My interest in economics and business is growing by the day especially since I found myself on the naïve side after the attempted soludization slash dollarization of the Naira. So, you can imagine my enthusiasm when I received my weekly dose of TIME Magazine (November 26 2007 Europe Edition) with a special report on The Best Countries For Business*. Since I live on a Scandinavian Island, I am always quick to look out for Scandinavian countries anytime a world rating is done on anything at all. Incidentally, on page 14-15 of this same Europe Edition of Time Magazine, there was an outline of 128 countries on the basis of gender equality. The first 3 countries are Sweden, Norway and Finland. They are Scandic countries. The UK is 11th while the US is 31st. Nigeria occupies the 107th position. It is the same Swiss-based World Economic Forum (WEF) that gave us the gender equality ratings that has also given us the list of the best countries to do business and Nigeria is number 95 out of the listed 100 countries.
The WEF has what is called Global Competitiveness Index (GCI) which was developed by a professor named Xavier Sala-i-Martin. The GCI is based on economic statistics and extensive polling of international business leaders. In the actual report released by WEF, 113 factors that contribute to an economy’s competitiveness were tallied for all the countries used in the study. Of interest among the range of index includes the quality of a nation’s roads to the independence of its judiciary to the incidence of certain diseases to how it is easy to hire certain labor (an engineer for example). I thought I would be able to read extensively on Nigeria when I learnt that 37 key countries were analyzed in-depth. Alas! Nigeria, the supposed giant of Africa has not been discussed as a key country where anyone can do business; she is ranked 95th out of the 100 on the list (same position as last year). With a population of over 140m people and abundant engineers in the labor market, can Nigeria be that bad for business or is this a make believe kind of story? Perhaps there are more issues to doing business or in investment than the anticipated market and labor sizes? I must learn.
The report stated that GCI is widely watched by countries that want to ferret (search about) out weak spots and by companies deciding where to invest. These observations bring serious questions. When Obasanjo was travelling around the world for 8 years to woo investors, did he or the Minister for Economic planning know anything about GCI? Was anyone taking note of our position on the scale and our weak spots and how to adjust in those areas? One thing is sure; the investors would have been watching the GCI because they would like to know where to locate their next investment by taking the index of the rankings into considerations. Doesn’t it make sense now that the many travels of Obasanjo didn’t yield much? The travels must be travails indeed! I am convinced that all the travels and the unnecessary wastage of tax-payers money would have been avoided if the economy monitoring team in Nigeria has been wary of this kind of index. Maybe they knew but the president still chose to be on his own trail rather than work on our weak spots as a prerequisite to natural wooing of investors.
Perhaps Obasanjo was out based only on Nigeria’s nascent democracy. That would have drawn some pity and ridicule from International Investors. According to Sala-i-Martin, the data used in arriving at the GCI show that democracy in the developing countries is a wash. Though democracy is desirable, it just doesn’t help economic growth. What I can make from this is that democracy is the more acceptable form of governance but basic infrastructure and whatever makes up the remaining 112 factors are equally important in attracting investors. Fundamentally, Nigeria has a very bad power supply system which can knock down the benefits of being democratic. There are several other factors that make Nigeria investment unfriendly. It is not a secret that several Nigerian businesses now operate from neighbouring African countries. This means that a true legitimate government in Nigeria would have to first of all do its homework and put things right such that indigenous investors and industrialists would feel at home to do their businesses. Then it would not be too stressful if there is a need to attract foreign investments.
In the overall GCI ranking, the US finishes first not because it was perfect on all fronts but because it grabs the number 1 slot for 10 measures (out of 113 factors). The US did badly in primary school enrollment, in her ability to ward fend off organized crime, in macroeconomics, debt deficit and savings rate. Yet, it tops the list on the GCI ranking. This is a big lesson for Nigeria sinking at 95th position. Perfection is not the key word but setting the priorities right. Quite naturally, the Scandic countries were up in the ladder: Denmark-3, Sweden-4 and Finland 6. The 2nd and 5th spots went to Switzerland and Germany respectively. The report was quick to point out that the nature of the ranking could masks certain economic realities of a globalized world. Indeed, it further stated that the ability of countries to raise their citizens’ standard of living is not a zero-sum game.
Still, why would certain countries rank abysmally? The example of Kenya which ranked 99 overall was cited. In Kenya, favoritism in decisions of government officials and the business impact of malaria were major obstacles. However, this East African country enjoyed some good runs as well. Kenya is remarkable for legal rights tied to the financial markets and she boasts of a very high quality of scientific research institutions. Kenya must have skipped the basics and therefore lacks the foundation to make her a competitive place for business. Mauritius ranking 60 is the only African country to have eradicated malaria or provided free education and health care and HIV/AIDS infects just 435 people a year. There have been no coups and its ethnicities are a model of integration.
Without repeating the obvious, we should just ask ourselves: In what ways can Nigeria sharpen things up so that in the nearest future, she can truly claim her place as the giant of Africa? How can Nigeria place herself strategically so that she can be a major beneficiary of the anticipated growth that Africa will encounter before the turn of this particular decade? What is the quality of Nigerian roads? How has corruption in Nigeria deterred genuine investments by her own citizens and international investors? What is Nigeria doing about her power supply system? How independent is her judiciary? One thing that Nigeria must avoid or urgently get away from is the Angola model or pattern of bad Africa described in this Time report as a ship heading for the reef of authoritarianism, corruption and popular discontent (you can say this again).
1. Best Countries for business, getting to the top by Barbara Kiviat. 2007 Time Magazine Report
2. Online version The Best Countries for Business