Economy

Ease of Doing Business in Nigeria; Meaning, World Ranking, Factors that Affect, Steps to Improve

Ease of doing business is how easy it is to do business in a country without any hassle. In Nigeria, doing business can be pretty stressful and difficult as there are lots of processes involved before a business can commence or operate successfully.

Ease of doing business in Nigeria is still a long way up the ladder as lot of businesses suffers from the external forces associated with running a business in the country.

The crippling factors that affects the free operation of businesses in Nigeria has greatly brought about the early demise of many businesses.

Meaning of Ease of Doing Business

Ease of doing business is an index setup by the World Bank to score and rank countries based on how it is easy to setup and operate a business.

Ease of doing business index measure regulations directly affecting businesses by examining several factors including dealing with registering property, getting credit, getting electricity, enforcing contracts, resolving insolvency, etc.

SMEs in Nigeria suffer greatly as there are lot of factors that stunt its growth. Nigeria low ranking in the ease of doing business prompted President Muhammadu Buhari to setup the Presidential Enabling Business Environment Council (PEBEC) in October 2016.

PEBEC was tasked with improving the ease of doing business in Nigeria. It is mostly responsible for pushing through changes to speed up business registration and the passage of two bills to boost SME credit access.

Doing business in Nigeria have never been a smooth ride as there are many pot holes that impedes the progress of a successful business operation.

Read Also: 20 Business Ideas you can Comfortably Start with N100,000 in Nigeria

World Ranking of Ease of Doing Business in Nigeria

According to the latest World Bank annual ratings, Nigeria is ranked 131 among 190 countries in the ease of doing business. This is a drastic improvement from 146 in 2018 to 131 in 2019.

Factors that Affect Ease of Doing business in Nigeria

The following are the factors that affect the ease of doing business in Nigeria:

1.Access to Capital

This is one factor that affect the ease of doing business in Nigeria as it is pretty difficult to get access to capital to start up a business in Nigeria.

Entrepreneurs are faced with this problem when it comes to starting up their own small business. Sourcing for capital can be really stressful as the available channel to get the capital become non existent.

Business operation cannot commence if there is no available capital to conduct various business activities. In most cases, entrepreneurs use their personal savings, government grants, business loans to start up their business.

2. Government Regulations

This is another factor that affect the ease of doing business in Nigeria as government make the big decision on how business gets done in Nigeria.

Setting up a business in Nigeria is like running on a treadmill nonstop as you struggle to regain your balance and breathe. It is such a tedious process with the rules and regulations involved.

Registration of a business in Nigeria takes longer process which involves time and money which is not suppose to be. This makes doing business in Nigeria unfavorable.

3. Power Supply

The epileptic power supply in Nigeria is another crucial factor that affect the ease of doing business in Nigeria as businesses into production tends to fall behind.

Small businesses like barbing, welding, hair dressing salon, business centre, cyber café, printing, cannot function effectively when there is no constant power supply .

Constant power supply is very important in order for business to be done easily without any problem. In Nigeria, many business owners have come out to complain bitterly on how lack of constant electricity has greatly affected their businesses.

Generator incur more costs when it comes to maintenance and this can badly affect the financial status of the business.

4. Corruption

This is yet another factor that can affect the ease of doing business in Nigeria as corruption can hamper the smooth running of a business in the country.

5. Payment of Exorbitant Taxes

Taxes can be very high and when one have to pay multiple taxes for a business it can greatly affect the operation of the business. Payment of exorbitant taxes can affect the ease of doing business in Nigeria which can lead to its early demise.

 6. Market Development

Market development can also affect the ease of doing business in Nigeria with the changing trends and as such organization look to the future and be aware of new trends in the market that can affect how business is done.

7. Registering Property

This is an important step involved in the setting up of a business. Registering property in Nigeria is a factor that affect can the ease of doing business because of the rigorous process involved .

8. Trading Across Borders

Business involves interaction and trading with other businesses will not boost the country’s economy but also bring about expansion and success.

Trading across borders can affect the ease of doing business in Nigeria as government controls the border and that determines the goods that comes in to the country as well as goes out of the country.

With the border closed, many businesses are affected as the purchase of goods from other neighboring countries have been stopped.

Read Also: 5 Biggest Business Challenges Facing Nigerian Startups Revealed

Steps to Improve Ease of Doing Business in Nigeria

The following are the steps to improve the ease of doing business in Nigeria:

1. Free Access to Credit: To improve the ease of doing business in Nigeria there should be free access to credit without any problem. Entrepreneurs should be able to access credit to start up their small business with little or no interest rate.

2. Steady Power Supply: There should be constant and steady power supply in order to improve the ease of doing business in Nigeria.

3. Business registration procedures should be simplified by the government in order to improve the ease of doing business in Nigeria.

4. Another important step that should be taken to improve the ease of doing business in Nigeria is to completely address the issue of corruption.

5. Reduced tax rate can also improve the ease of doing business in Nigeria.

Read Also: 10 Problems Of E-Business In Nigeria And Possible Solutions

Conclusion

For business to be done easily in Nigeria, government have to tackle the factors affecting the ease of doing business. Nigeria would only improve in world ranking if necessarily changes can be made.

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Cynthia Victor

Cynthia Victor is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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