Trade Mission to UK

I once attended a trade mission to the United Kingdom which was organised by a bilateral chamber of commerce. At one of the forums, a speaker noted that investors are wary of investing in Nigeria as successive governments are reluctant to follow through with projects commenced by their predecessors. I clarified then that Nigeria is signatory to over 28 Bilateral Investment Treaties hence with proper advice investors can be protected from unilateral actions of government as proceedings for enforcement of contracts entered into with government entities can be carried out in the international legal sphere by arbitration under the auspices of the International Centre for the Settlement of Investment Disputes (ICSID). I made a good point, at least I was told so by many of the participants. I knew however that investors are not interested in getting involved in any form of dispute resolution irrespective of how credible the process might be. They would rather do business and repatriate their funds without hassles. The very possibility of having to resort to a process of seeking redress before they can get the benefit of the proceeds of their investment is antithetical to commercial mind-set. Well, that point was not for me to make at that forum. I was part of a delegation meant to showcase Nigeria as a viable place to do business.

Mark Zuckerberg, CEO Facebook

On another note the CEO of Facebook, Mark Zuckerberg was in Nigeria some time ago. His appearance in Nigeria was hailed in many quarters as setting an example in humility for Nigerian Billionaires. It was reported that Mr. Zuckerberg came into the country without any elaborate protocol and went to ordinary places where he met with the locals. He was reported to have been sighted in the “hinterlands” as well jogging on the streets of Lagos defying the negative publicity that Nigeria has received in some foreign media as not being safe due to terrorist activities. Indeed it was rumoured that Mr. Zuckerberg did not visit the Presidential Villa initially as it was not part of his itinerary and that it was much later that he was made to fulfil that protocol. Whilst some believed these acts underscore his humility and humanness, others believed Mr. Zuckerberg is a shrewd business man who came looking for where his bread was buttered. Indeed I came across a comment analysing this issue which said that investors do not need to be encouraged to invest in any economy but that investors are like ants who know where the sugar is.

These two incidents raise issues as to the plausibility of image making for Nigeria as a viable destination for Foreign Direct Investment (FDI). Is it a worthy venture for the Nigerian public and/or private sector to devote time and resources to actively seek and attract FDI via trade missions and investment roadshows or should investments be attracted by our having appropriate structures and policies in place? Better still, should we forget about FDI and look inwards for investments?

Definition of FDI

FDI refers generally to investments made to acquire lasting interest in enterprises operating outside of the economy of the investor. It has been suggested that the “direct investor” ought to have at least 10% of equity ownership and/or maintain an effective voice in management in a “direct investment enterprise” to qualify as a foreign direct investor. In the Case of Salini Costruttori S.p.A. and Italstrade S.p.A. v. Morocco (ICSID Case No. ARB/00/4), Decision on Jurisdiction of 23 July 2001. 42 ILM 609 (2003) it was decided that for a venture to be classified as an FDI, there must be the expectation of a relationship of a certain length of time between the foreign investor and the state, the regularity of profits and returns, assumption of risks by one or both parties, and a substantial commitment by the investing party in a venture or project that would normally have significance for the development of the host state.

Advantages of FDI

FDI is advantageous in that it causes growth in the economy of the host country and improves standard of living for its populace. It causes a rise in the income of the receiving country propelled largely by the creation of more jobs and opportunities to earn higher wages. It is also a source of healthy competition for domestic businesses, therefore indirectly ensuring that they improve the quality of goods and services rendered. Foreign technology, expertise, skills and ideas are also imported thereby. New jobs are created and the attributes gained by sharing experience and training increases the education and overall human capital of a country. It also facilitates access to foreign markets. Inevitably, FDI improves the integration of the host country with the global economy; thereby fostering growth and development of the host country’s economy.

Bilateral trade chambers are known to play a major role in driving foreign investments. They generally promote the development of trade, commerce, investment and industrial technological relationships between the public and private sectors of two countries. They promote and encourage contacts, mutual understanding and ethical business relationships between host countries and nationals of other countries, they promote the consideration of all matters relating to trade, commerce and investment and communicate and circulate such information to their members, in both countries. They also advise governments on matters pertaining to trade relations between their respective countries.

