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In its effort to improve the country’s Ease of Doing Business (EoDB), the Federal Government has proposed a $750 million or N315 billion World Bank Ease of Doing Business intervention fund for the 36 states of the federation. Specifically, the fund will be used to reform the ease of doing business at the sub-national level. The programme also seeks to provide additional incentives such as using results-based financing targeted at improving the business environment and facilitating private sector/investors’ participation at a higher level.
The eligibility criteria for the programme include developing an annual action plan with the private sector collaboration to be approved by the executive council of each state. Beyond that, the recommendations from the second sub-national EoDB report due to be released in October, is also required. Until recently, Nigeria ranks low in the World Bank Ease of Doing Business index, which is a yearly ranking that assesses the business environment in about 190 countries using various indicators, including payment of taxes, trading across borders, registration of businesses, enforcing contracts, stable power supply, access to credit and protecting investors’ funds, among others.
The Secretary of Presidential Enabling Business Environment Council and Special Adviser to President Muhammadu Buhari on Ease of Doing Business, Dr. Jumoke Oduwole, said the $750 million financing would amount to 36 per cent of the $2billion government SABER programme over a three-year period, 2022-2025. It is expected that the initiative will accelerate the Ease of Doing Business mandate articulated in the Federal Government’s Economic Recovery and Growth Plan (ERGP). Under the ERGP, the government will generate about 21 million jobs and lift about 35 million people out of poverty by 2025.
The plan to strengthen the nation’s ease of doing business is long overdue. And it is exhilarating that the World Bank is supporting the project. It must be encouraged to succeed by the participating parties. For years, Nigeria has performed abysmally in the World Bank EoDB report. For instance, in its 2015 report, the World Bank gave a damning report on Nigeria’s ease of doing business. According to the bank, “there are only 20 countries in the world where it is harder to do business than Nigeria.” The report eroded investors’ confidence in Nigeria.
The 2015 report lampooned the country’s unstable power supply, as well as lack of access to credit facility, which it noted, were impediments to growth of business in Nigeria. The negative report must have led to the inauguration of the Presidential Enabling Business Environment Council, led by Vice President Yemi Osinbajo. However, in 2020, Nigeria improved significantly in the World Bank EoDB, moving 15 places from its 2019 spot, and 39 places up since 2016. Following the improvement on the ease of doing business report, President Muhammadu Buhari gave assurance that his administration would strive to hit the 70th position in 2023. While the aspiration to hit the target is welcome, the government should walk the talk to accomplish the goal. An improved climate of ease of doing business will attract domestic and international investors.
The nation’s poor rating on ease of doing business has adversely affected the economy as many small businesses in the country have almost collapsed. Over 320 medium and small businesses have relocated to neighbouring countries, according to data from the Manufacturers Association of Nigeria (MAN). Those still in operation are running at great cost due to high cost of production, insecurity, foreign exchange scarcity and the opaque regulatory environment and corruption.
Therefore, addressing the challenges of ease of doing business is one of the best ways to stimulate economic growth and development. The federal and state governments are enjoined to make judicious use of the World Bank intervention fund and achieve its set objectives. If Nigeria will improve on its present position in the EoDB index, it is of critical importance to enact enabling laws that will make Nigeria the preferred business destination in Africa.
It is not enough to be the largest economy in Africa by GDP, the necessary infrastructure, such as good roads, stable power supply, security, streamlining business registration requirements, and corporate governance must be efficient at federal and state levels. Investors go to where there is security. Nigeria’s dream for economic prosperity will be an illusion if foreign investors detest investing in the country. For Nigeria to achieve the envisaged economic growth, domestic and foreign investments should be encouraged.
