‘Economic diversification is not quick fix, but gradual, steady’

Yewande Sadiku, the Executive Secretary and Chief Executive Officer of Nigeria Investment Promotion Commission (NIPC), is an industrial chemist, but had all her career in 23 years in banking, two of which in commercial banking and 21 in investment banking. She was on the same job before her appointment to head NIPC. Sadiku said her role as an investment banker- advising companies on long term capital, mergers, business combinations and acquisitions, had unknowingly prepared her well ahead of the current job. In this interview with Assistant Editor, Finance/Economy, CHIJIOKE NELSON, the investment czar says the country’s diversification efforts are not where they should, but now progressive, adding that it has never been a quick fix any where.

What specifically is NIPC set to do?
NIPC was established to encourage, promote and coordinate investments. The first part of NIPC’s mandate was to project a positive image for Nigeria as an attractive investment destination, such that when people think of investment destinations that are receptive and welcoming, Nigeria comes to mind. The second part was to encourage people to invest in Nigeria and that means that if those people need information, they need to meet people in government or the private sector that will help to make that available. The third part of NIPC’s mandate was providing quality aftercare to people who have already invested, to help them deal with challenges. And the last part of the mandate is policy advocacy, where we either initiate or we work with others to help government ensure that policies are supportive of the kind of business environment and the kind of investments that the government wants to promote. So, NIPC is an advocacy agency and not an implementing agency or a regulator. Our only responsibility is to make sure that people are aware of any incentive and support investors in their existence and operations in Nigeria, but the incentives are created by other government agencies.

Generally, what’s your assessment of the economy?
The economy I believe has been responsive to the articulation of the plan that government had to exit it from recession and for the economy to achieve the diversification that government desired. Economic diversification will never take a sharp bend to reduce Nigeria’s dependency on oil and grow other things. To go from simple crop production to adding value to the crops that we grow will requires a gentle, gradual shift and based on the information that National Bureau of Statistics puts out about economic indices, I believe that gradual shift is happening. I also see from our engagement with investors that from the attitude of government, there is a more committed effort at value addition in Nigeria- going from primary product to secondary things. I believe that we are on the right course. But I personally think that we are going a little slower than we could, but that is also just a function of many things. You can’t run like Usain Bolt if you have not trained like Usain Bolt and part of the rigour that am trying to subject, even NIPC to, is for us to be better planned for the mandate that we are created to deliver. 

What are the impediments that you generally hear people complain about?
The first thing many investors complain about is policy flip-flop. You know that one government has a policy that is adjudged supportive and progressive and another government comes and takes a different track. When investors invest, they do so for the long term and if government changes position from one to the other, sometimes they are too deep to be able to change track. But I like the fact that this government took a lot of what existed from the previous government and built on it. They did not create a brand new blueprint. The second thing investors complain about is that sometimes, government say that it wants investors, but doesn’t behave in a manner that suggests that it wants investors and they don’t look at government as one entity. They look at the different part of government- the different agencies of government. Investors sometimes, complain of harassment from government agencies. When I say government agencies, it can be parastatals like NIPC and government structures can be at local, state or federal. They just see all as Nigeria engaging with them. Investors also complain that sometimes, the quality of skills and attention to details by Nigerians are not quite what they expect. But without a doubt, I find that investors acknowledge that Nigeria is a country that they cannot take their eyes off, even if we have challenges we are dealing with.

So, is it convincing that Nigeria is doing well in the diversification plan?
The economic diversification focus only started two years ago. It has been mouthed for years, but this government has gone to great lengths not to mouth it, but to ensure that it is achieved. After documenting the Economic Recovery and Growth Plan, government then went further to try to ensure its implementation. It has created focus labs where over a six-week period, different investments opportunities across Nigeria came to those labs and disclosed their problems and the issues were resolved. It was a government-sponsored platform, with the objective of ensuring that whatever impediments exists, they are removed and opportunities can emerge. I think the focus labs where very successful that NIPC is implementing something similar in also dealing with the issues that investors bring to us.

