Written evidence submitted by the African Foundation for Development (AFFORD) (IRN0032)

 

AFFORD Founded 1994 ●

 

UK Charity No: 1104682 ● UK Company No: 4772972

 

Rich Mix Building, 35-47 Bethnal Green Road, Shoreditch, London E1 6LA

Website: www.afford-uk.org              Tel: 020 3326 3750

 

 

Date:              9 June 2021

From:              Onyekachi Wambu, Executive Director, African Foundation for Development (AFFORD), a UK based charity that aims to enhance and expand the contribution the diaspora makes to Africa’s development.

To:              Foreign Affairs Committee Inquiry on Nigeria

 

Re:              Written Evidence on behalf of AFFORD to the Foreign Affairs Committee Inquiry on Nigeria

1         What are the emerging opportunities for aid and investment in the science and technology sectors in Nigeria? How should the FCDO encourage investment in these sectors, including in small and medium sized enterprises?

 

1.1   Nigeria is dealing with several severe problems, including governance issues, insecurity, economic instability, and passive ethnic aggression.[1] Alongside there is an exploding youth population, which have led to pressure on jobs. Nigeria’s jobs challenge: various forecasts show that Nigeria, already Africa’s most populous country, will drive the boom in Africa with an expected population of 790.7 million by 2100. the United Nations already predicts that this will make it “harder” for African governments to reduce poverty and hunger or boost local access to standard health and education. In the case of Nigeria, the population will rise by nearly 300%.

 

1.2   However, successive governments have not managed to turn the economic situation around to create jobs. This has resulted in sustained emigration of Nigeria’s middle-class and young people, typically among its best educated citizens, to Europe and North America, often without the intention of returning. This trend is likely to continue as the population grows and results in more pressure on stretched amenities and infrastructure. More Nigerians will go in search of better economic fortunes, standards of living and education and to pursue opportunities for lives and jobs abroad.[2]

 

1.3   This presents a challenge as well as an opportunity for job creation, especially for young people. The Nigerian diaspora can play a crucial role in investment in SME’s and job creation in a number of sectors, including the science and technology sectors. The role of the diaspora in developing businesses has increasingly been widely recognised, alongside its catalytic potential in creating sustainable/decent jobs.

 

1.4   The diaspora is already engaged in Investment into education, apprenticeships, TVET skill and capacity building for women and young people to address significant gaps between what the education system can offer and what is needed to support a thriving science and technology sector. This includes:

 

 

 

 

1.5   Harnessing Nigeria’s fintech potential: Nigeria’s youthful population, increasing smartphone penetration, and a focused regulatory drive to increase financial inclusion and cashless payments, are combining to create the perfect recipe for a thriving fintech sector.

 

1.6   Nigeria has a vibrant and growing tech sector. Large firms are delivering services in healthcare, agriculture, and finance while smaller firms are providing e-commerce platforms and other retail-related services. However, the sector is still relatively young. As Africa’s largest economy and with a population of 200 million. Nearly 40 percent of which is financially excluded, Nigeria offers significant opportunities for fintechs across the consumer spectrum, notably within the small and medium-sized enterprise (SME) and affluent segments and, increasingly, in the mass-market segment. While the Nigerian government has made the tech sector a priority, more needs to be done to improve the basics of the business environment. The government and the private sector should also take steps to increase the participation of women in the tech sector. Finally, digitally savvy, middle-aged and young affluent individuals face poor user experience on products and find the value-added from using financial products underwhelming.[4]

2. How should the FCDO encourage investment in these sectors, including in small and medium sized enterprises?

2.1 Setup dedicated diaspora SME investment and match funding schemes which AFFORD has pioneered through its Diaspora Finance Initiative (DFI) to:

3.  What opportunities and challenges do the UK’s historic links with Nigeria pose when considering the future partnership between the two countries?

3.1     Opportunities

 

3.2   Nigeria is today Britain’s second largest trading partner in Africa, after South Africa, with trade worth £6 Billion. There is enormous scope for growth. The strong British Nigerian community represents a gateway to enter Nigerian markets. The British Nigerian community is already playing a significant role in real and financial transactions between the UK and Nigeria. For example, many British Nigerians maintain stocks of primarily storable and non-perishable Nigerian products in the UK to either supply the UK market or export to other countries. Meanwhile, Nigeria is the top destination for UK remittances, which makes these the second source (after trade in oil) of foreign revenue from the UK in Nigeria. In general, British Nigerians have advantages over other UK investors in Nigeria, owing to their knowledge of navigating the complex business environment and ease in finding business partners in the country.

 

3.3   Nigeria offers familiar business practices for UK companies, providing opportunities for the services sector. The use of English as a commercial language is widespread in the country. In addition, it has legal regimes that are compatible with the UK, meaning UK and Nigerian lawyers understand legal complexities in both jurisdictions.

 

3.4   The UK remains an important destination for Nigerian students attending universities and other tertiary educational institutions. Moreover, an increasing number of Nigerians studying in the UK are generating knowledge in compatible disciplines, such as information technology, law, management and engineering.

