The recent fallout between the Nigerian Ports Authority (NPA) and Integrated Logistics Services (INTELS) over non-compliance with the Treasury Single Account (TSA), has again highlighted the huge political risk involved in doing business in Nigeria and could threaten the country’s quest to improve ease of doing business perception.
“This action will impact investments, not only international investors even local investors. An investor will say, I don’t want to get into an arrangement with government and overnight somebody will say it is terminated on the pages of newspaper, that is not appropriate, especially for a country trying to improve its ease of doing business perception,” Taiwo Oyedele, head of tax practice at PricewaterhouseCoopers Nigeria, said.
Nigeria is ranked 169th in the World Bank ease of doing business and scored 139 in enforcing contracts.
INTELS, a logistics and facilities services provider in the maritime sector and concessionaire of Onne Oil and Gas Free Zone, Warri and Calabar Ports, was co-founded by Gabriele Volpi, an Italian national and Atiku Abubakar, a former vice president of Nigeria, had its contract terminated after allegedly failing to comply with the TSA directive in the past 15 months.
Chuks Nwani, energy lawyer, said, “What that action is saying is that if you want to invest in Nigeria just invest as a portfolio investors, don’t do real investments because government can wake up tomorrow and terminate your contract and say it is illegal.”
Nwani reiterates the point made by Oyedele that government is a continuum. “There is a maxim in law which says a party cannot plead remedy for fraud when it is a beneficiary, the government is saying the agreement it signed is illegal because it is looking for a loophole to terminate it, if this not reversed, it will affect the risk rate for foreign investments in Nigeria,” Nwani said.
Lack of respect for sanctity of contracts is a bane of doing business in Nigeria. Recently, the House of Representatives arbitrarily amended the Nigerian Liquefied Natural Gas (NLNG) Act by legislative fiat in disregard for Nigeria’s bond with four countries that were part of the deal. In many cases, emotive arguments trumped legal.
“Unfortunately, this is what we do every time in Nigeria and many of us still remember clearly the issue with Virgin Nigeria and those issues about who uses the international airport. Nigerians are so sensational, they like stories where you take on a rich person or somebody who has been in politics, and we all just castigate, people don’t care to look at the details,” Oyedele said.