Total Pageviews

Monday, February 13, 2012

NIGERIA: FOREIGN INVESTORS AND CURRENT SECURITY RISKS


     The most deadly attack by Boko Haram in Nigeria - the Friday evening attack on Kano that left about 200 dead - is yet another reminder of security situation in Nigeria in the last two years. The other two attacks in Abuja, Nigerian capital and evolving destination for tourists coming to Nigeria, show how mercurial Boko Haram can be and it ability to strike far away from it comport zone - the North East. Though, attacks from Niger Delta militant has subsided since coming to power of Good luck Jonathan, that does not mean threats from that part of the country have reduced as there are growing cases of Kidnapping of foreign and local workers. Then there are cases of arm robbery in all sections of the country that strike at the heart of the country economic growth and political stability. But, the most serious threat yet to the country’s chase for higher economic growth is the threat from Boko Haram, which has proven difficult for Nigerian authorities to confront. Boko Haram, an Islamic sect, that originated from the North Eastern states of Borno and Yobe has attacked many government installations. So far, it has carried out it missions with zeal. 

      As one of the fastest growing economies in Africa, Nigeria need stable environment to continue with high economic growth and to achieve vision 2020:20 targets. Already rate of economic growth this year is forecast to grow slower than last year, due to security concerns. Inflation, another economic barometer is forecast to increase. These, together with depreciation in the value of Naira, will make the economy a lot hotter. Notwithstanding, Creaky infrastructures throughout the country, foreign investors continue to pour their money in the last one decade. But, considering current security threats investors are bound to rethink their investment decisions. Just last week, President Jonathan commissioned the Multi Billion Dollar Dangote cement factory in Ogun state. He informed the world that very soon they will stop hearing sounds of bombs, but landmark investments like the Dangote plant he commissioned. Whether Mr President delivers on that or not, investment climate in Nigeria is going to be unpredictable in the foreseeable future. Until the time mounting security challenges facing this country are tackled. During last year election, political risk was put top on investors’ calculation, but this year it is insecurity. Though, so far security challenges remain confined to distance ends of the country, the attacks on Kano have aroused fear that security problems may (if appropriate measures are not taking) show it ugly face in other major economic centers of Nigeria.

    The decision of government to sack former IG of police Hafiz Ringim so as to rid the police of source of its lackluster performance and brace it up for current challenges only achieve it purpose when government realize that like Nigeria itself the problem of the police is corruption. Over the years, corruption in Nigerian police has changed police officers from security agents to corruption agents. What a shame!  Nigerian police as it is today can not fight Boko Haram. Kano city is filled with stories of how police officers run for their dear lives where Boko Haram visited police station in Kano metropolitan. The only credible Nigerian security agency holding Nigeria together remain the military. Despite the fact that it efforts alone cannot fight Boko Haram, it has hold to it ground wherever it is deployed. But, the same problems of ineffectiveness and corruption that has killed the police is beginning to manifest in the military, and unless something is done the military will go the way of the police. The cause of Nigeria security threats is not even the Boko Haram that everybody is afraid of, it is the growing army of unemployed youth and poverty stricken families angry with government inability to provide basic necessities. Unless government do something to address these issues, problem of insecurity will linger into the foreseeable future.

     Foreign investors, unlike domestic investors such as Dangote, are motivated by different factors. For example, outside profit, the main consideration for any investor is security of his investment. When he is not so sure of security, his trust in that country is weaken.  So, the first thing a country that desire to attract foreign investments do is guaranteeing of investments security. Failure to do that reduces investments. Based on this, one can argue that Jonathan’s efforts to woo foreign investors would be in vain. So much as his government fails to improve on the security situation in Nigeria. Thus, high on Jonathan agenda should be creation of strong police force capable of confronting any domestic security challenge.  The recent appointment of MD Abubakar as the acting inspector general of police is a well come development that shows this administration firmed belief in finding people with the right qualifications and credibility to lead it reform process in various arms of government. An important assignment this government must embark on is creation of jobs for the unemployed on our streets. Without jobs and atmosphere devoid of poverty, Nigeria security problems will not come to an end. Likewise, government should look for alternative solutions to Boko Haram rather than use of force which failed to deliver desire results. Lastly, foreign investors are not philanthropist. They are for profit and avoid making lost. The earlier Mr Jonathan understand this the better for his drive to woo investors.