UAE show Nigeria the way to attracting foreign investors
As Nigeria continues to innovate and source strategies to attract foreign investors, making the country an investor destination in sub Saharan Africa and indeed the whole of Africa, the United Arab Emirates’ example is perhaps the way to go.
Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of the United Arab Emirates, and Ruler of the Emirate of Dubai revealed in a tweet from his handle @HHShkMohd, yesterday that “At today’s Cabinet meeting, we decided to allow 100% foreign ownership of companies in United Arab Emirate, with a 10 year visa for investors, scientists, doctors, engineers, entrepreneurs and innovators. The United Arab Emirate has always welcomed, and always will, innovators and business leaders”
“This decision will be enforced by third quarter this year. Our open society, tolerant values, excellent infrastructure and flexible legislation offer the best environment for international investment and exceptional talent.”
Analysts have described the move as one to further open the country to investments and also are incentive to bring needed professionals and skilled labor especially from developing country in their numbers to further the UAE’s development story often described as a wonder.
While Nigeria can’t be said to have stringent laws prohibiting foreign ownership of companies and investments, the challenge has been providing enabling environment to encourage foreign investments.
The struggle getting around regulatory bottleneck, the length of time it takes to close a deal to the very high cost of doing business resulting from infrastructural deficit (especially power infrastructure) have made doing business in Nigeria is an uphill task.
In terms of infrastructural support, liberalized foreign exchange market and other immigration support policies, Nigeria is lagging well behind the UAE.
According to Johnson Chukwu, “the investment market is a global market; capital will go to where it gets the best returns at the lowest possible risk. For any country that is receptive to foreign investors, they will bring their investments to that country. The United Arab Emirate is an investor friendly country”
“At a time, the foreign investment inflow into the United Arab Emirate was because it was tax free zone, but now they have imposed taxes (withholding tax, value added tax) and people are still going there because the environment and infrastructure is exceptional. The legal system is also very good and there is high level of security”
With a population estimated to be around 200 million, Nigeria is no doubt a great attraction for foreign corporates looking to invest on the African continent. The country however, needs to address those factors that have served as disincentives to foreign investors, with key elements being infrastructural deficit, transport infrastructure, high level of insecurity, challenges getting approvals from government agencies, among others.
The United Arab Emirate, in contrast to its Nigerian counterpart have been able to build on the back on the back of the oil prosperity it found in the 1950s and have developed critical infrastructure across various sectors of the economy.
The United Arab Emirate have successfully been able diversify its economy from a monolithic one to becoming the world’s leading destination for trade, tourism and real estate.
The country is also experiencing increased growth in medical tourism and has shown great drive and potential to improve its Information Communication and Technology sector in recent times.
Perhaps borrowing from United Arab Emirate, Arabian Peninsula giant and economic power houses’ development experience will further Nigeria’s drive to economic growth and development.