The news that Nigeria has moved up 24 places to 145th in the World Bank’s ‘Doing Business’ report published yesterday, which also indicated that for the first time the country is recognized as one of the top 10 most improved economies in the world is a good reason to cheer.
Established in 2002, the ease of doing business ranking has becoming a benchmark against which reforms are measured and the clearest indicator yet of a country that is open for business. It is a standard report format that allows for comparison of various economies globally on clearly defined parameters.
To arrive at the ease of doing business rankings, several assumptions are made to get an equilibrium point between economies. More often than not, they indicate how much red tape is involved in getting a business off the ground. Therefore, to a large extent, governments interested in reforms achieve good result improving ease of doing business in their countries.
Countries spend huge resources courting foreign investments hence the index provides considerations by which investors judge the seriousness of a country. For too long, Nigeria has failed to take pragmatic steps at reforms. Public institutions are weak and administrators are pliable. Processes are painfully tedious and systems are minefield of corruption. The situation is worsened by epileptic power supply.
This improved ranking is the clearest indication yet that Africa’s biggest economy is turning the corner. Yemi Osinbajo, Nigeria’s vice president, who is leading the charge to improve doing business ranking, said he is elated that the country is now one of the top ten reforming economies in the world in 2017.
“After a decade-long decline in Nigeria’s rankings, last year the Government recorded a modest increase. This year, the President set us an ambitious target of moving up twenty places in the rankings – I am delighted that we have exceeded his goal. Improving the business environment is at the heart of the Buhari Administration’s reform agenda. We are reinforcing our economic turnaround by a vigorous and active implementation of the Economic Recovery and Growth Plan (ERGP) so businesses operating in Nigeria can thrive and be competitive globally,” said Osinbajo.
The World Bank highlighted five reforms making it easier to do business in Kano and Lagos, the two cities covered by the report in Nigeria over the course of last year.
These are starting a business, dealing with construction permits, registering property, getting credit, and paying taxes.
In the area of company registration, the Corporate Affairs Commission has moved to offer online registration and introduced new features such as electronic stamping of registration documents. Thus, entrepreneurs have been able to register their businesses much faster, within 24-48 hours, thereby saving cost and time.
This is important because a simple, fast, and transparent business registration processes enables investors, both local and foreign, to register as quickly as possible. A registered company benefits from access to credit, is able to hire full time employees in accordance with the country’s laws, has more leverage when negotiating with suppliers, and shows clients and consumers that it is a legitimate business according to the Investment Climate Facility (ICF) a body facilitating investments in Africa.
According to the ICF, the sooner a company can start operating, the sooner it can start earning money. A delay in the business registration process therefore, not only consumes valuable time but also increases costs, which some businesses cannot afford. Once registered, a business becomes a legal entity, which opens up avenues for growth and expansion.
Getting construction permits and registering property in both Lagos and Kano States have become more transparent and easier for businesses with the online publication of all relevant regulations, fee schedules and pre-application requirements online.
Getting access to credit is now easier and Nigeria is placed 6th in the world on this indicator. This indicates that the construction sector may see a boom.
The Government recorded a significant success by collaborating with the National Assembly to pass two new Acts, the Secured Transactions in Movable Assets Act 2017 and the Credit Reporting Act 2017, thereby strengthening the legal framework for access to credit for SMEs across the country – an important requirement for the success of SMEs.
Finally, it has become easier to pay taxes in Nigeria because taxpayers can file tax returns at the nearest Federal Inland Revenue Service (FIRS) office, and electronic payment and filing are gradually gaining acceptance. This will increase tax compliance and improved government earnings helping to pay off Nigeria’s debt.
But it is not yet uhuru for the country and we must not rest on our oars. The distraction of the 2019 general elections and the political campaigns expected to start in full earnest next year, the president’s state of health, volatility of oil prices and the spectre of militancy hangs about this achievement.
The critical imperative for Nigeria therefore is to mainstream these reforms persuaded the legislature to include those yet to be included as part of the country’s laws. A revision of the company code and other relevant business registration laws are now required.
It is also important to acknowledge that only two cities, Lagos and Kano were reviewed to arrive at the latest ranking. Admittedly, they represent the economic livewire of the country but they are not the only states where reforms in ease of doing business are required. Not much progress was achieved in electricity and this should be the next target in the quest to improve the ease of doing business in Nigeria.