Bproject on business environment and Association of Nigeria (MAN

Vol. 1, No. 2. July, 2006 ISSN No 0795-0160 BECANS makes Major Strides! In the picture... Front Row from left (squatting): Mr. Nkereuwem Isaac Akpan, Central Bank of Nigeria; Mr. Endurance Uhumuavbi, Manufacturers Association of Nigeria; Mr. Amaechi Chukwu African Institute for Applied Economics; Mr. Oliver Ujah, African Institute for Applied Economics. Front Row from left (standing): Prof. Mrs. S. O. Anyanwu, Department of Economics Federal University of Technology, Yola; Mrs. C. N. Ikpechukwu, National Planning Commission; Mr. Chijioke Okoli, University of Nigeria; Mr. Effiong G. Thomas, National Bureau of Statistics; Barrister Ogadinma Ogbonna, African Institute for Applied Economics; Mr. Eke Ubiji, National Association of Small and Medium Enterprises; Dr. (Mrs.) J. Alumonah, University of Nigeria; Mr. Chukwuma Agu, African Institute for Applied Economics; Dr. Mrs. A.I Achike, University of Nigeria Back Row(standing): Barrister Ikeazor Akaraiwe, Legal Practitioner; Mr.Vincent Onodugo, University of Nigeria; Mr. Benedict I.C Maduagwu, Central Bank of Nigeria, Prof. Eric Eboh, African Institute for Applied Economics, Mr. I. G. Uzomah, Statistician, Mr. Danjuma Mahmoud, United Nations Industrial Development Organisation. ECANS, AIAE's flagship research, survey, reporting and advocacy project on business environment and competitiveness across Nigerian states has experienced major strides in the last few months. The project which has national ownership and stakeholder legitimacy, is being carried out on the heels of respective Memoranda of Understanding with a number of leading private sector organizations and the Academia. These include Manufacturers Association of Nigeria (MAN), National Association of Small and Medium Enterprises (NASME), and the Department of Economics, Federal University of Technology, Yola. Further to this, the National Planning Commission has adopted the project as an important monitoring mechanism to elicit private sector feedback on business environment across the country. Collaborating in the project through membership of the Technical Working Group (TWG) is the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), National Association of Small and Medium Enterprises (NASME), United B Nations Industrial Development Organization (UNIDO) and Manufacturers Association of Nigeria (MAN). Membership of the TWG also extends to experts from Universities and Research Institutes across the country. To familiarize and sensitize international development partners on the objectives, purpose, methods, implementation updates and work plan of the project, the National Planning Commission, the key government partner in the project, held a seminar on Tuesday April 11th 2006 in its Conference room at Abuja. The seminar was chaired by the Economic Adviser to the President/Chief Executive, National Planning Commission Dr. Osita Ogbu and attended by representatives of Central Bank of Nigeria (CBN), United Nations Development Programme (UNDP) and United States Agency for International Development (USAID). The TWG serves as the research team and think tank. It is charged with the intellectual function of developing the BECANS methodology-design, sampling, instruments and work programme. Already, the TWG has produced papers which will be reviewed at the National Workshop, July 6-7, 2006 in Abuja. In addition to ensuring the application of sound scientific methodology in BECANs, the TWG serves as the mechanism to network national and international experts in business environment and competitiveness benchmarking and evaluation. In this Edition BECANS is good for Nigeria AIAE services to USAID REFORMS Alliance with Nigeria Trade Network New AIAE Publications Workshop on Fertiliser Policy The Hidden Source of Growth BECANS in the Press 2 3 3 3 3 4 4 AIAE Newsletter, Vol. 1, No. 2. July, 2006 BECANS is good for Nigeria t is today imperative for countries to promote good environment for business and investments so as to be globally competitive, create jobs and reduce poverty in a sustainable manner. Good environment entails favourable macroeconomic and investment policies and efficient and transparent regulatory and administrative processes. While NEEDS and SEEDS emphasize regulatory and administrative reforms to ease doing business or reduce the cost of doing business in Nigeria, there is need to move from prescribing measures to taking action. In this light, the Federal Executive Council recently approved the establishment of a Presidential Committee with a mandate to improve and ease the processes of doing business and engender a better investment climate in the country. Specifically, Nigeria targets to improve its 94th position