Nigeria’s worst violence in two years poses a threat to the momentum the country has built from years of economic growth, said executives at a business conference being held in the West African nation under heightened security.
Attacks by the Boko Haram Islamist group in the past month, including two bombings near the capital, Abuja, have left hundreds of people dead. The group is holding more than 200 girls it kidnapped from a boarding school, threatening to sell them as slaves and prompting offers of assistance from the U.S., the U.K. and other countries to help rescue them. More than 100 people were killed in a May 5 assault on the northeastern town of Gamborou blamed on the militants.
“It does slow down the plans that we have, it does put out the projections that we have by a year or two,” Thabo Dloti, chief executive officer of South Africa’s fourth-largest insurer, Liberty Holdings Ltd., said in an interview at the World Economic Forum in Abuja.
His is one of the companies committed to investing in Africa’s biggest economy, where, for now, the promise of selling goods and services to a population of about 170 million outweighs the danger of bomb attacks like the two that killed more than 90 people near Abuja in the worst attacks on the capital.
The worry is the impact on “potential foreign investors currently sitting on the fence and waiting for the right time to come to Nigeria,” Guinness Nigeria Plc CEO Seni Adetu said. “It’s massively of concern to me, first as a Nigerian and secondly as a Nigerian businessman.”
Foreign direct investment in the West African oil-exporting nation rose 28 percent to $21.3 billion last year, and was $2.5 billion in the first two months of 2014, according to the national statistics agency.
“Of course security issues are very real and daunting for development,” Nigerian Finance Minister Ngozi Okonjo-Iweala said at the forum today. Investors are looking at the long-term rather than short-term risks so will take decisions on that basis, she said.
Less than a month after a revision of its data propelled Nigeria ahead of South Africa as the continent’s biggest economy, it has become the focus of international outrage after Boko Haram Islamist militants kidnapped the schoolgirls.
President Goodluck Jonathan’s government said two days ago it would accept help from the U.S. in the search and rescue operation.
Boko Haram’s five-year insurgency, largely confined to the northeast for the past two years before the Abuja attacks, has killed more than 4,000 people, according to the Brussels-based International Crisis Group.
Many investors remain optimistic about Nigeria’s prospects, even as ethnic and sectarian blood-letting dominate global attention.
The Nigerian Stock Exchange All-Share Index gained 0.2 percent in the commercial capital, Lagos, the third straight increase. The country’s naira gained 0.6 percent to 160.95 per dollar as of 3:36 p.m., paring yesterday’s decline.
Frans van Houten, chief executive officer of Dutch electronics firm Royal Philips NV, said his company will not be deterred by the violence in Nigeria.
“Philips has a strong commitment to develop the business here,” he said in Abuja, where he is attending the World Economic Forum. “Yet there needs to be stability and at this time there’s more stability in the east of Africa than the west of Africa, and that is bound to have some effect.”
“People are naturally concerned from a human point of view with the tragedy going on, but not from an investment point of view,” Julian Roberts, CEO of Old Mutual Plc, said during his visit to the capital for the gathering of business leaders and politicians. “It doesn’t take away from the fundamental improvement that we’ve seen. So we’re keen to carry on investing, it doesn’t put us off at all.”
Key to the sentiment is the security situation in commercial hub Lagos, a city of about 20 million people 700 kilometers (435 miles) southwest of Abuja, which so far has not suffered Boko Haram attacks. Liberty’s Dloti said the metropolis is a safe haven from violence in the northeast.
“For example we can start saying ‘Look, we can do business in Lagos, maybe Abuja, but let’s wait and see before we expand to other areas to see whether this problem is going to go away’,” he said.
Insecurity remains a challenge across the entire Sahel region of Africa, a semi-arid band stretching from Senegal on the continent’s western shore, through parts of northern Nigeria, to the Horn of Africa, according to Ismail Douiri, co-CEO of Attijariwafa Bank, Morocco’s biggest lender.
“If you wait for all countries to resemble Sweden or Norway then you will wait until returns become equal to 1 or 2 percent,” he said in an interview in Abuja. “Unfortunately that’s the equation. With high returns you have high risk.”