Local and foreign investors and entrepreneurs
have continued to express concern over the
process of doing business in Nigeria, despite the
establishment of various government bodies such
as the Nigerian Investments Promotion Council,
NEPC, the Nigerian Export Promotion Council, NEPC,
amongst others. Several efforts made by present and past
administrations to ease the process have proved abortive
with severe implications for our economy.
Take Egypt for instance. In 2014 and 2015, the Arab nation
topped the list of reformers that are making it easier to do
business. Egypt’s reforms went deep with reforms in 5 of
the 10 areas studied by Doing Business, a global business
performance ranking journal. Beside Egypt, the other top
10 reformers are, Croatia, Ghana, FYR Macedonia, Georgia,
Colombia, Saudi Arabia, Kenya, China, and Bulgaria.
Today, Egypt is the top reformer in both Africa and
worldwide with huge lessons for the Nigerian government.
Egypt’s reforms went deep. Egypt cut the minimum capital
required to start a business, from 50,000 Egyptian pounds to
just 1,000 and halved the time and cost of start-up. It reduced
fees for registering property from 3 percent of the property
value to a low, fixed amount. It eased the bureaucracy that
builders face in getting construction permits. It launched
new one-stop shops for traders at Egyptian ports, cutting the
time to import by seven days and the time to export by five.
And it established a new private credit bureau that will soon
be making it easier for borrowers to get credit.
With such excellent encouragement, why will the process of
doing business in that country not improve unlike in Nigeria
where entrepreneurs go through the proverbial eye of the
needle before establishing their business?
In this country, when entrepreneurs draw up a business
plan and try to get under way, the first hurdles they face are
the procedures required to incorporate and register the new
firm before they can legally operate. In some, the process is
straight forward and affordable. In others, the procedures are
so burdensome that entrepreneurs may have to bribe officials
to speed the process—or may decide to run their business
Cumbersome entry procedures are associated with more
corruption, particularly in the public service. Each procedure
is a point of contact—an opportunity to extract a bribe.
Analysis shows that burdensome entry regulations do not
increase the quality of products, make work safer or reduce
pollution. Instead, they constrain.
Is it therefore not unfortunate that despite Nigeria’s current
status as Africa’s largest economy, the country’s global ranking
has continued to nosedive, a development not healthy for the
growth of the economy and international business?
Results of two of such rankings released recently give no
cause to cheer. Nigeria slumped in the global competitiveness
ranking falling by seven places to 127th position.
The 2014-15 Global Competitiveness Report stated that
infrastructure (human and physical) continue to be Nigeria’s
toughest challenges.
The report attributed the decline in Nigeria’s global
competitiveness “to weakness in public finances (as a result
of lower oil exports), continuing institutional frailty and
deterioration in national security.”
Unfortunately, Nigeria, the famed giant of Africa and
continent’s largest oil producer lags behind little known
countries as Lesotho (107th) and Cape Verde (114th)
registered the largest improvements, while Botswana (74th),
Namibia (88th), Zambia (96th), Ghana (111th), Senegal
(112th) and Swaziland (123rd) are relatively stable.
Among the oil-exporting economies, Gabon is the highestranked
economy (106th) followed by Cameroon (116th), and
Chad (143rd).
Even Africa’s lowest-income economy Ethiopia recorded
the biggest leap, rising nine places to 118th. In the same vein,
Nigeria didn’t also make it to the top-10 list of businessfriendly
countries, according to a recent World Bank Report.
Efficient business registration process reduces transaction
costs and helps keep formal titles from slipping into
informal status. Simple procedures to register business are
also associated with greater perceived security of rights and
less corruption. That benefits all entrepreneurs, especially
women, the young and the upstarts. The rich have few
problems because they can buy their way through, which is
very unfortunate. But small entrepreneurs cannot. It is only
comprehensive reform that can change this practice.