Diesel-dependent Nigeria looks up to the sun - FT
It is Nigeria’s migraine-inducing anthem: the incessant drone of millions of diesel generators straining to power homes and offices starved of electricity by the feeble state of the national grid. While it is hard to imagine this cacophony as anything other than the sound of the country’s propensity for self-sabotage, Ademola Adesina hears only opportunity in the din........
AfDB salutes Nigeria’s economic recovery, diversification efforts - PUNCH
The Nigeria House of Representatives has constituted a Tactical Committee on Economic Recession to guide innovative legislative actions by the House and the National Assembly to return the economy to the path of growth and stability. In this regard, the committee is holding a summit in the nation’s capital, Abuja, on 6 and 7 November 2017.
The Summit will bring strategic stakeholders together to interact on relevant issues of concern and develop a legal framework for economic recovery and sustainable development in Nigeria. It is expected that deliberations at the Summit will enhance the quality of legislative reforms for economic development.
The African Development Bank’s (AfDB) Nigeria Senior Director, Ebrima Faal, representing AfDB President, Akinwumi Adesina at the summit noted that Nigeria’s sound growth prospects are increasingly underpinned by generally improved macroeconomic policies, low external debt, political stability, and good governance. Fewer conflicts and more democratic institutions, have also provided better clarity for investors as evidenced by the recent improvements in Nigeria’s ranking in the ease of doing business index.
Faal said that despite reports to the contrary, the AfDB is in consultation with the Government about how best to support the country’s laudable Economic and Growth Recovery Plan. He added: “I would like to stress that the African Development Bank Group is highly encouraged by the economic recovery of Nigeria from recession, and the Bank salutes the Government’s efforts toward diversification of the economy. The Bank also strongly supports the Economic and Growth Recovery Plan (ERGP) of the Government; including efforts to stem corruption and strengthen fiscal consolidation and efficiency. ‘’We shall continue to strengthen our engagement and ties with the Federal Republic of Nigeria.
The country is the largest and most important shareholder of the African Development Bank Group, and as such our commitment to Nigeria is resolute.”
In a passionate presentation titled ‘The Nigerian Recession – We must never Walk this Way Again,’ Nigeria’s Vice President, Yomi Osinbajo said that recession was not an option for Nigeria.
“Never again should we experience the horrors of being in a state of recession. Reliance on dwindling oil revenue and unbridled, unprecedented corruption and waste were the major causes of the 2017 recession,” he said, noting that the country could have fared better going into a recession if it had had savings instead of debt.
“We did not have the fiscal buffers to enable a counter approach,’’ he said, citing the intractable delay in the budget approval process and the long procurement processes that followed as the two other major forces that deepened the recession. “No developing economy can afford the luxury of long legislative rambling over the budget. Budgetary delay in a situation of national economic emergency and the hardship encountered by so many is simply unacceptable,” he said.
The Vice President said the Economic Recovery and Growth Programme remains Nigeria’s blueprint for development actions going forward. He reminded the group that “the obligation that history and providence has forced upon us today is to honestly do all we can to ensure that the future of our people is secure and prosperous. We must not walk this path of recession again.’’
$250m grant for Nigerian youths yet to be accessed —World Bank - VANGUARD
THE World Bank said Nigeria had so far accessed less than $50 million of the $300 million earmarked by the bank for youth empowerment and other social works in the country.
The World Bank’s Nigeria Lead Social Protection Specialist, Mr Foluso Okunmadewa, said this, yesterday, in Abuja at the Youth Employment and Social Support Operation, YESSO, Midterm Review Policy Level meeting. wold bank Okunmadewa said the bank had in 2013, earmarked the fund to support federal and state governments’ efforts to improve the lives of the poor and vulnerable in the society.
He said of recent, the YESSO programme, which had four components, had been doing badly, mentioning the Social Register component, which had the ambitious aim to compile the list of the most vulnerable people and households in Nigeria, as example.
According to him, it is sad to note that only eight states have thus far keyed into the programme. He said: “The support operation is in its fourth year of implementation and currently active in 13 states of the federation, including the North-East and coordinated at the federal level, also with the NDE. “The operation is expected to close in mid 2020 and the performance today is not impressive. Less than $50 million, which is about 13 per cent of the assistance has been disbursed.
