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How Nigeria Can Attract And Keep The Right Kind Of Foreign Direct Investment

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Two of the largest banking and financial services institutions in the world, HSBC and UBS, have recently closed their local representative offices in Nigeria.

There’s also trouble brewing elsewhere in Nigeria’s business world that’s prompted fears about the climate for foreign direct investment in the country. Foreign direct investment is an investment made by a firm or individual in one country into business interests located in another country.

For instance, Nigeria’s government in September accused HSBC of money laundering after an analyst working for the lender said a second term for President Muhammadu Buhari may stall economic recovery  in Africa’s biggest oil producer.

There are also tensions between Nigeria’s central bank and the South African telecom company MTN. In 2015, MTN was fined about $5bn for failing to cut off unregistered SIM cards. This was later reduced to $1.7 billion after a long legal dispute and the intervention of South Africa’s then President Jacob Zuma.


Recently, the central bank has ordered MTN to repatriate $8 billion it said has been taken out of the country illegally.

Analysts are concerned that the Nigerian government’s attitude towards MTN and the two banks may erode the confidence of foreign direct investors. Their fears seem to be well founded: foreign direct investment in Nigeria fell to $1 billion in the first half of 2018, from $1.48 billion in the first half of 2017.

Foreign direct investment is crucial for any economy. So how can Nigeria attract and keep the right kind of investment from global companies? Compromise will be key, both for the government and foreign firms.

Why foreign direct investment?

Foreign direct investment is often preferred to exporting. That’s because while exports merely involve moving goods from one country to another, foreign direct investment actually involves an investor establishing foreign business operations or acquiring foreign business assets.

This often includes establishing ownership or controlling interest in a foreign country (for instance an American business establishing a physical business presence in Nigeria). Many emerging economies like China, Brazil, Vietnam and India have built their growth on FDI flows.

The trick is to attract “quality foreign direct investment” that links foreign investors into the local host country economy. The International Growth Centre, a British-funded research centre that aims to promote sustainable growth in developing countries, characterises “quality” here as contributing to:

  • decent and value-adding jobs and enhancing the skill base of host economies;
  • transfer of technology, knowledge and know-how;
  • boosting competitiveness of domestic firms and enabling their access to markets.

What Nigeria can do

There are a few things Nigeria can do to boost foreign direct investment. For starters, it must play fair. Foreign and domestic businesses should be treated equally. They should be open, transparent and dependable conditions for all kinds of firms.

Another area that needs attention is infrastructure. Businesses need easy access to ports, an adequate and reliable supply of energy and relative certainty that the country will be good to invest in.


Good institutions also promote FDI.

The government should encourage partnerships between foreign and local businesses. Foreign firms might be familiar with global good business practices, but local firms will be more familiar with the indigenous context. This synergy could be very beneficial.

It’s also critical that Nigeria gets its regional governments involved: there are many regions in Nigeria, and these regions all have unique opportunities and challenges. 

Our latest research shows that when the central government of Nigeria ran out of ideas and foreigners wanted to exit the agricultural sector, the regional government of Kwara state stepped in to create a positive business climate based on the cooperation of local banks, community members, and the foreigners themselves culminating in the Shonga farms public-private venture.

This has kept the firm in Nigeria. It’s also brought private investors to the table, bolstering the firm and the local economy.

Nigeria should also tap into its huge diaspora. There are many Nigerians living outside the country who understand its challenges. They should be encouraged to help, or asked to work with their networks to invest in the country.

What foreign firms can do

Foreign firms also have a role to play. They can enhance their success in Nigeria (and elsewhere on the African continent) in several ways.

First, they need a long term strategic plan. This means thinking carefully about what sectors or activities to target. Many foreign firms come to developing countries when things are rosy but leave when conditions change. They don’t properly consider that solving such problems will gain them a competitive advantage in the long run.

If they stay and follow a learning curve, foreign firms will better understand the local business context. They’ll also gain credibility among ordinary people and possibly get more customers and support that way.

