WHAT GCI HAS BEENTELLING NIGERIA

Nigeria—now Africa’s largest economy—continues its downward trend and

falls by seven places to 127th this year, largely on the back of weakened public

finances as a result of lower oil exports. Institutions remain weak (129th) with

insufficiently protected property rights, high corruption, and undue influence.

In addition, the security situation remains dire (139th). Nigeria must continue

to upgrade its infrastructure (134th) as well as improve its health and primary

education (143rd).

Furthermore, the country is not harnessing the latest technologies for

productivity enhancements, as demonstrated by its low rates of ICT

penetration. On the upside, Nigeria benefits from its relatively large market

size (33rd), which bears the potential for significant economies of scale; a

relatively efficient labor market (40th) driven by its flexibility (20th); and a solid

financial market (67th) following its gradual recovery from the 2009 crisis.

However, poor availability and affordability of finance in general and the

difficulties in obtaining loans in particular (137th) remain an important

bottleneck to economic growth. Ahead of the 2015 election cycle, it will, thus,

be critical to keep the ongoing reform momentum to diversify the economy

and increase the country’s long-term competitiveness.

THE GLOBAL COMPETITIVENESS INDEX 2014–2015

This analysis takes a look at the World Economic

Forum (WEF) Global Competitive Index (GCI)

report on Nigeria from Year 2009-2010 to Year

2014-2015.

It compares the Rankings and Scores of Nigeria

during this time frame with the expectation of

establishing a trend in Nigeria’s development

and possibly as a measure to determine if

Nigeria is becoming more competitive or

otherwise, as well as serve as a guide in regard

to where the Government can focus

developmental effort on.

The World Economic Forum

(WEF) measures Nation’s

competitiveness using 12 Pillars.

These 12 Pillars are divided into 3 Stages of

Development namely:

1)FACTOR-DRIVEN

2)EFFICIENCY-DRIVEN

3)INNOVATION-DRIVEN

This is also referred to as: Basic Requirements,

Efficiency Enhancers, Innovation & Sophistication

FACTOR-

DRIVEN

STAGE

EFFICIENCY

-DRIVEN

STAGE

INNOVATION

-DRIVEN

STAGE

Countries compete based on their factor endowments—primarily

unskilled labor and natural resources. Maintaining competitiveness

at this stage of development hinges primarily on well-functioning

public and private institutions (pillar 1), a well-developed

infrastructure (pillar 2), a stable macroeconomic environment (pillar 3),

and a healthy workforce that has received at least a basic

education (pillar 4).

At this stage, countries begin to develop more efficient production

processes and increase product quality because wages have risen

and they cannot increase prices. Competitiveness is increasingly

driven by higher education and training (pillar 5), efficient goods

markets (pillar 6), well-functioning labor markets (pillar 7), developed

financial markets (pillar 8), the ability to harness the benefits of

existing technologies (pillar 9), and a large domestic or foreign market(pillar 10).

Finally, as countries move into the innovation-driven stage, wages

will have risen by so much that they are able to sustain those

higher wages and the associated standard of living only if their

businesses are able to compete with new and unique products. At

this stage, companies must compete by producing new and

different goods using the most sophisticated production processes(pillar 11) and by innovating new ones (pillar 12).

STAGES OF DEVELOPMENT

DEFINITION OF PILLARSPILLAR 1 - INSTITUTION: The

institutional environment is

determined by the legal and

administrative framework within

which individuals, firms, and

governments interact to generate

wealth.

PILLAR 5 - HIGHER EDUCATION

AND TRAINING: Quality higher education

and training is crucial for economies that

want to move up the value chain beyond

simple production processes and products.

PILLAR 9 - TECHNOLOGICAL

READINESS: In today’s

globalized world, technology is

increasingly essential for firms to

compete and prosper.

PILLAR 2 - INFRASTRUCTURE: Well-

developed infrastructure reduces

the effect of distance between

regions, integrating the national

market and connecting it at low

cost to markets in other countries

and regions.

PILLAR 6 - GOODS MARKET EFFICIENCY:

Countries with efficient goods markets are

well positioned to produce the right mix of

products and services given their particular

supply-and-demand conditions, as well as to

ensure that these goods can be most

effectively traded in the economy.

PILLAR 10 – MARKET SIZE: The

size of the market affects

productivity since large markets

allow firms to exploit economies

of scale.

PILLAR 3 - MACROECONOMIC

ENVIRONMENT: The stability of the

macroeconomic environment is

important for business and,

therefore, is significant for the

overall competitiveness of a country

PILLAR 7 - LABOR MARKET EFFICIENCY: The

efficiency & flexibility of the labor market are

critical for ensuring that workers are

allocated to their most efficient use in the

economy & provided with incentives to give

their best effort in their jobs.

