When the Federal Government set up the Ministry of Industry, Trade and Investment, it was to create an enabling environment to stimulate domestic investment and attract Foreign Direct Investment (FID) in all sectors to make Nigeria the preferred investment destination on the African continent. Industry, Trade and Investment Minister, Adeniyi Adebayo speaks on how to reduce the impact of COVID-19 on the economy and other issues as captured by Group Business Editor, SIMEON EBULU.
What are the efforts of your ministry in growing the industrial sector, and creating jobs, particularly with the negative impact of COVID-19 on the economy?
Our overarching goal is to drive job-intensive growth of the economy. This is being executed through three thematic areas: Backward Integration and Domestication of Production, for which we have designed and are executing the following programmes: Driving local production of key commodities – sugar, oil palm, cassava starch, automotive assembly, cotton, textiles and garments; Fast-tracking the Establishment of six world-class Special Economic Zones across the country; strengthening the chances of survival and growth of MSMEs through access to market and finance intervention programmes and Intervention programmes such as the MSME Survival Fund.
The second thematic area is by Enabling Business Environment to Attract and Retain Investments.This consist of the following projects which aim to improve the ease with which businesses operate: reform of critical legislation such as the NEPZA Act, OGFZA Act, passage of the Automotive Industry Bill, etc; and Presidential Enabling Business Environment Council.
The third thematic area involves positioning Nigeria to participate in the AfCFTA through the National Action Committee which coordinates relevant ministries, departments and agencies to drive the implementation of the AfCFTA readiness projects and initiatives.
What has your ministry done to attract foreign investors into the country, particularly in promoting a positive business environment?
Given the strong correlation between the ease of doing business and economic prosperity, Nigeria believes in the value of proactive investment facilitation in encouraging domestic and foreign investments into the country. To demonstrate the Federal Government’s commitment, President Muhammadu Buhari appointed Vice President Yemi Osibajo in July 2016 as chair of the Presidential Enabling Business Environment Council (PEBEC), which was tasked with ensuring an improvement in Nigeria’s business environment. Because of the work of PEBEC, Nigeria has recorded improvement in its business environment in four of the last five years, based on the World Bank’s assessment through its Doing Business Index. Nigeria’s ranking stood at 131 of 170 countries in 2020, up from 170 of 189 countries in 2016. We also recorded improvement in the World Bank’s Sub-National Doing Business assessment between 2014 and 2018. Nigeria has also revised its model Bilateral Investment Treaty (BIT); a specific provision for investment facilitation was inserted to institutionalise the principle of supporting investors to actualise their investments. This new model is a ‘new generation’ BIT, which highlights the economic development objectives of the Government, and balances investors’ rights with obligations in a bid to ensure that Nigeria attracts Responsible, Inclusive, Balanced and Sustainable (RIBS) investments.
Nigeria is also one of 14 African countries to develop an online investment guide-“iGuide Nigeria”, to help investors make better informed decisions about investing in Nigeria. The iGuide Nigeria is an easy-to-use online platform which provides investors with up-to-date and pertinent information on the processes, procedures and basic costs of setting up and doing business in Nigeria. As part of efforts to modernise and upgrade our One Stop Investment Centre (OSIC), we are also in the pilot phase of instituting the OSIC Lab, which is aimed at achieving a speedy resolution of investors’ problems by bringing the investors and government agencies required to resolve their issues into a “laboratory” until the issue is resolved. The OSIC Lab should help us to drive practical policy reform, protect existing and prospective investments, encourage investments and create/protect jobs.
Nigeria is also an active player in informal engagements at the World Trade Organisation (WTO) on Investment Facilitation for Development (IFD), an initiative that emphasises increasing investments for sustainable development in developing countries through proactive investment facilitation.
The ratification of the African Continental Free Trade Agreement (AfCFTA) by Nigeria was a welcome development. What are the expected gains and what efforts were being made to ensure Nigeria derives maximum gains from AfCFTA?
AfCFTA is expected to complement Nigeria’s national development agenda and act as a catalyst for export diversification, by providing preferential access to the huge African market for Nigerian products and services, which sources over 85 percent of its imports from outside the continent. AfCFTA is interesting because Africa demands finished goods and Nigeria aspires to industrialise and progress beyond export of primary commodities. It also provides immense opportunities for Nigerian companies to provide services to Africa, especially in financial services, e-commerce, the digital economy and the creative sector where we have already developed significant domestic capabilities.