In the same vein, foreign businesses should create local solutions that meet ordinary people’s needs. The banks leaving Nigeria have been accused of only catering to the needs of wealthy Nigerians, who are perceived as corrupt. A more diverse portfolio that catered to the needs of ordinary Nigerians would have nullified this claim.

Foreign firms must also work closely with credible and strategic local firms, and be willing to enter into dialogue with the Nigerian government where necessary. This is crucial especially as administrations may change or government policy may evolve. Dialogue could ensure that all parties are on the same page.

Act local, think global

It’s unfortunate that these banking institutions have decided to leave Nigeria. Hopefully both the Nigerian government and other foreign investors can learn from this.

The main takeaway for both foreign investors and governments involved in foreign direct investment is that it would be prudent for all parties to act locally but think globally.

READ MORE | Nigeria: To Invest Or Not To Invest? That Is The Question

READ MORE | Investment Marketplace Coming To Africa

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Roadmap For African Startups

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Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship, explains how African impact entrepreneurs will continue to rise.


Does impact investment favor expats over African entrepreneurs? If so, how can it be fixed?

There is a growing recognition all over the world that investment is not a fully objective process, and is biased by the homogeneity of investors, networks and distant locations.

A Village Capital Report cited that 90% of investment in digital financial services and financial inclusion in East Africa in 2015-2016 went to a small group of expatriate-founded businesses, with 80% of disclosed funds emanating from foreign investors.

READ MORE | It’s Time For Africa’s Gazelles To Shine

In a similar trend recognized in the US over the last decade, reports that only 3% of startup capital went to minority and women entrepreneurs has triggered the rise of new funds focused on gender and minority-lensed investing.

There has been an explosion of African startups all over the continent, and investors are missing out by looking for the same business models that work in Silicon Valley being run by people who can speak and act like them.

In South Africa, empowerment funds and alternative debt fund structures are dedicated to investing in African businesses, but local capital in other African countries may not also be labelled or considered impact investing, but they do still invest in job creation and provision of vital services.

There is still, however, a several billion-dollar financing gap of risk capital in particular, which local capital needs to play a significant part in filling. And of course, African impact entrepreneurs will continue to rise and engage investors convincingly of the growing and unique opportunities on the continent.

READ MORE | The World’s Most Generous Billionaires Outside Of The US

What are the most exciting areas for impact investing and social entrepreneurship today?

After several decades of emergence, the most exciting areas are the explosion of new products, vehicles and structures along with the mainstreaming of impact investment into traditional entities like banks, asset managers and pension funds who are using the impact lens and, more importantly, starting to measure the impact.

At the same time, we’re seeing an emergence of partnership models, policies and an ecosystem of support for the work of social entrepreneurs, who’ve been operating with insufficient capital and blockages in regulation for decades.

Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship. Picture: Supplied

The 2019 OECD report on Social Impact Investment  mapped the presence of 590 social impact investment policies in 45 countries over the last decade, but also raises the concern of the risk of ‘impact washing’ without clear definitions, data and impact measurement practices. 

In Africa, we are also seeing National Advisory Boards for Impact Investing emerge in South Africa and social economy policies white papers being developed; all good news for social entrepreneurs.

READ MORE | Naomi Campbell: Africa Is One Of The Leading Continents In The World

What role does technology play in enabling impact investing and social entrepreneurship?

The role of technologies from the mobile phone to cloud services, blockchain, and artificial intelligence is vast in their application to enhancing social impact, improving the efficiency, transparency and trust as we leapfrog old infrastructures and create digital systems that people in underserved communities can now access and control.

From Sproxil (addressing pirated medicines and goods), to Zipline (drones delivering life-saving donor blood to remote areas of Rwanda) to Silulo Ulutho Technologies (digitally empowering women and youth), exciting new ways of addressing inclusion, education and health are possible, and applications are being used in many other areas such as land rights, financial literacy etc.

