The federal government needs to do more than improving the nation’s Ease of Doing Business (EoDB) ranking to attract Foreign Direct Investment (FDI). Analysts at Lagos-based investment firm, Afrinvest Plc, stated this stressing that attaining higher World Bank’s Ease of Doing Business (EoDB) ranking is insufficient to attracting foreign direct investment (FDI).
They stated this while reviewing the effectiveness of the National Action Plans (NAPs) implemented by the Presidential Enabling Business Environment Council (PEBEC).
They noted that Nigeria is yet to record strong improvements in FDI due to the business environment which, they averred, remains unaccommodating despite reforms instituted of late.
“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,” they noted.
PEBEC is the institution set up by the federal government in 2016 to initiate reforms that make it easier to do business in Nigeria.
The improvements are expected to come in the form of reduction in cost, time and procedures in starting and running a business in the country. The overall target at the commencement of the reforms was 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.
Afrinvest analysts however noted that the results from the three cycles of actions so far taken have been mixed.
They stated: “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.
“Between February and April 2018, the third phase of reforms covered nine indicators and the success rate marginally improved to 62 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.”
Last week, PEBEC launched fourth National Action Plan (NAP 4.0) which is intended to cover ten reform areas from March to April 2019. The analysts called for faster and more effective implementation of NAP 4.0 in order to achieve a set target of top 100 in the 2020 World Bank’s EoDB ranking.