The Nigerian Business Environment

Ease of doing business: Sub-national rankings

The Nigerian Business Environment

The World Bank’s “Doing business in Nigeria” report for 2014 details the sub-national rankings across four indicators: starting a business, registering a property, enforcing contracts, and dealing with construction permits. The indicators measure business regulation and the protection of property rights and their effect on businesses, especially small and medium-size 10 domestic firms . Figure 8 shows the rankings of the focus states compared with the “best in Nigeria” across each criteria. Significantly, there are two key observations: (i) None of the focus states is best in Nigeria in any of the four indicators and (ii) Each of the states outperformed the rest of the group in only one indicator. These would suggest that there are best practices in each state that can be shared to raise the overall performance of all the states. These rankings by no means measure how progressive a state is relative to the others. Instead, they illustrate the requirement for appropriate actions by state governments to improve the business environment, in order to enable them deliver on their social agenda including employment creation and poverty reduction.

The World Bank’s Doing Business Group (2013) examined the relationship between business environment indicators and FDI flows. This approach uses distance to frontier scores rather than economic rankings and covers between 145 and 160 economies across different criteria. Results suggest that on average across economies, an increase of 1 percentage point in regulatory quality is associated with an increase of USD 250–500 million more in FDI inflows. Jayasuriya (2011) using panel data of 84 countries from 2006 to 2009 examined the relationship between improvements in some determinants of the doing business rankings and FDI. The results suggest that on average, an increase in the doing business rankings significantly increases FDI inflows by approximately 11 USD 300 million .

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