Political uncertainty and corruption are seen as the major barriers to investments for Nigeria and Africa according to a new survey.
The unstable political environment had the highest point of 55 percent while corruption returned 26 percent on the chart for perceived investment barriers to Nigeria and Africa.
According to the Ernst &Young’s Attractiveness Survey for Africa 2015, weak security returned 22 percent among investment barriers in the country and the continent, just as poor basic infrastructure had 14 percent vote.
Similarly, lack of skilled labour was given 13 percent vote while inconsistency and lack of transparency in regulatory framework returned 10 percent.
The last but not least is unattractive tax policies and financial incentives, which had seven percent vote.
“Investors we interacted with said some of the regulations are not set up to aid investments,” said Ajen Sita, chief executive officer, EY Africa, on Tuesday at a press conference in Lagos.
“But the sentiment today is that Nigeria’s long-term prospects remain intact. We also believe the reforms of the new government will have positive impact on Nigeria,” said Sita.
The seven-year report (2007-2014) shows the investor perceptions of Africa reached the lowest level since 2011. While North Africa is rebounding after the Arab Spring of 2011, Foreign Direct Investment (FDI) in the sub-Saharan Africa (SSA) shows contrasting trends.
It reveals that FDI investors enthusiastically returned to Egypt and Morocco, while project numbers in SSA reached their lowest point since 2010, with South Africa, Angola, Nigeria, Ghana and Kenya receiving fewer FDI projects.
“In 2014, traditional investors, including those from North America and the Middle-East, refocused their attention on Africa. Investors from the US, France, the United Arab Emirates (UAE), Portugal and China were particularly active during the year. From a regional perspective, Western Europe and Africa remain the largest sources of FDI into the continent,” the report says.
Nigeria and the rest of Africa have severe infrastructure challenges, which clog investments and development. The report sees this gap as an opportunity for investors. There are also openings in consumer-facing and agricultural sectors.
Africa’s largest economy has a demographic advantage, which provides market for goods and services. Oil has been the major sources of revenue and foreign exchange to the country. But with the oil market crash and poor diversification of most economies in Africa, some of investors that responded to EY questions believed that was the real sector that could transform the continent.
“Thirty-one percent of respondents expect agriculture to drive growth in Africa over the next two years,” the report says.
Five priorities for inclusive and sustainable growth for Nigeria and the rest of Africa include shared value, entrepreneurship, infrastructure development, partnerships and regional integration, says the report.
“In terms of shared value, we believe that when you work in Africa, you participate in countries in lifting communities by creating access to job opportunities. It has been proven in the world that entrepreneurs create the most jobs. We also believe that no country is going to succeed without others,” the chief executive officer, EY Africa, explained the priorities for Africa’s inclusive and sustainable growth.
ODINAKA ANUDU