As with other developmental initiatives, AfCFTA is not without its challenges, both in terms of its implementation and its overall outcomes. In the long run, and to be able to take full advantage of the AfCFTA initiative, Africa will need to harmonise the monetary policies of State Parties amounting to a loss of monetary policy independence for member countries. We are aware that goods made in other continents could be disguised as made-in-Africa to qualify for duty-free treatment. However, we already have specific built in safeguards to mitigate this challenge.
What are you doing to grow Nigeria’s export capacity and building export infrastructure?
Export growth is at the centre of our strategy for diversifying Nigeria’s sources of foreign exchange and reducing the vulnerability of the economy to external shocks. We have witnessed time and again, the devastating impact that events outside our control can have on our livelihood due to our reliance on a primary source of foreign exchange. The Ministry is implementing the Export Expansion Facility, which is one of the projects of the Nigerian Economic Sustainability Plan. This Programme aims to protect export businesses from the effects of the pandemic, safeguard jobs and de-risk the economy from shocks like COVID. Its primary goal is to increase Nigeria’s export capacity in the near-term and its export volumes in the medium term. It represents a huge financial commitment from the government and demonstrates President Buhari’s commitment to export diversification. The Programme consists of 14 projects which focus on providing capital for expansion, building export capabilities, export market entry and development, establishing export infrastructure and ensuring inclusiveness in export.
What initiatives is the ministry taking to stimulate MSMEs during this period? What intricacies and desired impact will the MSME Survival Fund have?
In the wake of the COVID-19 pandemic, the Federal Government launched the MSME Survival Fund, which is one of the programmes of the Nigerian Economic Sustainability Plan (NESP) aimed at protecting MSME businesses from the shocks of the Pandemic. The Fund comprises the following: the Payroll Support Scheme, which aims at supporting MSMEs in meeting their payroll obligations and safeguard jobs by paying up to N50,000 to a maximum of 10 employees in each MSME for a three-month period; the Artisan and Transport Grant, which supports self-employed artisans with a one-off payment of N30,000 targeting 333,000 individuals; the General MSME Grant which will provide 100,000 MSMEs with one-off grants of N50,000 each; and the Guaranteed Offtake Scheme which will engage approximately 100,000 businesses across the country to produce items typically produced in their locality, targeting 300,000 beneficiaries. The Fund is estimated to save at least 1.3 million jobs across the country, while strengthening the growth potential of beneficiary businesses.
What are the key challenges to industrialisation which you have faced in executing this plan?
The Industrialisation Programme requires an unprecedented quantum of capital from the public and private sectors. We estimate that funding required for Government backed programmes such as provision of credit to MSMEs, credit for investment by the private sector in Backward Integration Programmes, financing consumer credit to boost demand and enable economies of scale in capital-intensive sectors and financing the development of special economic zones all require significant financing. Creating wealth in the Agriculture Sector is the Federal Government’s primary strategy for ensuring inclusive and sustainable growth and this is reflected in our focus on Backward Integration Programmes. Large expanses of land are required for commercial agriculture that accompanies agro-processing. However, such large expanses of land are difficult to acquire, and investors are unable to take full possession of land acquired due to insecurity, continuous community agitation and unending and unpredictable cost of compensation which are extremely disruptive. The result is project delays and disruptions to the Backward Integration Programmes. These challenges impact the competitiveness of our economy and ability to attract and sustain direct investment. The Federal Government is working with state governments and the Central Bank on several interventions and programmes to address these issues holistically.
What will you like to be remembered for as a minister?
We are operating in unprecedented conditions. We have had to grapple with two ‘Black Swan’ events in one year that significantly set back economic growth – the COVID-19 pandemic and the ENDSARS protests. Their resulting impact on movement restrictions and on investor confidence have taken a significant toll on the economy and challenged us to think innovatively and operate outside our usual lines. I would like to be remembered as part of President Buhari’s Team who weathered this storm and guided the economy through it successfully. I also hope to bequeathe an economy in which the manufacturing sector is the dominant job creator, a diversified export base and Nigeria is the manufacturing hub of Africa.
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