PILLAR 11 - BUSINESS

SOPHISTICATION: Concerns two

elements that are intricately

linked: the quality of a country’s

overall business networks and

the quality of individual firms’

operations and strategies.

PILLAR 4 - HEALTH AND PRIMARY

EDUCATION: A healthy workforce

is vital to a country’s

competitiveness and productivity.

Workers who are ill cannot function

to their potential and will be less

productive.

PILLAR 8 - FINANCIAL MARKET

DEVELOPMENT: An efficient financial sector

allocates the resources saved by a nation’s

citizens, as well as those entering the

economy from abroad, to their most

productive uses.

PILLAR 12 – INNOVATION:

Particularly important for

economies as they approach the

frontiers of knowledge and the

possibility of integrating and

adapting exogenous

technologies tends to disappear.

STAGES OF DEVELOPMENT & PILLARS

BASIC

REQUIREMENTS

EFFICIENCY

ENHANCERS

INNOVATION &

SOPHISTICATION

FACTOR-

DRIVEN

EFFICIENCY-

DRIVEN

INNOVATION-

DRIVEN

COMPONENTS PILLARS STAGES

Business Sophistication

Innovation

Institutions

Infrastructure

Macroeconomic Environment

Health and Primary Education

Higher Education & Training

Goods Market Efficiency

Labor Market Efficiency

Financial Market Development

Technological Readiness

Market Size

NIGERIA GCI RANKING & SCORE2009-

2010

2010-

2011

2011-

2012

2012-

2013

2013-

2014

2014-

2015

POPULATION 151.5 154.7 158 163.1 162.5 169.3

GDP (US$ Billion) 214.4 173.4 216 238.9 268.7 286.5

GDP per capital ($) 1,450.5 1,142 1,389 1,490 1,631 1,692

COUNTRY 133 139 142 144 148 144

RANKING 99 127 127 115 120 127

SCORE 3.6 3.4 3.4 3.7 3.6 3.4

Based on the above table; Nigeria was best rated (in terms

of Score) in the year 2012-2013, since then it has been a

downward progression in our ranking and score.

BASIC REQUIREMENTS RANKING & SCORE

Basic Requirements, which is also known as the

Factor-Driven Stage of Development comprises of:

a) Institutions

b) Infrastructure

c) Macroeconomic Environment

d) Health and Primary Education

While the Ranking is important, it is dependent on the

number of countries that were considered in the report.

However, an indicator that may better reflect the true

state of Nigeria would be the Scores of each of the four

Pillars above as well as the cumulative score for Basic

Requirements.

BASIC REQUIREMENTS RANKING & SCORE

YEAR2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

RankScore

RankScore

RankScore

RankScore

RankScore

RankScore

TOTAL COUNTRY 133 139 142 133 148 144

BASIC REQUIREMENTS 118 3.5 136 3.1 139 3.2 130 3.5 136 3.4 140 3.2

INSTITUTIONS 102 3.3 121 3.2 111 3.0 117 3.3 129 3.1 129 3.0

INFRASTRUCTURE 127 2.3 135 2.0 135 2.0 130 2.3 135 2.3 134 2.1

MACROECONOMIC

ENVIRONMENT20 5.4 97 4.3 121 4.0 39 5.2 46 5.2 76 4.6

HEALTH & PRIMARY

EDUCATION132 3.0 137 3.0 140 3.3 142 3.2 146 3.0 143 3.0

Nigeria best score in Basic Requirements is 3.5, which were

achieved in 2009-2010 and 2012-2013. Of the components

that make up the Basic Requirements, Macroeconomic

Environment is the best rated, with 5.4 in 2009-2010 but

currently at 4.6 in 2014-2015.

Institutions, Infrastructure, and Health & Primary Education are

all below average, with Infrastructure being the lowest rank

and requiring the most urgent attention.

WHICH INDICATORS NEED ATTENTION FOR IMPROVEMENT?

