How not to treat foreign investors in Nigeria



Foreign Direct Investments (FDIs) are largely sought after by almost all countries of the world as they seek to grow their economy, improve capital flow, increase exchange rate stability, create job opportunities and remain competitive in international trade.

Successive governments in Nigeria have continuously deployed resources and diplomatic efforts to attract FDIs into the country in order to enhance the medium and long term goals of the nation. The Nigeria Promotion Council (NIPC) was established and saddled with the role of identifying and attracting FDIs into all sectors of the economy.

Unfortunately, a few shady businessmen and women in Nigeria have continued to frustrate foreign investors, using all kinds of unconventional and unethical practices to either swindle potential investors or lure them in, only to frustrate them out of the country and take over their investments.

The latest of these unfortunate incidents is the current ordeal being faced by an international investor in health care, Alta Semper Capital, a UK-based private equity investor. Alta Semper Capital is one of the leading impact firms investing in health care across Africa. Alta Semper has invested in excess of $150 million to impact health care investments in Nigeria, Egypt and Morocco, with the view to providing access to sophisticated and high quality medical and pharmaceutical goods and services to African peoples.

In March 2018, Alta Semper came to Nigeria and acquired the majority shares in a pharmaceutical chain, owned by a Nigerian family (names withheld), through a Mauritian holding company.

The Nigerian pharmaceutical chain was set up by some Nigerian community pharmacists who were the initial shareholders in the company. In their dealings with the foreign investors, they both signed agreements that gave the investors the majority stake in the while the Nigerian holds the minority stake.

News reports had it that by the terms of , the foreign investor agreed to invest $18 million in the Nigerian company. This was to be done through a first and second subscription. While the foreign investors had fulfilled its of the first tranche of $10 million since March 2018, subsequent of $8 million is yet to occur because the conditions specified in SSPA are yet to be met. The Nigerian wanted the second tranche paid, but the investors alleged that the initial had not been prudently managed.

As part of the transaction, the Nigerian also entered into a management agreement with the investor to allow the Nigerian manage the company, but where the majority of the board believes that the manager has engaged in misconduct, they will terminate the appointment by expressing an opinion in writing. 

Further media reports had it that following the discovery of alleged material breaches of corporate governance practices by the management, the majority of the board expressed their opinion in writing on September 25, 2020, regarding the appointment and it was thereby automatically terminated. This was in line with the management’s agreement, but the Nigeria manager started to cry foul. 

All the transaction documents are governed by the English Laws and the mode of dispute resolution agreed in the documents is arbitration in London under the Rules of the London Court of International Arbitration. 

In a surprise breach of the agreed mode of dispute resolution, the Nigerian manager filed petitions with the , Nigerian Security and Civil Defence Corps (NSCDC), Pharmacists Council of Nigeria, and the House of Representatives to pass a damaging verdict against the investors on a matter that the Nigerian manager had taken to the lawmakers for resolution.

Additionally, the Nigerian unsuccessfully sought the intervention of prominent citizens, including former President Obasanjo (via an open letter) to “prevent foreigners from hijacking an indigenous company,” but Obasanjo ignored the plea. The Nigerian didn’t mention in the open letter that he willingly sold the majority shares in the company and took direct benefits of the . The Nigerian also failed to mention that he was being investigated by the police regarding management of the company. Obasanjo probably did his independent investigation and found that the Nigerian did not make disclosure of the full facts and that was probably why he ignored the Nigerian.

It was, therefore, with great trepidation that members of the investment community received the news that a member of the House of Representatives had issued a public statement describing the investment as an illegal one when it has not been determined as such by any rightful authority.

The media also reported that the Nigerian had engaged the services of one of the most reputable commercial law firms in Nigeria as transaction advisers so he has no reason to suggest that he sold the majority of his shares out of ignorance. The crux of the matter is that the Nigerian sold the majority of his shares and still wants to own and control the company – something like eating your cake and trying to have it. Analysts say that Alta Semper Capital is not completely faultless in this transaction as they failed to do a thorough due diligence on the character of the Nigerian businessmen they were dealing with. This is a lesson they must also ponder on.

The unfortunate experience of Alta Semper Capital may just be one out of the many unfortunate experiences of foreign investors in the hands of some Nigerian businessmen. As it stands, the federal government’s efforts to attract more investors are being jeopardised by a few businessmen and women in the country. The snail speed of the Nigerian judiciary has not helped in promptly resolving even the most basic and preliminary issues in the matter.

The Nigeria judicial system, the and Financial Crimes Commission (EFCC), the Federal Ministry of Industry, Trade and Investment, the Nigerian Investment Promotion Council (NIPC), and other key government stakeholders need to step in to protect Nigeria from this shame. We already have enough damage done to the country’s reputation by advance fee fraudsters. We cannot allow corporate mobsters, who want to eat their cake and have it, to make a mess of what is left of the reputation of our beloved nation.

Abiodun, a public affairs and financial analyst, writes from Lagos via [email protected]

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