“The single register component of the operation, which is quite innovative and has been adopted by the Federal Government for its Cash Transfer programme, is however, recording very slow process.
“Only a small fraction of the poor has been identified and registered even in participating states. “Also, the intervention component of the operation, which targets grants transfer for internally displaced people and vulnerable in the North East, is performing very poorly.”
Okunmadewa said to encourage more states to participate in the YESSO programme, the World Bank had cut the ration of the required counterpart funding between states and the Federal Government from 50/50 to 90/10.
This, according to him, means that for every one Naira the Nigerian government, whether state or federal government invests into youth empowerment, the World Bank will provide nine Naira for it. Also, National Coordinator of YESSO, David Adejo, urged the states to take advantage of the reduction in counterpart funding by the World Bank to invest in avenues that would lead to youth employments in their respective states.
“Some states had a public workfare, but when the YESSO started, they pulled back and were no longer funding these projects, thinking that the World Bank would do it alone.
Read more at: https://www.vanguardngr.com/2017/11/250m-grant-nigerian-youths-yet-accessed-world-bank/
Bank speaks on scheme reportedly assisting Nigerians financially - DAILY POST
The World Bank has denied report making the rounds online that it is giving out money to individuals to do business.
In a statement released in Abuja on Monday by Olufunke Olufon, World Bank warned Nigerians to be wary of fraudsters parading as its representatives and soliciting fees to enlist Nigerians in a fake scheme.
Olufon, spokesperson of the bank in Nigeria, disclosed that the group has been going about demanding registration fees of about N1000 from unsuspecting Nigerians in communities to be enlisted in the scheme.
The statement readS: “Several correspondences targeting innocent citizens are being circulated falsely claiming that the World Bank is giving out money to individuals to do business and demanding processing fees of N1000 from prospective awardees.
“Please note that: The World Bank is not behind this multi-purpose scheme. The World Bank does not request for personal financial information for applicants to its programmes.”
“Members of the public are advised to verify any information regarding any World Bank-assisted programmes purportedly offered by any individual or groups on its website.”
Ms. Olufon added that the World Bank would not be held responsible for any refunds of fees solicited by fraudsters.
UPDATE 1-Nigeria raises 100 bln naira in treasury bills - REUTERS
LAGOS, Nov 1 (Reuters) - Nigeria raised 100.84 billion naira ($320.64 million) at a treasury bill auction on Wednesday as traders locked in yields in anticipation of higher liquidity from repayments.
The central bank sold 74.76 billion naira of one-year debt at a rate of 15.53 percent, slightly lower than the previous auction, traders said. It had initially offered to sell 54.35 billion naira in that maturity.
Traders said the bank also sold 12.98 billion naira of six month bills and 13.09 billion naira of 91-day paper at 13.1 percent, unchanged from the last auction.
Traders said around 420 billion naira in open market bills was expected to hit the banking system on Thursday, which spurred buying at the auction.
Nigeria’s central bank issues treasury bills regularly to help lenders manage their liquidity, curb rising inflation and provide naira to help the government fund its budget. ($1 = 314.5000 naira) (Reporting by Chijioke Ohuocha; Editing by Mark Heinrich)
Buhari may present 2018 budget on Tuesday - BUHARI
Baring last minute changes, there are indications that President Muhammadu Buhari may present the 2018 budget before the National Assembly.
BusinessDay sources at the Presidential Villa, said the budget which is ready for presentation was being delayed because the Federal Executive Council was yet to approve it.
“We stand by our plans to present the budget this October. So, as soon as it is approved, we will notify the National Assembly that we are ready for presentation,” a high profile source said.
Our source also believe that the Mid Term Economic Framework 2018-2020, ( MTEF) recently forwarded to the National Assembly will be approved before the budget presentation.
This is just as the budget has been listed as the only item for discussion at the Federal Executive Council (FEC) meeting fixed for tomorrow, Thursday.
Presidency had taken to its Twitter handle Wednesday to announce the postponement of the regular weekly FEC meeting from Wednesday to Thursday
“@NGRPresident: Federal Executive Council (FEC) Meeting will hold tomorrow, Thursday Oct 26. Agenda is #Budget2018, which is currently being finalized.” according to the statement on twitter, Wednesday.
