Improving business environment in Nigeria

Naira depreciation

Naira depreciation

The Federal Government is justifiably concerned about Nigeria’s low rating in the current World Bank Index on Ease of Doing Business. Accordingly, the government’s announcement the other day of an Inter-ministerial Committee to recommend measures for improving the business environment is a worthy step. Right now, Nigeria is ranked 169th out of 189 countries. While the initiative to tackle this matter is commendable, lessons must be learnt from the past and aim achievable goals in specific areas and in a given time period must be set.

It is appropriate that the inter-ministerial committee will be headed by Professor Yemi Osinbajo with the Minister of Trade and Investment, Dr. Okey Enelamah, as vice chairman. Information available now is that it will include representatives of the organised private sector which will avail it the benefits of experience, while the government will ensure backing with political will and overall direction.

The World Bank report is based on the research of experts who identified specific areas resulting in Nigeria’s challenges in the effort to improve the country’s ranking. These are given as sloppy taxation system, electricity shortage, troubles with registering property and bottlenecks to starting business. In a damning indictment, the report said that, “Everything takes time in Nigeria.” On average, it takes a month to start a business, compared with one week in Zambia; 908 hours to pay taxes; 10 weeks to register property (at about 11 per cent of its value), as contrasted with three per cent in Rwanda; and six months to get electricity, compared with one month in Rwanda.

In the last decade of the last century, many manufacturers shipped out of Nigeria and set up in neighbouring countries mainly over the dearth of infrastructure necessary for effective operations. In establishing Metal Box Toyo Glass factory in Agbara Estate in 1980, for example, the investors decided at the outset, to run the factory on generators, as the furnace had to run non-stop for five years. Many manufacturers do the same. Yet, they must rely on supply of automotive gas oil (diesel) which could not be assured given the problems that are well known.

Nigerians are all too familiar with the challenges of interstate commerce. Transporters report the hazards of moving goods across the country. They are harassed by multiple agencies of the three tiers of government. In many parts of the country, they dare not travel by night. The road transport mode is burdened with more than 90 per cent of haulage of raw materials and finished products. Yet the roads are in deplorable condition, nationwide. This is an area of emergency all on its own. Since 1972, studies and recommendations for a Highway Authority (for the funding and management of this transport mode) have not been implemented due to lack of executive will; especially by civilian ministers responsible for roads and the civil servants who have not been supportive of the necessary reforms.

The problem of interstate commerce cascades into cross-border trade. The report revealed that on average, it costs $786 for compliance with requirements at Nigeria’s borders. In Kenya, the corresponding figure is $143. As a result, the largest economy in West Africa has not reaped the benefits of its leadership in the Economic Community of West African States (ECOWAS).

It is tempting to question the propriety of comparing a large country like Nigeria to Zambia, Rwanda, Ghana or Kenya. The challenges are different. In computing its averages, the World Bank researchers needed to recognise that property registration is a matter for the states in a country like Nigeria, while business registration is a matter for the Federal Government. However, valid principles are applicable across countries, with due cognisance for the peculiarities of each country. So, Nigeria must imbibe good examples from other lands.

Thus, in proffering suggestions for improving ease of doing business in Nigeria, the researchers drew on what has worked in some of these African countries. Kenya climbed 21 places between 2014 and 2015 by making critical reforms leading to improved electricity supply and access to business finance as well as changes in property registration procedures. For Nigeria, it was recommended that a focus on improved taxation system and property registration would take Nigeria 47 notches up to a ranking of 122 by 2019; towards achieving the Nigerian government’s goal of rising to the first 100 by year 2020.

Nigeria must create an environment to attract highly qualified persons who have excelled abroad as experts and specialists in every field. It is a ray of hope that the minister responsible for trade and investments is at the vanguard of the initiative to improve Nigeria’s business environment. A positive sign in this direction is his announcement that the Federal Government has resolved to implement the Nigerian Industrial Revolution Plan launched in 2014 by the Goodluck Jonathan administration, acknowledging that it is a comprehensive and useful document which will be implemented taking into consideration the experiences and lessons of the intervening years.

In its drive to attract investors in a highly competitive global village, the government may also wish to consider establishing an interstate commerce commission to work at improving domestic trade. Nigeria has the potentials, and the will to realise those potentials must be fostered.

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1 Comment
  • Patrick Nrialike

    We don’t need any more committees. The executive council is more than enough. Every ministry should look inwards, set achievable goals based on a framework of rule of law, patriotism and free market economic systems. From ensuing and effective taxation the government should then concentrate with health, education and general infrastructure establishment.