Recently, the World Bank and its private sector arm, the International Finance Corporation, IFC, in its ‘Doing Business’ 2015 data for Nigeria believes that the nation’s slow-moving economy has something to do with the poor business environment. In the report, which looks at how easy or difficult it is for a local entrepreneurs to run small to medium size businesses when complying with relevant regulations, Nigeria looks a disappointing 170 out of the 189 economies surveyed.
A bit of an improvement from the 175 recorded in 2014. While Doing Business 2015 distance to frontiers, DTF, is 47.33 per cent, very different from the 2014 figure of 43.72 per cent. This ranking is a sad reminder of the deteriorating state of the economy, particularly for a nation that has all it takes to inaugurate and sustain rapid economic growth.
The result based on survey of a total of 189 countries around the world, centred on regulations in 11 areas in the life cycle of business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across border, enforcing contracts and resolving insolvency. Each, no doubt has an impact on a business either positive or negative, depending on how a country formulates and implements regulations concerning them.
Overall, countries that are doing pretty well are Mauritius, South Africa, Ghana, Rwanda, Botswana, Namibia, Hong Kong, China, New Zealand, the United States of America, United Kingdom, Norway, South Korea and Australia among others. Surely, more needs to be done in the country to make Nigeria more business-friendly and more competitive for both local and foreign investors.
Simplifying and reducing multiple taxes that businesses sometimes have to pay, shortening the time it takes to obtain land and register a business, easier credit lines and improving transport modes like railways and seaports, would go a long way in removing the impediments that stand in the way of a favourable business environment.
Above all, the issue of poor power supply is worrisome. Electricity is unarguably the greatest factor that has and will continue to have negative effects on business undertakings in the country. No modern business anywhere in the world can succeed without adequate power supply. Ironically, the country is short of this crucial ingredient for good business climate.
According to the Manufacturers Association of Nigeria, MAN, businesses and industrial sector rely mostly on generators, which are about 80 per cent of the power they use. This also helps to explain why it is tough and difficult to start and run business in the country, and equally costly because of the poor power supply the country has been grappling with over the years. Unless, this is tackled, the business environment would continue to remain unattractive to investors.
Therefore, for the country to get out of this quagmire and getting the right business climate, that can attract investors both locally and internationally and to even ensure that existing business stay in operation, it needs to reform its business regulations.
We therefore urge government to introduce smarter regulations that are friendly to businesses and at the same time are beneficial to the overall interest of the country. And since doing business is about smart business regulations, the government must as a matter of urgency formulate smart policies that will eliminate or at least minimise bureaucratic red-taps and corruption as well as adopting measures that will result in better infrastructure, such as transport and power supply and skilled manpower.
This is the surest way to turning our potentially rich country into a great business hub. However, until this is done, we will continue to be struck at the bottom of the business ladder, an unenviable place to be for a well-endowed nation like Nigeria.