Nigeria is Moving Towards Mid-table in Ease of Doing Business

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Culled—Proshare

November 2, 2017/FBNQuest Research

The positive headline emerging from the World Bank Group’s Doing Business 2018 report is that Nigeria has climbed 24 places to no 145 out of 190 countries over the past year. It appears that the head of state set a target of a rise of 20 places. For the first time Nigeria has joined the ranks of the top ten improvers, measured by the introduction of reforms to business regulations. This would have been unthinkable in the recent past, and sees Nigeria rubbing shoulders with the likes of India. 

The rankings are published alongside a country’s distance to frontier score, which captures the gap between current performance for the set indicators and best practice for the same across all economies. Nigeria’s score of 52.03 was 3.85 points above the previous year’s. It therefore achieved an improvement in absolute terms and relative to other economies surveyed.  

Two economists involved in the report have calculated that a ten percentage point (pp) rise in this score can be equated with a two pp reduction in the economy’s poverty rate, which is measured by the number of adults earning less than US$1.90 per day. 

Among the ten areas which together make up the overall ranking, the most striking is Nigeria’s no 6 slot for getting credit. The report is not assessing the availability of credit, for which the ranking would be far lower, but movable collateral laws and credit information systems. It has identified specific reforms introduced in both areas. 

The presidential enabling business environment council, formed by the head of state n July 2016 and chaired by the vice-president, has been an influence behind the climb towards mid-table respectability. It is now pushing hard on its second 60-day national action plan. This is the 15th report in the series, and we believe that it is among those most monitored by foreign investors. 

To its credit, Doing Business 2018 publishes the names of its respondents and their companies, or at least those prepared to be acknowledged individually. The vast majority are employed by government agencies, lawyers, accountants and consultancies. These may well be the most reliable respondents but, if we wanted to be difficult, we could say that are likely to  have a similar mindset. 

No two indices are the same, and we have often said that there are too many of them. For the record and for the context, however, we note that The Global Competitiveness Report, 2017-18, released in September by the World Economic Forum, placed Nigeria at no 125 out of 137 countries while noting that its score had fallen each year since 2012.

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