Nigeria has Africa’s largest economy and population. But as recently as 2016, the country ranked near the bottom of the World Bank’s Ease of Doing Business index, which measures business regulations and their enforcement worldwide. Nigeria’s low ranking that year—169 out of 190 countries—reflected the difficulty businesses faced in dealing with construction permits, getting electricity, registering property, paying taxes, and trading across borders.
Today, although Nigeria is grappling with the COVID-19 health and economic crisis that has swept the globe, its business regulations look different. Recent economic reforms have removed some bureaucratic hurdles. As of 2020, the country has risen 34 places on the index and has been named a top 10 improving economy by the World Bank.
How? Doing business has gotten easier in Nigeria thanks to reforms led by the Presidential Enabling Business Environment Council (PEBEC) and supported by the UKaid-funded Policy Development Facility Phase II (PDF II). The facility, implemented by DAI between 2015 and 2020, worked with government officials to improve economic and social policies.
In March 2020, PDF II celebrated its completion. The milestone was made more significant as the project received a special recognition award from PEBEC.
Dr. Titilola Akindeinde, PDF II Program Manager, pictured center, receives the PEBEC award in March 2020.
A flexible, rapid-response facility, PDF II supported “champions of change” to implement economic and social policies to reduce poverty in Nigeria. These champions were primarily federal ministers and high-level officials such as the Office of the Vice President, but also included National Assembly Committees and nongovernment actors such as civil society organizations (CSOs).
The facility helped the Nigerian government make its ministries, departments, and agencies more efficient, leading to substantial financial savings and increased transparency. PDF II’s work focused on addressing constraints to economic growth and building the evidence base required for reform.
Along with promoting clean energy through the Rural Electrification Agency, enhancing trade and investment through the Nigeria Sovereign Investment Authority, and promoting efficiency through support to the Ministry of Finance, PDF II contributed to a national reform process that supports entrepreneurs and removes barriers to doing business.
PDF II’s efforts resulted in:
- 27,765 jobs directly and indirectly created through interventions such as the Energizing Economies Initiative, green bonds, innovation hubs, and fertilizer programs.
- 116 advisers embedded across 155 projects to support Nigeria’s reforms for poverty reduction and economic growth.
- 616 million naira disbursed through the Development Bank of Nigeria to 300 micro, small, and medium-sized enterprises (and another 1.5 billion naira made available for those firms).
- More than N25 billion raised by the government in Sovereign Green Bonds.
UKaid’s investment made a difference. For every pound the British government spent on technical assistance, Nigeria was able to save £3,953 in excess expenditure, and an additional £89 to support budgetary expenditure.
“Through technical support provided by PDF II, we developed a roadmap that articulated the vision for the advancement of the mining sector,” says Dr. Kayode Fayemi, Nigeria’s former Minister of Solid Minerals Development and current Executive Governor of Ekiti State.
Another partner, Auditor General of the Federation Anthony Ayine, thanked PDF II for “the technical support provided in the development of our five-year strategic development plan that laid the foundation for audit reforms in Nigeria.”
PDF II’s impacts extended to business owners and individuals. Through the project’s capacity building programs, “I have upped my game in quality standards and measures, which has helped me access higher value markets,” says Osagie Azeta, CEO of Crop Safe Agro-Services. “My sales have improved, I have finally exported for the first time, and I also supply products to other exporters. I have two streams of income now.”
A Plan for Reform
One project that received PDF II advisors’ support was PEBEC, an intergovernmental and inter-ministerial body founded in 2016 and responsible for driving business reforms in Nigeria. Led by the Vice President Yemi Osinbajo, PEBEC spearheaded a national reform process designed to improve the country’s performance on the Doing Business index. This goal is in line with Nigeria’s Economic Recovery and Growth Plan, which aims for the country to rank above 70 by 2023.
Central to improving Nigeria’s business environment was PDF II’s support for a coordinated approach by government stakeholders, both in formulating and implementing necessary reforms, and engaging with national and international business stakeholders for feedback. The facility also commissioned research to develop an evidence base to guide PEBEC’s reform, including operationalizing an executive order to improve business transparency and efficiency.
PDF II helped set up a non-oil export community of practice to help these businesses influence Nigeria’s trade policy and increase their exports. The facility conduced Exporter Experience studies to understand trade challenges, which provided crucial evidence to support reform.
As a result, Nigeria introduced an automated electronic export process to remove barriers to cross-border trade. PDF II’s embedded advisors also played a critical role in facilitating Nigeria signing on to the African Continental Free Trade Agreement in 2019.
By 2019, Nigeria ranked 131 out of the 190 countries surveyed in the Doing Business report—15 places higher than the previous year. The country was also named among the top 10 most improved economies for its reforms across six of the report’s 10 indicators:
- Starting a business—reforms in Kano and Lagos reduced the time needed to register a company.
- Dealing with construction permits—Nigeria eliminated a fee for construction permits for warehouses.
- Getting electricity—Nigeria now allows certified engineers to conduct inspections for new connections.
- Registering property—Lagos implemented a geographic information system for land administration.
- Trading across borders—reforms in Kano and Lagos reduced export and import time through an upgraded electronic system and e-payment for fees.
- Enforcing contracts—Nigeria introduced a pretrial conference to enhance case management techniques. PEBEC honored the organizations and projects that contributed to Nigeria’s improved Doing Business ranking in an award ceremony at the State House on March 11, 2020. PDF II received a special recognition award for its technical support for PEBEC and the work of the project’s embedded advisors. Program Manager Dr. Titilola Akindeinde accepted the award on behalf of the project team.
“I am amazed at how PDF II, through its targeted support to various critical projects, made such significant impact in driving reforms which ultimately led to improving the lives of ordinary Nigerians,” says Dr. Akindeinde.
At the event, Vice President Osinbajo Tweeted his appreciation for the private sector’s assistance, saying it “deserves our heartfelt gratitude and commendation for its commitment and collaboration, especially their contributions in technical support and capacity building.”
PDF II Program Manager Dr. Titilola Akindeinde (ninth from the left) with Vice President Yemi Osinbajo (tenth from the left) and other awardees.
What’s next for the Policy Development Facility? DAI will implement the project’s next phase—PDF Bridge—over 18 months between 2020 and 2022.
PDF Bridge will support the Government of Nigeria, its agencies, and independent regulators in key economic sectors, helping champions of change to conceptualize, design, and drive important policy and regulatory reforms.
Embedded advisors will provide technical assistance to improve audit processes, implement the African Continental Free Trade Agreement, and revive the economy from the effects of COVID-19. Currently, PDF Bridge is helping Kano State with communications on COVID-19 safety and training exporters to adapt during the crisis.
Nigeria still has challenges ahead in creating a business-friendly environment and reaching the PEBEC’s goal of raising the country’s Doing Business ranking above 70 by 2023. Nigerian businesses continue to face hurdles in areas such as getting electricity, registering property, paying taxes, and resolving insolvency. Reforming policies on these issues is even more vital as the country works to recover from the economic impacts of COVID-19. PDF’s support will continue to assist the country’s leaders as they address these and other reforms.