manufacturers’ investment of N691.77 billion in 2014 went to Ogun State. This trend continued in 2015 and 2016 with the State having over 70% of the investments, while other zones shared the remaining investments, with Apapa and Ikeja having the bigger share of the investment. Evidently, from the available data, in 2017, Ogun and Lagos (Apapa and Ikeja) attracted 32.9ercent and 48.8 percent of the investments”
Given further reasons for the development, the Economist explained that manufacturers and other investors would often appreciate incentives because they were key enablers of investments. Ogun State had specifically offered tax and land rebates, as well as seamless issuance of certificate of occupancy, which lowered production costs. As part of the investment promotion and protection mechanisms, a one-stop-shop was established to facilitate easy and single point of contact for investors dealings with various ministries, departments, and agencies of the state.
On what the southeast region should do to change the ugly trend, Uba advised that the region needed to improve the business environment. “Currently, the region is not ranked well on the World Bank’s Sub-national Ease of Doing Business and on the AfriHeritage’s Business Environment and Competitiveness across Nigerian States (BECANS),” he said. “No real investor will invest in an environment or economy that does not support or grow his investment.
“South East does not have a functioning and operational industrial cluster. Unfortunately, most of the industrial layouts have been converted to estates. While the DAWN Commission in the South West has done so well for the region in promoting investments, our own South East Governors’ Forum Secretariat, which ultimately should serve as the think-tank, seems to be more political than it should be.
“Clearly, the region lacks strategic direction for industrialization and mobilization of investments. There is urgent need to create the right incentives to attract the right investments. We must rethink our strategy, model, and policies”
He added, however, that, while the Southeast battles with the internally induced constraints inhibiting investments, it was important to observe some of the external factors, including nearness to seaport and dry ports, among other advantages enjoyed by the South West that were not in the Southeast.
“While the region develops the dry ports and the free economic zones approved by the Federal Government, the dredging of River Niger to allow ferrying of goods with smaller ships would be of great importance to the economy of the region, as well. The zone needs to develop an industrialization plan, while it works to improve business environment. How many of the states in the South East have the States investment opportunities well defined and posted on the State’s website? In fact, with the exception of Anambra, almost all the states in the region have no dedicated agency for investment promotion and protection. For the states that have established one, it is operated like the typical political office with all the bureaucracy and managed by a politician,” he said.
He observed that the Southeast appeared to give more preference to foreign investors than to local investors. Foreign and domestic investors, he said, should be treated equally, in open, transparent, and dependable conditions.
“The region should provide basic infrastructures (school, good roads, hospitals, etc) needed to drive businesses. Investment positioning is very important. Kwara State showed what positioning can achieve when it created a positive business climate leading to the establishment of Songhai Farms public private venture.”
But a former Director at the Central Bank of Nigeria (CBN), explained that investment in Nigeria had generally been low, pointing out that the Gross Fixed Capital Formation (GFCF), which included land development and production facilities, as a percentage of Gross Domestic Product (GDP), declined from 89.386 percent in 1981 to 19.018 percent in 2018.
He argued that investments, especially around third world countries, have been made to develop natural resources, like crude oil, coal and timber and by putting in place production and infrastructure facilities, stressing however that the southeast was naturally resource-poor and does not attract investment in that respect.
“The coal deposit in Enugu State, the oil and gas resources in Abia, Anambra and Imo States and the rock and metallic minerals in Ebonyi State are not being actively developed because they cannot be easily linked to the local economy or the export market. This is so because the region lacks economic infrastructure such as railways, waterways, roads, power, gas, water dams and ports. Without economic infrastructure, investment in production of made-goods and services, such as manufacturing, is difficult.
“Besides, fiscal policy of government makes manufacturing in the zone noncompetitive. Imports of a number of manufacturing inputs is restricted to Lagos, where there is an import inspection facility, making plants outside the Lagos area doubly noncompetitive against foreign and domestic producers. This explains why a number of manufacturers from the Southeast zone have large investments in pharmaceuticals, electrical goods and food manufacturing in the Lagos area, while their zone is deprived.”
