What merit attends the call for Nigerian exceptionalism in the World Bank’s Ease of Doing Business Rankings? What research or science informs the call? How does one grapple with it? Or is it merely asking for lower standards for Nigeria from the rest of the world?
The call by the Lagos Chamber of Commerce and Industry (LCCI) for country-specific indicators in the global Ease of Doing Business Rankings of the World Bank compels a review of the rankings and the Nigerian situation. It raises many more questions including the rubrics of the envisaged Nigeria-specific rankings.
LCCI Director-General Muda Yusuf on January 21, according to reports quoting the News Agency of Nigeria, called for indicators that reflect the Nigerian condition in the global Ease of Doing Business Rankings. Yusuf stated, “Some of the indicators in the Ease of Doing Business composition do not properly capture the critical variables in our environment. Issues of power, transportation, security and our regulatory environment are not captured. We need to address these other variables that are not on the list of the ease of doing business parameters.”
The LCCI boss added: “If you look at the present indicators, it is about construction permits, ease of starting business, credit, reforms, trading across borders, amongst others. In many of those countries that you roll out these parameters, security is not an issue, power and transportation are taken for granted, whereas in our environment, these are very big issues.”
The World Bank gathers data and publishes the annual Ease of Doing Business Rankings. There is also a subnational report focused on individual countries. The Nigerian subnational ranking is now in its fourth year.
The Ease of Doing Business Index emanated from research led by Simeon Diankov at the World Bank. Academic research conducted with professors Oliver Hart and Andrei Shleifer was the basis. It looks at ten indicators and assigns values to them to show the complexity or simplicity of regulations and how they enable or disenable business performance. “Higher rankings (a low numerical value indicates better, usually simpler, regulations for businesses and stronger protections of property rights”.
The Ease of Doing Business project commenced in November 2011. The ten sub-indices for ranking nations (and states in the subnational) include the following:
- Starting a business – Procedures, time, cost and minimum capital to open a new business;
- 2. Dealing with construction permits – Procedures, time and cost to build a warehouse;
- Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
- Registering property – Procedures, time and cost to register commercial real estate
- Getting credit – Strength of legal rights index, depth of credit information index
- Protecting investors – Indices on the extent of disclosure, the extent of director liability and ease of shareholder suits
- Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as a share of gross profit
- Trading across borders – Number of documents, cost and time necessary to export and import
- Enforcing contracts – Procedures, time and cost to enforce a debt contract
- Resolving insolvency – The time, cost and recovery rate (%) under a bankruptcy proceeding
According to the World Bank, the Doing Business project also offers information on following datasets: a) Distance to frontier – Shows the distance of each economy to the “frontier,” which represents the highest performance observed on each of the indicators across all economies included since each indicator featured in Doing Business; b) Entrepreneurship – Measures entrepreneurial activity.Includes data directly from 130 company registrars on the number of newly registered firms over the past seven years; c)Good practices – Provide insights into how governments have improved the regulatory environment in the past in the areas measured by Doing Business; d) Transparency in business regulation – Data on the accessibility of regulatory information measures how easy it is to access fee schedules for 4 regulatory processes in the largest business city of an economy.
In 2018, Nigeria scored 145 out of 190 points in the rankings. The Doing Business in Nigeria 2018 ranking compared business regulations in our 6 states and FCT. It measured progress since 2014 in four areas of starting a business, dealing with construction permits, registering property and enforcing contracts. It found that 29 states implemented 43 reforms across the four areas, making it easier for local entrepreneurs to start and operate a business. Kaduna, Enugu, Abia, Lagos and Anambra showed the largest advance toward the global good practice frontier.
Covered in the indices are matters such as electricity that the LCCI mentions. Some of the issues are now subject of regulatory review in ongoing work on the Companies and Allied Matters Act in the National Assembly. The indices have a global application because of the commonality of the issues across countries and regions.
It would be interesting to receive a more detailed case for Nigerian exceptionalism from our foremost chamber of commerce based on its research. It should include implementation modalities for carrying out the research. It would be a major contribution by LCCI to developing the business environment in Nigeria.
