Foreign Investment: Forget Sokoto, Target ‘Shokoto’

OUTSIDE THE BOX

By Alex Otti; alex.otti@thisdaylive.com

“We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time” – T. S. Eliot (1888-1965)

There is this popular Lagos saying that people have the tendency of looking for opportunities or valuables in Sokoto when in fact, those opportunities exist in ‘shokoto’ also spelt as Sokoto, but pronounced differently. Sokoto is the Capital of Sokoto State in Nigeria which is understood to be very far from Lagos. It is about 980 kilometers away from Lagos and can take a better part of a day’s journey by road depending on the state of the road and the speed of travel. Shokoto (Sokoto), on the other hand is a Yoruba name for trousers or pants as Americans will call it. Literally, the saying describes a situation where you have a solution with you and you are traveling hundreds of miles away looking for same solution. We shall return to this shortly.

It is no longer news that the Nigerian economy is struggling. Amongst all the challenges the economy is facing, is the revenue challenge, or more rightly the cost challenge which continues to outstrip revenue. In the last three years, we have only been able to raise a little over 50% of our annual revenue projections as per our budgets. Without extra- budgetary borrowings, all we would be able to implement is at best, half of the expenditure budget. If this trend continues, the over N10 trillion budget for this year would also only be partially implemented. Matters are not helped by the burgeoning population which continues to put enormous pressure on available resources. Meanwhile, economic growth slowed down alarmingly and now stands at less than 2% per annum. Finding a solution to these intractable challenges has become the preoccupation of experts and those who genuinely care about the economy. There is no doubt that many of our young people are either unemployed or underemployed, with the unemployment rate expected to increase to 33.5% in the course of the year. Youth unemployment figures are even more scary as they are estimated to be over 60%. To put it graphically, about 6 Nigerians drop into the poverty basket every minute. The number of people living below poverty line is chasing 100 million and that amounts to roughly half of the population. It is a no brainer that if the economy attracts more investments, jobs would be created, productivity would increase and the economy would do a lot better. The big question is: where will such needed investment come from? Conventional wisdom has it that the best source of investment is from outside the shores of the country. That is called Foreign Private Investment. Our leaders, in their knee-jerk response to that conventional wisdom, have been trooping out of the country ‘in search of foreign investment’. In fact, some state governors have virtually relocated abroad, in search of foreign investment. It has become a mantra and the circus gets into greater frenzy as the economy slows and the unemployment figure continues to soar. How successful they have been in their international road shows, is a matter beyond the scope of this essay. We, however, will like to interrogate this belief that foreign investment is the panacea for the growth of the economy.  

For the purpose of context, it is important to state that there are two types of foreign investment, namely foreign direct investment and foreign portfolio investment. Foreign Portfolio Investment refers to remittance of funds from abroad into a country for the purpose of purchasing stocks and bonds in the market, most times for speculative purposes. So, it simply involves investing in the financial assets of a target country on a short term basis for the sole purpose of profit. Decisions here are made based on foreign exchange stability amongst a few others. The behavior of foreign portfolio investment has earned it the sobriquet, ‘Hot Money’. It is essentially there when things are good and once there is any sign whatsoever of turbulence, it takes flight!  Foreign Direct Investment, on the other hand, refers to the movement of funds from abroad to a local country for the purpose of investing in business assets, again for profit. Here a company, institution or individual moves money to another country to set up business, buy business or expand existing businesses from their home countries. It is axiomatic that this kind of investment is for a longer term and is more likely to create jobs and impact the local economy. A major condition that would encourage foreign direct investment would include political stability, ease of doing business, exchange rate stability and ability to transfer dividends and profit without let nor hindrance.

Usually, Foreign Investment is part of what makes up the foreign reserve of the country. Recently, our foreign reserves have been declining from close to $50 billion to around $38 billion by the end of 2019. The major reason for this is the liquidation of foreign investment. Like we observed earlier, the component of foreign investment that is most affected is the foreign portfolio investment as that is the one that is most liquid.  This is the so called, ‘Hot Money’. In spite of its volatility, we seem to continue to push to replace the fleeing foreign investment. We had argued in this column that other than bragging rights, there is just so much of foreign reserves that we are required to keep. Once we have reserves to cover 3 to 6 months of imports, that should suffice, according to economists. We had also argued that holding so much as reserves in the face of inadequate and decaying infrastructure, and mounting debts, makes no sense. We had demonstrated that the interest rate that we receive on our reserves is a little fraction of the interest rate we pay on loans. Based on the above position, we should actually be actively discouraging Foreign Portfolio Investment (Hot Money) in favour of the more stable and longer-term Foreign Direct Investment. At this point it won’t be out of place to ask if we really need foreign investment at all and if we do, how much of it do we need and at what cost?

