Nigeria is moving forward with strategies to improve the business and investment environment in the country following the launch of a new package of reforms designed to support small businesses and clear hurdles to growth.
On October 3 the federal government unveiled its second 60-day national action plan (NAP 2.0) – which forms part of the broader Economic Recovery and Growth Plan 2017-20 – aimed at increasing levels of employment, boosting GDP and facilitating business expansion.
Targets of the NAP 2.0 include the adoption of electronic registration processes for new businesses; the registration of 300 microfinance banks to the national registry to assist with SME financing; and the elimination of illegal roadblocks on major trading routes across the country.
Speaking at the Financial Times Africa Summit in London on October 9, vice-president Yemi Osinbajo said the NAP 2.0 would place a particular focus on addressing the challenges faced by small and medium-sized businesses (SMEs), adding that Nigeria was pursuing a strategy of economic diversification built on resource-based revenues, along efforts to engage with the private sector and create a supportive business environment.
The new action plan comes off the back of the first 60-day NAP, implemented in February, which aimed to improve business conditions through targeted reforms in eight areas: starting a business, obtaining construction permits, getting electricity, registering property, getting credit, paying taxes, trading across borders, and the entry and exit of people.
This saw the introduction of technology to fast-track business registration and the payment of taxes, the launch of a 48-hour electronic visa procedure, and the issuing of an executive order mandating greater transparency and efficiency across all government agencies.
The issues addressed by the action plans have been identified as longstanding hurdles to businesses in Nigeria, with the World Bank’s “Doing Business 2017” report highlighting the need for reform in several areas to better facilitate trade and business in the country.
Nigeria ranked 169th out of 190 countries in the bank’s 2017 ease of doing business index, up one place from last year’s position of 170th. While efforts to improve access to government portals, streamline property transfers and upgrade credit access have seen the country’s rank improve in certain areas, Nigeria’s overall index score of 44.63 was still below the sub-Saharan average of 49.51.
These modest gains were mirrored in the World Economic Forum’s Global Competitiveness Index for 2017, released in September, suggesting that the first tranche of reforms are having a positive impact on assessments of Nigeria’s economic environment.
The country climbed two places in the WEF index, placing 125th out of 137 economies surveyed – the first time since 2012 that Nigeria had improved its ranking.
Despite still facing difficulties adapting to lower commodity earnings, which in turn was affecting improvements in infrastructure, technological readiness and innovation capacity, the report stated that gains in other areas helped drive the country’s improved ranking.
The WEF report cited efforts to strengthen the banking sector as a positive development, along with planned reforms to improve the business environment, reinforce power and transport infrastructure, and increase investment in education.
These improved assessments of Nigeria’s economy also come on the back of positive economic results, with data from the National Bureau of Statistics reporting improved signs of growth in 2017.
GDP in the second quarter grew by 0.55% year-on-year (y-o-y) and 3.23% quarter-on-quarter, reversing five consecutive quarters of recession.
Meanwhile, according to an economic outlook released in September by PwC, Nigeria “is set for another long period of economic growth”, noting that the country could return to its pre-recession growth rate of 6.7% in the medium term.
While acknowledging the rate of expansion was in part dependent on the success of the government’s reform programme, PwC expects full-year GDP growth to be 0.7% in 2017, predicting y-o-y growth of 1.8% and 1.1% in the third and fourth quarters of the year, respectively.
The positive outlook was shared by the IMF, which has forecast economic growth of 0.8% this year, followed by expansion of 1.9% in 2018 and 1.7% in 2019.
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