The executive director of the Centre for Fiscal Transparency and Integrity Watch, Umar Yakubu has partly attributed Nigerian economic woes to lack of due diligence. Yakubu recently mentioned this during the Centre for Journalism, Innovation, and Development (CJID) Media and Development conference in Abuja, when discussing the country’s infrastructural deficit. While he acknowledged that investments can help reduce the infrastructure deficit, he stressed that the country must first improve its utilization of borrowed funds.
According to him, the country has a relatively low level of due diligence as it signs contracts without fully comprehending them. Even in scenarios when they are fully understood, contracts are not signed in the consideration of national interests and national security. He also mentioned that Nigeria needs to work on improving its internal procedures and making better use of borrowed funds. A crucial aspect is to maintain due diligence, enhance transparency, and ensure accountability in order to maximize the impact of borrowed funds.
Nigeria business climate is unattractive for investors.
Speaking at the event, Lola Adekanye, the director of the African program at the Centre for International Private Enterprise, noted that the environment for investment and growth is the key factor hindering the country’s capacity to attract essential investment. He claimed that Nigeria business climate is unattractive because typically stable investors are now concerned about various potential risks. Adekanye gave the example of the Abuja Kaduna train, where investments were made but were later met with insecurity attack. He said huge losses were and are being incurred as a result of the project’s inefficiency.
Meanwhile, potential investors research previous investments in the country and are put off if they find the return on investment is not as secure, is declining, or is accompanied by too many unstable indications. This is as the second quarter of 2023 overall investment in the Nigerian economy fell to $1.03 billion, a 33 percent decrease from the $1.535 billion recorded in the second quarter of 2022. Adekanye continued by emphasizing the need of the government fostering economic stability through sound fiscal policies and promoting potential for private sector expansion.
Investing in capital expenditure can generate economic value.
In addition, she criticized the inappropriate use of borrowed funds, which she claimed were used for operating costs rather than capital expenditure. According to her, Investing in capital expenditure has the potential to generate economic value in the long run. The government’s decision to borrow for recurring expenditure and as well to provide palliatives for the public raises concerns about the guarantee of a return on the investments. Thus, she noted that such issues require government action.
Akintunde Babatunde, head of programs at CJID, said bilateral connections with foreign countries have not resulted in the anticipated investments in the country. He explained that the conference’s goal was to shed light on the obstacles to development in the country and offer possible solutions on how to overcome them. Babatunde continues by adding that CJID has made investments over the years to help strengthen the ability of journalists in all fields, including health, health reporting, climate change, conflict reporting, anti-corruption, and every other sector.
Figuring out the details of government’s deal is vital.
Babatunde said when expected results from partnerships with other countries, foreign investors, and bilateral ties fall short, then have something to worry about. “When the media is unaware of the specifics of a government contract or the size or terms of a loan being sought by the government, that is the time to be alert. Thus, the media should be important to figuring out what side of a deal the government is taking. What are the parameters, who stands to gain, and how do we identify warning signs? he asked.