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World Bank Tasks States On Reforms To Support SMEs

The World Bank on Thursday advised states in the country to sustain their reform initiatives aimed at improving the ease of doing business for domestic small and medium enterprises in their domains.

The advice was based on the findings of the multilateral financial institution’s latest edition of it’s  Doing Business in Nigeria report.

The report, which is the 4th in the sub-national series on Nigeria and covers 36 states and the capital city of Abuja, analyzes business regulations in four Doing Business areas: Starting a Business, Dealing with Construction Permits, Registering Property, and Enforcing Contracts.

According to a press release issued by the Breton Woods institution’s Nigeria Country Office, over the past four years since the last report was issued, 29 Nigerian states have implemented 43 reforms.

The statement indicated that majority of those reforms were in the area of Starting a Business in which 28 states enacted changes to improve business incorporation.

The bank reported that while no state performs well across all areas benchmarked, Kaduna, Enugu, Abia, Lagos and Anambra made the biggest strides in improving their business regulations.

In addition, it noted that several states that were lagging in 2010 were now narrowing the gap in regulatory efficiency with the better-performing states, adding that across all indicators, the gap in time difference between lagging states and better-performing ones has been cut by at least one-third.

The report findings showed further that location still mattered for local entrepreneurs wanting to start and operate a business in the country, as large differences exist in the regulatory environment throughout the country.

The World Bank pointed out that for example, incorporating a new business can take more than six weeks in Adamawa and just 10 days in Abuja.

Commenting on the latest report findings, the Country Director, World Bank Nigeria, Rachid Benmessaoud, said: “It is encouraging to note that the private sector acknowledges the business environment reform agenda initiated at the Federal level is trickling down to several states. “While these findings are encouraging, substantial variation remains across the country.  Going forward it will be critical for the states to engage in peer learning and put in place the institutional mechanisms that will ensure continuous improvement and the sustainability of reforms”, the banker added.

The report indicated further that on average, it now takes 26 days to incorporate a new business, compared to 34 days in 2010. Abuja remains the easiest place to start a business.

The World Bank clarified: “The improvements have been the result of introduction of an electronic platform by the federal Corporate Affairs Commission. The online platform enhances speed and transparency of the business registration process. As a result, it takes less time to start a business in states which have adopted the online platform.

“Reform efforts to improve construction permitting slowed – only three states implemented reforms in the past four years. Nevertheless, Niger, Kano and Jigawa surpass even some of the advanced economies in the world in terms of streamlined and expeditious processes for obtaining a building permit.

“Nigeria is one of the most difficult and expensive places to register property in the world. On average, it takes 12 procedures, 74 days and costs 15.3 percent of the value of the property to transfer land.  Kaduna implemented some landmark reforms catapulting the state to the top spot in Nigeria for ease of registering property”, it added

According to the multilateral financial institution, in the area of Enforcing Contracts, Kaduna, Bauchi and Jigawa are the best performing states. However, the quality of judicial processes and the efficiency of resolving a commercial dispute vary widely, with the greatest differences seen in the time to complete the trial and judgment phase.

In her remarks, Senior Manager of the Global Indicators Group at the World Bank, Rita Ramalho, said: “The acceleration in the pace of business reforms to reduce the time, cost and complexity of bureaucratic processes is a welcome step in the right direction.

“However, federal-level initiatives will need to be matched by state and local efforts to spread the benefits more uniformly across the country and help bring much-needed prosperity. We hope this report will serve as a roadmap for reform at the subnational level”, she added. 

The Doing Business in Nigeria 2018 is the fourth report of the sub-national Doing Business series in Nigeria. The first edition was published in 2008, with subsequent editions released in 2010 and 2014.

The report was produced by the World Bank Group at the request of the Government of Nigeria, in collaboration with the Enabling Business Environment Secretariat (EBES) of Nigeria’s Presidential Enabling Business Environment Council (PEBEC) and the Federal Ministry of Industry, Trade and Investment (FMITI).

The project was funded by UK Aid from the UK government, the World Bank Competitive Industries and Innovation Program and the World Bank-assisted Growth and Employment (GEM) Project at FMITI. The subnational Doing Business work is based on the same methodology as the global Doing Business report published annually by the World Bank Group.

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