States and the challenge of attracting investors
The National Bureau of Statistics (NBS), in its latest report on capital inflow into Nigeria, stated that a total of $6.3 billion came as fresh investment between January and March this year. According to the report, only 14 states and Abuja accounted for the entire inflow with 22 states contributing nothing.
While the Federal Capital Territory led with a total investment of $3.54 billion in the three-month period, representing 56 percent, Lagos attracted for $2.67 billion, with both territories jointly for accounting for $6.21 billion, about 98.57 percent, of the total capital importation into the countr y in the first quar ter.
Of the remaining 35 states, Akwa Ibom comes next with $43.62 million inflow with Ogun attracting $24.81 million. In the five states of the south east, Anambra attracted $5 million while Enugu contributed $1.632 million. Abia, Ebony and Imo states attracted virtually zero investment within the period. Although the report covers only the first quarter of 2018, it portrays the general trend on investments into the country.
From the skewed distribution of the investment flow, it is clear that an overwhelming majority of the states are yet to come to terms with the challenges they face and the options available to them. Many of them are still steeped in the belief that the path to their development is tied to regular and enhanced allocations from the Federation Account, a mentality that has lulled them into lethargy. States are yet to wake up to the fact that they have the constitutional leverage, albeit limited, to evolve policies that will attract investments, foreign and local, for their development.
It is this lack of imagination on the opportunities that abound in wooing the private sector to invest in their domains that informed the puzzling statement from Mr. Rauf Aregbesola, governor of Osun State, who bizarrely blamed his failure to implement his developmental agenda for his state on former President Goodluck Jonathan in a recent statement. To Gov. Aregbesola, the only basis for generating income for the development of his state is allocation and more allocation from the Federation Account.
In a federal system as the case in Nigeria, there is still room for states to maneuver and create new frontiers for engendering development. The key option is partnership with the private sector. It smacks of lack of initiative to anchor a state’s development entirely on federal allocations from Abuja. Indeed, government in modern times is not the source of development. Rather, it drives development by creating the right ambience for the people and investors to harness the economic and investment potentials in their environment. Every state has something unique by way of natural endowments and human capital to successfully woo entrepreneurs who are looking for new frontiers to invest their excess capital and create wealth. Nigeria is not in short supply of such people.
The major encumbrance, unfortunately, is the inability of governors and their teams to rise above primordial considerations and really get imaginative. Land acquisition, a critical factor in attracting investments, and perfection of title deeds in many states is still mired in frustrating bureaucratic hurdles that ultimately serve to discourage potential investors.
That Lagos was able to attract 42 percent of the total investment inflow at a time that it had long lost its status as the administrative capital of the country is a testament to its leadership’s ability to reinvent itself. Lagos has been leading the line in the effort to attract investors, beyond the tepid drives of the federal government. With the reforms it executed in all facets of public service, especially in land administration where it pioneered the simplification and computerisation of the process for obtaining title deeds as well as investments in improving critical infrastructure, Lagos has remained attractive to businesses even when its tax regime is seen to be on over drive and oppressive.
For the south east states, their very poor performance in attracting investors is incongruous with the perception of their people as adventurous and astute entrepreneurs who just look for the most clement environment to invest their resources.
The eastern states should embark on comprehensive reviews of their laws on land administration to make the process of obtaining land less cumbersome. Being contiguous in location, they should adopted a collaborative approach to the development of infrastructure, especially roads and electricity. In many parts of the country, people of south east extraction are in the front row of investors that have created wealth.
That they have failed to invest a significant part of their wealth in their home zone is an indictment of their governors. The opportunities for investors in the south east are there; the entrepreneurs and the resources to plough into the region are equally in abundance. What is missing is the imagination and willingness to create that clement environment. The governors should borrow a leaf from successive governments in Lagos who have continued to innovate and adapt to the evolving demands of the investing public by addressing their peculiar needs.
Development cannot come to the south east and, indeed every other state, through the efforts of government alone. The path to sustainable development lies in partnering with the private sector and providing the right legal, administrative and infrastructural environment to encourage businesses to invest their resources and create wealth.