The latest World Economic Forum (WEF) rankings for global competitiveness and ease of doing business has seen Nigeria dropping three places from 124 to 127 in the world, meaning it is more difficult to do business in the country, while the situation has forced Nigerian companies resort to downsizing and other measures to keep afloat.
Of the 138 countries considered in the Global Competitiveness Index, GCI, Nigeria was only better than 11 countries, most of which are war-torn and crises ridden countries.
According to the report, Nigeria ranked least on health and primary education, and was greatly affected by a weaker macroeconomic environment.
“Although still relatively low, the government deficit has almost doubled since last year and national savings has significantly suffered, worsening the current account position,” WEF said.
“Banks are less solid, reducing the availability of credit. Despite the central bank ending its currency peg, financial authorities have retained restrictions on access to the interbank market, meaning access to finance will remain difficult for many businesses.
“Additional factors holding back Nigeria’s competitiveness,” the WEF said, “include an underdeveloped infrastructure (132nd), which is again rated as the country’s most problematic factor for doing business; insufficient health and primary education (138th), with only 63 percent of children enrolled in primary school; and the poor quality and quantity of higher education and training (125th).”
Recall that in 2015, WEF GCI showed that Nigeria’s macroeconomic environment was more buoyant and friendlier for doing business.
Back home, Nigerian companies have resorted to various measures to survive the harsh business environment. These include downsizing of manpower, backward integration and other cost cutting measures.
Early in the week, a leading tomato paste manufacturer in the country, Erisco Foods Limited announced it was ready to retrench about 1, 500 staff, citing several factors which include difficulty in accessing CBN’s intervention loans for manufacturers/farmers, deliberate policy/ strategy of encouraging importation of foreign products at the detriment of locally produced ones, high interest rates, inability to access foreign exchange for business, etc, as reasons. In his own reaction to the harsh business environment, Managing Director, Austin Laz & Company Plc, Mr. Austin Laz Asimonye, said although manufacturing in the country had improved, “Nigerian manufacturing has gone 30 years behind, in terms of industrial development between 2015 and 2016. This is because of the economic recession primarily. This is as a result of the forex situation, power situation, and the security situation. Industries are closing in their numbers every day, and we have been managing to survive because the problem has become overwhelming.”
According to him, companies now find it difficult to buy machineries and to buy raw materials, adding that manufacturers are facing difficulties in accessing raw materials, while forex is not available.
“I doubt if the government has any solution to the economic recession,” he added.