Last updated on August 26th, 2022 at 03:00 pm
A favourable business environment is one of the key factors that drive foreign investors to a country. Government policies, security, and infrastructural development are some of the things investors put into consideration, and some African countries are more serious and committed to easing the way business is done in their country.
For instance, in the 2020 Ease of Doing Business index, Nigeria, which prides itself as the giant of Africa is 21st and 121 globally on the list while Egypt and Ghana occupy 15 and 17 on the continent respectively.
While Egypt occupies the 114 in the global ranking, Ghana takes the 118 spot, thereby throwing Nigeria behind them.
What Does This Mean
It isn’t easy for Nigerians to do business here because of frustration from government officials and bad plus inconsistent policies.
That’s why foreign investors are most times mandated to pay heavily to bribe government officials to set up their businesses.
The government needs to do more as pointed out in one of our analysis on the factors foreign investor needs to consider before investing in Nigeria.
With an astronomically growing population of more than 200 million, Nigerian leadership needs to learn from Mauritius how it became the most suitable country to establish a business in Nigeria.
Mauritius doesn’t only have the facilities that accommodate investment and businesses, it also has a friendly tax regime that supports small and medium enterprises.
Why Ghana and Egypt Are Better Than Nigeria In Terms of Investment
For countries like Egypt and Ghana that have more conducive business environments than the most populated African country, one may be wondering what they are doing better than Nigeria.
Some of them are:
- Policies on doing business
- Democratic Principles
- Power Supply
Other reasons why Nigeria may continue to lose investment to Ghana include:
- High running cost
- Scarcity of aviation fuel for the aviation industry
- Poor navigational and landing aids
A country that suffers acute infrastructural decay will find it difficult to attract foreign investment.
This is one of the reasons why many industries closed shops in Nigeria to relocate to either South Africa or Ghana.
The Government of Ghana is hugely investing in its infrastructure and it’s showing more commitment in this regard than Nigeria.
Most federal roads in Nigeria aren’t motorable. They have become kidnapping points for criminals.
When they build roads, such go into disrepair within a few years. A former Deputy Governor of the Central Bank of Nigeria (CBN) Tunde Lemo said something related to the ease of doing business in Nigeria in a recent interview on Channels Television’s ‘Business Morning’ programme monitored by InfemediaNG Business Solutions.
“Our infrastructure is in decay, it is very seriously impacted negatively,” former Managing Director of Wema Bank said.
How Nigeria Can Get More Funds To Develop Its Infrastructure
In a bid for the government of President Muhammadu Buhari to invest in infrastructure, he has plundered the economy into debt instead of managing the available resources.
Nigeria’s debt is estimated at around $900bn, that’s about twice the size of our GDP
Lemo suggested: “So, we need to free up resources beyond what government can do, and then harvest all of these and put aggressively into revamping our infrastructure.”
Policies On Doing Business
Several times, the Nigerian government boasted of improving on the Ease of Doing Business index, in actual sense, the progress made on the ranking isn’t impressive.
For instance, the 150, 000 free business name registration launched by Vice President Osinbajo in 2020 was not fully implemented as some government officials hijacked the process a month after it was launched. Those who should enjoy the free business registration were mandated to pay even more than they would have.
In 2019, it ranked 146 in global ranking while it moved to 131 in 2020, while its fellow neighbouring West African country Ghana which ranked 118 globally in 2019 moved to 114 spots, to occupy 17 spots in Africa.
The body language of Ghanaian leadership shows more commitment to ease business activities.
What does this mean?
If Buhari or his Vice Prof Yemi Osinbajo say Nigeria has improved, it is absolutely true, “but again are we as competitive as our comparators in Africa?”
For instance, Kenya is no. 4 on the spot of doing business in Africa, behind Mauritius, Rwanda, and Morocco, they occupy the first, second, and third positions respectively.
In recent years, we’ve seen how foreign investors choose Ghana instead of Nigeria, which boasts of the largest economy in Africa.
This means that Nigeria needs to ensure that the public sector units and “agencies that are involved actually become much more efficient.”
Apart from xenophobic attacks in South Africa, there is better security in the apartheid country than in Nigeria.
Nigeria has been battling communal clashes, terrorism, kidnapping, robbery, and other social vices that have literally crippled its tourism sector that worth several billion of US Dollars.
The fact is Nigerian can’t climb the no.1 spot in the ease of doing business in Africa by just being the most populous country on the continent, “global economy is becoming more competitive and everybody is trying to improve efficiency to access global capital.”
There are reports that politicians in Nigeria politicise security for their selfish interests or for political gains.
Or instance, Benue state which is known as the Food Basket of the Nation and the rest of the Middle Belt are afraid to farm because of being killed by killers herdsmen who occupied their farmlands.
It isn’t surprising that there is food inflation because the region that majorly feeds the country are being killed.
A country that fails to uphold democratic principles may likely find it difficult to attract foreign investments.
For instance, during the endsars, the Nigerian government deployed the military to suppress the demands of the protesters.
After the protest, human rights abuses were discovered, the government shut down Twitter in Nigeria. What follows was the flock of foreign investment into Ghana rather than Nigeria. No foreign investors want to put their money in a country where they won’t have a say over their business.
Above all, accountability is very important, it anything goes wrong, who is to hold responsible? Who handles complaints? How effective is the resolution process? This is very difficult in Nigeria.
Apart from the media trial of alleged corrupt government officials in Nigeria, nothing is done afterwards, most of them go unpunished especially if they are members of the ruling party.
Data Don’t Lie:
In 2006, Michelin and Dunlop relocated to Ghana. The two of Nigeria’s leading tyre manufacturers cited epileptic energy and security reasons for the move
On April 16, 2019, Google opened its Artificial Intelligence office in Ghana, according to a report by the CNN it’s the first Artificial Intelligence research lab on the African continent.
In April 2021, Twitter founder Jack Dorsey announced that its African headquarters would be located in Ghana.
He chose Ghana over Nigeria because Ghana supports free speech, online freedom, and the open internet. Than Nigeria.
The government of Nigeria needs to get to work and show impressive results to its citizens before she turns 62 by October 1, 2022.