Do you think that the unending gridlock at the Apapa export terminal gate shows commitment to diversification?
This government has been empowered for just three years and the work that is going on now to fix the roads in response to that gridlock should have happened a long time, but it didn’t. So, the problem was not created by this government, but has chosen, in my view, to be part of the solution, which is why the efforts that are ongoing- working with the private sector to fix the road and to build the kind of road that is appropriate are commendable. I agree with you that government should never have allowed it to decline to that level, but you know that you deal with what you meet. This government is trying to fix the problem at the Apapa port but I think that it is even more important from our own role of investment promotion in Nigeria, to attract investors’ attention to other avenues that can be used for entry and exit in Nigeria, to ensure that other ports actually develop and not concentrate only on one. Of course, the Lekki free zone and the work that is ongoing will see the emergence of another port of entry. Onne is also a port of entry. The Kaduna state government has been talking about expanding the resources that they have and develop their own dry port, among others.
 
So, the focus is that we should try to develop other points of entry and exit, but again, it is not a problem that can be fixed overnight. In the course of fixing a road, you will inconvenience all of the road users, but it is a small pain that you take for a long term benefit. Work is ongoing at the Apapa road. There is a real acknowledgement that there is a big problem. Unfortunately, we don’t have the capacity to say that we want the road fixed and fix it immediately. We have to fix it day by day and at the extent that the work is going, I believe that government is dealing with the issue.

Do you think that we are making the best of the favourable crude oil price conditions now? 
I think we are taking good advantage of it. The fact that we all realised the shock from the decline in oil prices and that we cannot continue to rely on oil are manifest by the government’s commitment to economic diversification, despite the recovery in oil prices. But, that we want to diversify away from oil doesn’t mean that we don’t need oil. In fact, we need the oil to achieve the diversification, because that is where the bulk of government revenue comes from, but the government is interested in making sure that we develop our gas reserves. Now, we use that gas to generate electricity and while we are doing that, we are looking at other ways of generating electricity, because electricity is important for economic development across the board. Government is trying to ensure that we actually have infrastructure, especially the infrastructure that is supportive of the development of agriculture, taking the food from where it is grown to where it is required. In the context of the resources that the government have, it is doing the best that it can now.

Does it bother you that our value chain development is still at lower level?
Of course, it bothers me and one of the strategies that government is intent on, as articulated in the growth plan, is more value addition, so that we are not only exporting raw items, but adding more value to the things. But its also not something that will change overnight. We’ve had rice mill develop, so that we go from planting to exporting. We were not even planting rice as actively as we are planting now and when the planting started, it was just unprocessed in the first instance. The rice mill, from Olam to Dangote and the likes, came in effort to move from unprocessed state to what you and I can eat. Government have articulated the same sense to developing the tomato value chain. We grow and eat a lot of tomatoes. It is also a strategy for cassava and you know that Nigeria is one of the largest growers of cassava in the world. But we consume our cassava as Garri and if you look at its value grid, it goes from cassava as we eat it, to starch, ethanol and industrial grade ethanol and that is where the biggest value is. Like I said, it is not something that will happen with a snap of the finger, it is something that will happen gradually. The real indicator to look at is whether the signs are there. 

How much do you think NIPC mandate has been attended to under your watch?
In reality, I think there is a lot of rooms for improvement. The mandate is one thing, but the capacity to deliver the mandate requires a number of things. It requires giving the agency the right tools to deliver on that mandate. The right tools mean appropriate funding, equipment, people, appropriate exposure for those people, right access to government to make sure that those who are responsible for policy making and creating the right business environment actually listen and do what they are supposed to. I think when I joined the agency that there was a big gap between what it was expected to do and what it was doing and in my time here, I have taken the Act almost like a Bible, as a beacon and guide to where we need to go to. I have also been trying, almost on a line by line basis, to take off on the things that the Act says that we are supposed to do. We were doing some of them but a lot of others, for a variety of reasons, we were not doing.
 
It was exactly with this focus that made us publish in November 2017, a compendium of investment incentives. It’s a single book, available on NIPC’s website and in hard copy, that brings together all of the investments incentives that exists in Nigeria. We are now working on the second face of that document, where we will include state level incentives and things that were left out in the first edition and those created since then. We have worked with partners to create an online investors guide. We found out that many people were not aware that Nigeria is one of a hand full of countries that has an online investors guide. In the process of creating it, even I with my 23 year banking experience, I found things on that guide that I was previously not aware of. 
 