out of 155 countries on the World Bank's ease of doing business rating to 30th position by 2010. This ambition would not be realized if federal-level measures to improve the business environment are not corresponded with state-level reforms. This is because several reported bottlenecks to doing business fall within responsibilities of state and local governments. Some of these are land registration, business locating and connection to public utilities, court procedures, tax and license administration, sanitation and safety, roads and transport infrastructure as well as security. Incidentally, Nigeria's worst performance on the World Bank's doing business indicators include “paying taxes”, “registering property” and “enforcing contracts”- all these are regulatory services administered at the state level. We need therefore to focus on the state and local governments and their impact on the business environment. This is why BECANS has come. BECANS works to remove bottlenecks to business at the state level through regular supply of empirical evidence to monitor business conditions. The BECANS statelevel database on business environment ser ves policy makers, g over nment technocrats, investors, entrepreneurs, business managers, researchers, policy activists, students and the general public. It establishes mechanisms to utilize the evidence for engagement and dialogue between state governments and the private sector. BECANS encourages a peer review system whereby states are assessed against one another on several agreed benchmarks I by Prof. Eric C. Eboh and measures. This will promote information flow, experience sharing, mutual learning, understanding of best practices and stimulate reforms among states. Also, BECANS makes it possible for business conditions in a particular state to be directly assessed against that in another country, rather than comparing Nigeria (as one entity) to another country. With BECANS results, state-level private sector and civil society organizations become more confident and credible in evidence based advocacy for better business environment. Prof. Eboh. Executive Director, AIAE AIAE calls on all Nigerians to support BECANS in order to break the vicious bottlenecks to doing business in Nigeria. BECANS is about unleashing the private sector energies, promoting enabling environment for productive and competitive entrepreneurship, growing the non-oil economy, creating jobs and reducing poverty. The BECANS approach is novel and timely. Now, let us point out what BECANS is not. BECANS is not a mere academic exercise. Though Do you know that... the methods are scientific The World Economic Forum's global competitiveness report a n d r e q u i r e s r i g o r o u s 2005 ranks Nigeria: scrutiny, it is an action- w 98th out of 117 countries on quality of public institutions index o r i e n t e d p r o g r a m . I t w 79th out of 117 countries on the quality of the national produces data and statistics business environment index th for current and future use. w 88 out of 117 countries on the growth competitiveness index BECANS is not intended to pitch states against one The World Bank's Doing Business 2006 ranks Nigeria: th another. It is not designed for w 94 out of 155 countries on overallthease of doing business index, compared to South Africa (28 ) and Botswana (40th ) any political end. It is about th N i g e r i a n s a n d t h e i r w 91 out of 155 countries on the “paying taxes” indicator th businesses. It is about w 152 out of 155 countries on “registering property” indicator th improving Nigeria's business w 117 out of 155 countries on “dealing with licenses” indicator, compared to South Africa (37th) and investment prospects in a th globalizing and increasingly w 119 out of 155 countries on “enforcing contracts”, compared to Botswana (28th ) competitive world. Though it could promote healthy comparison between states, it has no political undertones. It will find out the aspects of the business environment where states are doing well, and where there is scope for improvement. This could become the bases for development assistance to the states. We are not unmindful that BECANS may be misconstrued as a ranking of states. In order to eliminate such misunderstanding of BECANS and ensure ownership and sustainability, the design and methods have been arrived at based on extensive consultations since 2004. The principles and methods are open and transparent, thereby bringing about buy-in from the broad spectrum of stakeholders. The National Workshop on State-Level Business Environment is also a good opportunity to build understanding, interest and support for BECANS and business environment reforms at the state level It will find out the aspects of the business environment