Special Infrastructure Devt Fund underway
The Federal Government has set up a presidential-level, inter-ministerial initiative to address Nigeria’s consistently poor performance on various Global Competitiveness and Ease of Doing Business Indices, THISDAY has learnt.
The initiative, being championed by the Ministry of Industry, Trade and Investment (MITI), is headed by Vice President Yemi Osinbajo as chairman and has Minister of Industry, Trade and Investment, Dr. Okey Enelamah, as vice chairman. Baring last-minute change of mind, it would be unveiled this month.
A presidency source, who revealed this to THISDAY noted that the initiative would have substantial private sector input and leadership, with the government supplying the needed political will and leadership, and will tackle specific challenges inhibiting industrialisation, domestic and cross-border trade, and local and foreign investment.
Nigeria is currently ranked 169 out of 189 countries, on the World Bank’s Ease of Doing Business rankings. However, the federal government’s vision, THISDAY gathered, is to rise into the top 100 by 2020.
“We’re looking keenly at the example of Kenya, which climbed 21 places on the rankings between 2014 and 2015, simply by focusing on a number of critical reforms ranging from access to electricity and access to finance for businesses, to property registration procedures. Between 2013 and 2014 Kenya actually slipped eight places, before pulling off the remarkable feat of improving from 129 to 108 the following year.
“Nigeria has spent long enough time talking about creating an enabling environment, now it’s time to make it happen, like many other countries have done in recent years. Rwanda is another inspiring African story; the second-highest ranked African country, after Mauritius, and currently more than 100 places ahead of Nigeria,” the source said.
Analysts at Renaissance Capital have proffered ways by which the country can jump to within 100 best countries to do business .
The World Bank Ease of Doing Business index identified major drawbacks to doing business in the country as sloppy taxation system, getting electricity, registering property and bottlenecks to starting business; and advocated reforms in critical sectors of the economy.
To arrive at its conclusions, the analysts noted that it constructed two scenarios for improvement, which show where the country could rank if it implements practices that were found in other countries including Kenya, Ghana, Rwanda and Zambia. The note showed that adopting the best case scenario would see the country jump to 71st, and 104th under the second case scenario.
Lamenting slow turnaround time in the country, the report noted that “everything takes time in Nigeria” adding that, “on average, it takes a month to start a business, 908 hours to pay taxes, 10 weeks to register property and six months to get electricity.” whereas “In Zambia, you can start a business in little over a week, while in Rwanda, you can get electricity in just over a month. For registering property in Nigeria, it can cost on average 11 per cent of the property’s value. By contrast, in Rwanda it costs just 3 per cent. Cross border trade is particularly difficult – an exporter spends $786 on border compliance vs. just $143 in Kenya,” the note stated.
“We construct scenarios for improvement showing where Nigeria could be ranked if it matches the practices found among comparable countries such as Kenya, Ghana, Rwanda and Zambia. Based on our analysis, Nigeria could improve to 71st position under our best-case scenario, and 104th under our second-best case.
“One way of overcoming this issue would be for targeted reforms, focusing on a single area, as opposed to broad changes which may prove costly to enact. We highlight paying taxes and property registration as two areas which would have a large impact on Nigeria’s ranking. Our estimates show that reforms in just these areas could contribute an improvement of 47 places; by 2019, this could see Nigeria ranked at 122nd, all else constant,” researchers at RenCap argued.
THISDAY also gathered that work, involving the Ministries of Finance, Industry, Trade and Investment, the Nigeria Sovereign Investment Authority (NSIA) and several stakeholders from the private sector and international investment funds, is ongoing to establish a special Infrastructure Development Fund that will focus on high-priority projects that the government is eager to deliver.
The presidency source pointed out that, “the Qatar Investment Authority for example has shown great interest in investing to help Nigeria meet its infrastructure ambitions – the President’s recent trip to Qatar was connected to this.”
THISDAY checks revealed that a sizable portion of the N500 billion earmarked for Social Investment Programmes in the 2016 budget will be going into a special Enterprise and Empowerment Programme fund to be managed by the Bank of Industry, and which will be made available as micro-credit to two million market women, traders, youth entrepreneurs and smallholder farmers.
Similarly, the source told THISDAY that the President Muhammadu Buhari-led government would implement the Nigerian Industrial Revolution Plan (NIRP), launched by the previous government in 2014.
According to the source, the Minister of Industry, Trade and Investment has acknowledged that it is a comprehensive and useful document, and that his focus is now on implementing it in light of current realities.
“In the two years since it was first unveiled, there are many lessons and insights that have emerged. The Ministry is studying these, and also holding discussions with stakeholders in certain priority industrial sectors in which Nigeria has comparative advantage, to see how the government can better implement an industrial policy that creates jobs, profits and prosperity,” the source pointed out.