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nairaland.net • View topic - Hostile Environment Hampers Investment in Nigeria

Hostile Environment Hampers Investment in Nigeria

Hostile Environment Hampers Investment in Nigeria

Postby fw12 » Wed Oct 11, 2006 7:37 pm

Former Minister of Finance, Dr. Ngozi Okonjo-Iweala, has charged Nigerians to stand up and speak boldly on issues relating to Nigeria's economy, saying that hostile environment have hindered private investment in the country.

Okonjo-Iwuala who stated this while speaking at a lecture on "Energizing Economic Transformation Through Venture Capital and Private Equity," organised by A. S. Consulting Limited in Lagos yesterday, observed that "when Nigerians are abroad they are outspoken, more assertive, bold and authoritative, and their ingenuity come to the fore; but when they are in their home country, the hostile environment and fear to speak out hamper their creativity to investment drive".

She, therefore, advised that Nigerians should mount pressure on government, if possible be militant in their demand for accountability, which she said, would make government to sit up and create conducive environment for investment.

"When I was in government I used to say, keep the pressure on us so that we can be up and doing," the former minister added.

She stated that Goldman Sachs, an international consulting firm, included Nigeria as one of the 20 emerging nations in 2020, but for this to happen the country must meet all the criteria for investment.

The former minister disclosed that for Nigeria to energise her economy, it must emphasize the development of small and medium enterprises (SMEs), lamenting that the country did not have micro economic financing that could support long-term investment and frowned that even with the last consolidation in the banking sector the financial institutions were not yet inclined to lending long-term loans to investors.

"We spent the past three years successfully implementing macro-level reforms to provide a platform to private sector like you to begin to invest," she said.

She said that the country's attention should now be turned to micro-economic intervention, which Nigeria needed to complement macro reforms, which could support private sector and create jobs in the economy.

Okonjo-Iweala said: "We now have a platform to support private sector growth. Now that we have achieved such a platform, let us not fall into the sin of taking it for granted. We must continue to be vigilant on the issue of a stable macro-economic environment because without it the micro-level reforms cannot take place."

Ikonjo-Iwuala added that to improve the investment climate, we must address a number of regulatory and institutional issues, which increase the cost of doing business in Nigeria, remarking that although the regulatory environment is not perfect in Nigeria, the current administration has made some noticeable improvement that include establishment of a one-stop shop for investors to simplify procedures required in starting and closing a business.

According to her, the one-stop shop facilitates business incorporation and registration, and eliminate the need for investors to deal with multiple agencies.

She also said that government is presently tackling the incidence of multiple taxation for businesses, which require harmonisation of taxes and fees at the federal, state and local government level.

The former Minister stressed that various tax bills have been prepared and presented to the national assembly for approval.

The World Bank Economist stated, "For a while, Nigeria often had a track record of macro-economic instability, repeated fiscal deficit, high inflation, unstable exchange rate and low levels of external reserve."

She also remarked that there was often poor management of oil revenue, noting that expenditure was volatile and pro-cyclical, in terms of high oil prices, government spending rose intandem with the prices and dropped when prices crashed.

She explained that such spending often resulted in low quality projects, unfinished projects, and also tended to be inflationary.

"But as part of recent economic reforms, prudent fiscal and monetary policies were adopted by the Federal Government. To cite one, the government adopted an oil price-base fiscal role in which government expenditure was based on a prudent oil price benchmark. Despite recent high oil prices, government budgeting has been based on conservative oil prices of $25 per barrel in 2004, $30 per barrel and $35 per barrel in 2006."

Okonjo- Iweala said that by adopting this fiscal role, government expenditure was de linked from fluctuations in the oil price, adding that monetary policy has also been disciplined.

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fw12
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