There is need to do more to re-position our economy and put the people to work
It is surprising that the federal government would claim being “gratified” by the latest World Bank’s Doing Business report which placed Nigeria at number 169 out of 189 countries in the overall ease of doing business ranking. The report, entitled “Equal Opportunities for All”, based the overall ranking on key indicators on starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and getting electricity.
In the current assessment, Nigeria made improvement in the area of starting a business, dealing with construction permits, registering property and access to credit. But the country also recorded a downward slope in key indicators like trading across borders, getting electricity, paying taxes, protecting investors, enforcing contracts and resolving insolvency. In all, the country improved by just one point from its position of 170 last year to 169 this year. We do not believe that is something to rejoice about, especially when we are talking about an assessment involving 189 nations.
According to the World Bank report, the marginal improvements highlighted for our country meant “that in the last year, Nigeria’s business regulatory environment as captured by the doing business indicators improved slightly in absolute terms – the country is decreasing the gap with the global regulatory frontier. This is a morale booster for stakeholders involved in the efforts aimed at removing existing bottlenecks in the business environment.”
While that small step is good, it still did not tell the complete story of an economy that is in recession. In any case, as we have highlighted in the past, the report is narrow as it did not measure some aspects that are also critical to investment decisions such as level of security, macroeconomic stability, corruption, labour skills of the population, underlying quality of institutions and infrastructure, the strength of the financial system and predictability of policies. The focus of the report was primarily on measuring the regulation and red-tape relevant to the life cycle of a domestic small to medium-size firms.
With Kenya, for the second consecutive year, among the top 10 global improvers based on reforms undertaken, details of the report revealed that Nigeria ranked 138th position on starting a business, 174th on getting construction permit and 180th on getting electricity. Others include 182nd position on registering property, 44th on getting credit, 32nd on protecting minority investors, 182nd on paying taxes, 181st on trading across borders, 139th on enforcing contracts, and 140th position on resolving insolvency.
“Simple rules that are easy to follow are a sign that a government treats its citizens with respect. They yield direct economic benefits – more entrepreneurship; more market opportunities for women; more adherence to the rule of law,” said Paul Romer, World Bank chief economist and senior vice-president. “But we should also remember that being treated with respect is something that people value for its own sake and that a government that fails to treat its citizens this way will lose its ability to lead.”
As the largest economy in the West African sub-region and by most ratings, still the biggest on the continent, it is in our economic interest to facilitate trade across borders, improve the tax system, ease the process of starting a business, improve access to credit, enhance the process of securing construction permits and registering property, initiate regulations that would protect investors, enforce contracts, and resolve insolvency. What is required is the will to pursue these smart and business-friendly reforms. But even at that, there is need to do more if we must reposition our economy and put our people to work.