The Commonwealth and Nigeria: Building a New Partnership
Date: 28 Feb 2000
Speaker: Secretary-General Chief Emeka Anyaoku
Location: Commonwealth-Nigeria Investment Conference, Abuja, Nigeria
We are grateful to the Nigerian Federal Government for the hospitality and warm co-operation that has been extended during the preparations for the conference. That co-operation is just one manifestation of the new partnership, which is being built between the Commonwealth and Nigeria.
The conference is a tangible measure of the Commonwealth's commitment to help foster economic expansion and development in Nigeria. It is the first national level investment conference, which has been organised by the Commonwealth Business Council as part of its programme to help mobilise investment in Commonwealth countries. It also honours a pledge we had made to President Obasanjo following the successful completion of the transition to democratic civilian rule to facilitate a dialogue between international investors and counterparts in Nigeria. It is important that the dialogue is taking place here because it demonstrates in a practical way that the country's doors are open and that there is a keen interest in discussing recent progress and a desire to hear the views of potential partners.
The democratic transition has already brought benefits to Nigeria in terms of ending its international isolation. Sanctions have been lifted and the country has returned fully to the Commonwealth fold. At their summit in Durban, South Africa, in November 1999 Commonwealth Heads of Government extended a warm welcome to President Obasanjo and I would again wish to pay tribute to his leadership, vision and determination to realise the country's full potential and restore it as an important member of both the Commonwealth and the wider international community.
Nigeria is now fully participating in all Commonwealth activities: for example, Nigeria's Finance Minister was one of the four ministers who, at the World Bank/IMF meetings last September, presented the conclusion of the Commonwealth Finance Ministers Meeting, in which he and the Governor of the Central Bank of Nigeria had participated. And Nigeria's Foreign Minister is now one of the eight members of the Commonwealth Ministerial Action Group which is concerned with assisting the promotion of the association's fundamental principles, including democracy and human rights, in Commonwealth countries. Thus Nigeria has returned to its traditional role in world affairs.
Experience has shown that isolation is not a viable option in the increasingly globalised economy. As Commonwealth Heads of Government observed in their Fancourt Declaration on Globalisation and People-Centred Development, "In today's world, no country is untouched by the forces of globalisation. Our destinies are linked together as never before. The challenge is to seize the opportunities opened up by globalisation while minimising its risks."
There can be no denying that globalisation is an unstoppable process, but it is essential that the process is managed so that the benefits are distributed more equitably both between and within countries and realised by the developing countries in particular. This was the key message articulated at both the Commonwealth Business Forum in Johannesburg and the Durban Commonwealth Heads of Government Meeting.
Heads of Government believed strongly that, in order to work effectively, the world trading system must take account of the interests of all countries. The process must be participatory and must allow a voice to all, not just the most powerful. To achieve that goal, they urged that the next round of global negotiations on trade should have a pronounced developmental dimension, with the aim of achieving better market access in agriculture, industrial products and services in a way that provides benefits to all members, particularly developing countries.
Given the stakes, it is even more important now that all countries are involved in the world trade negotiations.
One key objective of any negotiations should be to reverse Africa's declining share in world trade. Today, it stands at about 1 per cent, compared to about 3 per cent in the 1950s. Furthermore, over the period 1995-97, investment as a percentage of GDP amounted to 17.8 per cent for Sub-Saharan Africa, compared to 34.8 per cent for Asia (excluding Japan) and 20.9 per cent for industrial countries.
These trends have persisted despite the fact that the African region enjoys the highest rates of return on investment. Improvements in macroeconomic management and structural reforms have contributed to a significant economic upturn in recent years. Over the period 1995-97, real GDP growth in Sub-Saharan Africa averaged 4.5 per cent per annum compared to 1.5 per cent during the preceding five-year period.
There are attractive business opportunities in Africa. These have been bolstered by declines in the region's inflation, overall fiscal deficit and current account deficits. Improvements have been made through the liberalisation of exchange rates, the reform and in some instances, dismantling of inefficient public enterprises and the relaxation of restrictions on current account convertibility in many African countries. Building on these achievements, a number of countries have succeeded in attracting new investment. Among the Commonwealth countries receiving the largest percentage increases in Foreign Direct Investment inflows in 1997 were Ghana, Swaziland, Tanzania and Uganda.
That is good news, but it is unfortunate that it is often overshadowed in both the popular press and academic writing by reporting that tends to accentuate the negative. The challenge is to get the positive message through and I am pleased that so many international colleagues have come to Nigeria to hear first hand about the investment opportunities here.
The Commonwealth has been working to mobilise private investment for Africa through the Commonwealth Africa Investment Fund (Comafin), which was launched in July 1996 as the first of four regional funds under the Commonwealth Private Investment Initiative (CPII). This joint initiative of the Commonwealth Secretariat and the Commonwealth Development Corporation provides long-term capital growth for its investors through equity and quasi-equity investment in private sector businesses in Commonwealth Africa.
