How Nigeria Can Tap Into The Global Financial Glut

Anthony Okosun

U. S. A.

Global capital interconnectivity, systems and markets have been undergoing an unprecedented modification. Neither single country nor city has the bragging right to the title of financial capital of the world any more. New York remains the biggest financial market, but London is contesting that title. New boys on the block like Mumbai, Kualar Lumpur, Shanghai, Beijing, Hong Kong, Dubai, Rio De Janeiro, are all giving a good account of themselves against the old established markets in Frankfurt, Bonn, Paris and Amsterdam. Today there is an unprecedented glut of global liquidity which can be tapped from anywhere in the world. This liquidity glut has many sources; among them is China's trade surplus. China has over a trillion dollars in her financial reserves. Another major reason for the global financial glut is the unstoppable global run of privatisation. As former state owned and state run corporations are being sold to private investors all over the world especially in places like China, India, Russia and the former Soviet Union satellite countries in Eastern Europe, that are rapidly embracing capitalism and are democratising and privatising their former state owned assets, more capital is drawn to those countries. All such capital always eventually finds its way into the main stream of global commerce. Smart countries and cities are positioning themselves as magnets for the attraction of as much as possible of this great stream of global liquidity. Today large public offerings takes place in South East Asia, South Central Asia, Central and South America, Eastern Europe, Middle East and the South Pacific with no reference whatsoever to the old, established and hitherto domineering western exchanges.

The question that begs for an answer is how much of this liquidity streaming around the world is Nigeria able to attract. This question becomes more pertinent, when one realises that a single country can make a major difference in the balancing of the world's financial equation. Take China for instance, much of the success story being trumpeted around, about globalisation, is actually the success story of China. The reduction in the number of poor people in the world is actually due to the great reduction in poverty in China.

Thus the need to ask the question, how can Nigeria be repositioned to benefit from the current unprecedented global economic and financial reconfiguration. No doubt, it is an uphill task for investment bankers to explain to potential and prospective investors that Nigeria is a veritable source of high yield for seed capital in the international capital market. Despite Nigeria's history of bloody coups, religious violence, lack of infrastructure, corruption and flawed elections among others, the country is attracting a huge crowd of 'nosing around' foreign investors who would want to do serious long term huge capital intensive business in Nigeria, but for the country's inability to put it's house in order.

Two groups of investors are attracted to Nigeria. The first group is the short term investment group who are attracted to Nigeria because of the current glut of liquidity in the global financial system, which encourages the current in 'before-now-abandoned, relegated and rejected markets' like Nigeria. The second group comprising mainly Asians is the long-term investors who are impressed with the great improvements made in the Nigerian economic and financial sectors. The world financial regulators and global long-term investors took note when Nigeria in one historic stroke that has never before, been witnessed anywhere in the financial world, shed more than $30bn of her external debt.

Among the major factors that kill investors' interest in Nigeria is the Niger Delta crisis. The crisis has reduced by a third, Nigeria's total oil production and export capacity. Nigeria has the capacity to pump five million barrels of oil a day. That is 3% of total global oil production and consumption. Nigeria is the fifth largest foreign supplier of crude oil to the U. S., behind Canada, Mexico, Saudi- Arabia, and Venezuela. Nigeria Bonny Crude oil is the best in the world comparable only to the North Sea Brent oil. Which is relatively cheaper to refine because of its extremely low sulphur content? It is also cheaper to ferry oil from Nigeria to the U. S. than from the Middle East. Unfortunately in the past 5 years, many foreign oil industry employees have been kidnapped in the Niger Delta region of Nigeria. The crisis has forced a reduction in Nigeria's oil production and by implication, export, by a third of the total export capacity. Nigeria must deal with the Niger Delta crisis as the crisis scares potential investors away. The oil producing communities in the Niger Delta are not asking for too much. They are simply asking for development of infrastructure in their towns and villages. They want roads, hospitals, schools, bridges to be built. They want gainful employment. They want industries for gainful employment to be located in their communities. Several administrations have attempted to solve the Niger Delta problem all to no avail. The states and local government in the oil producing communities get the greatest allocation from the federation account. Yet there is no tangible development in the oil producing Niger Delta. Nigeria's federal government should throw a massive beam of accountability searchlight into the activities of all the administrative bodies and governments entrusted with the monies set aside for the development of the Niger Delta. Government should also engage in direct dialogue with all the principal players in the Niger Delta crisis. Until a lasting solution to the Niger Delta crisis is found, attracting investors to Nigeria will continue to be a nightmare.

Another major factor that hinders the attraction of investors and by implication capital to Nigeria is lack of infrastructure. Yes, some gains have been made. From half a million connected telephone lines a few years ago to about 40 million mobile hand phones today, Nigeria's mobile telephone wonder gadgets makes communication, business and family interaction easier and faster. However, a vast majority of Nigerians still does not have access to electricity and clean drinkable water. Investors need assurance that water supply and electric energy supply are stable for maximum industrial utilisation. Nigeria has not been able to develop an acceptable network of roads to make commercial inter-connectivity between all the regions of the country easier to access for business.

Another factor that hinders the attraction of investors and their capital is the problem of lack of good and accountable governance. Military and civilian leaders in the past sadly and lamentably re directed Nigeria's huge wealth to their private pockets, leaving the citizenry in untold hardship and economic brutality. Even recently, many northern Nigerian states introduced Sharia Law. Whereby they applied penal sanctions, to their citizens while their political leaders steal with impunity. Many ordinary Muslims have realised that their political leaders only introduced Sharia law for expediency as the same leaders have failed to deliver on other tenets of Islamic social justice to their societies, like caring for the poor and running transparent government. Investors, many of whom are used to high ethics, rules, regulations and standards are appalled by the abysmally low ethical standards prevalent in Nigeria, as they cannot get anything done in Nigeria, except they first pass a bribe, which negates the laws of their home countries. Then we have the problem of flawed elections. Investors perceive flawed elections and crude and barbaric electoral vices as manifestation of political immaturity and by implication instability of a nation. Which are all interpreted to mean, that such primitive societies are not yet ready for excellent economic and financial investors? Equity and Capital titans desire a society they can trust with their assets.

Investors are desirous of incorruptible legal systems, where they can quickly settle contractual disputes. Investors want to be able to settle their company and allied matters very quick. Investors want a society that has a highly educated youth populace. This explains the attraction of Indian to investors. Indian has a highly educated youth populace especially in the area of mathematics, Information systems and Engineering. Nigeria's recent increase in the number of universities that are licensed to operate in the country is a welcome development. However, Nigeria must match quantitative advancement in education with qualitative advancement. Our Universities and high schools must be encouraged and assisted by both the public and private sectors to turn out more science, technology and mathematics based graduates.

If these nuggets of wisdom are adhered to, Nigeria will metamorphosed into a new, revamped and economically restructured and repositioned dynamic entity , all set for massive attraction of investments, capital, and other sundry and collateral equities. `