October 22, 2018 / 09:27 AM / FBNQuest Research
This may be the season for the release of new league tables but we make no apologies for commenting today on one of the longest established and most thorough, the World Economic Forum’s Global Competitiveness Index for 2018. The headline is that Nigeria is sitting at no 115 of 140 countries surveyed, and so three places lower than the previous year. Its overall score (47.5 ex 100) has also declined so it is difficult to argue that Nigeria is reforming but at a slower pace than its competitors.
Of the 12 pillars which make up the overall score, Nigeria’s best ranking is no 30 for market size. This is a core element in the Africa Rising narrative but can also be a double-edged sword, as we noted in our comments on the World Bank’s Human Capital Index .
The lowest ranking is no 131 for the financial system. Good marks for banks’ regulatory capital are undone by poor scores for the market cap of listed companies, insurance premia, domestic credit to the private sector and financing of SMEs. The last two weaknesses are regularly highlighted by the CBN and the monetary policy committee.
Pillar no 1 (institutions) has 20 components. Nigeria does well for conflict of interest regulation, shareholder governance and auditing standards but the score and ranking are predictably dragged down by land administration, the burden of government regulation and issues of broader governance.
The overall score and ranking would be lower still were it not for Nigeria’s performance in business dynamism and innovation capability. For the latter, the score is low (31.4) and down on 2017. However, this is an area where many economies have barely started and where Nigeria therefore has a window in which to accelerate its development.
There is a temptation to argue that Nigeria, by virtue of its size, requires time to launch the policies and make the investment to move significantly up the table. This, however, overlooks the reality that the process could have started several years ago, and that China is placed no 28 and India no 58 in the latest rankings.
On the methodology, the partner institute in the country is the Nigerian Economic Summit Group. The survey part of the exercise attracted 105 responses, 20 more than in 2017 and a little above the global average of 92.
The report, unlike the World Bank Group’s Doing Business series, does not publish the names of responding organizations content to be identified in print/online.