Details soon.BY TONY AILEMEN
Banks to challenge FG on BVN order - BUSINESSDAY
There are indications that deposit money banks will challenge the order by the Federal Government seeking to confiscate all funds in accounts without Bank Verification Number or BVN.
This follows the outcome of the meeting with legal advisers of banks yesterday Tuesday and that of banks chief executives on Monday at the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
A source familiar with the outcome of the meeting says that while the banks do not want to be confrontational about this, the issue is beyond corruption as being touted by the FG.
It will be recalled that Justice Abubakar Malami, Attorney-General of the Federation and Minister of on October 17 obtained an order from Federal High Court judge Nnamdi Dimgba, seeking to confiscate all funds in accounts without BVN to the Federal Government. The order was obtained against 19 banks in the country with the Central Bank of Nigeria also included as a defendant in the case. The banks have been given an ultimatum of 14 days to advertise accounts without BVN in a national newspaper, during which time, the owners of such accounts are expected to show cause why the money should not be forfeited.
Stakeholders argue that there are many reasons for not having a BVN which include cases of death of an account holder where the probate process is still ongoing or many Nigerians that are outside the country.
They see no legal basis for such sweeping order, saying that if FG wants to enforce such an order, it should have been done by an Act of the National Assembly.
Johnson Chukwu, managing director/CEO, Cowry Asset Management limited told BusinessDay by phone that banks have strong basis to contest the order particularly on the aspect that FG gave a timeline for banks to advertise accounts without BVN in a national newspaper, during which time, the owners of such accounts are expected to show cause why the money should not be forfeited.
Chukwu said there is no provision of such in the Money Laundry Act, adding that the Act does not allow forfeiture of funds for reasons of not having a complete documentation.
He said if the banks are willing to challenge the order, it is good but was concerned that those who may lose their funds may be unable to challenge the order directly because they don’t have the capacity to do so or for other reasons.
The banks CEOs agreed to reach the Attorney General of the federation as well as others in the executive to explain to them the far reaching implications of the order, especially since it also affects foreign investors with funds in Nigeria.
“The economy may shrink again if the federal government goes ahead to seize the funds in the non – BVN linked accounts as the magnitude of the numbers involved is huge .The extent of shrinkage will depend on the volume and whether these accounts were active or dormant in spite of the regulation,” Bolade Agbola, Analyst and CEO of LAM Agro Consult Limited said in an emailed response to BusinessDay.
Ayodeji Ebo, managing director, Afrinvest Securities limited told BusinessDay by phone that the banks should engage with the Federal Government on the issue.
However, Ebo said it may be good for banks to get an injunction to halt the order and engage until agreement is reached.
Data obtained by BusinessDay from Nigeria Inter-Bank Settlement System Limited (NIBSS) shows that a total of 46 million bank accounts are yet to be linked to BVN as at February 2017, the latest period for which data is available. Total bank accounts in the banking system were 97.57 million as at February 2017 while total accounts linked with BVN stood at 51.72 million, leaving a total of 46 million accounts yet to be linked with BVN, introduced in February 2014 to ensure that all bank accounts have the biometric identification of their owners.
“Expropriating people’s money can give the wrong impression especially for an emerging market like Nigeria,” said the banking source.
“The Government can choose to restrict access to non BVN accounts if it is concerned about money laundering but not seize funds in said accounts, to avoid hurting innocent people.”
BY HOPE MOSES-ASHIKE
Investors urged to buy into opportunities in blue economy - BUSINESSDAY
Dakuku Peterside, director general of the Nigerian Maritime Administration and Safety Agency (NIMASA), has called on Nigerian investors to key into the opportunities in the nation’s blue economy, which is now the world’s fastest growing sector that has enormous potentials.
Peterside, who made this appeal at the just concluded 23rd Nigerian Economic summit (NESG) themed “Opportunities, Productivity and Employment: Actualizing the Economy Recovery and Growth Plan,” said that the length of the nation’s coastline and the attendant volume of maritime trade provide Nigeria an advantage as a developing nation.
However, he stated, that stakeholders must actively participate in the sector in order to reap its benefits.
“Developing the blue economy is paramount across the globe now, and the public and private sectors have to collaborate to sustainably harness the potentials of our maritime sector for the benefit of the Nigerian economy especially in the wake of the Federal Government’s economic diversification drive,” he said.