where states are doing well, and where there is scope for improvement. It fits into the NEPAD African Peer Review Mechanism model. It coheres with the NEEDS and SEEDS framework of growing the economy by creating an enabling environment for private sector growth and competitiveness. It aligns with the national objectives to reduce pover ty, create wealth and employment and enhances Nigeria's march to the poverty-related Millennium Development Goal. So, let all stakeholders government, private sector, civil society and international development partners support BECANS. It addresses the needs of both government and non-state actors. Nigeria needs BECANS. BECANS is poised to serve Nigeria. It is indeed an idea whose time has come. 2 ? AIAE Newsletter, Vol. 1, No. 2. July, 2006 AIAE Services to USAID Nigeria REFORMS Under sub-contract from USAID REFORMS Contractor- Development Alter natives Incorporated, USA, the African Institute for Applied Economics, Enugu is conducting an assessment of the capacity and capabilities of state-level civil society and private sector organizations to undertake policy analysis and advocacy. The project is intended to provide understanding and information to enlighten and guide capacity building for state-level civil society and private sector organizations in Nigeria. Furthermore, AIAE is also implementing a capacity/resource gaps assessment of the Central Bank of Nigeria's Development Finance Department (DFD) and Other Financial Institutions Department (OFID), towards the implementation of the Microfinance Policy, Regulatory and Supervisory Framework for Nigeria. Both studies are projects of USAID NIGERIA REFORMS. Alliance with Nigerian Trade Network The Nigeria Trade Network (NTN), in a bid to enlarge its membership and give strategic direction to its activities, invited the African Institute for Applied Economics to a strategic planning meeting. The Nigeria Trade Network is a research and advocacy group working to build capacity and enhance Nigeria's participation in international trade agreements and protocols. Invitation to the meeting targeted organizations that would add value to the work of the Network and held between the 11th and 14th of April, 2006 at Gubabi Royal Hotel, Abuja. The Institute was equally invited to become a member of the Network. The Institute was represented at the meeting by Mr. Chukwuma Agu, its Research Coordinator. A IIA E c o m m e n c e s ttw o A AE commences wo n e w p u b lliic a ttiio n s e rriie s !! new pub ca on se es he African Institute for Applied Economics has added two new series to its growing list of publications. The two publications, the State of Nigerian State Series and the Economic Forecast Series are billed to be released within the next couple of months. The State of Nigerian States Series which is the first of its kind in the nation, publishes periodic reviews of the policy and institutional developments across Nigerian States. It reports analysis of economic performance and trends at the state level and covers key issues on economic policy, business environment, private sector d e ve l o p m e n t , b u d g e t a n d f i s c a l management, service delivery and human development. The objective of this series is to develop understanding of comparative developments across Nigerian states and to disseminate authoritative information which will be useful to private sector and civil society stakeholders, researchers, academics and government agencies. Information for this series will mainly derive from the survey of Nigerian states under the flagship Business Environment and Competitiveness across Nigerian States (BECANS) project. It is hoped that this series will foster peer review among state governments and promote debate and dialogue for greater impact of sub-national governments in economic growth and poverty reduction. Economic Forecast Series presents analysis and forecasts of key Nigerian macroeconomic trends and indicators. The Series reports outputs of modeling and forecasting exercises done by the Institute. It seeks to infor m and sensitise policymakers, researchers, advocacy groups and private sector stakeholders. The projections in the forecast series are based on models built by the Institute for the different macroeconomic indices being analyzed. Some of the major indicators include inflation, money supply, quarterly output, interest rate and exchange rate. The forecasts will be based on sound scientific methodology in trend analysis and economic modeling. Watch out for the maiden edition coming soon. T AIAE conducts Baseline Survey for USAID Markets AIAE is providing services to USAID MARKETS in conducting a baseline survey and data collection in 17 project states. These states include