The report revealed that Nigeria now ranks among the top five economies in sub-Saharan Africa in two areas: the ease of getting credit and the strength of minority investor protection. Also, some improvement was recorded in the process of starting up a business.
Analysts had hailed the feat as encouraging and laudable, stressing, however, that Nigeria needs to do more to make its economy attractive to foreign investors and catch up with other developing countries, despite the improvement recorded.
“It’s appealing to see improvement in the ease of doing business in Nigeria; moving five notches to rank 170th of 189 ranked countries in the world. Whilst it is still a long haul to where a country like Nigeria should be, given the potentials and business opportunities in the country, I think it is important to look at the components of the rank to ensure further improvement going forward.
“In my view, the CBN, operators, as well as other collaborators in the financial services sector, have enhanced access to credit, especially at the low-end of the market, with expectation of further improvement, when the high interest rate tapers out. Most state governments and the Corporate Affairs Commission (CAC) have also relaxed rigid rules on starting or registering businesses, thus improving our score on this component of the ranking criteria, ”said a market watcher.
In ease of obtaining credit, Nigeria jumped 73 places up to 52, while in ease of starting a business it improved nine places to 125.
The report went further to say that Nigeria has implemented 10 regulatory reforms, starting from 2005, making it easier to do business. Nigeria improved its credit information system through a Central Bank of Nigeria (CBN) guideline defining the licensing, operational and regulatory requirements for a privately owned credit bureau.
The country, the report showed, improved access to credit information by distributing credit information from retail companies.
Also, a majority of reforms have focused on improving business incorporation, trade, and credit reporting systems—allowing the country to gradually narrow the gap with the best regulatory practices in the region.
Between 2013 and 2014, Nigeria saw an increase of 3.6 points in its distance to frontier score, greater than the global average increase of 0.8.
This is due in large part to an increase in the coverage rate of Nigeria’s credit reporting system and a reduction in the company registration fee that made it less costly to start a business.
Nigeria’s upward movement (+5) compared favourably to the BRICS (Brazil, Russia, India and China) (+0), other MINT (Mexico, Indonesia, Nigeria, Turkey) (+2) nations and Sub Saharan Africa (+2).However, the country recorded a decline in rankings in the dealing with construction permit, getting electricity, paying taxes and resolving insolvency.
Regulatory Hindrances
While the recent improvement in the ease of doing business in the country is commendable, it is important to note that these gains may be reversed if regulators fail to do what is necessary. While the effort of the federal government via the Minister of Industry, Trade and Investment, Mr Olusegun Aganga, is commendable, the country has missed several opportunities in the past to enhance its business climate.
While the recent improvement in the ease of doing business in the country is commendable, it is important to note that these gains may be reversed if regulators fail to do what is necessary. While the effort of the federal government via the Minister of Industry, Trade and Investment, Mr Olusegun Aganga, is commendable, the country has missed several opportunities in the past to enhance its business climate.
Over the years, the debate over the overbearing attitude of regulators as it concerns the ease of doing business in Nigeria has never been as contentious or rancorous as it is today.
Many analysts said what majority of the stifling policies or policy witch-hunt have effectively succeeded in doing is restrict or hinder innovation, investment opportunities, growth of economy and most importantly bring about a static economy where bureaucrats dictate the pace of growth of an economy or out-rightly retard the process.
A country that prioritises the ease of doing business is almost on a sacred quest for the solution that will create growth, and open new eras of prosperity and well-being.
Unfortunately, like many things called holy, the concept of innovation is invoked ritually and ceremonially more than it is embraced in practice.
Government Support
An Economist, Emeka Ohanyere learnt his voice on the need for government and other relevant authorities to support and encourage companies with huge investment appetite rather than stifle them with overbearing policies that will hinder industrial growth.
"It cannot be overemphasized that Nigeria needs as much Foreign Direct Investments (FDIs) as it can get, particularly with the recent transformation agenda set in motion by the federal government, intended to ensure rapid growth and far-reaching economic prosperity, “he said.
