Assessing The Gains Of Tinubu’s Travels

Nigeria's president Ahmed Tinubu recently joined other world leaders at the G20 Summit. On November 7, he left for Rio de Janeiro, Brazil, after returning from Saudi Arabia, where he attended the Joint Arab-Islamic Summit.

This marks the 29th international trip made by the president to 19 countries within his first 18 months in office. The frequency of these trips has sparked reactions from Nigerians and stakeholders, many of whom question whether the benefits gained in terms of capital importation and all forms of investment justify the expenses incurred by the president and his entourage on each journey.

The president has participated in a variety of engagements during his trips, including summits, conferences, private visits, vacations, bilateral discussions, and ceremonial events such as inaugurations and independence celebrations. 

Throughout these activities, he has interacted with heads of state and prominent business leaders from the host countries and across the world. He has had enough opportunities to promote Nigeria as a destination for global investment. 

The world has become more interconnected in the 21st century than in previous eras. Domestic issues, particularly security and trade activities, escalate into the global space, transcending national borders and surpassing the jurisdictional limits of the countries where they originated. Recognising this reality, national leaders and international organisations have acknowledged the shared humanity that binds us all. Despite differences in cultures, histories, and systems of governance, the collective challenges of insecurity and economic development demonstrate the interconnectedness of our fates.

This recognition has underscored the growing necessity for collaboration and the fostering of bilateral and multilateral partnerships among countries to ensure sustainable development. To fulfill these objectives and address other diplomatic imperatives, national leaders—Presidents, Prime Ministers, and government leaders—frequently undertake international trips to strengthen diplomatic ties with other countries and establish relationships to attract investment opportunities. Similar to diplomats, these leaders travel abroad to strengthen international relations in areas such as peacekeeping, conflict resolution, trade, economic cooperation, cultural exchange, environmental issues, and human rights. During such visits, alliances are forged, and treaties are signed, all aimed at safeguarding their nations’ interests, and building enduring partnerships that shape foreign policy.

However, do foreign trips alone attract investment without commensurate investments in the critical infrastructural facilities that enhance the ease of doing business and bolster investor trust back home? Infrastructure such as reliable energy, efficient transportation networks, and streamlined regulatory frameworks are vital to translating international engagements into tangible economic gains.

In his New Year broadcast in January, he said, “On every foreign trip I have embarked on, my message to investors and other business people has been the same. Nigeria is ready and open for business.”

How much investment these trips genuinely attract to Nigeria remains a pressing question for critics, particularly given the striking similarities in foreign trips with his predecessor. This concern stems from a pattern where extensive foreign travel does not translate into tangible economic gains back home.

In the first 18 months of President Buhari's first term, he embarked on 36 foreign trips to 25 countries. However, in the same period of his second term, this number dropped significantly to 17 trips to 15 countries. The decline coincided with the COVID-19 pandemic, which severely disrupted global travel and likely contributed to the fewer trips recorded in 2020.

A closer look at the capital importation trends during both presidencies raises further questions about the effectiveness of these trips in fostering foreign investment. While these engagements often serve diplomatic purposes, the critical issue remains whether they yield measurable economic benefits for the country.

An analysis of capital importation into Nigeria - an economic indicator that measures the inflow of foreign investments into a country for business and economic purposes shows an increase in capital importation in Nigeria between Q3 2023 when Tinubu became president and Q2 2024. 

Capital Importation comprises foreign direct investment (FDI), portfolio investment, and other investments. Foreign Direct Investment (FDI) is a long-term investment where foreign entities acquire assets or stakes in businesses within the country. Portfolio Investments are investments in financial assets like equities, bonds, or money market instruments without direct control over the business operations, while other Investments include loans, trade credits and other forms of foreign financial inflows that don't fall into the first two categories.

Between Q3 2023 and Q2 2024, total capital importation from 12 out of the 19 countries he visited tripled, increasing from $412 million to $2.2 billion. These countries include the United Kingdom, Netherlands, South Africa, United Arab Emirates (Abu Dhabi & Dubai), United States, Saudi Arabia, Germany, China, France, India and Ghana. 

There is no capital importation recorded for the 7 remaining countries including Brazil where he just visited. 

Notably, capital importation experienced an initial decline in Q3 2023, coinciding with Tinubu's assumption of office. However, it rebounded in Q4 2023 and continued to rise into Q1 2024 before experiencing another downturn in Q2 2024.

While the inflow of capital importation into the country shows an overall increase between Tinubu’s assumption of office and Q2 2024, the correlation between his international trips and the movement of capital importation during this period reveals a weak negative relationship, measured at -16.02%. This indicates that, thus far, Tinubu’s foreign engagements are not significantly linked to a rise in foreign capital inflows. However, the weak negative correlation suggests the relationship is minimal and likely shaped by a broader set of economic and external factors beyond these trips.

For Buhari, capital importation inflows during his second term in 2019/2020 were higher, coinciding with the COVID-19 pandemic, in contrast to the lower levels recorded in 2015 and 2016, even though he undertook fewer trips during the 2019/2020 period.

However, a notable outcome of Tinubu’s foreign trips is his roundtable with the leadership of the United Arab Emirate, which resulted in the immediate cessation of the visa ban placed on Nigerian travelers. Etihad Airlines and Emirates Airlines also resumed flight schedules in Nigeria after the roundtable meeting.

A press release from the State House Read in part “President Bola Ahmed Tinubu and the President of the United Arab Emirates, Mohamed bin Zayed Al Nahyan, on Monday in Abu Dhabi have finalised a historic agreement,  which has resulted in the immediate cessation of the visa ban placed on Nigerian travelers.

By this historic agreement,  both Etihad Airlines and Emirates Airlines are to immediately resume flight schedules into and out of Nigeria,  without further delays.”

The correlation between the foreign trips of successive governments in Nigeria suggest foreign trips alone are not a strong predictor of capital importation trends.

Other factors, such as domestic economic policies, global economic conditions, infrastructure, regulatory environment, and investor confidence, likely play a more significant role in determining capital inflows.

For both Buhari and Tinubu, the trips might serve more as opportunities for diplomatic engagement and laying the groundwork for future investments rather than directly influencing immediate capital importation figures.

As the Tinubu-led administration unfolds, we hope for fewer foreign trips that offer little beyond fanfare and more strategic frameworks that build lasting partnerships and deliver meaningful economic transformation for Nigeria.

Thank you for reading this edition of Data Dive. See you next week!