Adamawa, Bauchi, Benue, Borno, Ebonyi, Jigawa, Kaduna, Kano, Katsina, Kwara, Lagos, Niger, Ogun, Oyo, Taraba, Zamfara plus FCT. The general baseline data and information will be collected, processed and presented on the basis of targeted commodities - rice, cowpea, sorghum. The baseline data is intended to assist the monitoring and evaluation of USAID MARKETS project implementation. USAID MARKETS has listed a number of indicators for which data will be collected and fitted to provide benchmark and contextual basis for its future monitoring and evaluation. The indicators span crop production, value addition, input markets, product markets, technology adoption and agricultural extension and agricultural credit, etc. National Stakeholders' Workshop on Fertilizer Policy for Nigeria Towards the Africa Fertilizer Summit scheduled to hold in June 2006 at Abuja, the Federal Ministry of Agriculture and Rural Development in collaboration with IFDC (MIR Project) and USAID/NIGERIA REFORMS Project organized and held a National Stakeholders' Workshop on Fertilizer Policy for Nigeria at the Transcorp Hilton Hotel, Abuja on the 11th 12th April 2006. The workshop which was organized to create opportunity for brainstorming on a New Fertilizer Policy for Nigeria, and to harmonise Nigeria's position with Africa's Fertilizer Policy was well attended. AIAE team to the workshop was led by the Executive Director, Prof. E. C. Eboh. Other AIAE team members to the national workshop included Prof. S.A.N.D. Chidebelu, Prof. Elthelbert Nwagbo and Prof. Mbadiwe Igbokwe who presented the following thematic papers respectively, at the workshop: “Fertilizer Value Chain Production, Marketing and Use,” “Fertilizer Research, Development and Extension,” and “Governance and Institutional Aspect Quality Control, Policy Incentives, Monitoring and Evaluation.” Also in the AIAE team, were Prof. Jude E. Njoku, Mr. Oliver, C. Ujah, Dr. C. U. Okoye, Mr Chidiebere Ibe, Dr. C. U. Nwajiuba, Miss ifeyinwa Okpara, and Chief F. Nwabunie. 3 AIAE Newsletter, Vol. 1, No. 2. July, 2006 The Hidden Source of Growth he growth of any economy whether national, state, local or municipal, is amongst other primary factors, hinged on its ability to attract investors, both local and foreign. Inflows of capital through these investments create wealth, generate employment, and reduce poverty by creating a new class of entrepreneurs and professionals in that economy., or by strengthening existing ones. Globally, investors face important decisions such as evaluating alternative locations to expand their production or sales, or whether to simply invest directly and take advantage of the structures that exist within the local economy. Their decisions have important implications for growth and poverty, and therefore depend largely on the way government policies and behaviors shape the investment climate in those economies. It is therefore critical that policy makers identify their economy's strengths and weaknesses and tailor their investment policy objectives to either take advantage of these strengths or attract investors to assist it in overcoming its inadequacies or shortcomings. The first start is to undertake a full assessment of the investment climate, i.e. how conducive the economy is to attract enterprises and what opportunities and incentives exist for potential investors. Creating a good investment climate is therefore the hidden source of economic growth and sustenance. by Dr. Ifediora Amobi The hidden source of growth therefore, is in ensuring that the policies, procedures, regulations, institutions and infrastructure that are necessary for businesses to thrive and be sustained in a good business and investment environment are put in place. In its simplest form, an economy can do this in a number of ways; like a reduction in the number of procedures (steps) it takes to register a business, pay taxes, enforce contacts, get credit or register property for starters. Also, it could provide quality-of-life amenities like civic centers, public parks or an accessible public transportation system that can be improved and promoted. Economies have also been known to provide prospective investors with a pleasant climate comprising low costs, highly educated and often bilingual workforce, political stability, security, and attractive tax incentives. Since investment is based on expectations about the future and not just on current conditions, discovering and addressing this hidden source of growth will lower costs and delays, discourage corruption, and lead to higher productivity a panacea for any economy's overall development strategy. Dr. Amobi is Managing Consultant, Skoup and Company Limited, Enugu and a Fellow of the Institute T The World Bank has been in the forefront of