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Nigeria drops in World Bank Doing Business rankings – what happened and why it matters

VP Osinbajo is the chairman of the Presidential Enabling Business Environment Council

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Nigeria drops in World Bank Doing Business rankings – what happened and why it matters

Nigeria has dropped to 146th out of 190 assessed countries in the World Bank’s 2019 Doing Business Index (DBI) released on Wednesday. Last year, the country moved up by 24 places to 145 and was ranked among the top 10 most reformed economies. But this year, the country suffered a decline.

However, there was an improvement in Nigeria’s ease of doing business score from 51.52 to 52.89.

Backstory: The Doing Business Index is an annual ranking that assesses prevailing business climate conditions across 190 countries based on 10 ease of doing business indicators. The index captures ease of doing business reforms that have been validated by the organized private sector. For Nigeria, the two states assessed by the rankings are Lagos and Kano. 

Of the ten indicators, Nigeria did best in Getting credit, Protecting Minority Investors and Enforcing contracts, where it was ranked 12th, 38th and 92nd respectively. However the performance was woeful in Registering property (184th), Trading across borders (182nd), Getting Electricity (171st), Dealing with construction permits (149th) and Resolving insolvency (149th).

What happened?: The bank recognised four reforms carried out by the country in Starting a business (where the time needed to start a business was reduced and an online platform to pay stamp duty was introduced), Getting electricity (where it became easier to get electricity because of a requirement that DISCOs obtain the right of way on behalf of the customers), Trading across borders (where Nigeria reduced the time needed to export and import by implementing joint inspections, the NICIS2 electronic system and around the clock operations at Apapa Port) and in Enforcing contracts (where new rules for small claims courts which limit adjournments were issued).

However, the Bank noted that property registration became less transparent in Kano where there is “no longer publishing online the fee schedule and the list of documents needed to register a property). Also, nine reforms were not considered by the Bank for this cycle as they were either classified as too recent to have an impact on the business climate, or the private sector did not validate them – which impacted the ranking.

Response from the federal government, through Dr. Jumoke Oduwole, the Secretary of the Presidential Enabling Business Environment Council (PEBEC) and Senior Special Assistant to the Vice President on Industry, Trade & Investment: “We strongly believe that while Nigeria did not increase in the rankings, the country has indeed witnessed an improvement in the enabling business environment in the past year. This will be reflected as more reforms are accepted for Nigeria by the World Bank Index in subsequent years.”

Why it matters: This was bad news for the federal government just as the country enters the final stretch of the election season. When the last rankings were released showing a big jump for the country, the FG repeatedly touted that achievement in different fora as a sign of its commitment to improving the business environment. With this year’s decline, it is expected that the opposition will make a meal out of it.

Unfortunately, context may be lost in all this because despite the drop in the rankings, Nigeria actually improved in its Distance to Frontier (DTF) score from 51.52 to 52.89. It is a small increase, but an increase nonetheless. The reason for the drop in rankings despite the slightly improved DTF score is that other countries reformed at a faster rate than Nigeria. That should be food for thought for the government: No other nation is waiting for Nigeria to get its acts together.

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