The Business Founders Coalition has urged the Federal Government to evolve policies that would disallow foreign investors from having controlling rights in Nigerian businesses.
Dr Richardson Ajayi, Founder, Synlab Nigeria, made this assertion on behalf of the coalition during a media briefing in Lagos.
Ajayi, who is also the Executive Vice Chairman of Bridge Clinic, said that the government, through such policies and laws, would be protecting Nigerian entrepreneurs and ensuring that the investments ultimately drive national development.
According to him, most local businesses, due to unfavourable or unavailable access to local finance to upscale their businesses, resort to approaching foreign investors and venture capitalists.
“As progressive as this appears on the surface, they usually seek for controlling rights as one of the conditions to invest.
“Against the ‘spirit of the letter,’ they often use this to wrestle control from the founders and force their positions which can be inimical to the growth of the business and overall national development.
“You will agree with us that the issue and conditions of controlling rights is exceedingly difficult to fight when looking for vital investment,” he said.
According to him, these foreign investors make lots of promises beyond funding, capacity, processes, only to renege at the most crucial time of the growth.
“The most recent case in hand is that of our member, Mrs Bukky George of HealthPlus, and the on-going attempt by the primary investor to take over her business.
“Nigeria belongs to us all and the reasons why our economy is not growing at the desired pace has to do with issues such as this.
“If we continue like this, the stagnation and all its attendant fallouts will continue to bedevil us,” he said.
Ajayi said that the coalition have no objection to foreign investment, adding that there were good private equity companies and many successful private equity transactions that have contributed to national growth.
He advocated that all legal contracts to guide these transactions should be domiciled in Nigeria, and on exit, the investors must give the entrepreneur the right of first refusal to purchase the shares of the business.
Ajayi urged the government to look into the development of a Nigerian venture fund that would support the growth of local businesses.
He urged Nigeria to emulate many developing countries which used foreign direct investment protectionism linked to strategic sectors and national champions to protect local entrepreneurs.
Commenting, Mrs Bukky George, Founder, HealthPlus, called for evolution of policies that would regulate activities of private equity firms.
The HealthPlus boss added that founders and businesses must be protected from pitfalls associated with private equity firms.
According to her, bringing a private equity firm into the operation of HealthPlus was to enable the company to meet demand for high quality yet affordable healthcare and beauty supplies through distribution centres in Nigeria.
“Unfortunately, the pledged funds were never fully disbursed in order to implement our strategic objectives.
“Our partnership has been fraught with serious challenges and unmet expectations, jeopardising operations and relationships with our stakeholders,” she said.
George urged Central Bank of Nigeria (CBN) make flexible loan available to the health sector such that cash flows of companies would be considered as against only collateral.
She said that doing so would enable businesses scale up in order to achieve their potentials, enhance the economy and development of the health sector.
Also, Mr Yomi Badejo-Okusanya, Managing Director, CMC Connect Ltd, said that the coalition was not about a single organisation, but about changing policies to assist businesses thrive and boost investment.
The News Agency of Nigeria reports that other members of the coalition include Obinna Ekezie and Ralph Tamuno, Founders of Wakanow, Deji Akinyanju of Chicken Republic and Kene Mkapru of Filmhouse Cinemas.