Friday, October 16, 2009

Nigeria’s latest global ranking

The latest ranking of Nigeria’s economy as the 99th in the world by the world Economic Forum, a Geneva-based organisation, does not bode well for our country. Nigeria was among the 133 countries assessed in the Global Competitiveness Report for the period 2009-2010.

The ranking is based on a poll of over 13,000 business leaders and a collection of key indices of each country’s economy. The outcome of the ranking, which is a yearly exercise, shows Nigeria five places down the scale. Last year, Nigeria’s economy was ranked 94th in the world. This implies that the key indices necessary for economic development are deteriorating rather than improving. The recent economic meltdown is said to have taken its toll on many countries, and Nigeria may have been hard hit by the aftershock of the global economic turbulence.

But the World Economic Forum in its report noted that Nigeria’s reversal of fortunes was deepened by a combination of factors which include weak institutional frameworks, security concern, high level of corruption especially in key government institutions, and by public officials and wasteful spending. For instance, in the area of weak institutions, Nigeria was ranked 102nd, insecurity (117th), corruption (122nd) and wasteful spending (120th).

Also, the worst area in the ranking was at the primary education level which was ranked 132nd out of the 133 countries that were surveyed. Besides, Nigeria’s state of infrastructure was described as appalling by the report. It was ranked 127th.

However, the consolation is that Nigeria’s macroeconomic environment received a somewhat favourable rating. It was ranked 20th. This is on the basis of what the report called Nigeria’s “high national savings rate” and “low national debt.” Also, our market size was rated very highly at 42nd in the world. This, the WEF report explains, provides opportunities of economies of scale to companies operating in Nigeria.

Overall, South Africa’s economy came tops in the African continent. Its financial markets were rated five times higher than they were last year. Key institutions are said to be in excellent form.

We are not surprised by the ranking. It confirms our fears, and indeed that of investors, that the Federal Government has done so much talk and less walk in improving our economy. Clearly, in the last one year alone, more energies have been devoted to policy pronouncements and less to concrete action plan that will move the economy out of its present doldrums. Knowledge-based economics seems to be lacking by the handlers of Nigeria’s key sectors. Institutions of government that are supposed to ginger economic growth are not measuring up to expectations. Official corruption still ranks high, infrastructure decay, erratic power supply, bad road network and spate of kidnappings, remain disincentives to investments. The latest turbulence in the capital market may have equally worsened matters.

Indeed, one of the consequences of Nigeria’s latest poor ranking is that it is capable of weakening investors’ confidence since investors make their decisions based on the strength or weakness of every given country’s economy. Such decisions are determined by business environment and efficiency, innovation and regulations, among other critical factors.

Sadly, none of these indices ranks high in investors’ scale of preference. Therefore, we urge government to take this latest global competitiveness ranking as a wake-up call to improve the economy.
Government and its key institutions must strive to establish and maintain international performance benchmarks for the economy if it must get good ratings that can sustain confidence in the country. A poor rating as reflected in the latest ranking by the World Economic Forum will not do our economy any good whatsoever