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Richard Branson’s Virgin group, one of the highest-profile investors in Nigeria, is locked in a dispute with the government about which airport terminal the Virgin Nigeria airline can use. At the heart of the row is an agreement Virgin says it struck with the previous administration of former President Olusegun Obasanjo, which the new government of President Umaru Yar’Adua is questioning.
Nigerian officials say past deals with international investors have not always been in the best interests of the country and that Yar’Adua wants to ensure Nigeria is no longer “short-changed”. Virgin has said it is in talks to sell its stake in Virgin Nigeria.
Is Yar’Adua’s administration right to review deals struck by his predecessor, or does this suggest that contracts with government can be subject to change and make the investment climate unpredictable? Are such rows really about the national interest, or are they triggered by a clash of egos? Would Virgin’s departure from Nigeria have any impact on the country’s image as an investment destination?
Nigerian President Umaru Yar’Adua took office a year ago promising to pursue free-market reforms launched by his predecessor, Olusegun Obasanjo, vowing zero tolerance for corruption and listing seven national priorities including improving power supply and reducing food insecurity.
A year on, his critics say economic reforms are grinding to a halt, his anti-corruption efforts are just window-dressing and his cabinet is largely a collection of ineffective bureaucrats who are but a shadow of an all-star cast in the former administration.