The latest World Bank report on Ease of Doing Business, which indicated Nigeria’s appreciable progress with regard to the ease and speed with which small and medium-scale enterprises (SMEs) can be established in the country, is heartwarming. It is a significant improvement on the 2013 Report, which placed Nigeria at the bottom rung of the ten top countries in Sub-Saharan Africa. It is also incontrovertibly an indication that some of the reform measures instituted by the government are achieving the desired objectives.
The 2014 Report launched in Abuja recently by the World Bank, in conjunction with its development partners, showed that Nigeria recorded remarkable improvement in 34 vital thematic requirements. Some of these requirements, according to the report, include easy access to fund transfer, improved access to credit information, implementation of regulatory reform and tax holidays for outstanding entrepreneurs. Other requirements that have reportedly improved Nigeria’s performance on the ease of doing business scale are the government’s cashless policy and the lifting of some socio-economic burdens on various categories of businesses.
However, the report says Nigeria still needs to do much more to be among the nations on the top rungs of the Ease of Doing Business scale, both in Africa and the world. Nigeria, it said, is still ranked 147th out of 189 countries globally, the same position it occupied last year (2013).
Although Nigeria is widely considered the “giant of Africa”, this year’s report shows that much more remains to be done to create an enabling environment in which SMEs can blossom in the country. With the experiences of Nigerians, this assessment in the World Bank report may not be far from the truth.
Undoubtedly, one of the conditions precedent to massive job creation is the ease with SMEs can be established. Small and medium-scale enterprises are arguably the largest providers of employment in Nigeria. It is important, therefore, that we strive to increase the ease with each they are established. Easing the establishment and operation of businesses will improve the socio-economic development of the country.
It is no surprise that the 2014 survey put Singapore in number one position, followed by Hong Kong, Saudi Arabia and China, in a joint second position. New Zealand, United States, Denmark and Malaysia are ranked third, fourth, fifth and sixth, respectively.
Surprisingly, Rwanda is ranked topmost in Africa on the Ease of Doing Business index, and 32nd globally. The progress by Rwanda is inspiring. It is a lesson to Nigeria and the other African countries, many of which have consistently been at the bottom of the global list. Rwanda has since 2005 implemented a total of 26 regulatory reforms, as recorded in the World Bank report.
There is apparently a conscious effort by the present political leadership in Rwanda that has seen the country emerge as the best and easiest place to do business in Sub-Saharan Africa. It needs restating that virtually everything rises and falls with leadership.
We urge the Federal Government to address the conditions that hamper ease of doing business in the country. Although Nigeria is rated somewhat better this year, compared with last year, it is necessary for us to address the factors that have made us remain on the same 147th position that we were placed last year.
These include the high cost of operating businesses in the country, which makes it difficult for SMEs and even large companies to compete favourably with their counterparts in other emerging markets. This high cost includes financial, social and regulatory costs.
It must be said that these costs have far-reaching implications because they make the growth of SMEs to large-scale enterprises difficult, especially in the absence of government intervention. They also invariably limit the lifespan of these businesses and reduce their ability to keep pace with innovation.
In the same way, government should make its policy direction clear and spur socio-economic development by fixing business infrastructure and improving the power sector that holds the key to industrial development of the country.
