Nigerian Trade and Investment Challenges and Solutions

Anthony Kila in this piece discusses steps that can be taken to solve the myriad of challenges facing the nation’s trade and investment drive.

Dear Readers,

The title of today’s epistle is taken from an event held in the last week of October, 2024 at the Nigerian Institute of International Affairs (NIIA), Victoria Island, Lagos.

The event was to inaugurate the Bashir Adeniyi Centre for International Trade and Investment, and participants were like a list of who is who of the Nigerian political and economic world. I joined online from my classroom in Cambridge and listened with delight to the passion with which speaker after speaker spoke about what they deemed to be issues affecting the untapped potential of trade and investment in Nigeria.

Some of those who spoke included Prince Adewole Adebayo, the SDP presidential candidate; Prof. Eghosa Osaghae, the Director General of the Nigerian Institute of International Affairs; B.A. Adeniyi, the Comptroller General of the Nigeria Customs Service; Mr Donald Duke, the former Governor of Cross River State; Dr Chinyere Almona, the DG of the Lagos Chamber of Commerce & Industry; and Magnus Onyibe, author of Leading from the Street.

There was a strong emphasis on infrastructure, security, and, of course, the rule of law. Many also saw exports as a critical element that we must focus on to foster trade and investment.

As in every intellectual gathering or forum in Lagos and Nigeria, solutions to the country’s problems abound. Hearing speakers emphasise exports and their economic importance was impressive and delightful.

I do not doubt that the country will benefit significantly if those in charge allow the details in the case made for export by the speakers at the NIIA event on trade and investment to inspire and inform government and private sector policies.

As I have stated many times, I insisted in my intervention that Nigeria’s challenges in trade and investment are also the solutions to the country’s prosperity. Unlike other contributors, I believe we need to move from intangibles to tangibles. The first issue we must address as individuals and as a country is our conception of trade and investment. Rather than see trade as just a functional transaction that satisfies our needs to buy and consume or sell and acquire, I think it is essential that we conceive trade as a moral and civic index of our lives.

If we can see trade as an alternative to insularity, usurpation, and war, if we can see the correlation between development, prosperity, and trade in modern states, then it will be easy to understand why, as a collective, we need to deliberately and consistently promote and protect trade.

This conscious, shared collective desire finds its institutional expression in state laws and deeds of government through its agencies that ensure that trade and investment are safeguarded and even encouraged everywhere in the country.

In a system or country where trade and investment are viewed not just as personal or sectional interests but as concerns of the commonwealth, regulators and all those charged with ensuring that trade and investment are carried out in legal and compliant ways will also be very keen on ensuring that businesses survive and operate. It will be apparent to them that suspending or closing down any business’ activities damages workers, consumers, prices, and the economy as a whole.

In such a context, suspending or closing down businesses will be like a nuclear button; one would think more than once before pressing it.

Herein lies a challenge: How do we get regulators to act in the interest of most to keep trade and investments flowing? How do we ensure that regulators and all those who act in the name of government are more facilitators than disruptors? The solution, I argue, lies in three crucial but simple elements: (re)orientation, monitoring, transparency and certainty.

Regulators must understand that their role is not to stop, interrupt, or take over but to help businesses and all trade and investment activities improve their operations. The processes by which regulators and all government agencies relate with those involved in trade and investment must be transparent and certain. Every business or anyone engaged in trade and investment should be able to predict and plan for what to expect from any government office or officer.

Discretion must be used only in circumstances favouring businesses, traders, and investors; in every other circumstance, only clear, publicised, and known rules must be followed. A straightforward, effective, and efficient way to ensure transparency and certainty is to use checklists for regulating and other government relations with traders and investors.

Yes, even with all the best systems in place, corruption motivated by illegitimate interest, malice inspired by bias, incompetence provoked by a lousy recruitment and retention process, or just simple error are insidious human traits that can jeopardise any system; the solution to such a challenge is monitoring. People are less likely to go rogue when they know they are being monitored and their actions will have consequences.

There is an aspect of the law that most don’t talk about but dramatically affects our relationship with the law, and that is how human or realistic the law is. Any law or regulation that appears disconnected from the reality of those expected to obey it will tend to be disobeyed. It is easy to think of violating such laws because, though legally binding, many can still socially see them as unjust laws.

A law, for example, that asks one to pay as a tax more than one used to make or buy a product or a service can easily be perceived as unjust. Similarly, a law penalising trade and investment in sectors that cause no harm can easily be perceived as unjust.

It is important not to confuse rebellion with cutting corners. Businesses rarely confront the law; their natural behaviour is to exit, boycott, or conspire to survive. In both cases, the state tends to lose the best it can get from such businesses because, to survive, they either exit the system or remain in it but are not aligned with it.

Naturally, I agree that trade and investment challenges in Nigeria include a lack of infrastructure and security—or, should we say, insecurity? However, I believe that to solve these tangible problems, we need to start with the intangibles.

Please join us on Twitter, @anthonykila, to continue these crucial conversations.

-Kila is an Institute Director at CIAPS Lagos. www.ciaps.org.