The NIMASA boss, who was quoted in a statement signed by Isichei Osamgbi, head, Corporate Communications of the NIMASA, also said that it was high time Nigerians begun to tap into the opportunities embedded in the maritime sector, adding that economies of countries like Singapore, Ukraine and South Korea thrives on the activities of their maritime sectors.
Peterside, however, pointed out that an improved maintenance culture, adequate data management and statistics as well as articulated actions from stakeholders backed up with political will, can make Nigeria a leading light in the comity of maritime nations.
Peterside further advocated for synergy among stakeholders, stating that NIMASA with the support of the Federal Government is working assiduously to ensure that Nigerians reap the benefits that are bound in the sector.
He also said that the newly approved maritime security architecture will effectively reduce piracy and other related sea crimes to ensure safety of shipping.
The Nigerian Economic summit serves as a platform where stakeholders from both public and private sectors can converge to chart a way forward for the development of the Nigerian economy.
BY Uzoamaka Anagor-Ewuzie
PASSPORTS FOR CASH: Citizens of anywhere - THE ECONOMIST
Globalisation has turned citizenship into a commodity. Matthew Valencia went shopping for a new passport and found bargains to be had
Jalal is an Iraqi telecoms executive with fluent English and a Harvard degree. His wife is a surgeon. Well-off by any standards, they have always loved to travel, and have a particular fondness for Lake Como in Italy. But their Iraqi citizenship has often caused them visa problems. So, a few years ago, Jalal (not his real name) and his wife applied to become nationals of a second country: Antigua. After ten months of form-filling and “due diligence” (background checks and the like), they ploughed several hundred thousand dollars into property and a development fund on the Caribbean island, and in return got passports which entitle them to visa-free travel to 130 countries, including most of Europe. They send the citizenship consultant who helped them become Iraqi-Antiguans a card whenever they are in Como, to show their continued gratitude.
Francesco Corallo went one better in the Caribbean, for very different reasons. An Italian businessman on an Interpol most-wanted list, he bought himself a diplomatic passport from Dominica and tried to claim diplomatic immunity on the grounds of being the island’s permanent representative to the UN Food and Agriculture Organisation. He is now in custody in St Maarten, a tiny Dutch territory in the Caribbean, facing extradition to Italy on charges of tax evasion and bribing politicians.
One a meritorious executive looking to overcome travel barriers erected with others in mind, the other a wanted man: both are customers of the passports-for-cash business. Providing citizenship or residence permits in return for a financial contribution generally gets a bad press for offering a perceived back door to criminals, but, like offshore finance, it spans a wide ethical spectrum. How much is black and how much white is anyone’s guess because data are patchy. Peter Vincent of Borderpol, a border agents’ association, estimates that perhaps 1% of the industry’s clients are human-rights violators, money-launderers or other fugitives from justice, and the other 99% mostly jet-setters or “doomsday preppers” (from countries that are politically unstable or threatened by climate change).
Christian Kälin, chairman of Henley & Partners, a consultancy, estimates that several thousand people spend a combined $2bn or more a year on adding a passport or residence permit to their collection. The largest sources of custom are China, Russia and the Middle East. Demand is rising fast, says Eric Major, who helped pioneer the industry while at HSBC, a bank. The number of clients from emerging markets whose net worth ranges from $1m-100m is growing at 15-20% a year, he reckons; for them, a few hundred thousand dollars is a bargain for the perks bestowed by an extra nationality. Instability is boosting demand: more South Africans are looking for second passports, for instance, because the number of visa-free destinations they enjoy with their own has shrunk under the prickly government of Jacob Zuma. So is terrorism: citizens of some rich countries (especially America) want a different passport when travelling or working overseas.
Supply has risen to meet this demand. Between 30 and 40 countries have active economic-citizenship or residence programmes, says Kälin, and another 60 have provisions for one in law. Some demand a straight cash donation, others investment in government bonds or the purchase of property. Some take a longer-term view of the potential economic benefits, offering passports to entrepreneurs who will set up a local company and create a minimum number of jobs. The required investment ranges from upwards of $10,000 (Thai residence, for instance) to more than $10m (fast-track residence in Britain). In some countries the original investment can be withdrawn after several years.
