KPMG, a professional services outfit, has disclosed that the parlous state of most roads across the country creates a major setback to inflow Foreign Direct Investment.
To attract meaningful Foreign Direct Investment and enhance competitiveness, the international firm, in its new report on ‘Doing Deals in Nigeria’ said for the country to attract investors, it must articulate an integrated policy that would unlock the rapid development of transport infrastructure.
Besides, the report identified low level of transparency in Nigeria’s business environment as another obstacle to FDI inflow, especially at the due diligence stage.
The Head, Africa, Deal Advisory and Private Equity, KPMG, Mr. Dapo Okubadejo, explained that the parlous state of road infrastructure in the country, especially those connected to the ports, had become a major concern to foreign investors, as the inadequacies posed a significant challenge for businesses, by adding substantial amount to time and ultimately increasing overall cost.
The report said, “With only 20 per cent of roads being paved despite road transportation being the means of movement for 80 per cent of goods in the country, leaves much to be desired. Much of Nigeria‘s potential for economic growth remains untapped due to the chronic lack of electricity, which increases cost of domestic production.
“The country’s population is young and fast growing and companies are seeking to capture rising consumer spending. Nigeria is expected to remain Africa’s largest consumer market as income continues to rise, with fast moving consumer goods and food beverages companies set to benefit.”
“However, there still exists, challenges that need to be overcome. Underdeveloped infrastructure services push up operating costs, while a lack of transparency can cause unwanted delays in deal-making process,” the report added.
Furthermore, the report observed that bribery and corruption regulations are not well developed in Nigeria, especially in the real sector, thereby exposing businesses to risks, but urged government to implement stricter controls and regulatory measures that would help protect businesses under such
conditions.
The Associate Director, Deal Advisory, KPMG in Nigeria, Ms. Ijeoma Emezie-Ezigbo, argued that transparency issues were difficult to overcome once the business had begun, as it creates inaccurate forecasts and can completely hamper business objective.
“There is notable low level of transparency in Nigeria’s business environment, which is a challenge for investors, particularly at the due diligence stage. Such opacity can make investing risky by clouding accurate forecasting and valuations,”
she said.
She stressed the need for government to ensure that Nigerian firms operated with high level of corporate governance and well-structured financial reporting standard to enhance ease of doing business in
Nigeria.