BASIC REQUIREMENTS – URGENT ATTENTION

INDICATOR

2011-

2012

2012-

2013

2013-

2014

2014-

2015

SCORE

Diversion of public funds 2.2 2.2 1.9 1.8

Public trust of politicians 1.9 2.2 2.1 1.8

Irregular payments and bribes 2.9 2.9 2.6 2.5

Wastefulness of government spending 2.3 2.6 2.4 2.2

Reliability of police services 3.0 3.2 2.9 2.6

Quality of railroad infrastructure 1.6 1.9 1.8 1.5

Quality of electricity supply 1.5 1.7 1.8 1.6

Quality of primary education 3.1 3.2 2.9 2.6

QUALITY OF

RAILROAD INFRASTRUCTURE

QUALITY OF

ELECTRICITY

SUPPLY

PUBLIC

TRUST OF

POLITICIANS

DIVERSION

OF PUBLIC

FUNDS

WASTEFULNESS

OF

GOVERNMENT

SPENDING

IRREGULAR

PAYMENTS

AND BRIBES

QUALITY OF

PRIMARY

EDUCATION

RELIABILITY

OF POLICE

SERVICES

Efficiency Enhancers is also known as the Efficiency-

Driven Stage of Development comprises of:

a) Higher Education and Training

b) Goods Market Efficiency

c) Labor Market Efficiency

d) Financial Market Development

e) Technological Readiness

f) Market Size

EFFICIENCY ENHANCERS RANKING & SCORE

Higher Education

and Training

Goods Market Efficiency

Labor Market Efficiency

Financial Market

Development

Technological Readiness

Market Size

EFFICIENCY ENHANCERS RANKING & SCORE

YEAR2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

RankScore

RankScore

RankScore

RankScore

RankScore

RankScore

TOTAL COUNTRY 133 139 142 133 148 144

EFFICIENCY

ENHANCERS77 3.9 84 3.8 80 3.9 78 4.0 83 3.9 82 3.9

HIGHER EDUCATION

AND TRAINING113 3.0 118 3.0 114 3.2 113 3.3 120 3.0 124 2.9

GOODS MARKET

EFFICIENCY62 4.2 87 4.0 73 4.2 88 4.2 93 4.1 87 4.2

LABOR MARKET

EFFICIENCY61 4.4 74 4.3 70 4.4 55 4.5 52 4.5 40 4.5

FINANCIAL MARKET

DEVELOPMENT57 4.4 84 4.0 86 3.9 68 4.1 66 4.0 67 4.1

TECHNOLOGICAL

READINESS101 2.9 104 3.0 106 3.0 112 3.1 108 3.1 104 3.0

MARKET SIZE 42 4.5 30 4.6 34 4.0 33 4.6 32 4.7 33 4.7

Higher Education and Training, and Technological Readiness

are all below average.

WHICH INDICATORS NEED

ATTENTION FOR IMPROVEMENT?

EFFICIENCY ENHANCERS – URGENT ATTENTION

INDICATOR

2011-

2012

2012-

2013

2013-

2014

2014-

2015

SCORE

Quality of the educational system 3.8 3.5 3.1 2.9

Quality of math and science education 3.4 3.6 3.1 2.6

Ease of access to loans 2.1 2.1 1.9 1.6

Venture capital availability 2.2 2.5 2.3 1.9

Broadband Internet subscriptions/100 pop. 0.1 0.1 0 0

Internet bandwidth, kb/s/capita 0 0.4 0.3 0.8

BROADBAND

INTERNET

SUBSCRIPTIONS

/100 POP

INTERNET

BANDWIDTH,

KB/S/CAPITA

EASE OF

ACCESS TO

LOANS

VENTURE

CAPITAL

AVAILABILITY

QUALITY OF

MATH AND

SCIENCE

EDUCATION

QUALITY OF

THE

EDUCATIONAL

SYSTEM

Innovation & Sophistication is also known as the

Innovation-Driven Stage of Development comprises

of:

a) Business sophistication

b) Innovation

INNOVATION & SOPHISTICATION RANKING & SCORE

Business sophistication

Innovation

YEAR2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Rank

Score

Rank

Score

Rank

Score

Rank

Score

Rank

Score

Rank

Score

TOTAL COUNTRY 133 139 142 133 148 144

INNOVATION &

SOPHISTICATION 70 3.5 83 3.3 69 3.5 73 3.5 82 3.4 103 3.3

BUSINESS

SOPHISTICATION69 4.0 76 3.8 64 4.0 66 4.0 75 3.9 87 3.8

INNOVATION 73 3.1 98 2.9 82 3.0 78 3.1 100 3.0 114 2.8

WHICH INDICATORS NEED

ATTENTION FOR

IMPROVEMENT?