An Economist, Emeka Ohanyere learnt his voice on the need for government and other relevant authorities to support and encourage companies with huge investment appetite rather than stifle them with overbearing policies that will hinder industrial growth.
"It cannot be overemphasized that Nigeria needs as much Foreign Direct Investments (FDIs) as it can get, particularly with the recent transformation agenda set in motion by the federal government, intended to ensure rapid growth and far-reaching economic prosperity, “he said.
Ohanyere continued: “Often than not, regulatory, a situation where regulation takes the law in its hands rather than follow due process, is the key factor that negatively affects inflow of FDIs. Many a time, it unknowingly hinders investment inflows, for fear of losing domestic management control.
"The current Coca-Cola/ CPC issue which has raged on for a while occupying the centre stage in media discourse is one that is giving investors some concern. However, Nigeria needs to do more to make its economy attractive to foreign investors and catch up with other developing countries, despite the improvement recorded.”
Sending wrong signals
Having observed this situation for a while and the attendant effects, it is likely to have on the economy, one will expect that some level of caution be taken so as not to send the wrong signals to consumers it intends to protect.
One other worrisome policy is in the insurance sector, where FDI"s in insurance companies is permitted up to certain levels with restrictions on voting rights to ensuring that management control of an insurance firm doesn't shift to a foreign entity.
Having observed this situation for a while and the attendant effects, it is likely to have on the economy, one will expect that some level of caution be taken so as not to send the wrong signals to consumers it intends to protect.
One other worrisome policy is in the insurance sector, where FDI"s in insurance companies is permitted up to certain levels with restrictions on voting rights to ensuring that management control of an insurance firm doesn't shift to a foreign entity.
Concerns about loss of management control are of much less importance compared to sacrifice of economic growth. Considering the potential of FDI to spur growth, for an industry regulator to be unnecessarily harsh on businesses is misplaced priority.
Another case in point that easily comes to mind is that of India, Mexico and China losing huge Foreign Direct Investment (FDIs) due to their stifling policies that can best be described as Regulatory rascality. To put India's track record in attracting FDI in an international context, it has been at best a trickle compared to FDI into countries like Mexico and China. In the last 10 years, Mexico has attracted $247 billion of FDI net inflows and China $2 trillion, compared to India's $229 billion.
According to Kayode Omosebi, an analyst with UBA Capital, "Nigeria needs to do more to make its economy attractive to foreign investors and catch up with other developing countries. It needs to shed itself from stifling policies that might bring about the needed enabling environment that would attract investors, likewise deepen their level of presence. This is why I strongly. Condemn CPC over is recent disagreement with Coca-Cola.”
Coca-Cola vs CPC
The CPC had recently dragged the Nigerian Bottling Company Limited, Coca-Cola Nigeria Limited and their chief executives to court over alleged criminal breach of the its Act.
This was contained in a statement issued in Abuja by the Director, Public Relations of the council, Abiodun Obimuyiwa.
According to the statement, the NBC and its Managing Director, Ben Langat, violated the orders of CPC by deliberately failing and refusing to comply with its orders.
The CPC had recently dragged the Nigerian Bottling Company Limited, Coca-Cola Nigeria Limited and their chief executives to court over alleged criminal breach of the its Act.
This was contained in a statement issued in Abuja by the Director, Public Relations of the council, Abiodun Obimuyiwa.
According to the statement, the NBC and its Managing Director, Ben Langat, violated the orders of CPC by deliberately failing and refusing to comply with its orders.
It said that the offence was contrary to Section 21 of the Consumer Protection Council Act, Cap C. 25, Laws of the Federation of Nigeria, 2004 and punishable under the same section.
“Coca-Cola Nigeria Limited and its Managing Director, Mr. Adeola Adetunji, committed an offence by refusing to attend the hearing of the CPC held in Abuja.
This is in relation to investigations of violation of product quality standard under the Consumer Protection Council Act after Summons was duly issued and served to them. They thereby committed an offence contrary to Section 18 of the Consumer Protection Council Act Cap C. 25 of the Federation of Nigeria, 2004 and punishable under the same section”, said CPC.
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