By Abdulsamad Oladiran
FDI depends on getting the basics right, starting with trust. This means trust that deals will be honoured not discarded. Trust that money sent into a country, and assets thereby created or maintained, cannot simply be seized without compensation. Trust that if and when disputes arise, independent courts, mediators or arbitrators will be permitted to assess the facts, reach their own conclusions and see their decisions implemented.
Seizing Chinese assets
President Bola Tinubu’s administration, which took office in May 2023, must rebuild trust following its recent high-profile problems. These include allegations of government bribery by Binance’s CEO and its demolition of a beachfront on Victoria Island, which has sparked a damages claim worth N42bn ($28m) by developer Landmark Africa.
The government risks worsening its trust deficit, and is making a big and self-defeating mistake by choosing to defy or ignore court rulings over a major investment dispute with an overseas investor.
TThe administration is refusing to implement decisions reached by UK tribunals and courts — and has lost consequential court cases in the US, Canada and Belgium — in a dispute over the seizure without compensation of assets belonging to a foreign investor. The target, the Ogun Guangdong Free Trade Zone, was seized in 2016 by the local Ogun state government from Zhongshan, a Chinese company, in order to give it to a different Chinese investor. But the implications go much wider.
At the time of the seizure, Zhongshan was successfully developing the free trade zone which had been established by the Nigerian government in 2007 to incentivise FDI. Multiple manufacturing and consumer goods businesses had established themselves in the zone, which had received international recognition.