The World Economic Forum (WEF) recently released its annual competitiveness rankings for 2014-15. Out of the 144 countries that participated, Nigeria was ranked 127, moving down 7 positions from its 120th position last year. This must be the 13thranking exercise by WEF since 2003 when it released its first global rankings where Nigeria ranked 87 out of 101 participating countries. Nigeria (except in 2009) has always been in the bottom quartile of this global ranking exercise. Yet I must agree, that the dynamics of the Nigerian economy has changed in several ways and we should expect our ranking to have moved up, but then, the dynamics of many other countries have changed also – no one is standing still and only the strong will survive. That is why WEF’s ranking exercise is a “competitiveness” ranking.
I have studied the WEF rankings for several years and even provided commentary in one of its annual competitiveness publications. I have come to understand why, to a great extent, it is a very unique and robust barometer for measuring a country’s productivity on one hand and “attractiveness” on another. Bear in mind that this is a private sector view of its country’s competitiveness – its productivity and attractiveness for investment, for doing business and being seen as a nice place to work and live.
It is important to understand how the WEF rankings are computed. The WEF rankings are computed in a rather novel way, which when I discovered, left me rather embarrassed, having been aggressively protesting our unfair ranking and clamouring about Nigeria’s economic potential, only to discover that nationals of each country actually do the scoring and by default the ranking. The ranking falls into place from the scores that we give! Yes, the WEF global competitive rankings are really a local private sector stakeholder assessment, a scorecard of some key elements of the Nigerian economy, which contribute to its sustainable global competitiveness.
Sitting as the Chairman of the Nigeria Economic Summit Group, which is the local partner with WEF and actually assist in conducting this annual in-country survey, the message has become clearer each year, that we decide how competitive we see ourselves. The scores we give to each of the near 100 questions asked represent how we feel about the elements being assessed. This is an inside job and not the perceptions of a group of foreigners or national competitors who want to pull us down. How can anyone else know us better than ourselves?
Hundreds of executives in commerce, industry, manufacturing, professional services and the civil society participate in this annual survey, answering nearly 100 questions about key aspects of our economy, which WEF researchers have used (there has been modifications over the years) as their global barometer of national competitiveness. These scores are consolidated for the country and end up as the average country score for each of the 114 factors in 12 categories (Pillars), which represent elements necessary for any sustainable performance in any economy. Some of these elements are factual and not based on opinion (i.e. GDP, population, power output, inflation, debt figures etc.).
I am aware that the DG of the National Competitiveness Council of Nigeria (NCCN), Mr. Chika Mordi, has reacted to these rankings, challenging WEF on their comments on our weakening public finances, security, health and primary education and the use of the old GDP figures as base for some computations. I hope Chika has discovered by now that the cut off for the calculations of these rankings was several months ago, the security, health and primary education ratings was based, as I explained earlier on the scores given by resident Nigerian nationals; and if the current GDP base was used, we would have only moved up 3 or 4 rankings at the most, which is still not good enough. In fact, our ratio of savings to GDP would have been even worst than was recorded.
I encourage every one interested in economic and social development of nations to truly study the WEF rankings and the methodology adopted. What is clear is the robustness of the key factors measured. The self-scoring exercise highlighted some realities, which I am not sure we can argue with. The translated scores in comparison with how other countries scored themselves resulted in us being ranked out of 144 as follows; 142 – Diversion of public funds;134 – Public trust of politicians;135 – Irregular payments and bribes; 126 – Favouritism in decisions of government officials; 134 – Wastefulness of government spending; 137 – Business cost of Terrorism; 136 – Reliability of Police Services, even the private sector is not left out, where it ranked 132 – Ethical behaviour of firms!!! The old faithful’s – Quality of Infrastructure ranked 133 and Electrical Supply ranked 141. Of course, we expect dramatic change in Power going forward, but for now, the jury says its not working.
It is clear that Nigeria is still at that level, which WEF describes as trying to provide Basic Requirements and for which we are rated 140 out of 144. Yes, the consideration of our rebased figure would have helped a bit, but not enough to make us feel good.
I feel that our rebasing – as welcomed as it is, has become a two edged sword. It emphasizes potential, which is all we ever talk about, but worsens the status of our reality. With that large an economy, what are we doing at the bottom of most economic and social evaluation ladders? I temper my pride of our new economic base with some realities. Where do we rank with respect to our developing peers in terms of kilometers of motor-able roads per person; number of children per school desk, per classroom, per school; electrical output per person; kilometers of rail track per person; number of people per hospital bed; number of teachers per child, number of doctors per person etc…and the evaluation can go on and on. The ratios are not impressive but they are the ones that count. This is not a Federal Government issue only by any means; it concerns the State governments even more.
