Conflicts cause investment in Nigeria to fall

In spite of growing confidence in Muhammadu Buhari administration’ s commitment to security across Nigeria, especially in the northeastern region where terrorist group Boko Haram is active, a local paper is reporting that investors in the tourism and hospitality industries are still reluctant to launch new investments or expanding their already existing investments.

According to BusinessDay investigations, the lingering security situation has reduced major tourism ventures in the region, while no international hotel brand is willing to do business beyond Abuja, assumed to be secured because of the federal government’s presence.


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Moreover, northern Nigeria has lost more than N7 billion in five years (from 2010 to date) due the continued insurgence, according to tourism experts and a report of the rate of business confidence in states across the country.

Within the five years, the experts noted that the region witnessed the lowest tourist arrivals, unconcluded business visits, no opening of an international branded hotel, amusements parks and bars almost closed, government lost revenue, while social life was almost completely knocked down.

“If you add the aggregate of profit hotels would have made at a much better occupancy rate within the five years, the new ones that would have opened, the revenue from the parks, new bars and restaurants that would have opened, the revenue accruing to government as tax and  would have been flourishing since the five years, the amount is over N7 billion,” John Enejo, an Abuja-based hotelier who converted his hotel in Jos to a private school due to low patronage, told the paper. 

The loss of revenue over the five years, according to Business Confidence Report, will continue, as no northern city made it to the top 15 alternative investment destinations in 2013, and 2014 except Abuja, as the northern region has over time, enjoyed the lion’s share of insecurity. While Kano and Kaduna seem more peaceful, feasibility studies and investment advice do not encourage hospitality investors to look their way because of the vulnerability of the cities to surprise violent attacks. 

As such, willing investors are pulling back, those who cannot wait till the security issues are resolved are fast moving to the southern part, especially Lagos, while the more ambitious investors are going further to Ghana, and Gambia.

The most affected by the worsening security situation is the private sector, which employs majority of the workforce. Before the insurgence, local hotel owners reported about 40 percent occupancy but are today at less than 20 percent occupancy in cities like Kano, Kaduna, Jos and Maiduguri, with Abuja partially affected.

Most hotels in the region are struggling to pay staff as patronage keeps declining with each bomb blast, while discounted rates hardly woo guests, despite the high operational costs.

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