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Nigeria within the last one year has shown improvements in six key economic indicators out of 10, according to the World Bank Doing Business Report 2020.
The country moved 15 places up the ladder to sit at the 131st spot, from 146th, on the ease of doing business ranking, thanks to major reforms enacted by the President Muhammadu Buhari-led administration in areas of electricity, enforcement of contracts, registration of properties and enhancement of trade across countries, the report said.
According to the World Bank annual report which tracked business environment across 190 countries of the world from May 2018 to May 2019, Nigeria made tremendous improvement in ensuring that starting a business was easier. The country reduced the time needed to register companies through the adoption of improved online platforms as starting a business in the country needs not require on-site inspections for business premises registration.
Nigeria also made dealing with construction permits less costly by eliminating the Infrastructure Development Charge (IDC) on warehouses as well as made getting electricity easier by allowing certified engineers to conduct inspections for new connections.
“This is an indication that if Nigeria executes social and economic reforms, it would see positive results that would be acknowledged globally, as evident in the 2020 Doing Business Report,” Ibrahim Tajudeen, head of research, Chapel Hill Denham, said.
There were also improvements seen in areas of land administration system after the government implemented the geographic information system; reduction in the time it takes to export and import by further upgrading its electronic system and by launching e-payment of fees; and easier enforcement of contracts by introducing a pre-trial conference as part of the case management techniques used in court, the World Bank noted in the report.
With a score of 56.9, up from 52.9, and moving 15 places up from its previous ranking of 146, Nigeria beats rival economic giant, South Africa, and its West African neighbour, Ghana, to shine among the top 10 improvers in the index. Both Ghana and South Africa saw their ranking fall to 118th and 84th spots, respectively, from 114th and 82nd in the previous year.
Despite its improvement in ranking, Nigeria underperformed in areas of getting credit, protecting minority investors, paying taxes and resolving insolvency, the report highlighted.
The countries that recorded tremendous improvements in ranking were Saudi Arabia (62), Jordan (75), Togo (97), Bahrain (43), Tajikistan (106), Pakistan (108), Kuwait (83), China (31), India (63), and Nigeria.
Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, noted that the inclusion of Nigeria as one of 10 economies that improved the most on the ease of doing business is a reflection of continued efforts of the government in making the business climate more conducive and the small wins recorded across the key metrics adopted by the World Bank.
Ologunro, however, advised that while it appears like a piece of good news to cheer, the government must realise that a great deal of effort is still required to ameliorate the long-standing structural barriers that have hindered the productivity of SMEs and stifled the growth of the private sector.
“It is no news that urgent reforms are still pertinent in making the business environment more conducive for businesses to operate effectively and efficiently and also attract the much-needed foreign direct investment that will accelerate the pace of growth and development,” he said.
Since the past 17 years when the Washington-based lender started tracking the ease of doing business across countries, the index has been seen as metric used by investors, particularly Foreign Direct Investors, in making investment decisions.
When Nigeria moved up 24 places from 169 to 145 in the 2018 report, FDI into the country jumped 21.69 percent from $981 million in 2017 to $1.19 billion, making analysts argue a strong correlation exists between the indexes and investors’ confidence in a country.
“If the World Bank says that the ease of doing business in Nigeria is improving, it means that investments may likely flow in, both local and foreign investments which are good, especially in the area of considering long-term investments,” Ayo Akinwunmi, corporate banker at FSDH Merchant Bank, told BusinessDay.
“However, the challenge is that we are still very far away from where we should be. So we need to continue to improve more, sustain the recovery and make more efforts that will sustain the tempo,” Akinwunmi said.
In July 2016, the Nigerian government inaugurated the Presidential Enabling Business Environment Council (PEBEC) as the administration’s flagship initiative to reform the business environment. The PEBEC, chaired by Vice President Yemi Osinbajo, was also aimed to attract investment and diversify the economy to reduce the nation’s reliance on oil.
The big picture was to make it easier for Micro, Small and Medium Enterprises to do business, grow and contribute to sustainable economic activity, and provide the jobs essential to improving social inclusion. This helped in improving investors’ confidence in Nigeria, where businesses suffered an acute dollar shortage following the lengthy economic recession of 2016.
Ayodeji Ebo, MD, Afrinvest Securities Limited, said the 2020 improvement in the ranking is positive for Nigeria in terms of investor perception. He said, however, that this may not translate to improved capital investment in light of the insecurity challenges.
BUNMI BAILEY & MICHAEL ANI
