At the 2018 edition of the Lagos Chamber of Commerce and Industry (LCCI) security meet business dialogue in Lagos, the stakeholders admitted that on-going insecurity challenges in the country posed threat to the growth and developmentt of Nigeria’s business environment. Taiwo Hassan reports.
Business is any commercial or economic activity that tends towards making profit. The primary objective of organisations is to make profit, grow and survive in the environment in which they operate.
The environment being complex and multi-focus has a far reaching effect on any investment.
Ideally, the environment tends to shape the outlook and goal of organisations by placing constraints on them.
The stability of any environment guarantees conducive enabling environment for businesses to grow optimally.
In Nigeria, lately, the business environment where private sector firms operates has been compromised.
Particularly, Nigeria’s business environment has been undergoing lots of challenges bordering on economic and security risks, which have adversely affected growth and development as operators groan over the safety of their investments.
LCCI’s stance on insecurity
However, at the LCCI summit on impact of security risk on Nigeria’s business environment in Lagos recently, private sector operators believed that no meaningful business can take place in an environment that is insecure.
Particularly, they noted that security of life and property was a very clear factor in the investment environment and a major consideration in investment decisions.
Speaking at the event, President, Lagos Chamber of Commerce and Industry, Babatunde Ruwase, said that the event was a platform for discussions and exchange of ideas between the private sector, diplomatic corps and the security agencies on the security situation in the country.
He said the essence of the security summit was to deliberate on how the chamber could collaborate to make the environment more secure for business to thrive at a time the country is passing through concomitant security challenges.
The LCCI president said that security of life and property was a very critical, and a major consideration in investment decisions.
“In recent years, the country has been grappling with serious challenges bothering on terrorism, religious and ethnic crisis, attacks on oil installations, kidnapping, armed robbery and attacks by herdsmen,” he said.
“The impact of these security challenges on business and investors confidence is phenomenal.
“Not much investment activities are taking place in the northeastern part of the country, for instance. The same is true, perhaps to a lesser degree, in some other parts of the country. Nigeria’s position in the Transparency International Security Ranking has plunged to 143 out of 169 countries.”
Cost of doing business
The LCCI revealed that there was now a sharp increase of 10 per cent in insurance premium on security-related risks over the last one year on private sector investment.
Ruwase explained that private firms were spending billions of naira on security to protect their investment and that this had added to their operating cost in recent times.
He said that there was an increase in the cost of providing additional security by some key sectors in the economy, including oil and gas and banking.
According to him, these additional security measures include private security guards, convoy operations, additional air transportation by oil sector workers, instead of land and marine transportation for security reasons.
Ruwase said that there were also additional costs in the protection of facilities and equipment of oil producing companies operating in Nigeria.
According to him, the cost of firm’s protection of their facilities locally is becoming worrisome to their parent companies in abroad.
The LCCI boss noted that the oil and gas sector was facing fresh threats of attacks on oil installations, adding that attacks by herdsmen on farming communities across the country was not abating, resulting in increased loss of lives.
He revealed that an estimated N78 billion was spent by ICT/telecoms companies in replacing stolen or vandalised equipment in the last one year.
This, he said, disrupted the effective communication gadgets of telecoms operators, which consequently affected mobile phone communication in the country.
He said: “Let me acknowledge the efforts of security agencies and government towards addressing the problem of insecurity in the country. Some progress has been made in restoring peace and normalcy to the North East, but a great deal stills to be done.”
The United States (US) Consul-General, Lagos, Mr. John Bray, said that investment by US citizens in Nigeria was now $8.1 billion.
He urged the Federal Government to speedily tackle the ongoing menace of insecurity in the country to avoid exodus of foreign investors.
He said that the President Donald Trump-led administration was concerned with the spate of insecurity going on nationwide in Nigeria, adding that it was not good for foreign direct investment (FDI) into Nigeria.
According to him, the safety of US investments in Nigeria is critical to the survival of Nigeria’s economy, adding that taming the ongoing security risk in the country will guarantee investors’ confidence in Nigerian economy.
Nigerian Army’s submission
In his remarks, the Chief of Army Staff, Lt Gen TY Buratai, admitted that no doubt, insecurity had posed threat to Nigeria’s business environment, which if not handled properly, could degenerate into economic war.
He noted that in time past, development and security constituted separate discourses.
However, in the contemporary world, matters of security and development are increasingly being discussed in concert, both in relation to discourse and policy, giving rise to what is commonly referred to as the security-development nexus.
He said it was in consonance with this reality that the former Secretary-General to the United Nations, Dr Koffi Anan, asserted that security and development are inextricably linked.
According to him, “In the spirit of the security-development nexus, contemporary intra-state conflicts and threats such as we have in Nigeria cannot be prevented, resolved, or managed exclusively through preventive diplomacy, political negotiations and the use of force.
“This is so because they have complex causes ranging from social inequality, unemployment and under-employment, illiteracy, poverty, hunger and deprivation, environmental issues, amongst others, which require holistic correlated approaches to resolving them.”
The Chief of Army Staff acknowledged the fact that security and development were interdependent.
His words: “It is my pleasure to once again learn my voice to the avowed efficacy of this platform especially in providing a suitable avenue for discussing security issues, challenges, and their impact on the economy as well as the way forward with a view to developing appropriate strategies to be employed by the various instruments of national power.
“There is no gainsaying the fact that this discourse is equally judicious, coming at a time when our country’s security and development continue to be troubled by a plethora of threats namely, Boko Haram insurgency mainly in the North East, armed banditry, cattle rustling, armed robbery, sea robbery/piracy, militancy, cultism/cult-related violence, kidnapping among others.”
With the alarming rate of insecurity in the country, the future of Nigeria business environment looks bleak and this could deter FDI inflows if the situation is not checked by government.
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