Doing Business in Nigeria: Challenges and Opportunities

On the 31st of October 2018, the World Bank Group published their 2019 Doing Business report. It saw Nigeria’s ranking drop by one place (145-146) on the ‘’Ease of doing business” index. The below table provides insight into this ranking:

The result indicated that while there were improvements on the aspects of starting a business and paying taxes, Nigeria still has a lot to cover in areas such as creating reliable infrastructure, improving cross-border trading and the efficiency of registering property.


source: tradingeconomics.com

According to the report, cross border trading remains one of Nigeria’s weakest spots, but recent reforms by PEBEC (Presidential Enabling Business Environment Council) have simplified its systems and procedures to increase the transparency and efficiency of Ports. For instance, in Apapa Ports, one of Nigeria’s major import and export channel, key improvements such as increasing operational hours   to twenty four hours and seven days a week (24/7) , reducing required documents, decreasing processing times and opening online relations will  put the country on the right track for greater attractiveness to prospective businesses worldwide.

Another major problem of this country that has yet to be solved is the inability to meet consumers’ energy demands. This major infrastructural issue has stifled business growth in the region over the years by significantly reducing both the productivity and efficiency of business operations. Entrepreneurs are thus  forced to resort to generators which translates to increased running costs occasioned by constant procurement of Premium Motor Spirit (PMS) and diesel for powering the generators. The issues that plague progress in this area includes: inadequate metering of end users, power theft, inappropriate market pricing, poor transmission infrastructure, insufficient revenue collection, and slowly-paced extension of current grid networks. By understanding the present challenges, aligning incentives for each market player, and identifying possible solutions, there is a huge opportunity for companies to both solve these problems and create significant value. In fact, having more companies lean into the already existing combination of on-grid and off-grid solutions will most likely lead to significant growth in Nigeria’s power and utilities industry.

Registering property is another factor that was identified as impeding  the ease of doing business in Nigeria.  When investors are faced with the high cost of registration and exhausting regulatory issues as well as, it discourages them from [considering Nigeria as a solid base of operations.] These problems can be traced to obsolete laws that often remain unenforced, a. fragmented government rife with administrative malpractices and disjointed, incoherent regulatory structures. In the face of all these, buyers will look to literally anywhere else where the process of property registration are streamlined and smooth. In fact, there’s data proving that it takes an average of three days only for buyers to perfect titles to their landed properties in Dubai, almost for free.

However, in practice, these 30-Day guidelines are not being adhered to by officials involved in the perfection process in Lagos State. For this reason, the old regime (which is slow, inhibitive, and discouraging to business transactions), which existed before the issuance of the guideline has since resurfaced due to lack of regulatory control or enforcement of the guideline.

There is also the need to review downward some of the onerous rates and fees payable on land registration, but most importantly, there cannot be any real and quantifiable reform unless and until strict adherence to the streamlined is enforced and stiff sanctions laid down for non-compliance.

Sources
  1. https://kpakpakpa.com/spotlight/power-and-utilities-in-nigeria/
  2. www.doingbusiness.org



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