The Nigeria Employers Consultative Association (NECA) has raised alarm over rising rates of divestment, capital flight and business closure in the country.
The director general, NECA, Mr Adewale-Smatt Oyerinde who made the call, cited the folding up or relocating of factories and industries to other neighbouring countries because of government policy summersaults, as reasons for his warning.
According to Oyerinde: “in most developing economies across the globe, private businesses account for over 93% of employment, including formal and informal jobs. The private sector continues to remain the catalyst for economic growth, being a major contributor to national income and the efficient flow of capital.”
Speaking in Lagos, the director general stated that, “the recent trend of business relocation and divestment is unfortunate. Over the last decade, the Private sector has been adversely affected by various policy thrusts of government.
“Many of these policies were either anti-growth, ill-timed or not-well thought out, while others were not in alignment with the country’s economic realities. In more complex cases, we witnessed an era of policy clashes and contradictions, regulatory and legislative strangulation of businesses, which left many companies without a clear path for planning and decision making. Operational costs have increased astronomically, heaping more woes on many companies”.
Furthermore, Oyerinde noted that, “the consequences of the years of wrong policy choices are not far-fetched. As expected, divestment, capital flight and outright closures have become the ‘new normal’ within the business community. This is one of the chief reasons why the rate of unemployment continues to soar perpetually with consequential rise in crime and other security issues.
“When businesses cease operations, divest or move to other profitable and hospitable environments, large number of Nigerians become unemployed. Inadvertently, the country loses income from taxes, social investment is hindered and poverty holds sway.”
While urging a more definitive and urgent intervention, Mr. Oyerinde stated that, “it is germane to state that Government must take urgent steps to arrest this predicament. While we acknowledge and commend the current administration’s effort to address the concerns of the Private Sector and the steps it took to provide some respite to businesses in specific sectors of the economy, more needs to be done.
“Beyond the tax reforms activity and the provision of palliatives to select corporate entities, government should, by deepening engagement with the Organized Private Sector provide the right intervention and incentive not only to attract more Foreign Direct Investment (FDI), but to also prevent more companies from shutting down, divesting or leaving the country.”