The Institute of Chartered Accountants of Nigeria (ICAN) has urged the Federal Government to reassess the mandates of anti-corruption agencies, ensuring their alignment with the demands of the contemporary business landscape to enhance foreign investors’ trust in the country.
This policy recommendation is outlined in the ICAN Position Paper titled ‘Attracting Foreign Direct Investment.’
Based on data extracted from the National Bureau of Statistics Q3 Foreign Capital Importation report, the total capital importation during the specified period amounted to $654.65 million, marking a 36.45% decline compared to the Q2 figure of $1.03 billion.
On a year-on-year basis, foreign capital importation witnessed a decrease of 43.55%, falling from the $1.16 billion recorded in the corresponding quarter of 2022.
In addressing the imperative to augment Foreign Direct Investment (FDI), the ICAN Position Paper emphasized that the administration led by President Bola Tinubu must confront economic challenges contributing to the closure of businesses and the diminishing flow of FDI.
The document said, “The challenges of Nigeria’s business environment are multifaceted. Key among these are security concerns, infrastructural decay, and regulatory and policy inconsistency, which create a high-risk environment for sustainable business operations.
“A notable gap in infrastructure, particularly in critical areas such as power, transportation, human capital including technical human resources, and technology amplify operational challenges for businesses. There have been notable efforts at addressing power without noticeable results so far. The lack of reliable power is a significant constraint for citizens and businesses, resulting in annual economic losses estimated at $26.2bn (N10.1tn).”
It added, “The spectre of corruption and transparency issues looms large, potentially eroding investor confidence.” Foreign exchange volatility, marked by fluctuations in the value of the naira, introduces financial uncertainty, while limited access to finance, especially for Small and Medium Enterprises, restricts economic growth.”
The Institute in its position paper called for the reorganisation of the anti-corruption agencies in the country, especially as it relates to the prevention of bribery and corruption to make the environment attractive to genuine foreign investors.
“There should be zero tolerance for bribery and corruption. Bribery and corruption have a way of putting off genuine foreign investors and attracting the wrong ones, making it difficult for the benefits of FDI to flow to the economy and citizens. Appropriate sanctions should be stipulated and meted out to government officials and others implicated in this act.
“To this end, we recommend the establishment of anti-corruption courts in all states of the federation to expeditiously try cases of bribery and corruption. We are constrained to recommend the re-organization of the major anti-corruption institutions with prevention mandates such as the Independent Corrupt Practices and Other Related Offences Commission, The Economic and Financial Crimes Commission, the Code of Conduct Bureau, the Bureau of Public Procurement to make them more relevant in modern Nigerian business environment,” ICAN said.
Elaborating on security challenges, ICAN said, “Government should be more proactive in addressing the security challenges facing the country, working to optimise the synergy in intelligence coordination between the various security arms of government. Individuals and institutions involved in and sponsoring oil theft, illegal mining and insurgency should be identified and made to face the full weight of the law. This will create an atmosphere of peace and order that will attract both local and foreign investors.”
Regarding infrastructural development, ICAN urged the government to create an enabling environment that can attract private sector investment in infrastructural development. It also called for more proactivity from the Infrastructure Concession Regulatory Commission.
“While we welcome the Road Infrastructure Tax Credit Scheme, which is a form of PPP, we call for better accountability and transparency in project execution. There are many uncompleted projects littered across the country. This is where the skills of chartered accountants are required. Other states should emulate Lagos in making city rail transport functional,” ICAN said on infrastructure.
On forex market transparency, ICAN urged the Central Bank of Nigeria to ensure that forex market rules are clear and transparent as well as promote a level playing field for market participants. “Infractions should be promptly identified, and appropriate sanctions applied to sustain investors’ confidence. Volatility in exchange rates, availability of foreign currency and the ability of investors to repatriate their earnings should be guaranteed. A situation where there is scarcity of foreign currency and inability to repatriate earned income is not good for foreign investors,” the position paper stated.
To specific agencies, such as the Federal Environmental Protection Agency, ICAN said it should adopt sustainable practices and policies that will promote renewable energy sources and strict adherence to international environmental standards. ICAN also called on the government to “Provide budgetary allocations for regulatory agencies like Financial Reporting Council of Nigeria, National Council on Climate Change (to avoid them relying on regulatory fines to sustain and achieve the objectives of setting them up.”
ICAN said, “An investment-friendly environment leads to increased FDI, bringing capital, technology, and expertise that spur economic development. It fosters job creation by expanding businesses and reducing unemployment. Competitive advantages are gained, enhancing efficiency and innovation. Investments boost government revenue, allowing for more public infrastructure, and social investments. Also, it improves access to capital, attracting diverse investors for business growth.
“Hence, creating and maintaining an investment-friendly environment involves a combination of transparent and stable policies, effective governance, and a commitment to fostering economic development as well as concerted efforts by the Ministries, Departments and Agencies of government in achieving this objective. The Institute of Chartered Accountants of Nigeria offers its support to the government in its effort to attract and retain Foreign Direct Investment inflows and move our country forward.”