There is no doubt that in a globalised world, many economies can hardly do without foreign investment, given the economic theories of division of labour, specialisation and trade. There is no country in the world that produces all that it needs and all must therefore depend on others who have comparative advantage in producing what it does not produce and therefore, trade is encouraged. For Nigeria as a developing country, there is also an advantage of new technology, new skills, expansion in capacity and general economic growth that goes with foreign investment. Having said these, it is instructive to note that foreign capital behaves like domestic capital in several ways. It goes to those places where it can make maximum profit. It does not go to places where it feels threatened. It avoids locations that have not prepared themselves to receive it. Preparation may include enabling laws, security, infrastructure and markets. Some of the things not listed here are sloganeering, preaching and representation. Foreign Capital is very smart. In fact, it is smarter than those looking for it. It has a way of decoding lies. It does not need to visit nor does it require you to visit for it to assess your state of preparedness to receive it. With the advent of the information super highway, it accesses relevant information at the speed of light. Foreign Capital is not shy to vote with its feet if it senses danger or if it feels that the host country is about to do something stupid, even if it has to lose money in the process. If it has to take flight, it explains it as cutting its losses. If these are true of Foreign Direct Investment, they are even truer of Foreign Portfolio Investment whose stake is usually smaller and its risk appetite, extremely low.

It is in this light that we believe that it is high time we put on our thinking caps and begin to do things a bit differently. The first thing we should be doing is to aggressively begin to push Domestic Investment. We are known as the largest economy in Africa on the basis of GDP size. When looked at from the more relevant GDP per head, we pale into insignificance in the continent. The major reason for this is that our productivity is abysmally low. The only way to push this up is to improve economic activity. Improving economic activity requires investment in the economy. The best people to invest in a country are its nationals who understand the economy and its risks. Our suggestion is that we must do all that is necessary to encourage locals to invest in the economy. This is the case with the other economies that are doing well. China’s foreign direct investments are led by capital from Chinese who live abroad and desire to invest in the country. The same goes for India, Israel, Korea and so on. A lot of rich Nigerians maintain fat account balances abroad, that earn next to nothing in interest income. When you engage some of these our compatriots in this category, like yours truly had done in the past, you will discover that their major fears are maintaining a store of value for their assets. This is because the foreign currencies, in which they keep their money, are more stable in terms of exchange rates, and there is the ever-present fear of devaluation of the Naira. Obviously, some of the monies were not made legitimately and therefore are kept abroad, away from the prying eyes of the law. And there is a whole lot of such funds out there. What, one may ask, can be done about this? Some analysts and commentators have recommended amnesty to those hiding funds abroad to encourage them to repatriate such funds for local investments. In its publication released towards the end of last year, The Economist wrote that an estimated $582 billion had been stolen from Nigeria’s public treasury since Independence in1960. This humongous figure, if correct, exceeds our GDP. If we can target repatriating just 10% of this figure, our foreign reserve would more than double. So, it makes sense to do all we can to bring such monies and other funds, back into the economy.

There are a lot of Nigerian investors living abroad and/or that have significant investments abroad. It is a sad fact that the system we have chosen for ourselves, has continued to drive our people out of the country. Most of them resident abroad have huge investments out there and do not give a thought about bringing back their money to Nigeria. We need to address their fears and create the necessary environment to attract such investments. I have no doubt that some people will be talking about patriotism and nationalism. Again, investments do not respond to such emotional arguments. We must behave in a way that is attractive to Capital. While we salute a few Nigerians, who continue to invest in the country, we must point out that they are too few to make the required impact. Why do we think that Ogun State born Mr. Bayo Ogunlesi, the acclaimed investment banker and lawyer, whose net worth is put at over $10 billion dollars acquired 3 airports, Gatwick, London City and Edinburgh Airports, all in the United Kingdom? Why wouldn’t he buy the Lagos or Abuja airports, assuming they were up for sale? Of course, there are many other Bayo Ogunlesis scattered all over the globe. Can someone take it up as a duty to engage them and hear from them? Maybe we can learn a thing or two from them.

A major condition for attracting investments is good governance. We must pay serious attention to rule of law, security, infrastructure, healthcare and education amongst other issues. It is only when we can take most of those for granted that we can thump our chest and proclaim that we are open for business. Therefore, the next time your leaders tell you that they are traveling abroad on roadshows and in search of foreign investment, do not forget to advise them that they should abort the trip to Sokoto when what they are looking for is in their ‘Sokoto’.

BACK PAGE STORY 2

Supreme Court and Imo: A Matter of Courage

Certain facts in the Imo State gubernatorial election petition appear to be clear.

