Namibia, Ghana, Dubai to reap from Nigeria’s policy reversals - As investors await Fitch Ratings

By Debo Abdulai - 02.03.2008

THE spate of recent policy reversals by the Yar’Adua administration has begun to affect the confidence of investors who are beginning to consider relocating their businesses to Ghana, South Africa, Dubai and Namibia.

Sunday Tribune also gathered that the Yar’Adua government’s turn around on major economic and financial agreements with foreign and local investors may be one of the reasons why President George Bush did not include Nigeria in his itinerary during his recent visit to Africa.

It will be recalled that, in recent times, the federal government has reversed the sales of the Port-Harcourt refinery, the Independent Power Projects (IPP) strewn across various locations in the country, the Chinese — funded railway modernization, the Nigerian Iron Ore Mining Company at Itakpe as well as the NITEL and Mtel.

Sunday Tribune further gathered that the policy reversals are likely to affect the rating of Nigeria by the World Bank, the International Monetary Fund (IMF) and Standard and Poor’s, all globally acclaimed ratings agency, which, according to analysts, versed in the workings and dynamics of international institutions, may review their economic and financial assistance programme to Nigeria.

Already, investors are eagerly awaiting the findings of Fitch Ratings which arrives Nigeria this week to join its counterpart, Standard and Poor’s, which has already commenced a comprehensive assessment of Nigeria’s reform programme and economic performance.

The team which will hold discussions on the performance of the economy with the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and the National Pension Commission will also weigh the realisation of President Umaru Musa Yar’Adua’s seven-point reform agenda.

Fitch Ratings is a critical benchmark for the country and the banking sector, considering the confidence reposed on it by global investors and the international business community. Sunday Tribune gathered that the expected rating is now causing some disquiet in government quarters as the last rating done under the reform programmes of ex-President Olusegun Obasanjo and anchored by then finance minister, Ngozi Okonjo-Iweala, opened the flood gate of foreign investors and secured for Nigeria a “B” rating.

The rating, which is carried out by financial analysts with knowledge of the macro-economic environment in the rated entity operates, is also an assessment of the risk associated with an enterprise or country.

To compound Nigeria’s problems, there are fears that if these Direct Foreign Investment (DFI) and the Breton Woods institution stop assisting Nigeria, the country may not only be worse off than the pre-1999 but also world class Nigerian technocrats who have been given opportunities to excel at the top echelon of the world’s financial institutions, like Dr (Mrs) Ngozi-Iweala and Mrs. Oby Ezekwesili, presently Managing Director and Vice President of the World Bank, may lose their ratings.

To worsen matters too, it was also gathered that the federal government is getting ready to reverse the sale of the Ajaokuta Steel Complex, and that of African Petroleum Plc. (AP) just as was done to NICON, a move which is already causing disquiet in the country.

For instance, Bashir Borodo, President, Manufacturers Association of Nigeria, MAN, while speaking to a news magazine on the same issue last week said, the issue of government’s reversal on privatisation is not helping the economy. A government is not a revolution or a coup d’etat. In future, the business community would be wary of responding to government’s future overtures on privatisation.

Tunji Abayomi, a legal practitioner, while speaking on the same issue, said, ‘the signal is that doing business with government is not secure”. Some experts are also convinced that the greatest casualty of these constant policy reversals will be the president himself because, “his avowed commitment to make Nigeria one of the world’s 20 largest and biggest economies by the year 2020 would become totally unattainable as foreign investment flow at a rate that doubles every year and this is an integral component of achieving that objective.”

It was also gathered that the current NEEDS programme which is designed to uplift the socio-economic lifestyle of Nigeria’s rural and mostly downtrodden population over the next 10 years and is also largely funded by donor agencies collaborating with the federal government will be greatly jeopardized.

Sunday Tribune also gathered that the United Nations Millennium Development Goals (MDGs) project, which is driven and jointly funded with the federal government to eradicate poverty, disease and malnutrition by 2013 could be an aborted dream because of the continued assault of the federal government on both local and foreign investments.

A banker, Mustapha Olanrewaju, told Sunday Tribune that, “there must be a major policy pronouncement from President Musa Yar’Adua himself to assuage the feelings of international investors and reassure them that all is well with the policies and there would be no reversals in the future. This will surely calm frayed nerves”.

It will be recalled that the Olusegun Obasanjo administration’s policy to pursue the privatisation and commercialisation as the major plank of its economic reform programme, enabled foreign capital to flow into the country.

Investors were also pleased with the economic and political stability that was in place for the eight years that he was in power, a stability that ensured progressive reforms hinged on a consistent economic platform driven by privatisation.