Nigeria’s Generous Disposition to FDIs

Nigeria’s antecedents show a generous disposition towards the protection of FDI. These range from its barrage of local legislations in this regard, its being signatory to International Conventions and Investments Treaties, as well, Bilateral Investment Treaties and Multilateral Investment Treaties. One significant convention is the “Convention for the Settlement of Investment Disputes between States and Nationals of Other States’ (ICSID Convention) which established the International Centre for the Settlement of Investment Disputes (ICSID), an arbitral institution under the World Bank Group. As a protective measure to discourage a party from frustrating the dispute resolution process, under the ICSID provisions, where either party refuses to appoint an arbitrator, the ICSID itself will appoint an arbitrator for such party. Also, in an instance where a party fails to cooperate, the proceedings will continue notwithstanding, and the party will be bound by the award- such award cannot be reviewed, set aside or varied by a domestic court. This Convention has been enacted as a domestic legislation under the International Centre for Settlement of Investment Disputes (Enforcement of Awards) Decree No. 49 of 1967.

Also, the Bilateral Investment Treaties (BITs) Nigeria has entered into provide a measure of protection for FDIs. Indeed Nigeria is signatory to 28 BITs, although not all are in force at the moment, it buttresses the conscientious effort at protecting investments. Indeed the fear that FDIs are not protected should not arise as far as Nigeria is concerned as there has been reasonably sufficient efforts at protecting FDIs.

Finally, Multilateral Investment Treaties such as the ECOWAS treaty provide further protection for FDIs in Nigeria. Chapter 10 of the ECOWAS Energy Protocol imposes an obligation on contracting member states to ensure that they do not impair the Investments of other member states by unreasonable or discriminatory means. Art. 26 of the Protocol also provides investors with the option of submitting disputes arising thereof to either ICSID, United Nations Commission on International Trade Law (UNCITRAL) or the Organization for the Harmonization of Trade Laws in Africa (OHADA); and by assenting to the Protocol, member states are deemed to have given their unconditional consent to the submission of the dispute to international arbitration.

Whilst there is ample protection for Foreign Direct Investments in Nigeria flowing from the barrage of local legislations, International Conventions, Bilateral Investment Treaties and Multilateral Investment Treaties, Nigeria yet appears to be begging for FDI. Some commentators have argued the plausibility of such efforts. Should we continue to lure investors through roadshows and trade missions or should Nigeria and indeed Africa, like a beautiful bride, continue to mind its business and perhaps a groom who fancy her should come knocking. Africa is endowed with natural resources and even more so with human capital resources. Hence I find quite inspiring the concept of Africapitalism, which is an economic philosophy first recapitulated by Nigerian Philanthropist and private investor, Tony O. Elumelu, CON. Africapitalism postulates that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth. Wikipedia reports that the neo-capitalism philosophy most closely associated with Africapitalism is the theory of “creating shared value”, a concept defined in a Harvard Business Review article titled “Creating Shared Value: Redefining Capitalism and the Role of the Corporation in Society” written by renowned economist, Professor Michael E. Porter and Mark R. Kramer of the John F. Kennedy School of Government at Harvard University. The central premise behind creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent. I most certainly agree with the tenets of this kind of capitalism, perhaps this is truly what Africa needs. Perhaps this would make Africa to be more attractive to Foreign Direct Investors.

I have identified the advantages of FDI. I also noted the advantages of bilateral trade chambers and their efforts at encouraging cross border investments.  Further, I restated briefly the legal framework for the protection of FDI in Nigeria which in my opinion is judicious. FDIs are good and so are efforts to look inwards for investments.


I make no conclusions but leave posers. If we are for FDI, then at what cost? Must we bend over backward to get it? If we must look inwards for investments, also at what cost? Is it easy; is it feasible? Indeed Foreign Direct Investors who want to invest in Nigeria have little or nothing to worry about as there are considerable protections for FDI. Having said that, I agree that investors do not need to be encouraged to invest in any economy and that investors are like ants who know where the sugar is.

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