Caribbean nations are particularly accommodating. The islands’ colonial past means that they tend to have wide visa-free access; their small size means that rich countries haven’t felt the need to restrict their citizens’ access; their poverty means they need the cash. St Kitts and Nevis helped pioneer the business over a decade ago, after the removal of European subsidies clobbered its sugar industry. It has since sold more than 10,000 passports at $250,000 or more a time – a sweet earner for a pair of islands with 55,000 people and GDP of $1bn. Neighbouring Dominica pumps out passports at an estimated rate of around 2,000 a year for as little as $100,000 a time. Vince Henderson, Dominica’s UN ambassador, described the scheme as a “lifeline” after the island was hit by Tropical Storm Erika in 2015. In 2017, $148m of the country’s budget of $340m will be raised by the citizenship-by-investment programme. Antigua’s prime minister has said its passports-for-cash programme helped it avoid defaulting on its debt. Pacific islands are also touting for business in the hope of patching up weather-beaten public finances. Vanuatu even throws in goodies with its passports, including a free shell company and bank account.
The industry’s biggest leap forward was the entry into the game in recent years of European Union countries, notably Malta and Cyprus. Cyprus advertises “EU citizenship within a few months”, with all the perks, including Europe-wide health care, and with no requirement to live on the island or pass history or language-proficiency tests. The tax benefits are alluring, too. The price is fairly steep: €2m, to be invested in securities or property. The programme explains most of the Russian- and Chinese-owned villas popping up across the island.
Malta is cheaper: at least €650,000, with another €25,000 per spouse or child. But it is also more rigorous. The vetting process takes a year or more, and around a third of applications are said to be rejected. A single contribution can exceed what the average Maltese pays in income tax over a lifetime. The government has approved more than 1,400 applications. The programme limit (in theory) is 1,800.
Around half a dozen other countries are looking to get in on the act. Having failed to get a programme off the ground a few years ago, Montenegro – which could join the EU by 2022 – has just relaunched it. St Lucia recently joined the fray, offering a passport and visa-free travel in return for various investment opportunities. But the industry is troubled by its “optics”. Iranian sanctions-busters have been caught with St Kitts passports in their pockets; Jho Low, a suspect in the huge corruption scandal around 1MDB, a Malaysian fund, had one too, say American investigators. “Processing more than a few hundred a year in such small, resource-constrained countries is sure to result in slippage in terms of who you accept,” says a consultant familiar with the Dominica programme. The OECD has identified citizenship-for-sale schemes as a possible loophole in the fight against international tax evasion. Anti-corruption officials worry they may foster graft, particularly in micro-states, where oversight of officials running schemes is typically flimsy.
St Kitts is trying to regain credibility. Under international pressure, the government recalled thousands of passports and issued new, more detailed ones that made it harder to conceal the holder’s identity. That drastic action was prompted by Canada’s decision to rescind visa-free travel for Kittitians and Nevisians (it has since withdrawn the privilege from Antigua, too). Keen to show it is changing its ways, St Kitts hired an international risk-management firm to audit its programme.
Small-island schemes are not alone in attracting the wrong sort of headlines. Rich countries tend to offer residency instead of (or as a first step to) citizenship. The largest of those, America’s EB-5 programme, has a chequered history. It gives several thousand foreigners a year the right to live and work in the country if they invest $1m – or half as much in a “targeted” high-unemployment zone – and create at least ten jobs. Several projects have been exposed as frauds. The use of EB-5 by Jared Kushner, President Donald Trump’s son-in-law, to lure Chinese investors into his family’s development projects has also tainted the programme. Some senators want it scrapped. Congress is due to decide soon whether to extend it. Rich countries are keen to draw a sharp line between themselves and overt citizenship-sellers, but “the difference is increasingly one of degree”, says Jason Sharman, a professor of international relations at Cambridge University: since the global financial crisis, half of all OECD countries have started selling some sort of visa, residency or citizenship permit. In Britain, the more the investor shells out (up to a maximum of £10m), the faster the track.
In the middle of a late-afternoon interview in a suite next to the conference hall of the Grand Kempinski Hotel, Geneva, Christian Kälin stopped to order some bananas. Back-to-back meetings, he explained, meant he had had no time to eat. When in London, he spends much of the time at the same table in a dark corner of the restaurant at Claridges, a swanky hotel, hosting one client or contact after another.
