Doing Business in Nigeria 2014 Comparing Business Regulations for Domestic Firms in 35 States and Abuja, FCT Mierta Capaul & Madalina Papahagi Subnational Doing Business Development Economics September 29, 2014
What does Doing Business measure? Doing Business indicators: Focus on regulations relevant to the life cycle of a small to medium-sized domestic business. Are built on standardized case scenarios. Are measured for the most populous city in each country. Are focused on the formal sector. DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets. 1 Doing Business in Nigeria 2014
Doing Business measures areas of regulation that are important throughout the life cycle of small and medium size firms 2 Doing Business in Nigeria 2014
Pace of reforms remains strong in 2012/13: share of economies with at least one reform making it easier to do business OECD high 73% Europe and Income Central Asia 58% Middle East and 40% North Africa 60% 75% East Asia and Latin Pacific America & 66% South Asia the 53% Caribbean Sub-Saharan Africa Worldwide, 114 economies implemented 238 reforms in 2012/ 2013, 18% rise with respect to 2011/ 2012. While in 2005/ 2006 only 33 % of the economies in S ub-S aharan Africa implemented business regulation reforms, in 2012/ 2013 66% of the economies did so. 3 Doing Business in Nigeria 2014
What do Subnational reports add? • Expand Doing Business indicators beyond the largest business city measured by the annual report • Capture local differences in regulations or enforcement • Provide information on good practices within the same country that can be easily replicated • Provide a tool for locations to tell their story and to compete globally • Combine Doing Business media appeal with active participation of subnational governments in the reform process 4 Doing Business in Nigeria 2014
Subnational Doing Business studies capture local differences and large variations across locations The cost of dealing with construction permits varies widely across cities within the same country or region SEE11 110 2132 95 1509 Nigeria10 Philippines11 94 1035 Colombia13 68 312 45 Italy13 966 Russia12 40 417 Indonesia12 32 131 Mexico12 18 333 0 500 1000 1500 2000 2500 Cost (% of income per capita) Source: Doing Business database Note: Subnational Doing Business studies measured 23 cities in Colombia (2013), 13 in Italy (2013), 13 in Kenya (2012), 20 in Indonesia (2013), 30 in Russia (2012), 32 in Mexico (2012), 25 in Philippines (2011), 22 in in South East Europe (Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro, and Serbia- 2011) and 37 in Nigeria (2010) 5 Doing Business in Nigeria 2014
Subnational Doing Business studies show potential of reforms across locations within the same country Dealing with construction permits in Russia: what if the best regional practices were adopted in Moscow? Procedures Global DB Data for Russia* Time 181st 173th Best practice in Russia Improvement in Global DB 51 Rank 423 days Cost ** (1-183) 113th 103th 183 % 78th 16 46th 150 days 40% *Data published in Doing Business 2012 , as measured for Moscow as of June 2012 ** % of income per capita 6 Doing Business in Nigeria 2014
Subnational Doing Business studies motivate local governments to reform: the experience of Mexico Number of Doing Business 2009 2012 2014 reforms* 31 31 35 23 30 28 25 14 11 20 16 15 5 10 8 11 5 0 0 Starting a business 0 Dealing with construction permits Registering property Enforcing contracts *Subnational locations (does not include the Federal District) 7 Doing Business in Nigeria 2014
Demand for Subnational Doing Business in all regions and all income levels 355 cities and 55 economies Economies from all income levels BRICs More than one round of study in 26 economies 9 high-income economies 4 fragile state economies 18 upper-middle income economies Regional studies: OHADA (16) + OECS (6) + SEE (8) 18 lower-middle income economies 15 low-income economies 13 countries in Europe and Central Asia 4 in East Asia and Pacific 3 countries in Middle East & N. 16 countries Africa In Latin America & 2 countries in Caribbean 6 countries in Sub- South Asia Saharan Africa Economies with one subnational DB study Economies with more than one subnational DB study 8 Doing Business in Nigeria 2014
Since 2008 Doing Business in Nigeria has been promoting improvement of regulations 2014 2008 2010 10 states + Abuja, FCT 36 states + Abuja, FCT 35 states + Abuja, FCT • Baseline for 4 indicators • Updated 4 indicators • Updated 4 indicators • Measured progress over 4 • Measured progress over 2 years in 36 locations years in 11 locations • Compares gender employment and other data among public agencies 1) Starting a business, 2) Dealing with construction permits 3) Registering property 4) Enforcing contracts 9 Doing Business in Nigeria 2014
A state’s regulatory environment may be more business friendly in some areas than in others 10 Doing Business in Nigeria 2014
States that strive the most to maintain an active dialogue with their peers have a better business regulatory environment 11 Doing Business in Nigeria 2014
Good business regulations and governance In countries where business regulation is efficient and information on documentation requirements and fee schedules is easily accessible, the costs to start a business are much lower. 12 Doing Business in Nigeria 2014
Key findings 1. Twenty-two states have improved in at least 1 of the 4 areas measured. 2. While most reform efforts focused on reducing the complexity and cost of regulatory processes, several states also undertook judicial reforms to strengthen legal institutions. 3. Cross River, Ekiti, Niger, Ogun and Rivers improved the most across the areas measured, making the biggest strides towards the national frontier of good practices. 4. Different state regulations along with uneven implementation of federal legislation drive large variations across indicators. No single state ranks at the top on all indicators. 5. Federal leadership will be crucial to roll out reforms in federal agencies (such as CAC) and to ensure the effective implementation of legal changes. 13 Doing Business in Nigeria 2014
Ogun, Niger, Cross River, Ekiti, and Rivers narrowed the gap with the regulatory frontier of good practices the most since 2010 14 Doing Business in Nigeria 2014
Six states significantly reduced the time to start a business 15 Doing Business in Nigeria 2014
Ogun radically transformed the construction permitting process 16 Doing Business in Nigeria 2014
Property registration fees are generally high, but vary greatly across Nigeria 17 Doing Business in Nigeria 2014
Clearing court backlogs resulted in faster contract enforcements in Niger, Ekiti and Kaduna 18 Doing Business in Nigeria 2014
The gender perspective: assessing practices at public registries across the country 108 Corporate Affairs Commission branches, land registries and state building authorities were surveyed across 35 states and Abuja: No legal or regulatory restrictions were found for Nigerian women to start or operate a business In more than 2/3 of the agencies surveyed, it is common for a female entrepreneur to send a male representative on her behalf Women are underrepresented among the employees of the public agencies surveyed: only in 1/3 of the agencies, women make up more than 35% of the workforce. 19 Doing Business in Nigeria 2014
Adopting local good practices already existing in Nigeria would improve the business environment across the country 20 Doing Business in Nigeria 2014
Thank you! For more information: www.doingbusiness.org/Nigeria 21 Doing Business in Nigeria 2014
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