ECONOMIC DIPLOMACY AND NIGERIA’S FOREIGN POLICY

The Tinubu administration should prioritise the improvement of security to instill confidence in potential investors, argues  Sonny Iroche

In my article titled “Steps Needed to Attract Foreign Direct Investments (FDI) into Nigeria” published in THISDAY, July 15, 1999, I highlighted the importance of positioning the Nigerian economy as an attractive destination for FDI. Today, in the face of ongoing economic challenges, these steps remain relevant and urgent. Unfortunately, not much has changed, and certain aspects of our national life have even deteriorated further.

One of the most pressing issues is the alarming increase in insecurity. Violent attacks on communities, the actions of militant bandits, and the overall state of insecurity have created a hostile environment for potential investors. Addressing this issue should be a top priority for the government, as it is crucial for instilling confidence and attracting FDI.

Additionally, the sharp drop in the exchange rate of the Naira against foreign currencies and the stagflation state of the economy have further dampened investor confidence. To reverse this trend, the government must implement effective economic policies that promote stability and growth. This includes addressing inflation, improving the exchange rate, and implementing measures to attract foreign investors.

Nigeria, as the largest economy and powerhouse of Africa, is currently facing significant economic challenges. In order to address these challenges and maintain its leadership position, it is crucial for the Tinubu administration to continue to drive economic diplomacy as the focus of its foreign policy. Since his inauguration as the president, President Bola Tinubu has been crisscrossing the world, marketing the country in India, Saudi Arabia, Germany, France, the UK and a few African countries. While the Vice President, Kashim Shettima has visited, Russia, Italy and South Africa, promoting and marketing Nigeria.

Economic diplomacy, which focuses on promoting economic interests through diplomatic means, can play a pivotal role in attracting FDI into the country. However, to effectively ramp up FDI, Nigeria must address various domestic, economic and socio-political challenges. Because a country has to, first be strong in most socio- economic sectors, to be in a position to embark on international economic diplomacy. It is therefore essential to explore the key areas of our national life that need to be addressed, including security, ease of doing business, consistent and predictable government policies, market-driven economy, sanctity of contracts and upholding the rule of law, repatriation of dividends and capital, infrastructure, and human capacity development.

One of the primary concerns for foreign investors is the security situation in Nigeria. The Tinubu administration must prioritize the improvement of security measures to instill confidence in potential investors. By effectively combating insurgency, terrorism, and other forms of criminal activities, Nigeria can create a conducive environment for economic growth and attract more FDI.

Another crucial aspect that needs attention is the ease of doing business. Nigeria must streamline its bureaucratic processes, reduce red tape, and simplify regulations to make it easier for both local and foreign businesses to operate. By implementing reforms that facilitate business activities, such as faster company registration, review of the Land Use Act, efficient tax systems, and transparent procurement processes, Nigeria can enhance its attractiveness as an investment destination.

Consistency in government policies is also vital for attracting FDI. Investors seek stability and predictability in the business environment. The Tinubu administration should ensure that policies are not subject to frequent changes, as this can create uncertainty and deter potential investors. By providing a stable policy framework, Nigeria can build trust and confidence among investors, encouraging them to invest in the country.

A market-driven economy is another crucial factor for attracting FDI. Nigeria should focus on creating an enabling environment that promotes competition, innovation, and entrepreneurship. By reducing government intervention in the economy, encouraging private sector participation, and promoting fair competition, Nigeria can attract more foreign investors who are seeking opportunities in a dynamic and market-oriented economy.

The sanctity of contracts and upholding the rule of law are fundamental for attracting FDI. Investors need assurance that their contracts will be honored and that they will have legal recourse in case of disputes. The Tinubu administration should prioritize judicial reforms, strengthen the legal system, and ensure that contracts are enforceable. By upholding the rule of law, Nigeria can build a reputation as a reliable and trustworthy investment destination.

Repatriation of dividends and capital is another critical aspect that needs attention. Investors need to have confidence that they can repatriate their profits and capital without any restrictions. The Tinubu administration should implement policies that facilitate the repatriation process, ensuring that investors can easily transfer their funds out of the country.

Infrastructure development is a key driver of economic growth and FDI. Nigeria must invest in improving its infrastructure, including transportation networks, power supply, and telecommunications. By developing modern and efficient infrastructure, Nigeria can attract more investors who require reliable and well-connected facilities to operate their businesses.

Lastly, human capacity development is essential for sustaining economic growth and attracting FDI. The Tinubu administration should prioritize investments in education, skills training, and research and development. By developing a skilled and educated workforce, Nigeria can enhance its competitiveness and attract high-value investments that require specialized knowledge and expertise.

Iroche is 2022/2023 Senior Academic Visitor, African Studies Centre, University of Oxford, UK