REPORT on the investment climate assessment of Nigerian states conducted by the World Bank indicates that Nigeria remains the most expensive location from where to ship imports or exports.
According to the World Bank, it costs $1,730 or $2,450 to ship a 40ft container for export or import respectively.
Speaking on the report recently in Abuja, Senior Private Sector Development Specialist at the World Bank, Mr. Steve Dimitriyev told newsmen that transport constituted the third most important constraint for investment in the country, accounting for four per cent of annual sales losses.
According to him: “As more than two thirds of all Nigerian inputs are delivered by road the quality of the network is a key issue for the whole economy. Similarly, the efficiency of customs clearances is also a critical factor in transport efficiency. In Nigeria, it takes 46 days to clear imports, the second highest among compared countries.”
He explained that the survey, done closely with the bank’s Nigerian partners, entailed extensive surveys if over 2200 companies in eleven states: Anambra, Abia, Bauchi, Cross River, Enugu, FCT, Kaduna, Kano, Lagos, Ogun, and Sokoto aimed at finding out the constraints to achieving higher productivity and greater competitiveness of Nigerian enterprises, and what the managers of these firms consider the barriers to further growth in investment in the particular states.
He stressed: “The findings from this Investment Climate Assessment reveal a number of important implications for future policymaking of the governments at both federal and state levels, as well as for the international development partners currently preparing new programmes of assistance to Nigeria.”
According to him: “Labour cost in the manufacturing sector in Nigeria is not high. A recent Word Bank report on the investment climate shows that the cost of labour stands at below $200 per month per worker. This is similar or lower than many compared countries except South Africa, Kenya and Brazil. The same report shows, however, that Nigeria has also low labour productivity, at approximately $500 per worker per month, higher only than Indonesia and India. Hence, the unit labour cost (for instance, the share of value added that needs to cover labour cost) in Nigeria is among the highest in all compared countries.”
He continued: “These are the main reasons for such low productivity levels. First, obstacles to competition make it harder for productive firms to enter the market or expand their market share. Unlike other countries, Nigeria’s best firms have not been able to grow larger and take a bigger market share. To allow this to happen, policy-makers need to identify and eliminate the obstacle to competition, by reducing barriers to entry, simplifying taxes, property registration and licenses and facilitating trade across borders.”
He identified the three most important constraints to doing business in Nigeria as power, access to finance and transport.
On power, he stressed: “The electricity crisis is the most important infrastructure bottleneck in Nigeria today. Electricity is the main driver of Nigeria’s indirect costs. Unreliability of electricity costs average 10 per cent of sales per year to a typical Nigerian firm. All types of firms irrespective of size, location, export orientation and ownership complain about electricity shortages. All firms experience power outages and 85 per cent of them own a generator. This is higher than any of Nigeria’s compared countries.”