The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operations and stronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendlyregulations for businesses. A nation’s ranking on the index is based on the average of 10 sub-indices: Starting a Business, Dealing with construction permits, Getting electricity, Registering property , Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contractsand Resolving insolvency. Ease of Doing Business in Nigeria averaged 142 from 2008 until 2015, reaching an all-time high of 170 in 2014 and a record low of 120 in 2008. According to the World Bank’s Doing Business 2016 report, Nigeria ranked 169 out of 189 countries surveyed on the Ease of Doing Business. Nigeria trails behind a number of other African countries such as Mauritius 32, Rwanda 62, South Africa 73 and Ghana 114. Although, this year’s ranking represents a marginal improvement over last year’s ranking which placed the country in the 170th position. Lydia Ojarikre went to town to ask Nigerians how the ease of doing business in the country can be improved.
For the country’s ease of doing business rank to be improved, Government needs to create an enabling environment for investors. There has to be constant electricity and good road networks, starting a business process and cross border operations should be simplified. In 2008, we were ranked 120th, 133rdin 2010, 138thin 2012, 170thin 2014 and now 169th. Are we progressing or regressing? If Mauritius the first African country on the ease of doing business list by World Bank can be ranked 32nd, South Africa 73rd and Ghana 114th what stops Nigeria from aiming high. It all lies in creating good policies and implementing them. Not just creating them to be dormant or after creating them they are worked on for some time and later ignored. Consistency in policy implementation is the watchword to productivity.
In my opinion, for the rank of ease of doing business to be improved our trading across borders and starting a business process has to be less stressful and simplified if possible electronic means should be employed. World Bank document reveals that in Ghana, it will take an importer about 23 days to complete all necessary border and documentary compliance certificates to bring in goods into the country while an exporter will spend 8 days to complete all necessary documents for export. However, in Nigeria, for trade across border, an importer will spend 55 days to complete all necessary border and documentary compliance certificates to bring in goods into the country while an exporter will spend 12 days to complete all necessary documents for export. This is one of the reasons why cargoes are being diverted to neighbouring ports. Customs clearance and inspections by other agencies of government should ensure the process of clearing or exporting goods are simplified. Electricity is also a major issue that needs critical attention.
For Nigeria’s ease of doing business rank to be improved our foreign exchange rate has to be stabilized both in the official and parallel market. The naira has lost almost 100 per cent of its value on the streets and the gap between the official exchange rate and the parallel market continues to widen. The Central Bank of Nigeria (CBN) sells dollar to banks at an average rate of N197 while at the interbank market, the value of the naira hover around N199.However, the bureau de change operators sell foreign exchange at a higher rate, for example the dollar was sold between N210 and N230 last year but now it is been sold at N320 to N330. How can one do business effectively with that high rate as only few people are able to get forex at the official rate from CBN? I understand that our foreign reserves are low but what measures have the federal government taken to diversify the country from depending on oil revenue? Not much if I must say, because all I have seen is talk without action. They keep talking but no direct path or policies has been made or implemented. Another issue, government needs to work on is creating an enabling environment for investors, stabilizing power supply, good roads and security amongst others. I believe if all these are done, the country would experience a turn around and our ease of doing business would be boosted.
Nigeria’s ease of doing business has improved by a step above its previous position that is from 170th to 169th position out of 189 countries, to me that is an improvement but a lot still has to be done. We should be aiming at being the 1st to 5th position in Africa. Government should work on making the process of starting a business and registering a property easy, trading across borders process should be simplified and good power supply provided.
In my opinion, I think the Federal Government should first work on strengthening the naira. Policies that will strengthen the naira should be implemented like the restriction of foreign exchange on some items from the Central Bank of Nigeria (CBN) official window. The country should diversify from depending on Crude oil resources to Agriculture and Mining. The mining of minerals accounts for only 0.3per cent Gross Domestic Product (GDP) due to the influence of oil resources. The domestic mining industry is underdeveloped which has led to importation of minerals that could be produce domestically, such as Iron ore or Salt. This reveals our need to move away and divest from our crude oil blindness. Every region in the country has some real gem buried beneath them that can be used to develop every part of the country. Take a look at Japan, they have long been characterized as a nation with virtually no natural resources like oil, natural gas, iron and copper but yet are ranked as 34th in ease of doing business. Our neighbouring countries like Ghana and Benin Republic are ranked 114th and 158th in ease of doing business respectively. This is a shame to Nigeria whose slogan is the Giant of Africa to be ranked as 169th in ease of doing business. Nigeria is blessed with natural resources ranging from gold, iron ore and limestone amongst others. All of these need to be promoted. If half of the resources we have in the country are explored, it would go a long way in creating employment and revenue for the country. Government should make our economy conducive for investors by creating business-friendly policies, working on a stable power supply as this is also a major issue that should be addressed. If these are implemented amongst others it would help create job opportunities as well as increase our rank in the ease of doing business by World Bank Group.
There are several measures that need to be met before we can talk of improving the ease of doing business in the country. Government should reduce taxation on companies, boost electricity which is an important commoditybecause without electricity how would companies function effectively and also improve on our transportation systems. Without the necessary prerequisite, Nigeria’s ease of doing business rank would remain in the same range.
Federal Government needs to put the right policies in place especially with the economic situation of the country right now. The foreign exchange restriction by the Central Bank of Nigeria (CBN) is also not helping matters, as so making sectors are currently experiencing a downturn. If devaluation would stabilize the naira to foreign currency and also help the economy then that approach should be considered. As it is today, Nigeria has dropped out of the fastest growing economies in the world. In 2014 and early 2015, we were named the third fastest growing economy in the world by CNNMoney, with China and Qatar taking the lead. From the world’s 3rd fastest growing economy, Nigeria has dropped out of Top 15 in Africa. The fastest growing economy in Africa is now Cote d’Ivoire. Inflation in the country, according to National Bureau of Statistics (NBS) in March reached a four-year high of 12.8 percent. Nigeria is the Giant of Africa and it should lead by example. The Federal Government should work on repositioning and restructuring all sectors in the country. The right experts should be engaged from Economists to others and there should also be a clear cut policy direction.
With the current economic situation, I doubt if Nigeria’s ease of doing business rank would improve. The country is currently experiencing so many economic woes from foreign exchange shortage, spiralling inflation, proposed high electricity tariff to bad roads and now the removal of fuel subsidy which has hiked petrol price. How can a business venture well in this time? How can investors think of putting money into Nigeria with this current economic situation? It would be difficult. Foreign companies such as Truworth, one of South Africa’s largest publicly traded clothing lines closed down its operations in the country due to strict import restrictions while Woolworth, a South African retailer in 2013 also closed down its business operations in Nigeria due to high rental costs, duties and complex supply chain processes. The recent I read online was a South African beverage line, Clover, which is responsible for the production of Tropika fruit juice said it was withdrawing future investments in the Nigerian market due to financial crisis in the country fuelled by low oil price. We should be encouraging investors and foreign companies into the country not driving them away with stringent policies. Ease of doing business is ranked by how starting a business, trading across borders, getting electricity process amongst others are simplified. Since we know these, the government should look into making our economy suitable by providing the necessary prerequisite so as to encourage foreign investors into the country and also enable local companies thrive.