Comafin aims to contribute to the economic development of these countries by supporting private enterprises and playing a catalytic role in the mobilisation of other sources of finance from the private sector. The first closed-end ten year fund with a value of more than $60 million has been fully committed: Comafin 2 is already being planned and is expected to look at investment opportunities in Nigeria as well as other countries.
While it is true that most Foreign Direct Investment will originate from the industrialised countries, the strong links between Commonwealth countries including, for example, Nigeria and South Africa, have the potential to help mobilise further investment flows for other African countries. The strengthening of these relationships can make a significant contribution to the development of emerging markets and thereby capitalise on their prospects.
For its part, now that Nigeria has returned to a democratic polity, the country has quickly regained international goodwill and foreign investors are beginning to look at it in a serious way. But for this to be translated into the kind of confidence that is vital for investment and growth, Nigeria's new democratic process and institutions must be strengthened and be seen to work.
It is generally recognised that only a democratic system of government that guarantees the rights of all citizens and the rule of law can deliver long-term political stability, that in turn would provide the basis for sustainable development in countries as pluralistic and diverse as Nigeria. That is why problems such as the Niger Delta, and the fears and tension aroused by the present attempts to extend the existing scope of the sharia system of law in some States must be dealt with in a manner that will confirm the country as a secular democratic society of law and order.
Besides, potential investors will have high expectations and will wish to see progress in tackling corruption, bringing about greater transparency in the management of the country's oil and natural gas resources, and reforming its public services. Urgent action will be needed on the part of the government in dealing with the acute energy shortage in the country, especially of petrol and electricity, and improving its transportation and telecommunications infrastructure. In this regard, private-public partnerships may have a role to play in accelerating infrastructure development.
The government of President Obasanjo has signalled its determination to create the right political and macroeconomic environment for sustainable economic growth. Within that framework, economic reform has begun and specific measures in a number of areas have been announced. We look forward to hearing more about those measures over the course of this conference.
As I have mentioned, one of the hallmarks of globalisation is interdependence. Nigeria is not alone in addressing the challenges of economic growth and development. The country can expect support from the international community, including the Commonwealth, which provided assistance in the last transition programme, and which stands ready to work with Nigeria in promoting its fundamental political values of democracy, human rights, the rule of law and just and honest government.
Nigeria may be able to benefit from Commonwealth technical assistance in the area of public service reform and also in reviewing its legislative framework for foreign investment. Support can be provided to help improve systems that ensure transparency and accountability.
At their Durban Summit, Commonwealth Heads of Government were concerned that corruption has become global in reach and that it must be tackled comprehensively through action at both national and international levels. In this connection, I should mention that Commonwealth Leaders endorsed the Framework for Principles for Promoting Good Governance and Combating Corruption proposed by a Commonwealth Expert Group which I had established. Work will now begin on strategies to facilitate the implementation of the Framework. I am pleased that the Commonwealth Business Council will also be working to mobilise private sector inputs to that process.
Even more urgent support and understanding may be needed from the international financial institutions (IFIs) and from Nigeria's foreign creditors. Without a rescheduling of Nigeria's estimated $29 billion external debt, the process of political and economic reform will be seriously sabotaged, with serious consequences for the country's nascent democracy and its long-term political stability. The Commonwealth has taken a leading role in drawing attention to the crippling effect of debt on many countries and has given its support to agreements to provide deeper, wider and faster debt relief, particularly for the Heavily-Indebted Poor Countries. A realistic approach to Nigeria's requirements will help to advance the country's emergence from an unsustainable position.
In this regard, the government has given its support to a staff-monitored programme with the IMF. Successful implementation of such a programme, coupled with a continued commitment to good governance and macroeconomic stabilisation, should be matched by appropriate new financing and substantial debt relief on the part of the IFIs and creditors.
Care must also be taken to address the social effects of economic liberalisation and structural adjustment and to progressively increase investment in education and basic health care. If economic reform simply serves to increase the gap between the affluent political and business class and the rest of the population, the basis for popular support for democracy in Nigeria - the belief that it will promote social justice - may be fatally undermined.
This is probably my last public address in Nigeria as Commonwealth Secretary-General. I would like to take the opportunity of saying that it has been a very satisfying ten years. In that period, the Commonwealth has transformed itself into an active proponent and enforcer of democracy and the rule of law, and the respect for human rights. It has also acquired new instruments for assisting the economic development of its member states. Whereas ten years ago the Commonwealth was still beset by the contradiction of containing within its ranks military governments and one-party states, it no longer has within its councils any such regimes. We have indeed become a community of democracies. We now have to make sure that this democracy is not jeopardised by poverty and absence of development.
The journey ahead is not expected to be short or easy. There will be some hard choices and decisions to make. But President Obasanjo and his colleagues have shown that it will be possible to move forward with support and understanding from the nation and the international community. In addition to continuing to support in every practicable way the consolidation of the country's new democratic dispensation, the Commonwealth is similarly ready to lend its support through partnership to help achieve the goal of sustainable economic growth in Nigeria.
28 February 2000
Abuja
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