A damning report which would further scare away investors from Nigeria has been delivered by the World Bank Group’s Doing Business Report 2016, saying Nigeria is no longer a good business environment.
Comparatively, the 2015 report saw Nigeria ranking 170 point of 189 in the world, with a Distance To Frontier (DTF) or Ease of Doing Business Score of 47.33, against Singapore’s 88.27 and Eritrea’s 33.16.
However, in the 2016 version of the report, Nigeria climbed one rung of the ladder to the 169 position, but sheds almost 3 percentage points to clock at 44.69.
Highlighted in the report as Nigeria’s Achilles heel in doing business are the unusually long number of steps it takes to register a business, the difficulty of building a warehouse, poor access to electricity and the administrative burden of complying with tax payments, among other lacunas.
According to data collected by Doing Business, starting a business in Nigeria requires 8.70 procedures, takes 30.80 days, costs 31.70 percent of income per capita and requires paid-in minimum capital of 0.00 percent of income per capita.
Globally, Nigeria stands at 139 in the ranking of 189 economies on the ease of starting a business.
Underlying the indicators for Nigeria, according to the report, is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm.
According to data collected by Doing Business, dealing with construction permits requires 16.10 procedures, takes 106.30 days and costs 24.40 percent of the warehouse value.
Obtaining a new electricity connection in Nigeria requires 9.00 procedures, takes 181.20 days and costs 437.70 percent of income per capita.
Globally, Nigeria stands at 182 in the ranking of 189 economies on the ease of getting electricity.
The length of time it takes to transfer property is another setback for the country. According to data collected by Doing Business, registering property requires 12.10 procedures, takes 69.60 days and costs 10.50% of the property value.
Globally, Nigeria stands at 181 in the ranking of 189 economies on the ease of registering property.
The economy has a score of 6.00 on the depth of credit information index and a score of 6.00 on the strength of legal rights index. Higher scores indicate more credit information and stronger legal rights for borrowers and lenders.
Globally, Nigeria stands at 59 in the ranking of 189 economies on the ease of getting credit.
The economy has a score of 6.80 on the strength of minority investor protection index, with a higher score indicating stronger protections.
Globally, Nigeria stands at 20 in the ranking of 189 economies on the strength of minority investor.
The report observes that the administrative burden in paying taxes by companies leaves much to be desired.
On average, firms make 59.00 tax payments a year, spend 907.90 hours a year filing, preparing and paying taxes and pay total taxes amounting to 33.30 percent.
Globally, Nigeria stands at 181 in the ranking of 189 economies on the ease of paying taxes. The rankings for comparator economies and the regional average ranking provide other useful information for assessing the tax compliance burden for businesses in Nigeria.
Globally, Singapore keeps her place in the easiest country to do business in, with a DTF of 87.34, while Eritrea remained at the bottom of the ladder, plunging further to 27.61 from 33.16 in 2015.
The report, which chronicled enviable progress made since 1999 and the last few years of booming economy, categorically stated that doing business in Nigeria is far difficult than in 2015.
Nigeria has seen her stock plummet with a consistent fall in oil prices at the international market. Added to this grim environment has been lack of budget for almost a month fueling anxiety on the direction of the country.
Rwanda remained the best destination for business in Africa, invigorating new drives in the country long beset by political and ethnic violence. The two countries are 32 and 62 in Africa, respectively.
Nigeria’s West African neighbour Ghana came top in ECOWAS category clocking 114 of 189 countries. Ghana has innovative economic policies augmented by strong building of civil service, judiciary and curbing corruption, factors inhibiting Nigeria’s growth.
According to the World Bank, “Where informal construction is rampant, the public can suffer. Take the case of Nigeria, which lacks an approved building code setting the standards for construction,” slaying into authority’s lack of policy direction.
“Without clear rules, enforcing even basic standards is a daunting task, and many buildings fail to comply with proper safety standards. Structural incidents have multiplied.
“According to the Nigerian Institute of Building, 84 buildings collapsed in the past 20 years, killing more than 400 people,” the report pointed out.
Core to any nation’s stability and growth, the report decried the worsening power generation in the country pointing out that the “industry is a core sector for the generation of national wealth and employment in Nigeria, but faced with an electricity sector hampered by poorly utilized generation capacity, high transmission losses and frequent outages, companies turn to self-provision of electricity.”
Thus, “This raises their production costs, reducing their competitiveness and thus their demand for labour. The erratic and inadequate power supply in Nigeria has often been cited as the main reason forcing multinationals to relocate production lines to other countries. Power outages also affect output levels.”
On reforms, it said, “Nigeria made transferring property in Lagos less costly by reducing fees for property transactions.
“Nigeria strengthened minority investor protections by requiring that related-party transactions be subject to external review and to approval by disinterested shareholders. This reform applies to both Kano and Lagos.”