Insecurity projects Nigerian economy as unsafe destination for investments, LCCI tells FG

HERDER-FARMER conflicts, banditry, abduction, vandalism, insurgency and other forms of insecurity are projecting the Nigerian economy as an unsafe destination for local and foreign investments, according to the Lagos Chamber of Commerce and Industry (LCCI).

In a statement mailed to The ICIR weekend, President of the LCCI Toki Mabogunje said that the impact of the security  crisis on the Nigerian economy remained profound and multi-dimensional, noting that the crisis had crippled private and public investments across the nations.

“Many households have lost their means of livelihoods. Many farmlands across the country have been destroyed with consequent impact on food production and security,” Mabogunje said, noting that if unaddressed, it could thwart government’s efforts to attract foreign capital into the economy.

Nigeria’s North-East and North-West are hard hit by Boko Haram insurgency and banditry, whereas the North-Central zone is the theatre of farmer-herder clashes, which lead to hundreds of deaths.

The South-East and South-West are characterised by skirmishes  between secessionists and security agencies, with cases of kidnapping equally visible. The South-South is also s centre for kidnapping and oil-related crimes.

The situation is impacting the Foreign Direct Investment (FDI). Ghana, which is seven times less than Nigeria in terms of population size, got the FDI valued at $3.3 billion in 2018, but Nigeria could only get $2.2 billion within the year.

On the other hand, Egypt got the FDI of $7.9 billion within the same period. Also, Ghana recorded $785.62 million between January and June 2020, while Nigeria reported $362.84 million within the same period.

In the previous period of 2019, Nigeria’s FDI had stood at $470.51 million.

Mabogunje noted that investor confidence in the economy had been weak before the COVID-19 outbreak in late 2019, but many investors still saw Nigeria as a risky environment despite stronger oil prices and exit from recession.

She explained that investor confidence might not be restored in the near term if there was no significant improvement in the security environment, stressing that the situation had also impacted the country’s fiscal position by making government incur additional expenditure as contained in the supplementary budget, mainly to fund security operations.

This, according to her, could worsen 2021 fiscal deficit in the light of low revenue mobilisation.

“It is important to have this challenge resolved at all costs. Decentralising the security eco-system by enabling state and local governments take key security-related decisions is an option to consider,” Mabogunje said.

“It is also important to ensure a concrete and sustainable means of tackling the challenge of youth unemployment by designing programs and policies that would bolster employment opportunities for the youths in the country.”

The value of non-oil exports has been below $4 billion in the last eight years, according to The ICIR‘s checks.

    In the first quarter of 2021, non-oil export stood at N978 billion, which was just 33.62 per cent of total export  (N2.907 trillion ) within the period. Crude and minerals took the rest share.  In broad terms, the N978  billion was just 10.02 per cent of the total trade transactions over the period.

    The LCCI president noted that the numbers exposed the poor state of the non-oil sector and the continued dependence on crude oil for foreign exchange income despite the implementation of several policies and programmes aimed at boosting domestic production and driving economic diversification.

    The Federal Government recently inaugurated the National Steering Committee of the National Poverty Reduction with Growth Strategy (NPRGS). It is targeted at lifting 100 million out of poverty.

    Mabogunje noted that  the committee was not materially different in outlook from several other similar initiatives in the past, advising the government to build the capacity of the economy to create wealth and jobs.

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