Only in 50 other countries is it harder to start and manage a business than in Nigeria according to Forbes, in what is a grim reflection of the steep hurdles lined up for businesses operating in Africa’s most populous nation, which also ranked 146 of 190 countries in a similar business index by the World Bank.
Despite showing progress by moving five notches to 110 of 160 countries in the Forbes global ease of doing business index, there is still much to be desired at a time when countries engage in a stiff battle for private investment.
A difficult business climate puts Nigeria on the back foot in that tussle for private capital and threatens to cost Abuja’s oil-dependent economy in terms of inclusive growth and job creation.
South Africa, in 59th place globally, led the pack in Africa according to Forbes, while Morocco (62) and Seychelles (66) ranked second and third respectively.
Nigeria was also bettered by Kenya (93), Ghana (94), Egypt (95) and much smaller economies from Rwanda to Cape Verde.
Forbes did not state the criteria for the ranking, but the World Bank’s 2019 ease of doing business index, cited access to finance and a costly infrastructural deficit as the biggest hindrances to businesses.
From frequent power outages to dilapidated roads, rail systems and multiple taxes, most small business owners say doing business in Nigeria is a nightmare and they are keenly watching the progress being made in neighbouring countries.
The head of one of the advocacy groups for SMEs said members were already relocating to neighbouring countries like Ghana and Rwanda.
Rwanda’s journey to 28th on the World Bank ease of business index is one of the most intriguing success stories.
In 2009, when Nigeria was the 118th easiest place to do business, Rwanda ranked 139. However, a decade later in 2019, Rwanda sits in 28th spot while Nigeria has fallen to 146.
‘’Nigeria’s ranking in most global business assessment has been weak owing to the huge infrastructure deficit in the country, as well as issues in the legal environment,’’ Johnson Chukwu, CEO of Cowry Asset Management Limited told BusinessDay.
“Asides difficulties in processing contracts and receiving entitlements to properties, the ease of obtaining credit has also played a role in Nigeria’s poor ranking,’’ Chukwu added.
The pressure on Abuja to tackle the constraints to business is much more intense in a period of low economic growth and contracting average incomes.
However, with general elections barely a month away, 2019 may be a lost year for reforms as politicking takes centre stage.
Gbolahan Ologunro, a Lagos-based analyst at CSL stockbrokers explained that the Government has relaxed its efforts in improving business environment in the country.
‘’Unlike in 2017 when we saw government adopting different policies in reducing the number of days in registering your business, that momentum was not sustained in 2018 as the government shifted focus to the upcoming elections,” Ologunro said.
Analysts have varying views on whether the ranking would have significant effects on the business climate in 2019.
According to Johnson Chukwu, the current ranking has no significance as investors are already aware of the poor business clime in the country.
Gbolahan on the other hand believes the ranking puts the country at a disadvantage as Foreign Direct Investments would reduce.
The Forbes global ease of business index, similar to that of the World Bank, gauges which countries have the best business climates and are most hospitable for capital investment.
LOLADE AKINMURELE & ADAMS SEGUN
