IT is no secret that Nigeria has, for some years now, been on the bottom rungs of global rankings of competitiveness and ease of doing business. Improving Nigeria’s ratings on these critical rankings is an important task that should be at the heart of the government’s efforts to drive investment in the country.
But, getting investment opportunities right at the state level is a unique challenge. It is, therefore, heartening that the World Bank is supporting measures that can attract investment to the states. It is working on a business evaluation of the country’s 36 states and the Federal Capital Territory (FCT), using selected indicators.
The Minister of Trade, Industry and Investment, Dr. Okechukwu Enelama, and Jumoke Oduwole, Secretary of the Presidential Enabling Business Environment Council (PEBEC), confirmed to the National Economic Council (NEC) that the sub-national ranking will be undertaken by the World Bank Group, with the Enabling Business Environment Secretariat (EBES) and the Nigerian Investment Promotion Council (NIPC). These two agencies will provide support to the state governments with regard to their priority reforms.
The World Bank has listed eleven indicator areas to be ranked, plus seven additional areas of interest to the state governments. These indicator areas include starting a business, enforcing a contract, registration of property and dealing with construction permits. The additional indicator areas are: investing and marketing, infrastructure, access to property, regulatory environment, institutional support and business resources. Others are transparency and accessibility of information and security.
The ranking will culminate in a final report in June 2018, on how each of the states performed based on the identified indicators. The exercise will be the fourth in the series, following similar efforts by the World Bank in 2008, 2010 and 2014. Since 2005, the global financial institution has benchmarked 438 locations in 65 economies around the world.
This ranking is a good development for Nigerian states. It will breed healthy competition among them. For instance, a high ranking for any state will make it more attractive to investors, as it will indicate the ease with which they can operate in the specific areas that the state excelled.
Unlike the global World Bank business ranking, which evaluates nations based on the performance of two major cities, the sub-national exercise will rank all the states and the FCT, capture local differences and help the states and geo-political zones engage in a healthy competition by telling their own stories and highlighting their good practices that could be adopted by other states.
The World Bank proposed format, which is similar to the PEBEC and EBES model, is based on global best practice with proven record of delivering results.
We appreciate the results of the last ranking conducted in 2014 which showed areas where some states have comparative advantage in the ease of doing business. For example, in the 2014 report, the FCT ranked first for “Starting a Business”, while Jigawa State came tops for “Dealing with Construction Permits”. Zamfara and Katsina States were first in “Registering Property” and “Enforcing Contracts”, respectively. Lagos State was ranked 4th in “Starting a Business, 36th in “Dealing with Construction Permits”, 31st in “Property Registration” and 28th in “Contract Enforcement.”
But, beyond the attractiveness of states to investors, improving the ease of doing business in the states has other benefits. These include job creation and improvement in the quality of life of citizens. Others are improved competitiveness, efficiency and transparency, which are areas in which Nigeria has consistently scored very low in global ease of doing business rankings.
We recall that Nigeria was ranked 127th in 2016 by the World Economic Forum (WEF) in global competitiveness in doing business. This performance was only better than those of eleven countries covered in the ranking. It was in that connection that the Federal Government, early this year, set up PEBEC, and reduced the period required for the perfection of import and export documentation papers from two weeks to between 7 and 10 days. The plan is also targeted at three broad priority areas: entry and exit of goods, entry and exit of people, and government’s transparency in procurement.
While these efforts are commendable, creating an enabling environment for doing business across the states remains a challenge, thereby making the World Bank exercise worthwhile. Lagos and Kano states will be used as case studies in the reports, but data collection will be done in all the 36 states and the FCT. This ranking will effectively project the strengths and weaknesses of the individual states, 30 of which are reportedly insolvent, with most depending on monthly federal allocations to meet their basic obligations.
With such allocations declining from quarter to quarter, the ranking will clearly indicate the capabilities of the states and the way forward for them in their efforts to become financially independent and self-sustaining.