1. Senator Hope Uzodinma  claimed that elections took place in 388 polling units and that his votes in those units were excluded from the results of the election.
2. INEC claimed that elections did not take place in those polling units.
3. The Election Tribunal and the Court of Appeal agreed that Uzodinma did not prove that elections took place in those polling units.
4. A policeman who was not and could not have been, at the 388 polling units tendered the results of those polling units.
5. Both the Election Tribunal and the Court of Appeal rejected them.
6. The Supreme Court accepted them contrary to the legal principles the Supreme Court itself laid down over several decades, principles which the Supreme Court still confirmed two months ago in the case of Atiku V INEC .
7. As a result of the Supreme Court’s decision, Imo State now has a situation where the  total number of votes cast exceed the total number of accredited voters by over 100,000 votes- an electoral impossibility -meaning that something is manifestly wrong with the conclusion reached in the judgement of the Supreme Court.
8. Under the general principles of the Electoral Law, where the total number of votes cast exceed the total number of accredited voters,the election shall be declared  void.
9. It was not the act of INEC, or the acts of the candidates or the political parties that created this electoral impossibility but the decision of the Supreme Court to accept the votes in the 388 polling units and add them to Uzodinma’s votes.  Without the details of where there was over-voting, it is impossible for the Supreme Court or anyone to know which votes and results to declare void.
10. The judgement of the Supreme Court means two things. Either over 100,000 people who should not have voted did vote, or those votes are fictitious. Whichever the case, the only way this electoral impossibility could have arisen is by an error. 
11. The  Supreme Court in an earlier judgement had disqualified Uche Nwosu  on the grounds that he was both the candidates of the APC and the AA. If Nwosu was a  nominated candidate of the APC, the grounds on which he was disqualified, how come the same Supreme Court accepted that Uzodinma was also a validly nominated candidate of the APC who was now declared by the Supreme Court as having defeated Ihedioha ?
12. INEC declared that Rt Hon Emeka Ihedioha polled 273,404 votes, while Senator Hope Uzodinma polled 96,458 votes. For  Uzodinma to have defeated Ihedioha, he must have polled at least additional 176,946 votes (perhaps close to 200,000 votes)while Ihedioha’s votes did not increase in those 388 polling units. For the credibility and legitimacy of our justice system, the integrity, credibility and sustainability of our democracy, the nation needs to know where these votes came from.

Justices of the Supreme Court are human and therefore fallible. This is more so having regard to the workload thrust upon them not just by gubernatorial election petitions, but by pre-election matters in gubernatorial and other elections. Judicial officers do make mistakes, and that exactly is the reason for the appellate system. But where the apex appellate court that has a final say makes a mistake what should be done ? 

The conventional wisdom in the legal profession is that since the Supreme Court is the final appellate court nothing can be done. The Supreme Court should wait for another opportunity perhaps in 2024 to correct its mistake.

But is it correct ,fair or just to replace Ihedioha with Uzodinma  when the victory of Uzodinma depends on over 100,000 people who voted but who were not accredited, and who should not have voted ? Or possibly on over 100,000 votes that did not exist?

Is it right to let the consequences of the decision of the judgment of the Supreme Court- an electoral impossibility remain ? Is it right for any court including the Supreme Court to make a mistake and make that error its final decision ? These are the questions that the Supreme Court would need ask itself. What are the consequences if the Supreme Court stands its ground and refuses to correct its mistakes?

In the 2018 United States case of Rosales- Mireles V US ,  Justice Sonia Sotomayor of the United States Supreme Court stated. “Fairness  requires that the court should correct mistakes when they involve substantial rights.” “Correcting errors guarded judicial legitimacy. The  public reputation of the judicial system hangs on the perceived adherence to the principles of justice. An unjust court is considered an illegitimate court” 

With the present situation in Imo, this may be where we are headed. The decision of the Supreme Court in Imo goes beyond Ihedioha.  It goes beyond Imo. It goes beyond PDP or APC. It goes to the heart and foundation of the acceptability ,credibility not just of the Supreme Court, but of our justice system and our democracy . Amid its conflicts and contradictions, if this decision is allowed to stand, it will set a precedent, and under the doctrine of STARE DECISIS, the decision must  be replicated in the different Election Petitions Tribunals and Divisions of the Court of Appeal across the country with each one picking any that fits its fancy. With a loss of confidence in the justice system and disparate decisions by the various courts and Tribunals, the consequences could be grave, leading to a breakdown of law and order in different parts of the country in 2023/2024.

By changing the time-honoured legal principles and accepting the results from a police officer who was not at the 388 polling units, the Supreme Court may not appreciate the serious implications of their decision. But as a politician, I know that without knowing, they have just given a licence to politicians to manufacture results from their bedrooms and call an army officer, Civil Defence officer or anyone to present the results in court.

