According to the United States, the flow of foreign direct investment into Nigeria and Kenya has been hampered by widespread corruption and extortion by government officials in both countries. In the 2024 National Trade Estimate Report on Foreign Trade Barriers, US Trade Representative Katherine Tai highlighted the concerns raised by US firms regarding the lack of transparency in procurement processes in certain countries, hampering foreign investments. Nigeria, in particular, continues to face significant challenges due to corruption hindering trade and investment opportunities. U.S. companies have been greatly troubled by the lack of transparency and corruption in tender processes in the region.
Tai reported that American companies were facing challenges in their daily activities due to officials in Nigeria requesting facilitative payments. The report also highlighted that in Kenya, foreign businesses with local connections who were willing to break the law were doing better than US companies seeking opportunities in the largest economy in East Africa. Businesses are still facing obstacles in competing with foreign companies that have no qualms about disregarding legal regulations or resorting to bribery and unethical practices.
There is widespread corruption at the national and county levels.
In Nigeria, American companies often struggle to receive payments for the contracts they win, which can discourage them from participating in bids. The availability of supplier or foreign government-backed financing seems to play a significant role in the government procurement process. The report highlights widespread corruption at both the national and county levels impacting government procurements. Many Nigerian government agencies fail to adhere to procurement guidelines, even though it is mandatory that funds are secured and a Certificate of ‘No Objection’ to Contract Award is obtained from the BPP before any procurement processes can be finalized.
Analysis of Nigeria shows that its anti-corruption efforts were impeded by internal conflicts within the government and partisan political differences. Transparency International ranked Nigeria and Kenya among corrupt countries in the world, with Nigeria at 145 and Kenya at 126 out of 180 countries. The report also questioned the effectiveness of Nigeria’s judicial system in prosecuting and punishing corruption offenses. The interference of politics in Kenya’s judiciary is being highlighted by the US trade representative as a factor that is exacerbating the country’s issues.
Impact of bribes, corruption and extortion remains high.
Furthermore, Tai pointed out that despite advancements in judicial reforms, the impact of bribes, corruption, extortion, and political factors on court cases remains high, posing a risk of prolonged and expensive legal processes for both foreign and local investors. On a positive note, the report highlighted Nigeria’s incremental improvements in allowing foreign companies to participate in government tenders and promoting fair competition. US investments are hindered by the enforcement of intellectual property (IP) rights and data protection laws in both countries.
Despite previous challenges, Nigeria has demonstrated significant advancements by implementing laws to address intellectual property theft. The Federal Competition and Consumer Protection Act of 2019 was a pivotal moment, introducing measures to tackle trademark counterfeiting. Additionally, the adoption of the Plant Variety Protection Act in 2021 signifies a major step forward in establishing a regulatory system to safeguard plant varieties. The report noted that the Copyright Act 2022 was officially passed into law by the Nigerian President in March 2023.
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The lack of transparency in Nigeria’s regulatory system has raised issues. U.S. companies are worried about regulations being introduced abruptly without allowing for public input. Nigeria’s failure to consistently inform the World Trade Organization (WTO) about draft technical regulations is also a concern. Furthermore, the inconsistent implementation of technical regulations in Nigeria can lead to confusion and hinder adherence to regulations. There are still uncertainties surrounding the ability of the Nigerian justice system to secure convictions and issue suitable punishments for crimes related to corruption.
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