Everything, from labour laws and how land acquisition works, the investment and relevant agencies for an investor-education when you come into Nigeria, hiring people, how Pension Commission relates to investor to how the industrial training fund relates to investors, are all available. Basic information on what it costs to do business in Nigeria is also available in that guide. The best thing about the guide, because of the tool that was used to create it, is the multi-lingual flexibility.

So, it is available in over a hundred languages, which means that an investor sitting Japan, can set the language to Japanese and read everything in his own language.
We now, also have a number of initiatives that we have in the works that we thought would be useful for investors to get a picture on the investment trends in Nigeria. There is data that is put out, but data and information are two different things. Information is the insight you draw from data. So, we started through a newsletter that we send out six days a week and the newsletter gives a sense of different news on investments in Nigeria. So based on the investments that the newsletter tracks, we then progressed to publishing a report on investments announcements in Nigeria. So the volume of announcements made in 2017 we’ve published for Q1 in 2018 already. 
 
We are working on Q2 2018 and the first half of 2018, because the second report is both a half year report and a second quarter report, but that report gives us insight as to investor sentiment. When investors are interested in an economy, they will come to see for themselves and several of them would make an announcement and many would not, but investments announcement gives you an indication of investor sentiment about the country. Then, we have created a template for profiling investment opportunities in Nigeria, because one of our objectives is to help collate and disseminate information on investment opportunities that exists in Nigeria. We believe if we work with the state governments and our equivalents at state level, we can tease out the investment opportunities that exists in those states and put them on a consistent basis across board to investors. 
 
That data base is building gradually, but I believe that when the database is fully developed, we can potentially change the landscape for helping investors know what opportunities are in Nigeria. There are many things that exist in Nigeria that investors are simply not aware of, both domestic and foreign. We want to use our investment profiling platform as we engage states to find the opportunities and to give them visibility, because it is the first thing that investors need before they can be interested in anything. But to also deepen knowledge across board, as most investors only know many states, but are not fully aware of what exists, we have a template that we are using to profile states. We are reducing all the investment prospects and the competitive advantages of a state and the basic information that investors would like about that state to a one-page document that summarizes on a state by state basis what the essence of that state is. 
 
Some of the things am telling you now are still work in progress and generally, I don’t like to talk about work in progress, until it is done, because talk is cheap, but we have gone very far with it and when that work is done, we would like to work with partners to help ensure that investors and the world actually gets to see Nigeria.

People know Nigeria on a general basis as a country, but Nigeria itself is a collection of 36 states and the FCT and all of them are different from one another. To help investors, we included World Bank’s ease of doing business ranking, so that we don’t only put information about competitive advantages, but to also let them know the state’s business receptiveness, which is like what the World Bank’s ease of doing business ranking shows. But here, you will see the competitive advantages of the states and the investment prospects the state is interested in. Based on the information that we pull from NBS, the economic situation of the states, their revenue generation, household consumption and the likes, we show where the state is in Nigeria and situate it even in the context of the geopolitical zones and share the kind of information that the investors are interested in. 

What is your place in this African Continental Free Trade Area agreement?
My personal view is that it is in Nigeria’s interest to sign that agreement. The reason why Nigeria is an attractive market to many is because of its size. That agreement makes those who subscribe to it one entity for the purpose of the things that interest investors. So, Nigeria will no longer say, we are the biggest economy in Africa. The continental free trade area agreement will be the biggest economy in Africa. We can’t say we have the largest population, the continental free trade area will be the largest population. I believe that the perspective that many are taking, according to some of the arguments, is that Nigeria will become the dumping ground for products. You know, the products that they think will be the dumped must be manufactured in that area. So, why do we assume that the biggest market will be the dumping ground? Why don’t we assume that because of proximity to the market, that the biggest market will be the manufacturing base? So, you can manufacture from outside your gate. You don’t need to take anything outside Nigeria because everything can be taken off from you from outside your gate.  
 
