Leading investment banking firm, Afrinvest Plc, has tasked the Federal Government to aim beyond merely improving the country’s Ease of Doing Business (EoDB) ranking, if it hopes to attract Foreign Direct Investment (FDI).
Factors that boost FDI: According to analysts at Afrinvest Plc, luring Foreign Direct Investment into the country would also require pro-business regulations, accommodating monetary and fiscal policies. The analysts also believe that doing the aforementioned would add value to Nigeria’s standing on the World Bank‘s business environment index report.
Putting these policies in place is as significant as topping Nigeria’s previous position on the Ease of doing business report. Nairametrics had reported that Nigeria dropped on the list after climbing 24 places in 2017.
“This is because a higher EoDB ranking is not sufficient for increased investment. To attract investment, we believe PEBEC and the federal government have to look beyond gains in the ranking as business environment reforms must be complemented by pro-business regulations, accommodative monetary and fiscal policies, and the opening up of sectors to private investment.”
Attaining higher EoDB ranking
Improvement in Nigeria’s ease of doing business will be determined by three factors: reduction in cost, time and procedures in starting and running a business in the country. It is in a bid to achieve this that the Federal Government set up Presidential Enabling Business Environment Council (PEBEC).
Since its inception, the PEBEC has implemented various National Action Plans (NAPs) that are meant to improve Nigeria’s EoDBrank to the top 100. Since 2016, PEBEC has implemented reforms in three phases (NAP 1.0 to 3.0), mainly along the eight core focus areas of World Bank’s EoDB.
Breakdown of NAP performance
Afrinvest’s take: The National Action Plans (NAPs) implemented by PEBEC has failed to takeoff from the performance of the NAP 1.0 which saw Nigeria move up 24 places on the EoDB ranking after achieving 82 percent of its reform targets.
Fluctuating result: The NAP 2.0 and 3.0 have produced below par result which dragged Nigeria down on the ranking. The NAP 2.0 and NAP 3.0 were said to have recorded 52 per cent and 62 per cent respectively, far below the performance of NAP 1.0.
“We observed that the largest improvements were in the earlier phases of the programme, as the initial momentum seems to have waned.
“In the first phase, PEBEC hit the ground running by achieving 82 percent of its reform targets over a 60-day period from February 2017. This led to an improvement in Nigeria’s EoDB ranking by 24 places to 145 out of 190 countries.
“The second 60-day National Action Plan expanded the scope of the reforms to include such areas as selling to government, trade within Nigeria and trading across borders. The reforms achieved a poor success rate of 52 percent.
“These reforms improved Nigeria’s score from 52.03 to 52.89 in the 2019 EoDB rankings, but the country slipped one place to 146 out of 190 countries.
“We suspect that the slow pace of reforms in the second and third phases had a negative impact on the 2019 ranking.”
In order to achieve the target of making the top 100 countries, Afrinvest analysts urged faster and more effective implementation of NAP 4.0 which was launched last week with a timeframe of March to April 2019.