BUA’s snub rekindles case for states’ economic initiatives


THE recent withdrawal by the BUA Group of its investment interest in 50,000 hectares of land in Kogi State was an unmistakable snub to a state that was already embroiled in a messy fight with another national industrial giant.  Responding to threats by the Kogi State House of Assembly to revoke its rights to the vast acreage, BUA pointedly told the North-Central state to keep its land, citing the prevailing unfavourable investment climate. For Kogi and the 35 other sub-national governments, this is a wake-up call to exploit their natural and human resources and transform their states into investment destinations.

Nigeria is failing to deliver development and impoverishing most of its 2016 million people because though it is a natural federation, it is administered like a unitary polity. Alone among the 25 countries listed as federal by the Forum of Federations, its component states rely excessively on federal allocations and fail to develop robust autonomous, self-sufficient economies or compete for investments.  This leaves the central government with a near monopoly in economic policies and planning, while the states languidly roll out endless spending plans. This has to change if Nigeria is to regain its development momentum when the defunct four regions operated under a truly federal system until military rule, and subsequent constitutions eroded fiscal federalism.

The BUA-Kogi saga shows the negative attitude of Kogi and other states towards investment, job creation and economic self-reliance. Though hard pressed for revenue with some virtually bankrupt, the states have not prioritised attracting private investments to galvanise their respective economies. The guarantee of monthly allocations from the federally collected revenue (mostly from crude oil) makes them complacent.

The BUA rebuke should provoke action. The state parliament’s attempt to pressure the industrial group backfired spectacularly. Responding to its threat to revoke the Certificate of Occupancy on the land allocated to the company for investment purposes in 2012 for non-payment of compensation, BUA said it was no longer interested. It explained that since the state invited it to invest 10 years ago, there had been no effort by the state government to make the investment climate suitable to enable it to utilise the land for its intended purpose.

For instance, BUA recalled that the land itself was only accessible by water; there was no enabling public or private infrastructure, while there had been recurring security challenges over the years.

The firm said it was ready to make the necessary payments, including compensation, if the state government met all its obligations and the land was found suitable for its purpose, otherwise the government could keep its land.

The snub came in the midst of a brawl between Kogi and another investor, Dangote Industries Limited, where state government agents violently shut down DIL’s Obajana cement plant. According to the firm, a state-backed vigilance group invaded the plant, fired gunshots at workers, injuring many. The invaders were allegedly led by identifiable government officials.

The government on its part insisted that DIL did not validly acquire the site of the plant as there was no evidence of payment for the land. For a state that is one of the least economically viable in the country, and relying almost exclusively on federal allocations for its survival, its resort to strong arm tactics is condemnable. Its later recourse to the courts should have come first. In effect, it has sent a strong message to local and international investors that Kogi is an unsafe and lawless place to do business. This is unfortunate.

Related News
  • BUA withdraws interest in Kogi land
  • Kogi assembly summons BUA over unpaid 50,000-hectare land
  • Buhari hails BUA Group for bridging cement deficit

Sitting at the confluence of the Rivers Niger and Benue, Kogi is endowed with the 44 mineral types prepared for exploitation by the Federal Ministry of Mines and Steel Development. Unarguably, it is Nigeria’s richest state in minerals endowment. Had the state done the needful, Kogi should be a major Foreign Direct Investment magnet. Besides, Kogi has all natural advantages to be a national fishing hub. 

Governor Yahaya Bello has wasted almost all his two terms without implementing effective policies to transform Kogi into an investment-friendly destination. Kogi’s spat with DIL is a wrong way to right a perceived wrong. Just as the exchange with BUA is a faulty way to engage with an investor.  He can make amends by initiating ease-of-doing business improvement measures.

Kogi should actually get maximum benefits from its land and the resources. Moreover, it is necessary to unravel to the satisfaction of Kogi citizens the process by which a company initially registered by the state ended up 100 per cent in private hands, leaving it empty-handed.  

However, the state cannot be a judge in its own case; or take the law into its hands.  A more acceptable method of resolving the disputes should be by negotiation, or arbitration and if these fail, by approaching the courts.

Nigeria is ranked 131 among 190 economies in the Ease of Doing Business in the latest World Bank annual ratings. Kogi ranks 22nd out of the 36 states of the federation and the Federal Capital Territory on EoB.

Kogi and every other state should urgently accord priority to building autonomous economic units, each leveraging their advantages; provide an enabling business operating environment, and compete for local investment and FDI.

Macrotrends said India received $64.36 billion in FDI in 2019, up from $50.61 billion in 2018 and $42.12 billion in 2017. It was the seventh highest recipient of FDI in 2021, said UNCTAD and this was driven both by federal policies and vigorous competition for investments among its 28 states and eight union territories. Karnataka state deposed Gujarat as highest FDI recipient in 2021/22 leveraging its technology cluster; Maharashtra, with its capital Mumbai, India’s commercial capital and a global financial hub, was second highest recipient, investing heavily in power, tourism and industry.

Similar healthy competition among their federating states drives the economies of the United States, Canada, Australia, Malaysia and the United Arab Emirates among other federations. Nigerian states should follow this worthwhile template. ,

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