So, the focus is that Nigeria should have imperial ambitions that we want to manufacture for ourselves and the rest of the world. But many say that Nigeria is not ready because we have challenges. What does it take to fix those challenges? If we remove all the barriers that exists, we will be the most attractive destination for manufacturing. That is the right reaction to that free trade area. How more ready than us are the smaller countries that are subscribing for the free trade area? They are not more ready than Nigeria. They just have a commitment to improve. It will be such a tragedy in my personal view if Nigeria does not take advantage of that agreement.
 
That agreement was born out of many regional discussions of African leaders, who saw a bigger future. Most of those conversations were led by visionary Nigerian leaders. People who saw that Nigeria, given its size, wealth and talent, should lead a conversation about Africa. The gentleman who led the negotiation of that agreement is a Nigerian. Do we think he must not have had Nigeria’s interest? He couldn’t have sacrificed Nigeria’s interest at the altar of the continent. So, the agreement, as designed, in my view, is good for the continent and it is good for Nigeria. The risk that we run is that we give up the right to become the manufacturing base of the continent. We are already the biggest country and we are already the biggest economy. We could just have made ourselves the friendliest investment destination. So, instead of we looking at it as people railroading my borders, look at it as an opportunity for me. People have told us of going to the neighboring countries and facing some oppositions as Nigerians in getting into those countries and this is partly because there are very limited rules that are applied. Many Nigerian companies are already going beyond our borders but that agreement will better protect their interests, because those who have anti-Nigerian sentiments, now cannot express it, as the agreement has made all of us one continent.
 
But it’s useful to say and important to put it on the record that the agreement was not signed because the private sector expressed reservations about the implications for Nigeria. It wasn’t that the people working for the government, like me, felt that it was not good for the country. I believe that some of the considerations show that many are looking at the agreement with small minds. They are looking at it with the context of where we are today. When the Emiratis decided that they wanted to make Dubai a hub, it was not based on where they were at that time, it was where they believed that they could be. Nigeria could be the manufacturing base of the entire continent. If you look at the shape of the continent, there are very few countries that are blessed like we are, to have the capacity from North to South and from East to West. We are the natural base.

Where do you see the economy in the next five years?
If we continue on this part and course, if agencies like NIPC continue to add the value that they were created to, I think we will see an interesting shift in Nigeria’s economy. I think we will see that although agriculture may remain the biggest share of the economy and it will be, in my view, over the next five years, that it is possible we go from crop production, being the biggest part of Nigeria’s GDP, to domestically manufactured goods, contributing the bigger share. Right now, manufacturing accounts for only 10 per cent of the GDP, whereas crop production alone is about 23 per cent, when we plant but not adding value. In a five-year period, with the efforts of government, I believe that shift can happen. I believe that in a five-year period, it is also possible that gas, as a contributor to Nigeria’s GDP, grows in production level. I also see greater economic activity in the smaller communities that now seem stranded from the rest of the country, because they don’t have access to on-grid power because off-grid power.

All the efforts that NIPC has put under your leadership, how successful and deep has it been getting results?
NIPC’s efforts have been yielding results, but I don’t think that anyone in NIPC will say that its NIPC’s efforts alone that achieved the whole results. NIPC, by its mandate, must work with other agencies to deliver the results and a good indicator, for me, in the context of the value that NIPC gives, is that the investments announcements that are made are the first pointer to where things are going. So, last year, NIPC produced for the first time, a report on investments announcements in Nigeria. That report showed that $66 billion worth of investments announcements were made in a 112 projects in 27 states and the FCT and that was for all of last year from January to December.

In the first quarter of this year, we saw $17.88 billion worth of investments announcements in 32 projects. If you compare it with what happened last year, we only had $3.68 billion worth of investments announcements in the first quarter of last year and that was on four states. So there are more and in more locations. In the second quarter of this year, although the report has not been finalised yet, we have also seen a material improvements relative to what happened before. In this second quarter, it’s about the same level as the first quarter, but its materially higher than what we saw in the second quarter of last year. We are now working on the report for second quarter of 2018 and once the report is ready, we will put it out.