As the passport industry has grown, it has gone upmarket. It used to be dominated by small firms hawking their wares through classified ads in business magazines or developers selling beach houses with residence rights attached. These days it is part of the business of serving “high net-worth individuals”. Providers range from international consultancies such as Henley, Kälin’s company, to banks with big private-wealth operations, including UBS as well as HSBC. Canadian banks are active too, having cut their teeth at home: Canada was an early seller of residence, inspired by a scheme in Quebec, popular with Asians and Iranians, that helped lift the province’s economy in the 1980s and 1990s.
More recent entrants include big accounting firms, such as KPMG and BDO, and law firms. Mischcon de Reya, a high-end London law firm, offers a suite of “VIP”-branded services, including “VIP Student”, and a “holistic service” for those looking actually to move with their new residence rights, “to ensure a seamless transition to the UK for you and your children”. This includes a concierge service for everything from buying school uniforms to decorating a new property.
Kälin cut his teeth selling residence in various Swiss cantons and Canada, along with a smattering of Austrian passports. His big break was persuading St Kitts to allow Henley to rewrite its citizenship laws and design and market its passport programme. Several struggling Caribbean economies followed – including Grenada as well as Antigua and Dominica. Henley picks up fees for advising both private clients on citizenship planning and governments on setting up their programmes. In some cases, it gets a cut of each successful application. (The firm does not disclose revenues.) “If you operate globally, you have to have more than one passport,” Kälin says, but declines to reveal how many passports he holds himself.
As it goes upmarket, the industry is rebranding and euphemising. In 2014 some of the big firms formed a trade association, the Investment Migration Council (IMC), which holds events and publishes weighty reports designed to increase credibility in the eyes of regulators and the media. It insists it is not in the “passports for sale” business, but in “CBI” (for “citizenship-by-investment”) or, even more legitimate-sounding, “investor migration”. Consultants talk of “facilitating global talent mobility”. Last year the IMC joined Transparency International, an anti-corruption group, to produce a critical report on Hungary’s residence-for-cash programme, whose benefits seem to have gone to intermediaries rather than the taxpayer. Kälin says the IMC is “about setting standards. It’s like oil: do we want to be Norway or Nigeria?” Critics say he uses the association to plug countries whose programmes Henley helped craft and bash those it didn’t. He denies this.
Some of the rebranding effort has gone into developing an intellectual justification for selling passports. Kälin argues that ideas about what forms the basis of citizenship have constantly evolved. To view it as being purely about ius soli (“right of the soil”, ie, for those born in the territory) or ius sanguinis (a blood link) is outdated. Kristin Surak, a migration specialist at the School of Oriental and African Studies, University of London, notes that the European Union Observatory on Democracy’s citizenship database lists 27 grounds for acquiring citizenship. Why shouldn’t ius pecuniae be among them? It has been in the past: German and Italian merchants who contributed to empire-building were granted British citizenship in the 18th century.
The most energetic and eloquent proponent of this line of argument is Dimitry Kochenov, a constitutional-law expert at Groningen University who works closely with Kälin’s firm, for instance on a global quality-of-citizenship index. A tousle-haired Russian known for his quick wit, bow ties and garish trousers. Kochenov is a “rock star” of the citizenship-by-investment world, says Stéphanie Laulhé Shaelou, a fellow academic.
At a recent IMC conference in Geneva, Kochenov’s zeal was unmistakable as he chaired the opening session. “We are piercing tiny holes in the fences erected by nation states,” he proclaimed. “Our industry’s simple goal is to re-unite the world, and we should be proud to profit from it…We help people cross barriers and contribute to the societies of their choice.” He worries that populism and nationalism are raising those barriers. Brexit and Donald Trump’s ban on travellers from several Muslim-majority countries are the current bêtes noires of the passport-selling fraternity.
Kochenov did not go into the causes of the rise of nationalism, but some of them were sitting in the conference hall of the five-star Grand Kempinski, applauding his speech. Those expensively suited purveyors of passports to plutocrats embody – and encourage – the footloose globalism that has helped spark a nationalist backlash. In the eyes of many less fortunate souls, they enable the global elite to slide unimpeded between countries, moving on when things get tricky, taking what they can get and often giving nothing of themselves except money in return. The industry has to wrestle with the widely held view that citizenship is not purely transactional but has an important cultural and emotional component too. The idea that it can be bought sits uncomfortably with the belief that a sense of belonging matters. While people are keen on foreigners’ cash if it is likely to help the nation’s bills or fuel its economic growth, they feel uneasy about their government selling citizenship in the same way as they feel queasy about offering it to a foreign athlete with no connection to the country, solely to boost its medal count in the Olympics.
