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Business Environment and Competitiveness across Nigerian States III 2016 Report

Executive Summary

Despite improvements in some key macroeconomic indicators in the past ten years, low productivity and high costs of doing business, occasioned by poor business environment have remained major drawbacks in Nigeria's drive to increase employment, reduce poverty and accelerate the achievement of global, regional and national development goals. As in every country, the business environment in Nigeria affects everyone – people, businesses, investors (domestic and foreign), managers, communities and groups. A good business environment helps people get out of poverty and can accelerate the achievement of global and regional development goals such as the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs).

While good business environment is a direct outcome of efficient, transparent, credible and effective supply of public infrastructure and institutional and regulatory services, the private sector and civil society nevertheless have an important role in advocating for public accountability on the provision of an enabling environment for private enterprise. Working with stakeholders to design, measure, benchmark, and monitor the business environment is the overarching role of the Business Environment and Competitiveness across Nigerian States (BECANS). Monitoring and reporting the business environment is important for designing and implementing policy and institutional reforms by the federal, state and local governments. In addition, an independent and objective assessment of the business environment is a useful tool for the private sector and civil society to advocate and dialogue with government for good governance.

Thus, the BECANS initiative is designed to supply independent research-based evidence on the business environment across Nigerian states in an ongoing manner. Such evidence is essential to inform and influence advocacy by non-state actors (particularly private sector organizations) and improve the quality of dialogue between government, private sector and civil society. In effect, BECANS provides benchmarking tools for business managers, investors and policymakers to identify specific obstacles to improved business competitiveness, thus stimulating critical thinking about strategies to overcome them.

As noted earlier, this business environment scorecard of Nigerian states is the third in the publication series, which runs in successive cycles of research, surveys, dissemination and policy dialogue for the promotion of better business environments throughout the country. Each cycle begins with desk research (the scientific validation of models, methods and indicators) and followed by surveys and data collection, data analysis, report writing, publication, dissemination and dialogue between the government and stakeholders in private sector and civil society.

The logic of BECANS is that Nigeria's sub-national jurisdictions are crucial in ensuring good business environment and enhancing Nigeria's global economic competitiveness ratings. States and local governments have foremost responsibility in providing and managing basic public services and utilities such as roads and public transportation systems, water and sanitation and social welfare. State governments are also responsible for the bulk of business regulatory services including property registration, tax administration, designation and oversight of industrial and enterprise zones, contract enforcement, justice administration, business and construction licensing and territorial (physical) planning and development. Like every federation, business environment in Nigeria is the shared responsibility of the federal and sub-national governments (i.e. federal, state and local). Hence, the overall business environment will depend upon integration and synergy among these levels of government. In particular, state governments, are responsible for the bulk of the infrastructural, regulatory and administrative services needed by private enterprises. So, without commensurate business environment reforms by state and local governments, the macroeconomic and institutional reforms of the federal government cannot produce the desired impact on employment and poverty. It is essential to recall that businesses in the country are conducted within the state and local government domains.

The BECANS model defines sub-national business environment along four dimensions. They are infrastructure and utilities; regulatory services; business development support and investment promotion (BDSIP); and security. These dimensions are called BECANS benchmarks. The four benchmarks are derived from the theoretical knowledge and research evidence of the critical bottlenecks to business environment and competitiveness of enterprises across Nigeria. The overall measure of the quality of business environment is the Business Environment Index of Nigerian States (BEIONS). The BEIONS uses a continuous scale from 0-100, where a score of 100 represents the most conducive business environment. The business environment index is a weighted aggregate of scores on the four benchmarks. The weights are as follows: infrastructure and utilities (30%); regulatory services (30%); business development support and investment promotion (20%) and security (20%). Every benchmark is divided into measures and indicators, reflecting the criteria for analyzing the benchmark. The number of measures varies across the benchmarks. Infrastructure and utilities has 5 measures and 27 indicators. Regulatory services benchmark has 5 measures and 29 indicators. Business development support and investment promotion has 5 measures and 17 indicators. Security benchmark has 4 measures and 15 indicators. Altogether, the BEIONS is based on 19 measures and 88 indicators.

