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Nigeria Economy Commentary- Signposts on the road to a new business environment

At the end of October, the World Bank released its annual Doing Business report for 2018, revealing that Nigeria rose 24 spots to 145th place, the country’s biggest ever jump and its highest position since 2013 (131st). This development came on the back of efforts by the Presidential Enabling Business Environment Council (PEBEC) in the preceding 18 months to foster the growth of small businesses in Nigeria. As part of this mandate, PEBEC instituted a 60-day National Action Plan (NAP 1.0) at the start of the year to remove critical bottlenecks and bureaucratic constraints to doing business in Nigeria, targeting a 20-place advance on the Doing Business rankings – a target eventually surpassed. The Vice President also passed an Executive Order in his capacity as Acting President in May 2017, aimed at promoting transparency and efficiency across government agencies.

 

The NAP 1.0 sought to enact quick wins for improving Nigeria’s business environment by focusing on seven Doing Business indicators and including a homegrown one – Entry & exit of people. With its impressive rise up the rankings, Nigeria climbed from 37th to 21st among Sub-Saharan African (SSA) countries. Significant improvements were recorded across the Dealing with construction permits and Getting credit criteria – moving from 174th and 44th to 147th and 6th respectively, both of which were explicitly targeted by the NAP 1.0. Nigeria’s other notable improvement was in Enforcing contracts – from 139th in 2017 to 96th in 2018 – an area that was not directly covered by the NAP 1.0.

 

The economic impact of Nigeria’s success in the Doing Business indicators would be difficult to quantify in the near-term. Given this, measuring the real economic impact of Doing Business initiatives must assume a central role in PEBEC activities going forward, as this would generate buy-in from the business community and engender confidence in policy. The World Bank Doing Business indicators are a powerful tool for policy-makers looking to address impediments to SME growth in the country. To maximize the realized impact on SMEs, these measures must be complemented with macroeconomic and policy stability, and a tailored approach to improving the ease of doing business in the country.