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Nigerian Report on Ease of Doing Business
In 2016, the Nigerian economy was in a recession recording negative growth of 1.5%. This was mainly triggered by the fall in crude oil prices. There were also foreign exchange shortages and inflation which affected the growth of the services and manufacturing sectors. Central Bank of Nigeria’s (CBN) policies to protect the currency resulted in a decline of foreign direct investment (FDI) and foreign portfolio investment (FPI). These factors formed the catalyst for the government to diversify the economy by creating a business environment to attract investment.
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n the 2018 World Bank Ease of Doing Business Report (Report), Nigeria was ranked 145 out of 190 economies, moving up 24 spots from the previous year. According to the report, Nigeria was one of the top-10 most improved economies and topthree improved Sub-Saharan countries, including Malawi and Zambia. Nigeria’s improvement in the Ease of Doing Business rankings did not happen overnight. The improvement can be traced directly to certain initiatives and policies introduced by the federal government’s Presidential Enabling Business Environment Council (PEBEC.) PEBEC was set up in July 2016 as an intergovernmental and inter-ministerial body. It is chaired by the vice-president of Nigeria and comprises ten ministers including the ministers of Industry, Trade and Investment, Power, Works and Housing, the head of the Civil Service of the Federation, the governor of the Central Bank of Nigeria, representatives of the Lagos and Kano State governments, the National Assembly, and the private sector. The Enabling Business Environment Secretariat (EBAS) is the vehicle through which PEBEC implements its policies. PEBEC’s core mandate was to improve the ease of doing business, specifically for micro, small and medium-sized enterprises (MSMEs) by removing bureaucratic burdens and administrative bottlenecks across government ministries, departments, and agencies (MDAs). At inception, PEBEC’s principal remit was to increase Nigeria’s Ease of Doing Business rankings 20 places. At the time, the country ranked 169th. One year later, PEBEC had already exceeded its goal. This is commendable, and kudos to PEBEC and the EBAS, but the critical question is whether this progress is sustainable? More importantly, in the highly competitive global environment, can Nigeria improve further on its ranking?
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"At the end of the 60 days, EBES recorded a 70% success rate on all reforms and subsequently a 100% rate of success after 90 days. Following the reforms, Nigeria’s ranking increased across board." WORLD BANK INDICATORS AND METHODOLOGY In determining the ranking of each economy, the World Bank analyses eleven indicators directly affecting business owners. Each indicator is analysed to determine economic outcomes and identify regulations or policies needed to improve the ease of doing business. The indicators are: starting a business, labour market regulations, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, trading across borders, paying taxes, enforcing contracts, and resolving insolvency. Economies are measured based on the ‘distance to frontier’ (DTF) methodology where each economy is given a DTF score and benchmarked against a ‘frontier’ economy which represents the best performed economy - the highest score being 100 and lowest zero. The overall ranking of the 190 economies is determined by sorting the aggregate DTF scores. NATIONAL ACTION PLAN 1.0 In February 2017, PEBEC introduced a 60day National Action Plan 1.0 to implement initiatives aimed at improving the ease of business specifically for MSMEs. The initiatives were implemented across eight indicators including seven of the World Bank indicators. CFI.co | Capital Finance International
The indicators are starting a business, obtaining construction permits, getting connected to the grid, registering property, access to credit facilities, paying taxes, trading across borders, and entry and exit of people. In May 2017, the federal government issued the Executive Order No. 001 of 2017 on the Promotion of Transparency and Efficiency in the Business Environment. The order is broken down into six major pillars: Transparency, Default Approvals, One Government Directive, Entry Experience of Visitors and Travelers, Port Operations, and Registration of Businesses. Some of the initiatives implemented by PEBEC under the National Action Plan 1.0 include: STARTING A BUSINESS Before now, the Corporate Affairs Commission (CAC) did not have a functional online / electronic platform for prospective business owners to register their businesses. This led to unnecessary queues and congestion at the CAC offices. In addition, the manual registration involved filing seven different forms. There was also a separate process of visiting the stamp duties office for assessment and payment of stamp duties. These challenges often resulted in undue delays, as much as six weeks, to register a company. The average time globally is about two days. PEBEC set an objective to make it possible to set up a business in 24 to 48 hours. To achieve this, the following measures were introduced: • Online name searches • Allowing online registration of businesses • Improving the reliability and user interface experience of the online portal • Reducing the forms from seven to one • Integrating the payment for stamp duties with the registration process