The general performance on the business environment index is higher in BECANS III than for BECANS I and II. While this might suggest that the business environment across the states has generally improved since 2007, the performance across individual benchmarks and across states is rather mixed. The general performances on the two benchmarks - infrastructure and utilities and regulatory services - are higher than those for BDSIP and security. In fact, the relatively higher all-states average performance on the business environment index compared to BECANS I and II is accounted for by the higher performance on the two benchmarks – infrastructure and utilities and regulatory services. The implication of this result is that since BECANS II (2010), there has been general improvement in infrastructure and utilities and regulatory services, but the national performance on security has declined somewhat. The South-South zone has the highest general performance on the business environment index while the North-East zone has the lowest. Lagos State has the highest overall performance on the business environment index, followed by Cross River State, while Yobe State has the lowest. Overall, 60% of the states performed above the national average while 40% scored below the national average.

There is general improvement in performance on the infrastructure and utilities benchmark in BECANS III compared to both BECANS I and II. The North-Central zone has the highest performance on infrastructure and utilities, while the North-West zone has the lowest. Among the states and Abuja FCT, Kwara State has the highest performance while Yobe State has the lowest. The general performance on energy is higher in BECANS III compared to both BECANS I and II. The North-East Zone has the highest performance on energy, while the South-East zone has the lowest. Across the states and the FCT, Sokoto has the highest performance on energy, while Katsina has the lowest. The general performance on water supply is higher in BECANS III compared to both BECANS I and II. The South-East Zone has the highest performance on water supply, while the North-East Zone has the lowest. Edo State has the highest performance on water supply, while Ondo State has the lowest. The all-states average performance on access to information is lower in BECANS III compared to both BECANS II and I. The North-Central Zone has the highest performance on access to information, while the North-East zone has the lowest. Kwara State has the highest performance on access to information, while Yobe State has the lowest. The all-states average performance on transportation is higher in BECANS III compared to BECANS II but lower compared to BECANS I. The North-East Zone has the highest performance on transportation, while the South-West Zone has the lowest. Kwara State has the highest performance on transportation, while Abia State has the lowest. The general performance on social infrastructure is higher in BECANS III compared to both BECANS II and I. This shows that state governments made significant efforts towards the attainment of the MDGs particularly with respect to primary education and healthcare. The North-Central Zone has the highest performance on social infrastructure, while the North-West zone has the lowest. Kwara State has the highest performance on social infrastructure, while Anambra State has the lowest.

The all-states average score on regulatory services is higher in BECANS III compared to BECANS II and BECANS I. The South-East Zone has the highest performance on regulatory services, while the North-Central Zone has the lowest. Lagos State has the highest performance on regulatory services while Katsina State has the lowest. Compared to BECANS II in 2010, the all-states average performance on regulatory services improved on business registration, taxes and fees, land registration and fiscal transparency and management. It performed equally Commercial Dispute Resolution (CDR) in BECANS III compared with BECANS II. The all-states performance on business registration is higher in BECANS III compared to BECANS II and BECANS I. This shows that business registration services have steadily, generally improved since 2007. The North-Central Zone has the highest performance on business registration, while the South-East Zone has the lowest. Nasarawa State has the highest performance on business registration while Abia State has the lowest. The all-states performance on taxes and fees is significantly higher in BECANS III compared to both BECANS II and BECANS I. The North-East Zone has the highest performance on administering taxes and fees, while the South-West Zone has the lowest. Gombe State has the highest performance on administering taxes and fees, while Osun State has the lowest performance. The South-East Zone has the highest performance on CDR, while the North-East Zone has the lowest. Kwara State has the highest score on CDR, followed by Kaduna State. Adamawa State has the lowest performance. The all-states performance on land registration is slightly higher in BECANS III compared to BECANS II. South-East Zone has the highest performance on land registration while South-South Zone has the lowest. Ebonyi State has the highest performance on land registration, while Yobe, Nasarawa and Bayelsa States had the lowest performance. The all-states performance on transparency in fiscal management and public procurement is higher in BECANS III compared to BECANS II. The South-South Zone has the highest performance on transparency in fiscal management and public procurement while the North-West Zone has the lowest. Ondo, Delta and Cross River states record the highest performance of 100% on transparency in fiscal management and public procurement, while Nasarawa, Katsina and Benue states had the lowest.