While we have seen a great mobile penetration, much of Africa still suffers from high data costs, and insufficient investment in education and capacity to lead in areas of the fourth industrial revolution, with the risk that these technologies could negatively impact communities and further drive inequality.

READ MORE | Why Now Is The Time To Invest In African E-commerce

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Businesses At The Heart Of A Greener Future

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With every day that passes by it becomes more apparent that the Earth is deteriorating and time is running out to save it. Scientists have estimated that we have less than a decade to save the planet before it is irreversibly damaged, mainly due to climate change.

Businesses claim the largest percentage of global emissions (at approximately 70% since 1988, according to The Guardian) which is an alarming statistic, especially in a time when the planet’s well-being is being compromised.

Many large business corporations are hastily coming on board with operating sustainably by transforming their practices and placing business ethics at the forefront of their priorities.

READ MORE | The Most Sustainable Companies In 2019

Last week, a round table discussion was held at the Fairlawns Boutique Hotel, Sandton hosted by Environmental Resources Management (ERM) – the world’s largest sustainability consulting firm. Their aim was to discuss how imperative it is for African businesses to get on board with sustainability.

“We have been talking about how to be sustainable for a long time but now it is time for us to do sustainability,” says Thapelo Letete, Technical Director of ERM.

An engaging and thought-provoking panel discussion ensued with representatives from ERM and mining companies, Anglo American and Gold Fields. They emphasized the importance of sustainability being recognized by investors, especially in mining and oil companies that rely solely on Earth’s natural resources.

Civil society has a colossal role to play in ensuring the sustainability of businesses. Due to the law of supply and demand in production, consumers are being urged to be mindful of their buying habits and to make sustainable decisions. These are as simple as minimizing the utilization of plastic straws by replacing them with metal or paper straws and reusable shopping bags and by recycling selected items.

READ MORE | Challenging The Gender Divide

“Research suggests that socially and environmentally responsible practices have the potential to garner more positive consumer perceptions of (businesses), as well as increases in profitability,” according to an entry in Sage Journals published in May.

The advancement of science, artificial intelligence and the rapid growth of the technological industry make it an undeniable fact that the Fourth Industrial Revolution is underway. Many businesses across the globe seem to be well prepared for this change. However, businesses in Africa seem to be vulnerable. 

“It is difficult to say that all businesses in Africa are prepared for it. It is not a country specific thing but it does vary across corporations. There will be businesses that are well prepared and businesses that are not so well prepared,” says Keryn James, CEO of ERM.

A large part of sustainability also relies on empowerment and equality. Sub-Saharan Africa has the highest number of female-owned businesses who contribute a large amount of money towards their respective countries’ GDPs. However, most of these businesses struggle with the issue of scaling.

“Women sometimes underestimate their ability and they don’t necessarily  have the confidence that they should have about the value that their businesses present. Women often take less risks than men,” says James.

“The issue of scaling is one that we see globally. One of the issues are access to funding to support in the investment and growth of their businesses.”

READ MORE | Mastercard: Diligent About Digital In Africa

Going forward, the availability of mentorship programmes and skills development opportunities for women, especially black women in business should be encouraged.

According to a study done by the UN Women’s organization, an average of 3 out of 7 women score higher in performance when they are placed in senior managerial positions. Additionally, if more women work, the more countries can exponentially maximise their economic growth.

Women will be empowered when given the correct skills and opportunities to be able to run their own businesses independently which would ultimately lead to the scaling of female-owned businesses in Africa and sustainable development.

The Nedbank Capital Sustainable Business Awards aim to recognize the efforts of businesses that operate sustainably and to encourage other corporations who intend to adopt more sustainable strategies into their practices. Initiatives such as these prove that business value also depends on how sustainable they are.

It is clear that the prioritization of sustainability and accountability in businesses is the only way forward in the midst of this global crisis. With a combination of will and the rigorous work that African businesses have put into sustainability initiatives and strategies, it is easier to be optimistic about our planet’s wellbeing.