INNOVATION & SOPHISTICATION RANKING & SCORE

INNOVATION & SOPHISTICATION –

URGENT ATTENTION

INDICATOR

2011-

2012

2012-

2013

2013-

2014

2014-

2015

SCORE

Nature of competitive advantage 3.4 3.6 3.3 2.8

Quality of scientific research institutions 3.2 3.2 3.1 2.8

Company spending on R&D 3.3 3.1 2.9 2.8

University-industry collaboration in R&D 3.1 3.5 3.3 2.8

NATURE OF

COMPETITIVE

ADVANTAGE

COMPANY

SPENDING

ON R&D

QUALITY OF

SCIENTIFIC

RESEARCH INSTITUTIONS

UNIVERSITY-

INDUSTRY

COLLABORATION

IN R&D

2009-2010 2010-2011

NIGERIA STILL AT FACTOR-DRIVEN STAGE

2011-2012 2012-2013

NIGERIA STILL AT FACTOR-DRIVEN STAGE

2013-2014 2014-2015

NIGERIA STILL AT FACTOR-DRIVEN STAGE

THE MOST PROBLEMATIC FACTORS

FOR DOING BUSINESS IN NIGERIA

INADEQUATE SUPPLY OF INFRASTRUCTURE

ACCESS TO FINANCING

CORRUPTION

POLICY INSTABILITY

INEFFICIENT GOVERNMENT BUREAUCRACY

CRIME AND THEFT

INFLATION

INADEQUATELY EDUCATED WORKFORCE

POOR WORK ETHIC IN NATIONAL LABOR FORCE

GOVERNMENT INSTABILITY/COUPS

FOREIGN CURRENCY REGULATIONS

TAX REGULATIONS

TAX RATES

RESTRICTIVE LABOR REGULATIONS

POOR PUBLIC HEALTH

INSUFFICIENT CAPACITY TO INNOVATE

CR

ITIC

AL

HIGH

ME

DIU

M

THE MOST PROBLEMATIC FACTORS

FOR DOING BUSINESSCOUNT PILLAR

Tax regulations 12.4 GOODS MARKET

EFFICIENCYTax rates 11.5

Poor public health 6.8 Health and primary education

Inadequately educated workforce 18 Higher education and training

Inadequate supply of infrastructure 129.5 INFRASTRUCTURE

Insufficient capacity to innovate 3.6 INNOVATION

Corruption 104.1

INSTITUTIONSPolicy instability 54.2

Inefficient government bureaucracy 34.2

Crime and theft 25.9

Government instability/coups 15.2

Foreign currency regulations 13.8 MARKET SIZEPoor work ethic in national labor force 15.7 LABOR MARKET

EFFICIENCYRestrictive labor regulations 7

Access to financing 126.8 MACROECONOMIC

ENVIRONMENTInflation 20.9

The institutional environment is

determined by the legal and

administrative framework within which

individuals, firms, and governments

interact to generate wealth. The

importance of a sound and fair

institutional environment has become all

the more apparent during the recent

economic and financial crisis and is

especially crucial for further solidifying the

fragile recovery, given the increasing role

played by the state at the international

level and for the economies of many

countries.

The quality of institutions has a strong

bearing on competitiveness and growth.

It influences investment decisions and the

organization of production and plays a

key role in the ways in which societies

distribute the benefits and bear the costs

of development strategies and policies.

strong institutions,

available talent,

and a high capacity

to innovate hold

the key for the

success of any

economy. These

elements will

continue to be

even more essential

in the future.

WHAT GCI HAS BEEN TELLING NIGERIA

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 AVG

INSTITUTIONS 3.3 3.2 3 3.3 3.1 3 3.15

INFRASTRUCTURE 2.3 2 2 2.3 2.3 2.1 2.17

MACROECONOMIC ENVIRONMENT 5.4 4.3 4 5.2 5.2 4.6 4.78

HEALTH AND PRIMARY EDUCATION 3 3 3.3 3.2 3 3 3.08

HIGHER EDUCATION & TRAINING 3 3 3.2 3.3 3 2.9 3.07

GOODS MARKET EFFICIENCY 4.2 4 4.2 4.2 4.1 4.2 4.15

LABOR MARKET EFFICIENCY 4.4 4.3 4.4 4.5 4.5 4.5 4.43

FINANCIAL MARKET DEVELOPMENT 4.4 4 3.9 4.1 4 4.1 4.08

TECHNOLOGICAL READINESS 2.9 3 3 3.1 3.1 3 3.02

MARKET SIZE 4.5 4.6 4 4.6 4.7 4.7 4.52

BUSINESS SOPHISTICATION 4 3.8 4 4 3.9 3.8 3.92

INNOVATION 3.1 2.9 3 3.1 3 2.8 2.98

STRONG 5.0 – 7.0

MODERATE 3.0 – 4.99

WEAK 0.0 – 2.99

Data Source:

- The Global Competitiveness Report 2009-2010 to 2014–2015

Freely share, freely use and freely acknowledge the source – © Wale Micaiah

Analysis by: Wale Micaiah

e: walegate@yahoo.com

m: 08078001800

w: www.walemicaiah.com

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