The all-states average score on business development support and investment promotion (BDSIP) is 41.7%; and slightly higher in BECANS III compared to BECANS II, but lower in BECANS III compared to BECANS I. This shows that the state government's institutional support for business and investments has not significantly improved since 2007. Compared to BECANS II, the all-states average performance on BDSIP relatively improved with respect to investment promotion, support for industrial parks and public-private partnership (PPP), but declined in entrepreneurship promotion and access to finance and credit. The South-West Zone has the highest performance on BDSIP, while the North-East Zone has the lowest. Abuja FCT has the highest performance on BDSIP while Yobe State recorded the lowest performance. The all-states performance on entrepreneurship promotion is significantly lower in BECANS III compared to BECANS II by as high as 50%; and, compared to BECANS I, by as high as 40.5%. This implies that the states have progressively failed to take practical steps aimed at promoting skills acquisition and entrepreneurship among their citizens, especially among the youth The South-West Zone has the highest performance (52.9%) on entrepreneurship promotion, while the South-East Zone has the lowest score of 16.7%. Lagos State has the highest performance (100%) on entrepreneurship promotion while Kwara, Kogi and Abia states have the lowest. The all-states performance on access to finance and credit is lower in BECANS III compared to both BECANS II and BECANS I. The consistently low performance of the states on access to finance and credit since BECANS I shows that the states do not consider it necessary and important to take systematic and pragmatic steps aimed at promoting access to finance and credit for promoting business start-ups and development. The South-West Zone recorded the highest performance (43.1%) on access to finance, while the North-East Zone has the lowest score of 9.7%. Oyo, Ogun, Lagos, Anambra States and the FCThave the highest performance on access to finance and credit, while Yobe, Taraba, Jigawa, Gombe, Bauchi and Adamawa States have the lowest. The states' performance on investment promotion in BECANS III is higher compared to BECANS II, but lower compared to BECANS I. The South-South Zone has the highest performance on investment promotion, while the South-East Zone has the lowest. Rivers, Ogun, Niger and Cross River states have the highest performance on investment promotion, while Yobe, Plateau, Kwara, Kogi, Adamawa and Abia states have the lowest performance. The all-states performance on support for industrial parks in BECANS III is relatively higher compared to BECANS II, but lower compared to BECANS I. The South-West Zone has the highest performance on support for industrial parks, while the North-East Zone has the lowest. Ogun, Kwara, Benue States and the FCT have the highest score on support for industrial parks, while the lowest performing states include Yobe, Taraba, Osun, Kogi, Kaduna, Jigawa, Gombe, Ebonyi, Borno and Bayelsa. The performance of the states on public-private partnership is significantly higher in BECANS III compared to both BECANS II and I. The South-South Zone has the highest performance on PPP, while the South-East Zone has the lowest.

The all-states average performance on security is 45.5%. This performance is lower in BECANS III compared to both BECANS II and BECANS I; and, suggests that there has been a steady and general deterioration in security in the country since 2007 (i.e., since BECANS I). The North-West Zone has the highest performance on security, while the North-Central has the lowest. However, if the security institutions had been able to provide data on the number of recorded bombings across the states, the performance of the North, and in particular NorthEast on security in BECANS III would have been relatively lower. Among the states and the FCT, Anambra has the highest performance on security while Abuja FCT has the least performance. The all-states average performance on security is relatively lower on major and minor crimes in BECANS III compared to both BECANS II and I; and relatively higher on security resources and perception of security in BECANS III compared to BECANS II. The all-states average score on major crimes is 45.3%, which is lower in BECANS III compared to both BECANS II and BECANS I. The import is that the security situation in the country with reference to major crimes has steadily deteriorated since 2007. The North-West Zone has the least incidence of major crimes (i.e., highest performance score), while the North-Central Zone has the highest incidence. Anambra State, followed by Kaduna has the highest performance (least incidence) on major crimes while Abuja FCT has the lowest performance level (highest incidence) on major crimes. The all-states average score on security resources and personnel in BECANS III is 73.3%, which is significantly higher compared to BECANS II. This indicates growing commitment by the governments towards improving the level of security personnel and resources across the states.