At one of our Summits, the NESG encouraged (or maybe challenged) the Government to adopt the WEF rankings as a fair scorecard of its performance because of the robustness of its evaluation. We cannot applaud the Government for a great performance just because the price of crude went up or the demand for crude increased and so hiked up our financial performance. The very essence of sustainability, as captured in the main elements of the WEF ranking, challenges our systems, our processes, our institutions, infrastructure, corruption, efficiency of governance, effectiveness in instituting the rule of law, the state of our technology etc.
The Paradox of it all is that the very issues, which pull down our ranking, are the ones that we must turn into opportunities for investment, participation and partnerships with the more advanced communities. Whilst it is most unlikely that any major investor might select Libya (126th ranking) or Mali (128th ranking) in preference to Nigeria as an investment destination, the key issue is that the perception Libyans and Malians have of their country’s economy is seemingly not too far from that which Nigerians have of theirs. That really is the issue.
It is interesting that as the Federal Executive Council was approving the National Integrated Infrastructure Master Plan (NIIMP), Nigerians declared infrastructure in the WEF rankings as the most problematic factor for doing business in Nigeria. The greatest developmental challenge and yet opportunity in Nigeria today lies in the state of its infrastructure. Infrastructure without a doubt is a key driver of economic growth and development and an enabler of competitiveness.
Nigeria’s current national infrastructure stock is very inadequate and below the ideal at 35 – 40% of the UN-REBASED GDP (the global norm is 70%). Obviously, using the rebased GDP figure as a base would show a worst but realistic infrastructure gap. South Africa boasts a healthy 87% infrastructure stock as a ratio of its GDP, exceeding the global norm by 12% and outclassing the USA, which underachieved at 64% (as at 2012).
With a $3trillion 30- year infrastructure development target, the impediments to its achievement are the issues Nigerians have raised and WEF assisted to bring once again to the fore through these rankings. Those basic factors of building great institutions, attracting the necessary funds to build up our infrastructure through an attractive macroeconomic environment; and a realization that we must support a healthy population to make all this happen whilst guaranteeing a great educational system for our future generation. These are the issues that the first four pillars of the WEF Global competitiveness rankings speak to.
It has not been all bad news because our level of borrowing as a ratio of GDP ranked us as 18thout of 144 and would have been a better ranking if the rebased GDP figures were applied – so we can go out and borrow more money and have even more debt!! We also rated well in staff training – 48; Effect of taxation to invest – 40; Agricultural policy costs – 30; Effect of Taxation on incentives to work – 21; Capacity to attract talent – 47. The best ranking was for Legal rights index – 11 (scoring 9/10).
I have been asked – what next? My response is – “Forward”! This must be our watchword. We have so much to do that the only choice we have is to just get on with it. At the NESG, we want more private sector participation, we want more global participation in our economy, we want an open economy further still, we want the economy to encourage partnerships – global partnerships, which brings with it not just cash, but skills, intellect, methodologies, discipline, learning, process and structure. We have so much to learn and re-learn. We have been out of practice for so many years – decades. Now is the time. In spite of the politics, the economy ticks along. I believe we are not far from that positive tipping point.
Unfortunately, a good performance evaluation system is not as concerned with effort as it is with results. Nigerians will only judge the country’s performance on results that are seen and felt. Learning how to achieve these results is what the WEF data provides and they should be studied with an open mind, the more so that they are not foreign evaluations but ours. Perception is reality and people respond to their realities. That is the reality that WEF has presented.
I believe sincerely that there is a huge and massive critical mass of economic activity going on as “work in progress”. There are many quiet initiatives that will result in an overwhelming upsurge of economic activities when they come to fruition. If we quantify the value of all the feasibility plans, business plans, venture capital investments, loans and debentures and all manner of other financial investments, that is happening right now, we will appreciate the need for us to brace ourselves for burst of economic activities in all its ramifications in a reasonable future.
Clearly the government has not done enough in sharing with the people, these currently hidden public and private sector activities and that is why it will always get these poor ratings borne out of ignorance of what is really going on. Many seeds have been planted, for which nothing has sprouted yet. To the casual observer, nothing is happening, but yet the seeds are quietly sprouting roots. We must not, due to our impatience, uproot the plant before it grows; and when it does emerge, we must appreciate that our work has only just begun.
Let’s not waste time and energy complaining about the WEF rankings. An honest study and evaluation will show the authenticity of the exercise. The question is – Are we ready for the great opportunities we boast of? The WEF results do not say so.
Foluso Phillips
