Appraising Nigeria’s Ranking on Ease of Doing Business


Nosa Alekhuogie takes a look at the verdict of a delegation from the World Bank on the ease of doing business in Nigeria

Last week, officials of the World Bank paid a visit to the Nigerian Shippers’ Council (NSC) and made a damming verdict on the ease of doing business in Nigeria.
According to the World Bank, Nigeria currently ranks low on the ease of doing business amongst countries.

Nigeria, the World Bank observed, presently ranks 169 out of 189 countries examined for trade index for the year 2015.

The World Bank’s trade index is a tool that measures the ease of doing business amongst other indicators in each country.

Other indicators are:  Trading across border, access to credit, electricity supply, paying taxes, registering property and the ease of starting a business.

Before the recent economic crisis and the foreign exchange crisis that have virtually brought the nation’s economy on its knees, Nigeria was gradually improving on the ease of doing business ranking. Last year, Nigeria moved up five places in the World Bank Group on the ease of doing business. This, experts said, was as a result of the reform efforts of the immediate past administration of President Goodluck Jonathan.

At the time, the World Bank ranked Nigeria 170th among 189 countries survey, showing an improvement of 2.9 per cent on the 175 position it occupied in 2014.
Also, Nigeria was ranked 129 on the ease of starting a business (138 in 2014), on dealing with construction permits it was ranked 171 as against 168 last year. On registering property it remained 185th as it was the previous year.

The country however improved immensely on access to credit ranking as it moved from 125 in 2014 to 52nd position in the 2015 ranking.
Nigeria fell by one basis point on protecting minority investors ranking as it moved from the 61st position in 2014 to the 62nd position last year. On paying taxes, Nigeria was ranked 179 as against 177 in 2014.

Country Comparism
The report showed that Singapore was the best country in the world to do business, while Mauritius remained the best in Africa with a ranking of 28.
New Zealand emerged second followed by Hong Kong. Denmark, Norway, United States, United Kingdom, Finland and Austria were ranked the top 10 countries.

Haiti, Angola, Venezuela, Afghanistan, Congo DR, Chad South Sudan, Central African Republic, Libya and Eritrea were ranked the top 10 worst places to do business on the planet.
Tagged, “Doing Business 2015: Going Beyond Efficiency,” the report revealed that entrepreneurs in 123 economies saw improvements in their local regulatory framework last year.

Between June 2013 and June 2014, the report, which measures 189 economies worldwide, documented 230 business reforms, with 145 reforms aimed at reducing the complexity and cost of complying with business regulation, and 85 reforms aimed at strengthening legal institutions – with sub-Saharan Africa accounting for the largest number of such reforms.

The annual World Bank Group Doing Business report analyses regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency.

The aggregate ease of doing business rankings are based on the distance to frontier scores for 10 topics and covers 189 economies.
The Word Bank said the distance to frontier score aids in evaluating the absolute level of regulatory performance and how it improves over time.

“This measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. This allows users to see both the gap between a particular economy’s performance and the best performance at any point in time and to assess the absolute change in the economy’s regulatory environment over time as measured by doing business.

Economies, it added, were ranked on their ease of doing business, from 1–189 adding that a high ease of doing business ranking means the regulatory environment is more conducive for starting and operating local firms.

“The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2014,” it added.

Improving on Ranking

Meanwhile, in a bid to improve its poor ranking in the world’s trading Index, Nigeria, through the Nigerian Shippers’ Council (NSC) has concluded plans to endorse the Trade Facilitation Agreement, (TFA) with a vision to increase import and export trade in the nation’s ports.

Speaking in Lagos recently, Executive Secretary of the Council, Mr. Hassan Bello noted that trade was the single tool the government can use to reduce poverty and enhance national development.
He told the visiting World Bank officials that government was not pleased with the poor ranking of Nigeria in the World Trade Index trading,

He also said that the poor ranking of Nigeria in the trade Index was very important to the government adding that the government will do everything possible to improve the country’s ranking.
Bello explained that the implementation of the Trade Facilitation Agreement in Nigeria when finally ratified will boost the nation’s ranking in years ahead.
He said: “We are going to change the way of doing business in Nigerian ports and increase the much needed revenue.”

The Council boss also disclosed that Nigeria was ready to ratify the World Trade Agreement as an imperative for boosting the nation’s competitiveness and successfully integrating into the regional and global systems to enhance economic growth and development.

Bello noted that lack of capacity by governments and its agencies to drive the needed regulatory reforms were preventing developing countries from benefitting from the Trade Facilitation Agreement
Speaking further on the need to create a level playing field in Nigeria, leader of the visiting World Bank team, Ademola Adejuwon said Nigeria cannot afford to be left behind in the implementation of the TFA saying that once two-third of the members of the World Trade Organisation, WTO, signs the agreement, it becomes binding on everybody.

He explained that a global agreement have been negotiated and concluded by 162 countries adding that once the two-third of the critical mass of membership ratify, it becomes a legal document.
He further explained that Nigeria Customs Service had signified its readiness to implement the measures whenever they are approved.

Meanwhile, analysis of the 2016 World Bank report showed that while Singapore beats every other country to the number one position, New Zealand and Denmark took the second and third position respectively.
South Africa ranked 73, Tanzania, Togo, Liberia, Angola, Kenya, Egypt and Benin Republic ranked 146 respectively.