The comparison of performance between BECANS I, II and III has underscored the critical value in establishing an objective basis for measuring the quality of business environment across the states and Abuja FCT over time. Given that the performance of states and Abuja FCT is asymmetrical (that is, not uniform) across the three levels of measurement - benchmarks, measures and indicators, the key lesson is that states have different strengths and weaknesses. No state or zone is the best-performing in total (that is across all benchmarks, measures and indicators); neither is any state or zone the least-performing in total. . Also, the results show those business environment spheres where individual states are improving since 2007 and where they are not. Whichever situation any state is mirrored in this business environment scorecard, there is an important lesson to be gained. Whether the function of the state is on own-monitoring, cross-monitoring or peer review with others, there is considerable scope for this scorecard to serve as a basis for mutual learning and self-improvement among the states.

Despite the mixed picture, the results suggest some discernible common areas of strengths and weaknesses across the states and regions. Among the common challenges across the states are security, access to information, access to finance and credit, land registration, fiscal transparency and public procurement, support for industrial parks and public-private partnership. The wide disparity between states in performance across the benchmarks and measures indicates significant scope for mutual learning, particularly in the areas of energy, water supply, business registration, taxes and fees, land registration, commercial dispute resolution and entrepreneurship promotion.

Hypothetically, if all states were to perform at the level indicated by the best performing state across all the benchmarks, the all-states average performance on the business environment index would jump from 50.9% to 61.7%. In the same vein, if every state performed at the level of the highest scoring state across the respective measures under infrastructure and utilities, the all-states average score would jump from 58.3% to 81.5%. Furthermore, if every state performed at the level of the highest scoring state across the respective measures under regulatory services, the all-states average score would jump from 53.4% to 67.5%. Applying the same logic to BDSIP, the all-states average score would jump from 41.2% to 77.8%; and then from 45.5% to 70.0% for security. This simple simulation shows what better business environment could be achieved if states were to implement policy and institutional reforms across all the benchmarks. This underscores the power of peer review and mutual learning that brings about the adoption and replication of best practices by low-performing states.

 

To get the best from this report, government policymakers, technocrats and non-state actors would need to interpret the results not merely from the perspective of general performance on the business environment benchmarks. Rather, the interpretation has to be viewed through the lens of performance across the respective constituent measures and indicators. This is the approach that will maximize the usefulness of the lessons of the business environment scorecard.

 

Business Environment in Nigerian States 2010 -Tackling the Security Challenge


 

This book is the second in the research publication series under the Business Environment and Competitiveness across Nigerian States (BECANS) programme. The central theme of this publication –Tackling the Security Challenge– reflects BECANS II research evidence which shows that overall, the business environment deteriorated between 2007 and 2010 due largely to increased insecurity.The BECANS initiative is the first ever research-based business environment benchmarking across Nigerian States. The overall goal is to promote evidence-based reforms of the business environment in Nigeria, with focus on the sub-national jurisdictions.

 

 

The programme supplies independent research-based evidence on the business environment across Nigerian states in an ongoing manner. The logic is that state and local governments are crucial in ensuring good business environment and international economic competitiveness. Without commensurate state-level business reforms, the macroeconomic and institutional reforms by the federal government cannot bring about employment creation and poverty reduction.

This publication should therefore become the basis for business environment reforms in the respective states and Abuja FCT. Private sector and civil society organisations should utilise the evidence to dialogue and advocate for a better business environment. Also, state governments should see the performance assessment in terms of opportunities and challenges to make their jurisdictions

 

 

The Global Economic Crisis and Nigeria:

Taking the Right Lessons, Avoiding the Wrong Lessons


 

This book is fruit of a National Policy Symposium - Global Financial and Economic Crisis: Taking the Right Lessons and Avoiding the Wrong Lessons, held in 2009, at Transcorp Hilton, Abuja. The Symposium was an effort to give conceptual form and evidence-based perspective to the national public discourse on the global economic crisis and its implications for Nigeria’s economic planning and management. At the symposium it was seen clearly that he ideas and lessons canvassed there needed to be more widely disseminated in an enduring manner.


The book will enlighten government and private sector managers, civil society actors and development practitioners. It will sensitise stakeholders towards advocating for analysis-based responses to the global economic crisis. As one of the few organised analyses on the global economic crisis and Nigeria, this book will enhance the quality of public discourse on the appropriate policy responses. For policy advocacy purposes, this book serves as an evidence tool. Policymakers and technocrats will find the book as a useful and handy reference material. It will also serve as an important learning and reference material for professionals, scholars, teachers and students.

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