Bad for business
The management of Okomu Oil Palm Plc says its multi-billion naira investment in Edo State is being threatened by ongoing militant attacks…
The management of Okomu Oil Palm Plc says its multi-billion naira investment in Edo State is being threatened by ongoing militant attacks. Speaking to the News Agency of Nigeria in Okomu, Ovia SW LGA, Edo State, the company’s Managing Director, Graham Hefer, expressed the possibility that Okomu Oil might shut down if the situation continues unabated. A group named “Ijaw Freedom Fighters” launched an attack on Imariogha near the Okomu Oil palm plantation and demanded 25% of Okomu Oil shares, claiming that it was not interested in fighting security operatives but the oil firm.
Doing business in Nigeria is tough. From erratic power supply to poor roads and infrastructure to insecurity issues, any capital deployed always faces significant risk. The threat by armed gangs across Nigeria is not new, and in the past, various criminal groups have raised their heads, hoping for negotiated settlements with businesses and the government. Okomu Oil has been a target of not-so-random attacks by multiple groups with different causes. The host community in Ovia South West is said to be behind the latest attack due to a letter found on the body of a staff member who was killed on 13 May, demanding at least 25% of the company’s profits. What stood out poignantly in the wake of this development was the statement made by the CEO of Okomu Oil. While decrying the poor security that facilitated the deaths of four staff members in a week, he hinted that a continuation of these attacks might very well lead to the closure of operations. This case is disheartening, considering that Okomu Oil is the largest employer of labour in Edo State and one of the largest in Nigeria. At the end of 2023, the company paid ₦13 billion ($8.5 million, 16/5/24) in taxes. In the same 2023, it employed 351 workers spent ₦13 billion on employee benefits and ₦373 million on community projects. By all accounts, the company has not been exploitative in its practices, yet the state and federal governments are folding their hands while rogue elements attempt to extort the company. This has played out before in many crude oil-producing areas down the road in Delta State, and the results have been devastating for those host communities. Unfortunately for Okomu Oil, since its major assets are the oil palms, it will be difficult for the company to relocate its operations to Lagos, as many of its crude oil counterparts have done. Unlike the International Oil Companies, there are no offshore oil fields to run to. Nigeria’s social contract is badly broken, and the manifestation is being seen in multiple forms. Just as the state can no longer protect lives, business owners are finding that they can hardly operate even when they are required to make provisions for their own security, calling into question the income taxes they pay. When more of these ugly developments happen, they become institutional. A response from the Nigerian security agencies, particularly the military, is required. Urgently, the government must intervene to stem this tide. If this is not done, others will be encouraged to attempt this type of extortion with other businesses across the country. This poses significant challenges to retaining disgruntled businesses and attracting crucial Foreign Direct Investment. The exit of an investor like Okomu Oil will have an immediate adverse effect on the Okomu-Udo community where it is located and the households that will lose their sources of livelihood. The resulting decline impacts the state and local communities, leading to a downward spiral with social consequences. The government must discontinue the practice of abdicating its duty of securing lives and allowing non-state actors to thrive.