Nigeria’s competitiveness
The Global Competitiveness Report 2014-2015 released recently has generated some interesting debate amongst Analyst, and policy makers in Nigeria. While some Analyst believes that Nigeria deserved better ranking, others think otherwise.
According to the report, Nigeria, now Africa’s largest economy continued its downward trend and fell by seven places to 127th out of 144 countries, largely on the back of weakened public finances as a result of lower oil exports. The report further stated that Nigerian institutions remain weak (129th) with insufficiently protected property rights, high corruption, and undue influence. In addition, the security situation remains dire, with Nigeria ranking 139th.
The WEF report also stated that Nigeria must continue to upgrade its infrastructure (134th) as well as improve its health and primary education (143rd). Similarly, the country was criticized for not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration. On the upside, the report stated that Nigeria benefits from its relatively large market size (33rd), which bears the 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. However, poor availability and affordability of finance in general and the difficulties in obtaining loans in particular (137th) remain an important bottleneck to economic growth. And the report advised that ahead of the 2015 election cycle, it will be critical to keep the ongoing reform momentum to diversify the economy and increase the country’s long-term competitiveness.
The Global Competitiveness Report ranking which is based on the Global Competitiveness Index (GCI), defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. GCI scores are calculated by drawing together country-level data in 12 categories – the “pillars of competitiveness” – to create a comprehensive picture of a country’s economic performance. And the 12 pillars are institutions; infrastructure; macroeconomic environment; health; primary education, higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.
The index captured the opinions of more than 13,000 business leaders in 148 countries including Nigeria between January and May this year, focusing on the 12 pillars. Hence, Nigeria’s ranking is partly the perception of business leaders in Nigeria. And we note that there is still active debate about the extent to which perception is an active process of hypothesis testing, analogous to science, or whether realistic sensory information is rich enough to make this process unnecessary.
However, government recently established the National Competitiveness Council of Nigeria (NCCN) to drive the process by which we improve Nigeria’s competitiveness. Therefore, instead of dissipating energy over the poor ranking, we should see it as a stronger basis for more collaboration between the public and private sectors to enhance delivery on the 12 pillars. No doubt, if we are able to address the twin issues of inadequate supply of infrastructure and corruption, our ranking with significantly improve beyond our imagination.
Mauritius which was ranked as the most competitive economy in Sub-Saharan Africa undertook significant macroeconomic and institutional reform measures to get to where they are today. Their economy has diversified significantly over the past 40 years since their independence and no longer comprises of sugar exportation and tourism alone. A number of new industries, such as manufacturing, financial services and Information and Communications Technology (ICT) have taken over and made huge contributions to the island’s Gross Domestic Product (GDP). We can learn from Mauritius.