-Buhle Ntusi

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Ex-Google Staffer Says After Split With Chief Legal Officer David Drummond: ‘Hell Does Not Begin To Capture My Life’

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Former Google employee Jennifer Blakely has written a scathing blog post with allegations about how her affair with chief legal officer David Drummond unfolded.


A former member of Google’s legal team who says she had a child with the company’s chief legal officer, David Drummond, has written a scathing blog post about the way that their relationship unfolded within the search engine giant, including that he issued “terrifying threats” to take custody of their child after initially refusing to pay child support.

In a Medium post, Jennifer Blakely says that she was inspired to detail her experience after an explosive New York Times story last fall put a spotlight on how the company shielded top executives from harassment claims and sparked massive employee protests.

“Looking back, I see how standards that I was willing to indulge early on became institutionalized behavior as Google’s world prominence grew and its executives grew more powerful,” Blakely writes.

READ MORE | Google, Facebook, Twitter Fail To Live Up To Fake News Pledge

“Women that I worked with at Google who have spoken to me since the New York Times article have told me how offended they were by the blatant womanizing and philandering that became common practice among some (but certainly not all) executives, starting at the very top.” 

While her relationship with the married Drummond was included in the Times story and first reported byThe Information in November 2017, this is the first time Blakely has written about the experience herself.

Drummond is one of several current and former Google executives who has reportedly had relationships with employees or extramarital affairs, including Eric Schmidt, Sergey Brin, and Andy Rubin.

READ MORE | Calling Out Sexual Harassment

Blakely alleges that after their relationship ended, Drummond had another relationship with a subordinate, which is against Google’s workplace policy. He is still employed by Google and made more than $47 million last year. 

Blakely says that she started working in Google’s legal department under Drummond in 2001 and that after he told her that he was estranged from his wife, they began a relationship in 2004. She says the two had a child together in 2007 and that Google’s human resources department then told her that one of them had to leave the department.

She moved to sales, an area where she had no experience, and subsequently struggled with her work. Blakely alleges that after she ultimately left the company at Drummond’s urging in 2008, but that while they were living together in Palo Alto, he broke off their relationship via text message.

“‘Hell’ does not begin to capture my life since that day,” she writes. “I’ve spent the last 11 years taking on one of the most powerful, ruthless lawyers in the world. From that fateful night forward, David did things exclusively on his terms.” 

She alleges that Drummond initially refused to see their son or pay child support, and then fought against her in a custody battle. While she says they ultimately reached a settlement and he began paying child support, she writes that “months or years” would go by when he wouldn’t see their son. In 2014, Drummond allegedly showed her an article about Eric Schmidt’s reported history of extramarital affairs during an argument, implying that the executive’s position granted him impunity.

READ MORE | Young women in Soweto, South Africa, say healthy living is hard. Here’s why

“His ‘personal life’ (which apparently didn’t include his son) was off limits and since I was no longer his ‘personal life’ it was time for me to shut up, fall in line and stop bothering him with the nuisances or demands of raising a child,” Blakely writes.

Blakely’s story is the latest in a string of public posts from former Google employees highlighting issues with the company’s culture and policies (or their lack of enforcement).

One of the women who helped organize last fall’s protests, Claire Stapelton, recently wrote about her experience with retaliation, another employee detailed the disappointing way the company’s human resources department dealt with her harassment reports, and former senior engineer Liz Fong-Jones posted about “grave concerns” with the company’s decision making in general.

The outspokenness of Google employees exemplifies — and has helped spur — a broader activism in the tech sector that has seen workers speaking out against their employer’s internal policies and business decisions.

Blakely’s post also taps into the larger #MeToo movement which has drawn attention to sexual harassment and abuse in the workplace across industries.

“Until truth is willing to speak to power and is heard, there’s not going to be the sea change necessary to bring equality to the workplace,” she writes.

Neither Google nor Drummond immediately responded to a request for comment. 

This story is developing.

-Jillian D’Onfro; Forbes

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