How to promote investment opportunities in Nigeria, by Liebing

What is the operational profile of the German-African Business Association?

The association aims, on a general note, to develop business in the African continent. This ranges from very well known brands down to small and medium scale companies, specialised technology players, engineering companies and consortia. The organisation started about 50 years ago and the purpose was that we try to inform Germans about opportunities in Africa that they might not be aware of. Secondly, we are providing information to those who are active on the continent by maintaining contacts with African companies and embassies, through delegation meetings and conferences. One of the things we are planning to do is that after few years that we had put it on hold, is to have another German/Nigerian business summit where our delegation will be in Abuja in October this year.

How would you describe the current business volume between Africa and Germany?

I think German industries have performing below expectations as far as Africa is concerned in general and Nigeria in particular. One of the reasons is the specific structure of German industries. We pride ourselves in midi size, family-owned businesses.

This is the main reason for the current size of German industries – that we have families owning businesses and high technology companies.

However, the difficulty is that by definition, these smaller companies operated with family money are more reserved when it comes to joining new markets. They have less resources and they will normally just go for one or two new markets in the world at a time and they will maybe also follow the mainstream.

So, many of them are going to Asia now or to America, where there is still a huge number of German industries that have not put Africa on their register, which I think is a mistake. Although there is an increased interest in German industries in Nigeria, yet, there is a piece of work to be done to convince others to follow. We do have a number of success stories. You are aware of the long history of Julius Berger in Nigeria. There are lots of infrastructure companies on the continent but we need to create a few more light house projects, as we call them, so that we can be able to convince the huge number of the mid-sized technology companies to begin to invest in Nigeria.

When you talk about 1,000 German companies doing business in Africa, about 5,000 do business abroad. So, you see what the gap is. This is part of the reasons I am part of the delegation of the President to learn what is going on in Nigeria since I have not been here for a while and I am quite impressed with what I have seen.

How can the business relationship between both countries be enhanced?

I think in the first place, what is needed in Nigeria’s economy is the influx of foreign investments. You will need a business society here to create more jobs in a faster way. And I believe this is needed especially due to low oil price and the raw material price, which has slowed significantly, inflow of foreign income. I believe that Germany has a few unique things to offer. First is the unique way of training people. During our President’s visit to Lagos, there was an agreement signed between the Germany machinery associations and Dangote Company on the training of another 300 persons as a joint venture between these two organizations.

Sometimes, we might be slower but once we have a decision, we are there for a long time and we assist all the way in trying to create jobs, in terms of safety in the work place, long time commitment, training, education and sustainability. I believe there are a number of advantages that we would have out of creating industries in Nigeria.

The second thing is that the basis of any industrialisation is the presence of proper infrastructure. This is the case in some parts of the country. There is still a lot to do in energy, transport and other logistics. Germany is a world leading economy in renewable energy. So, why don’t we use that experience to help you in this area. This is something we have learnt in the past 10 years. That is the second thing we have to bring to the table. My association has 60 companies that are active in renewable energy in Africa. I need to bring them here so that they can start working on developing solar energy, wind farm and others but the difficulty in that case, is that there is so many things that are not clear in the whole system.

For instance, we have issues in respect of how to sell the power, who do you sell it to? What guarantees do you have in the sector? We are also proud that we have the signature of the business partnership between Dangote Industries Limited and the German Engineering Federation (VDMA) in Lagos. It is going to be the first project of its kind. So, I think there are few success stories developing but we also need the help of government of Nigeria so that we can speed up. In the first place, we need to have a very clear regulatory system with enough incentives for foreign investors to come. We should also understand that project developers that want to build solar powers or wind farm powers do not come with their money. They have to go for bank funds. These banks are only to give them money to build power generating units here. You have to show them that it is a reliable offer supported by government guarantees. So, this system is not something that is fully worked out. We need to have these sorted out so that we can meet the expectations of international financiers and financial institutions.

