FOR a state like Nigeria within the periphery of the global economic system it is often argued that liberal economic strategy is the best and honourable path for it to take tn order to attract the much needed foreign capital for development.
At. a symposium organised by the Franco-Nigerian Chamber of Commerce and Industry, the subject of how to attract foreign investment was examined. The issue that ran through the discussions was the need for Nigeria to adopt a liberal economic strategy to avail her of the immense investment opportunity world wide. Examining liberal economic policies shows such policies as one of the ways of ensuring that a state benefits from global economic transactions by attracting more of these transactions to itself.
Proponents of this economic approach see in it a way to forge national policies in a manner designed to exploit the highly sensitive international economic interdependence characterizing the contemporary world. Nigeria, it is believed, would gain more from the international business community if it takes advantage of the sensitivity of multinational corporations to business opportunities at over the globe.
Nigeria for instance, could attract foreign capital, increase its export and technology in accordance with its national economic priorities by die use of selective economic and rigid domestic political controls.
At the moment, foreign investment is not forthcoming as a result of what some foreign investors describe as hostile investment climate.
The foreign investor generally views Nigeria as fraught with considerable risk and certainty, a position confirmed by in te national finance institutions which rate Nigeria very low as to country analysis.
One of the causes c this negative attitude o foreign investors c Nigeria is the Nigeria Enterprises Promotion Act. Since the ac came into being, th State has witnessed th progressive deterioration of foreign investment.
This act and the present negative foreign investment climate which caused almost total lack of foreign: investment during this entire past decade was inherited by the present administration. Then arc indications that that controversial act is be in grieved with the in tension of making il reflect the existing the time. The hope is that the review would not take too long in coming.
Up to now Nigeria has not come up with a clear industrial policy. There arc no defined rules as to the preferred Sectors. All there is are rules that are not properly co-ordinated. More often it is reported that getting a company registered, getting expatriate quotas, business permits, and the Nigeria visas apart from taking too much time involves moving from one ministry to the other. Some of the times, genuine investors get frustrated along the line and give up such venture.
For Nigeria to get through this problem, there is the need for a comprehensive industrial policy and the setting p of a joint ministry committee to seat on company registration, granting of business permit, expatriate quotas and other necessaries for establishing a business in Nigeria.
Equally important is the need for the liberalisation of ownership rules. This must be linked to a clearly articulated industrial policy if the aim is to attract major priority investments to preferred sectors. Typical of international corporation, they require higher foreign participation the and major new foreign investors will only be attracted if higher participation is permitted.
The new schedule being prepared for Nigeria Enterprises Promotion Board would be a relief if as it would allow 80% foreign participation in some business venture especially in the heavy industry and those that require high level technology.
The present package of fiscal incentive are not far reaching enough and need to be improve upon. Such improved fiscal incentives should be made to support specific industrial policy objectives. It is believed in economic circles that fiscal incentives are much more workable than today’s bureaucracy approval systems and have the further advantage of favouring companies who are good citizens underground economy.
For instance, Nigeria stand to gain more in terms of foreign investment by extending pioneer status to private companies and eliminating the requirement of the present advance approval. Needless to stress that the present industrial location approvals is not serving and useful purpose. It should be abolished and replaced with tax incentives for those investing in favoured locations. There is also the need to introduce accelerated capital allowances to foreign invested capital and such allowances made competitive with other countries trying to attract foreign capital.
The Nigeria investment climate should be made out so that foreign investors particularly in the preferred sectors would see their returns off shore. This will require the simplification of foreign exchange remittance.
To realise this, banks should be permitted to process dividend, technology, consulting payments based on defined criteria. Also dividend limits and withholding taxes should be set by the federal ministry of finance rather than the productivity, price and income board.
To further encourage foreign investors, the government need to address new investors requirements for expatriate management and the entire issue of expatriate quota system.
In order to stimulate local demand for industrial goods and savings, the government should it its 1988 budget ensure a deliberate shift of resources out of the public sector and into private sector hands. More importantly, tad relief is necessary for both individual and corporate bodies. Cut in taxes will increase the disposable income in the hands of individuals and companies. This is vital to domestic investment.