 

3.5   Challenges

 

3.6   Visa regimes and entry into the UK for Nigerian visitors and students remains an area of concern. The APPG for Africa, the APPG for Diasporas, Development, and Migration, and the APPG for Malawi undertook a joint inquiry into this topic in 2018-2019, with the report launched in January 2019[5]. Drawing on the evidence presented to them, including from the Chief Inspector of Immigration, the APPGs identified six specific challenges faced by Africans in applying for visas to the UK and made the following recommendations to improve the system:

 

3.7   To improve the application process:

 

 

 

 

 

      3.8   To improve decision-making:

 

 

 

 

3.9   An important and growing issue for the future relationship between UK and Nigeria involves outstanding legacies of empire and colonisation, particularly involving the return of looted cultural artefacts. The most acute of these in the context of Nigeria are the Benin Bronzes, looted by British soldiers and sailors on a punitive expedition to Benin City in 1897, and subsequently sold to museums in Europe and North America. The single largest collection of Benin Bronzes is held by the British Museum. The Oba of Benin and the Nigerian Government have made longstanding demands for the artefacts to be returned. And these demands are growing, with other European competitors, such as the Germans, being much more open to return than the UK government. 

4. By what mechanisms could the UK government support trade and private sector development in Nigeria and stimulate investment?

4.1 Support Diaspora Investment and Development initiatives through Mobilizing diaspora investments by supporting the reduction of remittance commissions in line with Target 7 of SDG 10c thereby aims to reduce these commissions to 3% by 2030.[6]

4.2 Diasporas have emerged as an important resource in the economic development of their countries of origin. To illustrate how critical these figures are at individual country level– although the figures are contested by the Central Bank, in Nigeria, the amount officially remitted through financial systems in 2018 ($25.08 billion)[7] slightly exceeded the entire federal budget for that year ($25.06 billion).[8] Beyond their well-known role as senders of remittances, diasporas can also promote trade and diaspora direct investment, create businesses, and stimulate entrepreneurship, and transfer new knowledge and skills. The diaspora can also be an asset to reverse emigration of skilled and talented migrants[9]. FCDO can support these efforts by:

5. How should the FCDO take account of and mitigate potential inhibiting factors to investment (such as corruption, security, human rights abuses)?

5.1   On the security front Nigeria faces several internal security threats. Violence has devastated

the northeast in the form of an insurgency with Islamic State linked groups such as Boko Haram. There is growing unrest in the South-East, and with cattle herders and various communities in the Middle Belt and South of the country. Nigeria has traditionally played a role in conflict resolution and its military has been deployed on peacekeeping operations across the continent. But Nigeria’s military has been increasingly deployed to tackle its own internal conflicts. Underfunded and overstretched, its military at times struggles to battle better equipped militants.

 

5.2   Nigeria could benefit from additional assistance through leveraging its diaspora for humanitarian

interventions and conflict resolution. Diasporas understand the challenges and issues that lead people to violent conflicts (including poverty, historical injustices, inequality, unemployment, climate change, illegal financial flows, and corruption).

 

5.3   Support for structured Diaspora humanitarian volunteering programmes mean that diaspora can

be utilised as volunteers of humanitarian intervention in pre-crisis dialogue, conflict resolution, crisis management and peace building. This can be achieved within the framework of the African Union’s Silencing the Guns initiative to achieve peace and end conflict, extremism, and crime[11]. The FCDO has experience of supporting successful diaspora volunteering through its funding of the VSO run Diaspora Volunteering Initiative a decade ago. With the impact of the Covid-19 pandemic and the recruiting of Nigerian healthcare professionals to plug labour shortages in the NHS, structured diaspora healthcare volunteers are another resource to reinforce and strengthen at risk and fragile healthcare systems in Nigeria.

 

Ends

 

 

 

 

 

 

June 2021


[1] https://foreignpolicy.com/2021/03/05/britain-shouldnt-put-its-money-on-a-post-brexit-rapprochement-with-africa/

[2] https://qz.com/africa/1881468/how-fast-is-africas-population-growing/

[3] https://www.cgdev.org/sites/default/files/new-economy-africa-opportunities-nigerias-emerging-technology-sector.pdf

[4] https://www.mckinsey.com/featured-insights/middle-east-and-africa/harnessing-nigerias-fintech-potential

[5]https://www.afford-uk.org/wp-content/uploads/2020/01/appg-july-2019-report-on-visa-problems-for-african-visitors-to-the-uk-1.pdf

[6] https://ideas4development.org/en/to-what-extent-do-diasporas-contribute-to-development/

[7] Boyo (2019) ‘CBN claims $2.6bn, not $26bn as diaspora remittances’, Vanguard, URL: http://mif.media/rp-aiw-remittance

[8] Nairametrics Research Team (2018) ‘This is Nigera’s 2018 Budget Breakdown’, Nairametrics, URL: http://mif.media/rp-aiw-nrt

[9] https://ideas4development.org/en/to-what-extent-do-diasporas-contribute-to-development/

[10] https://www.enterprise-development.org/wp-content/uploads/DFID-Private-Sector-development-strategy.pdf

[11] https://au.int/en/flagships/silencing-guns-2020#:~:text=In%20the%20framework%20of%20the,initiative%20in%20the%20year%202020.