Making Nigeria more competitive

In its quest to improve business competitiveness and ability to attract local and international investment, Nigeria launched the National Competitiveness Council (NCCN) in 2013. The council, which was inaugurated by President Goodluck Jonathan, has Olusegun Aganga, minister of industry, trade and investment, as chairman, and Tony Elumelu, chairman of Heirs Holdings, representing the private sector, as vice chairman. Other members were drawn from the Nigerian and international communities.

Competitiveness, no doubt, is a prerequisite for a country’s development. Countries that successfully implement reforms and overhaul regulatory obstacles experience better economic outcomes, job creation and improved standards of living, according to the World Bank.

The World Economic Forum (WEF) defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be reached by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which, in turn, are the fundamental drivers of its growth rates. Thus, a more competitive economy is one that is likely to grow faster over time.

In the United States, for instance, the Competitiveness Policy Council was an independent federal advisory committee chartered in 1988 to advise the president and the congress on more effective policies to promote US competitiveness. The council membership composed of representatives from business, labour, government, and the public.

The identified 12 pillars of competitiveness to evaluate the performance of an economy include institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, and goods market efficiency. Others are labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

For us, therefore, the launch of the NCCN underscores Nigeria’s commitment to rapidly transform the business environment and enhance productivity in the country. The country has been touted as a member of MINT (Mexico, Indonesia, Nigeria and Turkey), the group of economies, amongst others, expected to lead the world economy in the next 20 years.

The council has identified infrastructure, technology, health and primary education as some of the areas in which the country needs to improve. Policy reform was also acknowledged as another key focus point that could impact positively on the environment for ordinary Nigerians and contribute to stimulating foreign direct investment (FDI).

By addressing these concerns with reformative actions, the NCCN believes it would be easier for Nigerian and foreign investors to do business in the country. Results would be measured by Nigeria’s rise in WEF’s Global Competitive Index and the World Bank’s Doing Business Index rankings – indices that are internationally acknowledged benchmarks for the openness of a nation’s economy.

At the moment, the country’s competitiveness outlook does not appear very bright. The WEF, in its recent report, indicated that Nigeria fell from the 120th position it attained in 2013 to 127th among 144 economies assessed in the world. According to the report, Nigeria’s appalling performance in the current year was traceable largely to weakened public finances as a result of lower oil exports. The WEF assigned positions to some of the pillars of competitiveness. Institutions remain weak (129th) with insufficiently protected property rights, high corruption, and undue influence. The security situation is awful (139th). Infrastructures, despite recent upgrades, remain low (134th), while health and primary education are pitiable (143rd).

However, it is not all bad news for Nigeria. Its relatively large market size (33rd) means enormous potential for significant economies of scale; a relatively efficient labour market (40th) driven by its flexibility (20th); and a solid financial market (67th) following its gradual recovery from the 2009 crisis. The report, however, said poor availability and affordability of finance in general and the difficulties in obtaining loans in particular (137th) remain an important bottleneck to economic growth.

The WEF advised that ahead of the 2015 election cycle, it would be critical to keep the ongoing reform momentum to diversify the economy and increase the country’s long-term competitiveness. We totally align with this recommendation, especially in the face of falling oil prices.

Nigeria recorded its highest Global Competitive Index of 3.8 points in 2008, with the lowest, 3.37, in 2010. This year’s ranking of Nigeria translates to index of 3.44 which is below those of some African countries like Egypt, Zimbabwe, Tanzania, Senegal, Ghana, amongst others.