championing improved investment climates around the world and on how they influence growth and poverty. Since 2004, it has published a series of annual reports across 155 countries, investigating and comparing the regulations that enhance business activity and those that constrain it. (See Doing Business in 2004: Understanding Regulation; Doing Business in 2005: Removing Obstacles to Growth; and Doing Business in 2006: Creating Jobs). The World Development Report 2005 is another valuable source that highlighted what governments at all levels can do to create a twodimensional investment climate: one that benefits firms, and one that benefits society as a whole. So why should we bother? In our economies where populations are growing rapidly, creating jobs and other opportunities for young people is essential to create a more inclusive, balanced, and peaceful society. A bad investment climate will dissuade investment, and the economy involved will suffer deep losses from income generating opportunities (e.g. tax revenue), job creation, and overall industrial development. The same administrative, institutional and regulatory bottlenecks that adversely affect the performance of local firms also deter potential investors from considering entering any economy. BECANS IN THE PRESS Daily Independent Wednesday, June 21, 2006 A8 FG, OPS plan survey on Nigeria’s Business Environment The Business Environment and Competitiveness Report Series will deepen and complement international comparative reports done periodically by international agencies. [BECANS] will integrate research, survey, dissemination and advocacy in a systematic effort to link research to advocacy towards evidence-based business environment reforms across Nigerian states. ThisDay, Financial Standard Monday, June 19, 2006 AIAE initiates project to promote business in Nigeria Unlike every other previous and existing project [BECANS] explicitly integrates Business Environment and Competitiveness survey with state-level advocacy, in order to foster critical constituencies for BEC reforms in the states. These constituencies are considered very necessary to the success of the project and will, based on survey results, pressurize respective State Governments towards improving the business environment. Monday, June 19, 2006 p.35 Business Competitiveness: NPC Partners Public/Private Sector The National Planning Commission is coordinating a public-private sector collaborative project on business environment and competitiveness across Nigerian States, implemented by the African Institute for Applied Economics in collaboration with key government Agencies such as the Central Bank of Nigeria, National Bureau of Statistics (NBS), Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and leading private sector Daily Sun organizations including MAN, NASME and Monday, June 19, 2006 HURILAWS. Public, private sectors collaborate on business environment Determined to produce Business Environment Daily Champion and Competitiveness reports across Nigerian States Tuesday, June 20, 2006 p, 7 on a regular basis, the National Planning BECANS will boost economy Commission is coordinating a public-private sector The Business Environment and Competitiveness collaborative project on the subject across Nigerian Across Nigerian States (BECANS) project which States…this assessment is expected to constitute is aimed at promoting the growth and an evidence tool for more credible and effective competitiveness of the private sector would advocacy by private sector and civil society provide a major boost to national economy organizations and inform self-appraisals and peer through provision of disaggregated assessment review among state governments. of growth at the sub-national level. The African Institute for Applied Economics is a non-governmental, not-for-profit and independent organisation devoted to economic research towards promoting evidence-based decision making. This Newsletter is published periodically to update stakeholders on the Institute’s activities. All contributions, suggestions and requests to receive this newsletter should be sent to newsletter@aiae-nigeria.org Business Day Monday, June 26, 2006 Benchmark for transacting business in states out soon Factors encouraging the growth of private sector in individual states of the Federation are the subject of a new study by a consortium led by the African Institute for Applied Economics (AIAE). The project tagged, Business Environment and Competitiveness across Nigerian states, aims to contribute to providing disaggregated assessment of factors facilitating business growth at the sub national level. African Institute for Applied Economics 128 Park Avenue,GRA, P.O. 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