After PDP started its protests, we are now hearing from APC stalwarts that Ihedioha did not poll one-quarter of the votes cast in at least two thirds of the twenty-seven local government areas in Imo State as required by Section 179 (1) (b) of the Constitution. The first question for the Supreme Court to address is whether this issue of spread was one of the grounds raised by Senator Uzodinma in his petition at the Tribunal. If it was not, this then is simply an after-thought which will occasion a miscarriage of justice as Rt. Hon Ihedioha  would not have had the opportunity to address this issue both at the Tribunal, the Court of Appeal and the Supreme Court contrary to the principles of natural justice.

Secondly, the Supreme Court has held for decades that the court will not grant a litigant what he did not ask for.

Thirdly, the issue of spread is one of simple mathematics based on the number of votes. The question therefore is ‘Spread based on which figures ? The figures declared by INEC or the figures added by the Supreme Court ? If it was based on the figures declared by INEC, the election should have been declared inconclusive and a re-run should have been scheduled between Ihedioha and the candidate who came second to him. 

Fourthly, if based on the figures from the 388 polling units accepted by the Supreme Court, then the Supreme Court needs to state the number of votes polled by Ihedioha in those 388 polling units because those figures will affect the issue of spread.

Fifthly, if it was based on the figures added by the Supreme Court, is it fair to base the issue of spread on the figures obtained from those polling units when INEC had rejected those figures and Ihedioha had  stated that the figures were fictitious ? In other words, is it fair to base spread on figures that are being contested or unproven? 

Finally, if over 100,000 people who should not have voted because they were not accredited did vote making those votes unlawful, how will anyone including the Supreme Court know where out of the total votes cast in Imo State these unlawful votes came from and how can the issue of spread be based on these unlawful votes when no one knows where they came from? 

A court correcting its own mistakes is not new. More than five hundred years ago, the English Courts, recognizing the fallibility of judges originated the Writ of Error Coram Nobis which allowed a court to correct its own error. Since then, other devices have been designed to address the problem. –eg The Slip Rule designed by English Common Law which we adopted in Nigeria.

The Indians designed their Constitution, to permit their Supreme Court to review any judgement pronounced by the Supreme Court. Even after the dismissal of a Review Petition, the Indian Supreme Court may consider a Curative Petition to cure a gross miscarriage of justice. What has happened in Imo appears to be a gross miscarriage of justice as over 100,000 votes of unproven origin have been deployed to nullify the election of Ihedioha.

Granted that Nigeria does not have a similar provision in its Constitution, there is nothing in the Nigerian Constitution that states that the Supreme Court cannot make a mistake and that where it does,  it cannot correct it. 

What section 235 of the Constitution states is that no appeal shall lie to any other body from the determination of the Supreme Court. It does not state that the Supreme Court cannot suo motu ( by its own initiative) correct its own mistake.

The Chief Justice of the Federation, Justice Mohammed Tanko, as an  act of historic courage and statesmanship should convene a conference of all the 17 Justices of the Supreme Court to decide whether there has been a mistake or mistakes,  and what the consequences of allowing the mistakes to stand are for the parties, for the judiciary, for democracy and for our country; and be bold enough to correct them.

Of course one is not unaware of the arguments against. That it will open the floodgates, as everyone who loses an appeal will ask the Supreme Court to reconsider its decision. No one is suggesting a further right of appeal. Section 235 is clear on that. In trying to ensure that the power to correct its mistakes is not abused, the Supreme Court should set out stringent parameters, including the minimum number of Justices who can correct such mistakes

The Supreme Court is a court of justice, and it has an inherent jurisdiction, power and duty to do justice. Once there is a mistake, there can be no justice. If they make a mistake, it may be pardonable because they are human. But to insist that because their decision is final, the people of Imo must accept that mistake as their final decision, will not only be itself the most egregious mistake, but an unpardonable sin.

In correcting its error, the Supreme Court will have to re-instate Rt Hon. Emeka Ihedioha by ordering INEC to return his Certificate of Return to him, on the basis of the fact that he won the March 2019 gubernatorial election as declared by the Election Tribunal and the Court of Appeal, or order that INEC conducts fresh elections in those 388 polling units while the Speaker of the Imo State House of Assembly is sworn in as Acting Governor.  To hold that Senator Hope Uzodinma should remain the governor while fresh elections are conducted will not only be a violation of the Electoral Act, but will amount to another gross miscarriage of justice.

In times like this, what our country needs is an act of courage.

• Senator Sola Akinyede OON, LL.M is a Constitutional Lawyer was in the Senate in 2007 -2011