Bureaucratic Inefficiency Limiting Effectiveness of Trade Ministry
In addition to their lapse in export promotion, completely neglecting the central importance of financial services as an export-oriented industry, the relatively newly created Ministry of Trade and Investment in Nigeria suffers from a degree of bureaucratic inefficiency. Before the existence of the Ministry of Trade and Investment, the newly created portfolio was the prerogative of the Ministry of Foreign Affairs.
The advantage of this was that the Foreign Ministry had at its disposal all the nations embassies and consulates throughout the world to assist in reaching out to foreign investors and those interested in doing business in Nigeria. Nigeria's foreign missions all have an economic and trade desk, where a diplomatic attach would handle all trade and investment related matters in the posting country as well as reach out to the Nigerians in diaspora that have invested heavily in the country.
Since the advent of the trade ministry there has been a severe disconnect in promoting trade and investment in Nigeria. The Ministry of Foreign Affairs still controls the Nigerian trade and economic desks throughout the world but their ministry back home in the capital is stripped of that responsibility and does very little with facilitating investment. Accordingly the Ministry of Trade functions as a ministry without arms and legs, because their arms and legs are still attached to Foreign Affairs.
This has made the Trade Ministry highly inaccessible to ordinary Nigerians in diaspora and other small an medium-scale investors who form the majority of Nigeria's potential global capital investors. The only investors that the ministry of trade handles and/or even bothers to pay attention to, are the large-scale multi-national corporate investors. I know personally of capital investors that have invested 100's of millions of capital in Nigeria in a myriad of smaller multi-million dollar projects over the past decade who have said that “it is a waste of time to reach out to the ministry of trade”, because of the unresponsiveness of the ministry to even medium-scale multi-million dollar investments in the country.
The Minister of Trade, claims to have an “open door” policy, but this is only in words, not in action or practice. In order for the ministry to truly have an open door policy, their doors would have to be open in every country that Nigeria has representation, as well as in Abuja and Lagos. Without their arms and legs, they remain a talk-shop touting the investment opportunities in Nigeria at conferences and trade summits, while for the most part ignoring the primary grass-root task of assisting investors of all shapes and sizes in executing their investment initiatives and programmes. As it sits now, the ministry serves as a fancy talk-shop, formulating investment policy at the executive level, and working with major capital projects and developments.
At the same time, the economic affairs officers at Nigeria's embassies and missions are left without much utility. While their desk should be among the busiest desks at any foreign mission, they actually accomplish very little. Many of the officers leave their desks altogether and are very difficult to find even at some of the countries most-prominent foreign missions. When one does get in contact, the officers are not very knowledgeable and lack the capacity to assist investors.
Periodically the officers write useless reports and send them back to Abuja as a way of justifying their existence, but its seldom for them to ever actually facilitate or support the investment of an individual or company in any concrete way. Since their ministry back home was stripped of that major role there is no real pressure on those officers to achieve anything of merit, so they sit around for years in the country of their posting doing very little in terms of actual productivity.
When you look at successful countries that facilitate high-levels of trade and investment, things are done drastically differently than the regime currently being run by the trade ministry and foreign affairs in Nigeria. Successful countries take every form of investment and trade seriously and have established roads and avenues to support interested investors throughout the world and guide them in achieving their objectives. The way things are currently set-up, many smaller investors get discouraged, and those that persevere do so on their own with no support whatsoever from the institutions of government that are mandated to support them.
The only investors and institutions that the Trade Ministry truly supports are the large-scale investors and multi-national corporations that do not need the assistance of the ministry at all and in many cases did not even solicit their support. All these large-scale projects would receive the support of government whether or not the trade ministry even existed. Accordingly, it does not take much to realize that this is a broken system and the newly created ministry is a faltering institution when compared to similar bureaucratic agencies in the world.
First at the core of the problem is the orientation of the Ministry itself, that approaches investment and trade promotion with a top-down approach rather than a bottom-up approach. With their current disposition they “help” the investments that do not need any assistance and ignore the investment projects and initiatives where they would actually have had an impact in the outcome. Secondly the arms and legs need to be attached to the body. The diplomatic officers charged with trade and investment should report to the Ministry of Trade along with Foreign Affairs.
BOTTOM-UP ORIENTATION
Even when you listen to the Minister of Trade speak, which I have done several times, it is clear that his focus is on the large-scale development projects that are ongoing in Nigeria. His office is open primarily to the proprietors of those projects, and most of their “work” is geared at supporting them. Despite their claims of having an “open-door” policy, their doors remain closed to the overwhelming majority of medium and small-scale investors. Thus many of the foreign investment projects in Nigeria go completely ignored by the trade ministry, even those who solicit their support in the process. While many of the smaller projects get implemented in spite of the disdain they received from the Ministry of Trade, many of the smaller-scale projects that could have benefited from support from the ministry, never see the light of day.
While it is natural in the private sector for the banks and global capital investors to gravitate towards the stronger and larger projects, its common sense in the framework of public administration that the public-sector cannot do this. In fact, the public sector has a fiduciary obligation to mimic the private sector in reverse, thus orienting themselves to support the projects and the proprietors most-likely to be ignored and shunned by the private sector.
The compound impact of this approach is that more projects get done, and many of the intermediate but important job-creating investments that are straddling the fence as to whether or not they would get executed, are bolstered by the support of government, and pulled over into safety.
Coming exclusively from the private sector, with very little understanding of public administration, the inaugural Minister of Trade has done a very poor job in this regard. Going forward, the new leadership is going to have to turn the culture fostered by incumbent minister on its head, reorienting the ministry to be primarily a bottom-up focused body. In this regards, they should develop much stronger ties with the start-ups, the young entrepreneurs, and the diaspora, developing initiatives focused on assisting them in achieving their objectives.
CONNECT THE ARMS & LEGS
With respect to the disconnect between the Ministry of Trade and Foreign Affairs, all economic and trade officials on foreign posting should be retrained and take the bulk of their marching-orders from the trade ministry. Only in matters of protocol and posting should the foreign affairs ministry be involved. The arraignment is similar to the ongoing posting of numerous military and naval officers stationed in Nigeria's diplomatic missions throughout the world where Nigeria has military cooperation and partnerships.
The military personnel are stationed by foreign affairs but they report back to there respective outfits and the Ministry of Defence as well as foreign affairs. Instead of sitting around idling at the country's foreign missions, economic foreign officers on diplomatic posting, should have a heavy case load, working for individuals and companies that are seeking to invest in Nigeria. Everything from assisting our nationals in diaspora seeking guidance in buying or building a home in Nigeria, or start-ups seeking foreign investment capital, or small SMEs in Nigeria seeking to sell their products abroad, should all be part of the daily routine within the trade ministry.
Economic and trade officers stationed abroad should be trained and mandated to handle volumes of these types of cases on a regular basis, with view of seeing them executed. In today's ministry most of these types of cases would be ignored. However the new and properly functioning Ministry of Trade should solicit and seek-out these types of small missions and reorient themselves from being an elite-serving ministry to one that serves the marginalized small-scale young entrepreneurs and assists our nationals abroad who desire to invest in their country. In order to achieve this, the new minister has to have an acumen for both the private sector and for public administration, with a keen understanding of bureaucratic organizational behaviour.
Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net . � Copyright 2014 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.