By Mike Abbah
Contrary to the impression conveyed by the Nigerian government and its officials that the economic policies of President Bola Tinubu will boost foreign investment, the Private Equity and Venture Capital Association of Nigeria (PEVCA) has warned the reverse may just be the case.
In its latest report published on its website, the industry and advocacy body promoting private equity and venture capital in Nigeria, stated that the recent policies of President Tinubu seem not well thought-out and might discourage investments into the country.
The association, which stated this in its midyear review and strategic outlook for the year 2024, noted that the recent policies of the current administration may hinder and hamper success, thereby failing to bring the desired economic recovery.
According to the report, the policies of the Tinubu administration have competing goals and, as such, might deter investors both local and foreign.
It noted that the short-term revenue generation goals of the current administration are impeding plans to create a business-friendly environment.
The report reads: “We are pleased to introduce this maiden edition of PEVCA Nigeria’s 2024 Mid-Year and Outlook, a publication that delves into the key trends, challenges and opportunities, shaping Nigeria’s private equity and venture capital landscape.
“It brings together expert insights from leading fund managers, general counsel, legal, financial, tax, and other professional advisers, and industry stakeholders, offering a thorough analysis of the most critical developments and strategic issues specific to the Nigerian market that are impacting the Nigerian market today.
“The introduction of policies with competing goals and interests will remain a deterrent for investors. Policies lack consistency and, in some cases, appear to be more of a knee-jerk reaction rather than a well thought out plan.
“Specifically, a number of short-term revenue generation goals continue to compete with the goal of creating a favourable business environment that attracts investors.”
Furthermore, the report provided examples of policies geared towards revenue generation which contrast with the goals of attracting foreign investment.
Such examples include; the introduction of an expatriate levy for companies operating in Nigeria which was later suspended, the cybersecurity levy and others.
It noted that the policies if implemented would have created an adverse working environment for the current administration but stated it revealed how the government does not collaborate with the private sector.
Also, the report stated that several key government agencies and departments, including the Securities Exchange Commission (SEC), remain without a board.
This situation follows President Tinubu’s decision in June 2023 to “clean shop” by dissolving all statutory agencies, ministries, and departments.
It was noted that new appointments have not yet been made, which has stalled economic activity.
It drew attention to the fact that the administration of President Tinubu on assumption into office had executed major reforms in the energy and foreign exchange market.
However, the ripple effects of these reforms which were initiated in less than a month into office have greatly affected the economy in terms of inflation and exchange rate.
Furthermore, to mitigate the ripple effects of the reforms on public finance, the administration is seeking some short-term revenue generation strategies in a manner that is anti-growth. .
For instance, the federal government in July proposed an amendment to the Finance Act to introduce a windfall tax on foreign exchange revaluation gains of deposit money banks by up to 50%.
Surprisingly, the National Assembly during deliberation on the proposal increased the levy to 70%, a move that has been widely condemned as a disincentive to investment and job creation.
