Saratu Umar is the Executive Secretary of the Nigerian Investment Promotion Council (NIPC). In this interview with Daily Trust, she speaks about the recent plans by the federal government to phase out antiquated pioneer and other tax incentives for mature industries and move a revised set of incentives for real infant industries.
Do you consider Nigeria with its current challenges to have investment opportunities?
Of course; the country has various opportunities that are untapped. With the different natural resources the country is endowed with, it is safe to say we are the richest country in Africa with the right investments.
No one will deny that there are challenges in the country to attract investors, but the higher the risk the higher the returns. By the time everything is so perfect, then the opportunity is not there.
That will not take away the fact that we must work towards mitigating the impacts of the challenges. There are a number of them that are beyond our control, but the nature of NIPC’s mandate is to liaise with different agencies, wherever possible, for us to work at solutions that will facilitate and resolve some of these issues and look at ways to make things easier for investment.
I can’t say everything is fine or not, but definitely, it is work in progress, and all hands will be on deck to proffer strategies and how we can work with different areas in the ecosystem.
Investments are still coming, maybe not as many as we want, but might not necessarily have to do with only insecurity but other issues to keep them away. We will tell them that there are some parts of the country that are safe and they can set up there and reach their investment aspirations and so on.
We have seen companies relocating to neigbouring countries for better operating climate, how do you intend to retain what we have attracted?
What we are trying to do as a commission is to put up a marketing branding strategy of the country, and hopefully, we will be putting out a committee to review a strategy we had on branding Nigeria as a preferred investment destination.
It is a campaign that we want to vigorously undertake so that we can get what is required to develop this country, and we can’t keep on going for loans.
We need investment to be critical in different sectors of the economy; we need to bring investment to enhance our production for companies to produce what we need instead of importing them. We need to bring in investment that will also give traction to the non-oil export potential of the country.
Once we do that, we can draw in more foreign exchange (forex), and once we are able to do that, the value of the naira as we see it today will definitely improve tremendously. We can’t do that as an agency alone, so we need the media as a critical partner.
As part of our after care services to investors, we have a LAB within the NIPC, where we take on the challenges of the investors and see how we can work with them to sort out those issues.
We are going to have MoUs with different MDAs in the ecosystem and we are working with the other agencies in One Stop Investment Center (OSIC), which has agencies like FIRS, CAC and other agencies that are there to service investors and we want to make it more impactful. That is why we are collectively looking at the services that are offered by the OSIC to see how we can make them more impactful for investors.
We have spoken with the Nigeria Immigration to make their desk at the NIPC a command so that it is more of a service to investors in Nigeria and they will be given certain levels of authority that investors will like to access
What is your view on the review of the pioneer status incentive by the federal government?
The pioneer status incentive (PSI) is a tax holiday that grants qualifying industries and products relief from payment of corporate income tax for an initial period of three years, extendable for one or two additional years.
The incentive, by the government’s essence, is that pioneer status is not meant to go on forever; it is supposed to develop a particular sector. So, once the sector is matured and does not need that kind of investment again, then the government will issue another one.
In the NIPC Act, we have what we call special incentives. Those are incentives that will come on when a particular industry does not have the status of pioneer again and there is a need to take further concessions with the government in conjunction with different arms of the government. We look at the requirements and needs at that time and make a proposal, and once approved, the industry can still enjoy some forms of incentive.
I know the issue about the government trying to review the tax holiday; it is because there is a belief that some of the industries have matured and do not need to take tax holidays again. So, they need to drop off and the ones that have been given, and to make sure that companies that actually need are the ones that are getting it.
From our own end at NIPC, we are strengthening our approval process to ensure that we approve companies that need a tax holiday to get it, and it will be a win-win as the companies are getting the tax holiday, the country is also getting the benefits for giving the tax holiday.
The essence of it is for the companies to create jobs, build capacity and others. So, while the government is foregoing its right to tax, it is also benefiting from another side because jobs are being created.
It is an interplay of all of that that will enhance it and the government will feel a bit more comfortable. I don’t think the essence is to stop the tax holiday because those will disincentivise investment.
But there are challenges with power and infrastructure which do not give room for them to reap from their investments?
All these challenges are also opportunities for some investors. So, it all depends on the company. Some investors do not go to a country where there is no power, while others love it when there is no infrastructure as that will enable them to invest in it and make money.
Yes, to the normal industrialist, they will have issues of power and it will be a big challenge, but also, we will be encouraging cluster industrialisation; where if you have clusters, they can share certain utilities, and that should help in meeting some of those challenges.
What areas will you encourage investors at this point in time to venture into?
I will lean towards sectors like agriculture, alongside various industries and value chains; and mining and its value chain. Also, infrastructure; this is because without it, a lot of these things will not be successful. So, we need to have infrastructure investors and an extractive industry.
Repatriating dividends has been a major issue, how do you convince investors about Nigeria’s FX shortage problem?
There are so many challenges that have to do with that, and it is not an easy one to answer. It all depends on how we strike a balance with the law that says you can repatriate 100 per cent, which is what the NIPC law says, and the fact that it is not coming at the rate they will like.
As an administration, we will try to encourage investments in the non-oil export sector because whatever we are trying to do is going to be ad hoc arrangement. What will really be sustainable is to make sure Nigeria takes advantage fully of its non-oil potential.
A lot of the forex we have today is from oil. Meanwhile, we have not touched our potential in so many sectors. So, it is a call to action for us that we must ensure that investment in all these sectors works. In all, I think the CBN is trying to balance things out within the situation it has found itself to ensure that its services are balanced. The non-oil sector is not doing badly as they are doubling hard to ensure we improve the forex we generate.