He, however, expressed the hope that the Federal Government could remedy the investment gap by intentionally, investing in economic infrastructure in the Southeast.
“Economically, it will increase economic output and labour employment in the zone and in the country at large. Socially, it will foster community peace because the default internal emigration of economically active people from the Southeast zone is creating colonies in other zones that in the long-term will create disharmony by raising fear of dominance and exclusion. People from the zone can also be more intentional in their investment behaviour by limiting their investment outside the zone. This is important, not only for safety of the investment portfolio but also to attract economic infrastructure and foreign investments,” he suggested.
Aligning with Uba however, an Investor, Henry Chibuzo, observed that lack of political will, security threats, lack of coordination among governors of the zone and poor infrastructure had continued to discourage investment in the southeast region. He stated that ease of doing business in the zone had remained cumbersome, stressing that, even when an investor decided to live with it, low patronage from governments could cause an exit.
“I have also noticed that many states in the Southeast have Investment Promotion agencies but these agencies are not properly funded. There is no cohesion among them in terms of driving the southeast investment programme; everybody is pursuing investment at individual level. There ought to be strategic collaboration. The governors ought to come together. There is no strategic effort that can trickle down to investment attraction in the zone.”
He added that security threats had threatened investment in agriculture, especially since the rise in farmer/herder issues in the zone, stressing that certain investors that came into the zone and invested in agriculture in the Uzouwani area of Enugu State had their crops destroyed.
“Moving through the southeast, there are several checkpoints and the policemen on the road care less about who is coming. They are only there to exploit the people. Any investor, who probably was in the southwest, south-south and on coming into the southeast to discover this level of security checkpoints, will certainly not want to have any business to do here.”
An Estate Management Expert, Obichukwu Umeh, stated that governments of the zone had not given enough encouragement to Igbo Investors to deepen investment in the zone
Using what happens in the sector as a case study, he stated that only a few of his colleagues could invest in housing in the Southeast, as, according to him, “you are subjected to all manner of levies by community and government officials, even when you have paid exorbitantly to procure land. You pay to fence your land; you pay neighborhood security; you pay more than 20 percent of what you bought the land to get approval for your drawing, among others. It is not easy. That is why the cost of acquiring accommodation is too high in the zone compared to other zones of the country. That aside, provision of road, electricity and water among other facilities that could make the place habitable is also on the investor. These are the challenges.”
Citing a housing project he did in Asaba Delta State, he stated that when he indicated interest to do a low-cost housing on the land he provided, “the state government freely did the access road and extended electricity to the area. For the boreholes we sunk in the process of construction, the government also helped us to ensure that the water was reticulated, which actually helped to reduce cost on the occupants. So we really need to look inwards and encourage investment in this zone.”
The Southeast governors however stated that they had supported investors in the zone and had continued to provide platforms for interaction and make their businesses thrive in the area.
Director of Communications, Southeast Governors Forum, Mr Mike Udah, told The Guardian that the governors “are in frequent contact with Southeast Chamber of Commerce and other stakeholders with a view to boosting investment in the region.”
He added: “On a yearly basis, they organised the Southeast Economic Summit. The taxation regime in the Southeast is as friendly as ever. Recently, following the outbreak of COVID-19, the governors of the Southeast, went a step further to stop outright some levies and in some cases, reduce them in effort to ensure that investors and ordinary citizens do not suffer.”
As an interventionist plan, the Ohanaeze Ndigbo had recently set up the Alaigbo Stabilization Fund, in partnership with governors of the zone, to cure the infrastructural deficit of the Southeast and boost investments.
President General of Ohanaeze Ndigbo, Chief Nnia Nwodo had said, while inaugurating the 54-member Steering Committee for the Fund, that it was envisioned as key instrument to articulate strategies, mobilize resources and coordinate policies to assuage the deep yearnings of Ndigbo for prosperous development and happy home.
Nwodo explained during the inauguration that Igbo nation had resolved to urgently address the total neglect of the area by the Federal Government since after the civil war to build an industrialised homeland having modern world-class physical and social infrastructure, competitive, attractive for investments and generating employment for the teaming youthful population.
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