Another thing is, maybe I have about 100 German companies active in Nigeria already, many of them are facing problems because of foreign exchange regulations. There are some of them that have been working in the country without getting paid and now that they might be paid, they cannot get the money up to the cost in Europe 10 years ago. So, if you have many of such companies that have 20 to 50 employees, it might kill your balance of trade completely. There are many German companies that are very much in trouble due to these reasons. We met with the CBN (Central Bank of Nigeria) Governor on the situation of the economy but maybe we can find solutions of different prioritisation system, so that there is ceiling or preferential treatment for smaller companies so that they don’t get into serious problems.

Specifically, how would you advise Nigerian government on the funding SMEs in the country?

I am not here to teach Nigeria what to do but to learn in the first place. However, I think Nigeria has grown in an astonishing ways in the past few years. Although about 70 per cent of its income still comes from oil but it has not been the case 10 or 15 years ago, you can already see that there is a huge diversification going on and we need to continue this, although the supporting infrastructural level is not there at the moment. The question is, how we can replace money from oil for foreign investment?

The second aspect is, as I said earlier, we have a specific structure of Germany industries, we are slightly different from the economies of some of our neighbouring countries you might be seeing here more frequently. One is that we have big and family-sized businesses that are bit more conservative, maybe slower in decision making. The second is that there are several sectors that we don’t cover any longer in our industries. Basically, we don’t have anyone, with a few exceptions, that is still investing in large agricultural activities.

We do have a few people growing coffee in Ethiopia, one or two financial funds trying to set up large firms in Africa but we don’t just have an industry that I can bring here to set up agricultural business. Yet, we are good in supplying machineries, equipment and technology for food processing. For instance, we are probably the world’s best providers of energy technologies, hydro power, power lines and sub-stations. What I don’t have is a good number of Germany construction companies that are doing business in Africa. This perhaps is because we are too expensive compared to others from Turkey and other nations. So, I can tell you a lot about the needs to diversify in agriculture but I am afraid the only thing I would be able to contribute is machineries for food processing, fertilisers, tractors and things like that. That is the reason I am a bit hesitant in trying to say what Nigeria needs to do because we come from a different industrial structure. I can say that our bilateral relations could be in energy. It might be conventional energy, it might be hydro power, it might be building infrastructure, it might be transport and logistics.

What really are the reasons for the gap in trade relations between the two countries?

Germans believe it is risky to come to invest in Nigeria but they might not be fully right. But if I want to change the perception, I need a few success stories to tell them – that it is great coming here to do business. The second is the lack of infrastructure. I have a number of members of business delegations with me who are talking about that. So, this of course, is something else. But my work is in basic industries, we work a lot in the cement sector, with local entrepreneurs and we are also looking at petrochemicals.

And what is your perception of the anti-corruption crusade currently going on in Nigeria?

We like what we hear about fighting corruption. We also know that government has just taken over. So, it will take some time to see what the outcome is and I am much hopeful to see a positive outcome. I have spoken to Nigerian entrepreneurs, many of them told me that the government is doing the right
thing now. We wish you all the best and we are happy to support where we can to take you to the top.

How about security issue in the country now?

Of course, this is next to the aspect I mentioned. Lack of security is the main concern of foreign investors. I know that many companies would to come to Lagos or Abuja for business but not necessarily prepared to go to the North at the moment. So, the sooner you can jointly work against insurgency, the better it is. I am not government, I am not in the business of developing security strategies but as far as I understand my government, there is high commitment and interest to work together in fixing this challenge. As far as something like the refugees situation and registration of people is concerned, you might want to know that it is German company that has been at the central bank biometric registration system and of course, we are also interested in contributing to developing the technologies and experience and any further system that might be required to improve security. So, you can count on German technology and reliability. Also when it comes to registering people, with ID cards, border controls and others.

What is the level of the association’s relationship with Nigerian business community in Germany?

We have Diaspora organisations from many African countries in Germany and there are many Nigerians, many of them coming to the universities, others doing their businesses or working in major companies, my association tries to stay in contact because I believe an experienced persons can be very helpful to prospective investors. When I was coming for this interview, German companies have asked me if I could help in identifying those good persons that know that are Nigerians working in Germany. I think that Nigerians living and working in Germany would be very helpful telling the success stories to their colleagues in their ongoing business activities. So, we try to support them and I believe they can be the perfect reach when it comes to creating better understanding and putting Nigeria higher on radars screen of Germans.
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