Throughout history, there has been a general feeling that the fruit of the land should only be harvested by the sons of the soil. The sentiment of nativism finds expression, fuelled by demagoguery, in government policy and rhetoric. The most recent I can remember is Sanusi suggesting that telecoms companies making huge profit in Nigeria should be compelled to list their shares in the Nigerian Stock Exchange. This is reminiscent of the indigenisation policy of the Gen. Yakubu Gowon (retd) government, and it is very common among African countries, being an insidious product of xenophobia. It is the reason Nigerians complain about Ghana's government policy targeting non-Ghanaian (mostly Nigerian) businesses. It is a vicious cycle that reduces trade among African countries and ensures that poverty level remains high for much of Africa and therefore feeds nativist mentality.
There is justifiable cause for fear of foreign influence in local business participation. At the time that American foreign and military policies were heavily influenced by commercial interests in the early 20th century, the American military invaded Haiti, Nicaragua and other Latin American countries with its politicians, egged on by plutocrats whose investments in such countries were under threat from the government policies of such countries.
But I believe this fear can be managed by the government seeking mutually beneficial trade agreements with foreign governments and protecting the interests of Nigerian businesses located abroad from harsh government policies. The conflict between Nigeria and Britain over Britain's policies that targeted Arik Air shows that foreign investments in the country can be used as a leverage against other countries who unfairly victimise Nigerian businesses.
The encouragement of foreign investments would not only bring foreign capital to the country, but also provide bargaining power for allowing Nigerian businesses to expand into foreign countries. The same philosophy should be pursued on the African continent with other African countries if we would have any chance of reducing poverty on the continent and improving trade. The dearth of trade between African countries has been identified as a reason for high rate of poverty on the continent.
It is unusual to hear anyone speak against any policy of indigenisation, as it is seen as something that benefits the masses. It doesn't. The indigenised companies of the early 1970s went to beneficiaries of government corruption and were run down. The expropriated farms and other properties of white farmers in Zimbabwe went to government cronies and were mismanaged. The “abandoned properties” of Rivers State went to government cronies and were also mismanaged and scared off other property developers from Rivers State who chose Lagos to invest in instead.
The people who bought over indigenised companies have made a lot of money for themselves but have destroyed institutions that would have provided jobs for the millions of unemployed Nigerians. These same Nigerians are the ones who would support the idea of forcing Telecoms companies to list their shares on the Nigerian stock market.
The reason indigenisation does not work is neither because all government policies are doomed to fail in Africa, nor due to bad implementation. It is because indigenisation is a faulty and retrogressive policy that rewards people for doing no work and adding no value to the economy. The history of indigenisation in a country scares away potential foreign investors and makes it difficult to attract Foreign Direct Investment to the economy. Indigenisation would eventually fail, even if it were possible to implement it without corrupt government officials and their cronies taking over the businesses. This is simply because when you reap where you did not sow, it is natural human tendency to squander the harvest.
Giving citizens, especially rich ones, handouts permits them to be reckless. Instead of people looking on the government to hand them the ownership of big foreign companies, the government should, instead, allow local businesses to compete with foreign businesses operating in the country.
Legislation has already been made protecting local big businesses from foreign takeover; that should allay fears of having our economy controlled by foreign powers with stronger military. Our banks, for example, have gone from one crisis to another since the indigenisation policy. Allowing more foreign participation in this sector – with foreign banks existing side by side and competing with local banks – would make the local banks step up their game. They would realise that they have to treat their employees and customers better when foreign banks begin to attract the best hands and wealthy customers.
Decisiveness on the part of the government is also important here. Better operation of our banks is also dependent on effective, but not excessive, regulation and action against corruption. The regulators should not be determined by the state or region of origin of the president or by Federal Character or quota system, but by their suitability for the job. The government should also resist the siren call for indigenisation of the foreign banks, whatever form it might take – whether it be laws requiring them to list their shares on the local stock exchange, “local content” or laws forcing divestment. Nigeria can encourage employment of more local employees through tax incentives, instead of through laws that will force them to employ more Nigerians. After all, we cannot legislate our way out of everything.
Economies that slowly encourage foreign participation have seen tremendous growth, not only in foreign investment and jobs, but also by the scale and competitiveness of local companies. China has encouraged American businesses to operate on their shores. The strengths of these businesses have even driven so many Chinese businesses that could not compete under and the rest have had to improve their operations. It is usually pointed out to Americans who complain about their large trade deficit with China that the companies in China that cause this trade deficit are American companies operating in China. In a sense, America is having a trade deficit with itself. India experienced the emergence of Infosys on the global scene after they opened their Information Technology market to international competition. Indeed, the founders of Infosys were concerned about this and considered selling their business to foreign competitors, but chose, instead, to make huge investment in Indian local human capital. Again, India recently opened its local retail sector to global supermarket chains.
The reason we seem to repeat all past errors in Nigeria and in Africa is because too many of us are ignorant of our history. This is why we do not challenge regurgitated policies that led African economies to their current state.
•Ofili wrote vide erwin.ofili@gmail.com
