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A couple of weeks ago, the news broke that Africa’s largest company – worth several times the size of the entire Nigerian Stock Exchange and on paper as much as 35 percent of its home country’s GDP – would carry out a $100 billion listing in the Netherlands. Against a backdrop of palpable outrage in South Africa, Naspers the parent company of Multichoice, which holds a massive 31 percent stake in Chinese internet giant Tencent revealed that it would list its foreign assets on the Euronext exchange in Amsterdam, leaving relative scraps like its cable TV division for a secondary listing in Johannesburg.
A few days later, a UN report revealed that while foreign investment into sub-Saharan Africa rose 13 percent last year, it fell a massive 43 percent in Nigeria. In what comes as a surprise to no one outside of Abuja’s government district, investors voted with their feet in the face of increasingly antagonistic regulatory posturing toward big foreign businesses like MTN. In both absolute and proportional terms, Nigeria now ranks behind Ghana in FDI inflows.
This obviously looks bad, but at least we didn’t just get $100 billion taken out of our economy and parked in Europe like South Africa right? Well actually, while Nigeria has no corporate entity close to the size of Naspers that it risks losing, it is losing capital worth far more than Naspers’ balance sheet billions in the long term.
Capital Isn’t Always Money
If you studied economics at a Nigerian secondary school, you were likely taught (erroneously) that there are three factors of production namely land, labour and capital. In fact, there is a fourth element widely recognised outside of our insular West African space as the most important factor of production – entrepreneurship, which is also … Read More...