Nigeria reversed five successive declines since 2012 after increasing its competitiveness ranking to 125 of 138 countries in the World Economic Forum’s (WEF) 2017-2018 index, but the rise is deceptive, as it is only because other countries are deteriorating faster.
According to the WEF, Nigeria’s score- which is a better parameter in gauging any level of improvement, slumped to a five-year low of 3.3, as its macroeconomic environment, institutional strength, poor infrastructure and health and primary education dents the competitiveness of Africa’s most populous nation.
“Its macroeconomic conditions are worsening (122nd, down 14), inflation (131st) is high at 15.7 percent, and its budget deficit (98th) has reached 4.4 percent. Institutions appear more fragile (125th, down seven), adding uncertainty to the business environment,” according to data from the World Economic Forum’s Global Competitiveness Report 2017-2018, published Tuesday.
On average, sub-Saharan Africa’s competitiveness has not changed significantly over the past decade and only a handful of countries (Ethiopia 108, Senegal 106, Tanzania 113, Uganda 114) are continuing to improve this year.
Leading the ranking in the region, come Mauritius (45), Rwanda (58), South Africa (61) and Botswana (63). Switzerland is the world’s most competitive economy.
In general, its macroeconomic environment is still penalising Africa. Average inflation grew to double digits last year, while public finances are still being affected by relatively low commodity prices, which curbed public revenues and hence government investments.
Nigeria is struggling to adapt to lower oil prices, with the potential for structural change impeded by low scores on infrastructure (132nd), technological readiness (112th, down seven), higher education (116th), and innovation capacity (112th), the WEF report observed.
However, new prudential requirements have strengthened the banking sector’s soundness, and the Economic Recovery and Growth Plan (ERGP) for 2017–2020 contains much needed reforms on transport and power infrastructure, the business environment, and education investment.
Lower oil revenues tipped the Nigerian economy into its first recession in a quarter of a century last year and slashed government revenue by more than half, even as acute dollar shortages crimped economic activity and hammered businesses.
The economy narrowly exited recession in the second quarter 2017, according to the NBS, after a 0.55 percent growth, driven by gains in oil prices and production. The introduction of a so-called Investors and Exporters Window has also helped ease the dollar shortage, handling over $10 billion since inception in April, according to data compiled by BusinessDay.
The naira gained 1.57 percent to N362.05 per dollar on the I&E window Tuesday, and was quoted at N306 on the CBN website.
The Monetary Policy Committee held the benchmark interest rate at a record high of 14 percent for the seventh consecutive time on Tuesday, shrugging off calls to lower the rate, to encourage lending to the private sector.
Godwin Emefiele, the committee’s chair and CBN governor, said six out of seven members voted to hold key rates, in order to “maintain the recent exchange rate gains in the FX market” and put a lid on inflation, which has slowed in the past six months, primarily due to base effects.
For the ninth consecutive year, the WEF’s Global Competitiveness Index (GCI) finds Switzerland to be the world’s most competitive economy, narrowly ahead of the United States and Singapore. Other G20 economies in the top 10 are Germany (5), the United Kingdom (8) and Japan (9). China is the highest ranked among the BRICS group of large emerging markets, moving up one rank to 27.
With Switzerland, the Netherlands and Germany remaining stable on first, fourth and fifth spots respectively, the only changes in the top five apply to the United States and Singapore, which swap second and third positions.
Elsewhere in the top 10 the big winner is Hong Kong SAR, which jumps three places to sixth, edging out Sweden (7), UK (8) and Japan (9), all of which decline one place. With Finland holding stable in 10th position, the other big winner in the top 20 is Israel, which climbs eight places to 16.
In Europe, the region’s third-largest economy, France, is edged out one position to 22.
Elsewhere, there seems little sign of improvement in addressing the region’s north-south divide with little change in the rankings of Spain (34), Italy (43), or Greece (87).
Portugal does excel though, climbing four places ahead of Italy to 42. Russia improves five positions, moving to 38. Improvements in basic requirements and innovation drive the increase.
North America remains one of the most competitive regions in the world. Leading in innovation, business sophistication and technological readiness, and ranking close to the top in the other pillars of competitiveness.
The United States rises to number 2 and Canada also improves one position to 14.
Among the 17 East Asia and Pacific economies covered, 13 have increased their overall score – albeit marginally – with Indonesia and Brunei Darussalam making the largest strides since last year.
Singapore, the most competitive economy in the region, slipped from second to third place, while Hong Kong advanced from ninth to sixth place – passing Japan, now ranked ninth. There have been signs of a productivity slowdown among the region’s advanced economies and in China, suggesting the need to pursue efforts to further increase technological readiness and promote innovation.
India (40th) remains the most competitive country in South Asia, as most countries in the region improve their performance. The two Himalayan countries of Bhutan (82nd, up 15) and Nepal (88th, up ten) are among the most improved countries globally, while Pakistan (115th, up seven) and Bangladesh (99th, up seven) have both improved their scores across all pillars of competitiveness. Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia.
Latin America and the Caribbean have seen 10 years of continued improvement in competitiveness. Chile continues to lead the region, placing 33, followed by Costa Rica ranked 47 and improving seven positions. Panama comes next, ranking 50 and falling eight positions. Argentina showed most improvement, placing 92 and going up 12 positions. Brazil stabilizes at 80, improving one position, as well as Mexico ranked 51st. Colombia and Peru each fall five positions, ranking 66 and 72 respectively. Last in the region comes Haiti and Venezuela.
The Middle East and North Africa improves its average performance this year, despite further deterioration in the macroeconomic environment in some countries. Low oil and gas prices are forcing the region to implement reforms to boost diversification, and heavy investments in digital and technological infrastructure have allowed major improvements in technological readiness.
However, these have not yet led to an equally large turnaround in the region’s level of innovation. The United Arab Emirates (17th) leads the way among the Arab countries, followed by Qatar (25th), while the most-improved country is Egypt (101st, up 14).
“Countries must establish an environment that enables citizens and businesses to create, develop and implement new ideas that will allow them to progress and grow. The Global Competitiveness Report helps us understand the drivers of innovation and growth and this edition comes at a time when increasing the ability of countries to adopt innovations is critical to achieving broad-based growth and economic progress,” said Xavier Sala-i-Martin, Professor of Economics at Columbia University.
LOLADE AKINMURELE
