World Bank rating and EODB in 5 states, FCT

Nigeria’s ranking on Ease of Doing Business (EODB) has received a boost as the World Bank on Thursday announced that five states in the country- Lagos, Kaduna, Abia, Enugu, Anambra and the Federal Capital Territory (FCT) – are making stride to improve the ease of doing business for domestic small and medium enterprises (SMES).

The Ease of Doing Business is an index published by the World Bank. It is an aggregate figure that includes different parameters which define the ease of doing business in a country.

The EODB is to facilitate the domestic producers as well as foreign. The benefits of domestic businesses are obvious. The foreign businesses will not only provide jobs, but also bring new technology with them, hence the need for Nigeria to create the enabling environment for new and old businesses to thrive.

According to the World Bank, the report which noted the improvement of the Nigerian states in ease of doing business; covered the 36 states and the Federal Capital Territory (FCT); noting that 29 states had implemented 43 reforms in the area of starting a business.

But World Bank observed that gaps still exist in the nation’s regulatory environment.

Though no state performed excellently well, the World Bank pointed out that Kaduna, Enugu, Abia, Lagos and Anambra made the biggest strides in improving regulations.

The EODB index ranks countries against each other based on how the regulatory environment is conducive to business operation and stronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

It is instructive to note that the EODB in Nigeria fell to 145.00 from 169.00 and Business Confidence went up to 24.80 Index Points from 21.50 Index Points in August, 2018.

Nigeria’s EODB all-time average stands at 145.00 and its projection for 2018 is 136.12, while Business Confidence averaged 11.64 Index Points and is projected to be 33.98 in October, 2018.

With the new report from the World Bank which places five states in the country –Kaduna; Enugu; Abia; Lagos, Anambra and the FCT, we wish to commend the governors of these five states for promoting a friendly and better business regulatory environment while urging other 31 states to emulate them.

If countries like Uganda, Zambia, Tanzania amongst others are doing well in creating an enabling business environment, Nigerian states which have more population than these smaller countries can understudy these countries and apply the policy so as to drive economic activities in their respective states. Doing this, will also increase Nigeria’s ranking in global competiveness.

Perhaps, the EODB leads to higher GDP per capita and a higher GDP per capita lead to better EODB which is entirely driven by the quality of institutions. Therefore, it is important that states in the country keyed in by creating a conducive business atmosphere for small and medium enterprises to flourish and this will in turn increase the tax revenue of the states and the GDP.

What is more important in the Nigerian case in particular, a large body of research clearly shows that productivity growth, the ultimate driver of economic growth, has been held back by burdensome regulations from successive administrations, crippling of industries as well as labour regulation, which has affected the growth of firms in the country.

We are of the opinion that wise economic judgement and sound public policy advice and formulation, involve more than merely parroting a statistic but require interpreting it with nuance and care.

We submit that clear understanding of this difference is one of the marks that distinguishes an economist from a technician masquerading as an economist.