On this view, citizenship shouldn’t just be a passport: it should be a commitment as well, carrying not only rights but also responsibilities. The typical passport buyer is unlikely to settle, will care little about her new country’s politics and will have no interest in defending its values. Unless her new citizenship is American – the United States is particularly hot on extracting taxes from all its citizens – she may well pay her new nation no taxes. The normal means of acquiring citizenship acknowledges that there is a cultural component: naturalisation typically takes years and requires an applicant to establish a real connection to their new country. An industry whose main purpose is to allow people to skip those queues does not.
The citizenship brokers counter that hostility towards flogging passports is born of reflex nationalism; some people just can’t abide the concept of global citizenship. Buying a short cut to citizenship, they argue, is no different to splashing out for speedy boarding or a first-class bed on a plane – and more socially useful, since it shovels cash towards poor countries. Why shouldn’t a passport be just another commodity, if neither the government issuing it nor those already carrying it have no problem with that?
These complex sentiments about nationality are making themselves felt through tighter regulation. The European Commission says it will look more closely at passport-selling. It blessed the Maltese and Cypriot schemes, but with reservations. Malta won approval after promising to ensure applicants would be forced to establish a “genuine connection” with the island. But the definition is elastic. Kim Marsh, a former police investigator now with Exiger Diligence, a compliance firm, points to rising public scrutiny of how businesses deal with “politically exposed persons” and other rich but potentially disreputable clients. He predicts that citizenship consultancies will be forced over time to “become reporting agencies, as banks have with tax”.
Tighter regulation is hitting Chinese demand. Although China does not allow its citizens second passports – those who buy them have to be discreet, for instance by keeping their other passport in a safe-deposit box in Hong Kong – the Chinese are big buyers of most schemes. They snap up around 80% of America’s EB-5 permits. But there are signs demand is softening, says Larry Wang of Well Trend, one of the largest of China’s 1,000 or so legal immigration consultancies (there are perhaps ten times as many without licences). Rising living standards at home are part of the explanation, as are tighter currency controls.
Yet hostility to the industry is not necessarily improving outcomes for the countries involved. It may be reducing the benefits to the sellers. One reason for schemes involving investment rather than cash is that a straight sale “lays bare that it’s a naked transaction”, says Madeleine Sumption of the Migration Observatory at Oxford University. But a passport-for-cash deal is normally better for the country that is issuing the passports: unlike EB-5-style investments, the government can be sure the money is really there and that it won’t be withdrawn later.
For the industry, though, the prospects are good. Kochenov is encouraged by the spread in Europe, the Gulf and elsewhere of “inter-citizenship”, where citizenship of one country allows free movement across a larger bloc. A passport which gives access to that bloc is correspondingly more valuable: Malta’s status as an EU member state, for instance, enhances the appeal of citizenship. Kälin reckons that “we’re part of a wider trend in our favour.” He’s probably right. When there is trouble in the world, there will be demand for extra passports; where there is strain on government finances, there will be supply. Neither looks like drying up.
Which passport offers the best perks? Read our buyer’s guide
Matthew Valenciais special assignments editor for The Economist
PASSPORTS FOR CASH: Which passport offers the best perks? - THE ECONOMIST
Want to buy yourself a more desirable nationality? There are bargains to be had
In the October & November issue of 1843, Matthew Valencia exploreshow globalisation has turned citizenship into a commodity. Here, he weighs up the pros and cons of different passports.
SAINT KITTS AND NEVIS
OPTION 1: Invest $400,000 in real estate, which must be held for five years.
OPTION 2: Pay $250,000 into the Sugar Industry Diversification Foundation.
FEES: $57,500 for main applicant, $25,000 for each dependant.
BENEFIT: Citizenship; visa-free access to 132 countries; no residency requirement.
DISADVANTAGE: Seen as shady by some countries; bad publicity led Canada to withdraw visa-free access.
OPTION 1: Invest $100,000 in Economic Diversification Fund, plus additional $75,000 for spouse, $25,000 for up to two children.
OPTION 2: Invest $200,000 in real estate. Property can be sold after three years if the intended buyer is a citizenship-by-investment applicant. Applicant must turn up for interview. Fees: $50,000 for main applicant, $25,000 for spouse.
BENEFITS: Citizenship; visa-free access to 91 countries; quick processing (3-6 months); no residency requirement; no mandatory interview; no physical residence requirement.
DISADVANTAGES: Poor reputation, though it claims to have tightened up vetting process; applicant must swear oath of allegiance.
ANTIGUA AND BARBUDA
OPTION 1: $400,000 invested in an approved real-estate project.
OPTION 2: $250,000 in National Development Fund.
OPTION 3: $1.5m invested in a business.
FEES: $50,000 each for main applicant, spouse and any dependant over 18; $25,000 for dependants under 18.
BENEFIT: Citizenship; visa-free access to 132 countries.
DISADVANTAGE: Weather risks for property buyers.
OPTION 1: Invest $200,000 in the Saint Lucia National Economic Fund.
OPTION 2: $500,000 in government bonds. Investment must be held for at least five years.
OPTION 3: $300,000 in an approved real estate. Must be held for at least five years.
OPTION 4: $3.5m in a new business that creates at least three jobs. Applicants must have a net worth of $300,000.
BENEFIT: Citizenship; visa-free access to more than 100 countries
DISADVANTAGE: As above.
EB-5 VISA: $1m investment in a business, or $500,000 in a high-unemployment or rural area. Company must create or preserve at least ten full-time jobs.
BENEFITS: Residency; access to US citizenship after five years.
DISADVANTAGES: Residency in the US required, especially during first two years; citizenship brings tax headaches, risk of being targeted by terrorists.
OPTION 1: C$2m in a risky investment for 15 years. Applicants must be worth C$10m.
OPTION 2: C$800,000 in a passive investment for five years. Applicants must be worth C$1.6m.
BENEFIT: Access to citizenship after four years.
DISADVANTAGE: Must speak English or French.
OPTION 1: Invest A$1.5m in a designated investment.
OPTION 2: For retirees aged 55-plus with A$750,000 of assets, an income of A$65,000 a year and no dependants (other than a partner). Must make a designated investment of A$750,000.
BENEFIT: Access to citizenship after four years
DISADVANTAGE: Other Australians will expect you to understand the rules of cricket.
CITIZENSHIP: Invest €350,000 in property, €150,000 in government-approved financial instruments and donate €650,000 to the National Development and Social Fund.
RESIDENCE OPTION 1: Invest €320,000 in property and €250,000 in government bonds. Fee of €30,000.
RESIDENCE OPTION 2: Invest €275,000 in property and pay €15,000 annually. Annual income of €100,000 or possession of capital of €500,000 required.
BENEFIT: Citizenship; visa-free access to 168 countries.
DISADVANTAGE: Successful applicants must show maintain a “genuine connection” to the country (though policing of this is not stringent).
CITIZENSHIP: Investment of €2m during the three years preceding the date of the application; must retain the said investments for at least three years from date of the naturalisation.
RESIDENCE: Purchase property of at least €300,000 with evidence of a secured annual income of at least €30,000 deriving from abroad.
BENEFITS: Citizenship; visa-free access to 159 countries; dual citizenship allowed.
DISADVANTAGES: Must visit Cyprus at least once every two years.
OPTION 1: Invest £2m to live in Britain for a maximum of three years. £5m gets you citizenship after three years, £10m after two years.
BENEFITS: Access to citizenship
DISADVANTAGES: Must spend at least 50% of their time in the country.
OPTION 1: Invest €500,000 in property, or €350,000 in research, or €250,000 in the arts, or €500,000 in venture capital, or create a minimum of ten jobs.
BENEFITS: Residency with a stay of only seven days in the first year; access to citizenship after five years; the right to free entry to the 26 Schengen countries; includes immediate family members
DISADVANTAGES: The cuisine
OPTION 1: Start a business in Russia and once profits exceed 10m roubles.
OPTION 2: Invest 10m roubles in a business worth 100m roubles, and pay taxes of at least 6m roubles a year for three years.
DISADVANTAGES: Two-to-four-week stay in Russia during processing required.
Sources: Investment Migration Council, The Economist
Matthew Valenciais special assignments editor for The Economist