Global ompetitiveness Index - Nigeria

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Index:Index:Index:Index:

Focus on Nigeria Focus on Nigeria Focus on Nigeria Focus on Nigeria

The World Economic Forum (WEF) Geneva,

Switzerland produces a yearly report to measure

countries and regions competitiveness among

Nations of the world using Global Competitiveness

Index (GCI)

The GCI was launched in 2005 and currently in its 7th

year, it has identified 12 Pillars that measures and

contribute to Nations’ Competitiveness.

This presentation focuses on Nigeria’s GCI for the

purpose of knowing where we are currently

competitive and how we can compete globally.

Data Source: WEF_GlobalCompetitivenessReport_2011 - 2012

The 12 Pillars of GCIThe 12 Pillars of GCIThe 12 Pillars of GCIThe 12 Pillars of GCI� Institutions

� Infrastructure

� Macroeconomic Environment

� Health and Primary Education

� Higher Education & Training

� Goods Market Efficiency

� Labor Market Efficiency

� Financial Market Development

� Technological Readiness

� Market Size

� Business Sophistication

� Innovation

BASIC

REQUIREMENTS

EFFICIENCY

ENHANCERS

INNOVATION &

SOPHISTICATION

FACTORS

1: Institutions1: Institutions1: Institutions1: InstitutionsThe institutional environment is determined by the legal and

administrative framework within which individuals, firms, and

governments interact to generate income and wealth in the economy.

Overall, Nigeria ranks 111 of 142

countries in Institutions, only with

competitive advantages in Burden of

government regulation and Strength

of investor protection.

The lack of strong Institutions lead to: � Excessive bureaucracy and red tape

� Overregulation

� Corruption

� Dishonesty in dealing with public

contracts

� Lack of transparency and

trustworthiness

2: Infrastructure2: Infrastructure2: Infrastructure2: InfrastructureExtensive and efficient infrastructure is critical for ensuring the

effective functioning of the economy, as it is an important factor

determining the location of economic activity and the kinds of

activities or sectors that can develop in a particular economy.

Overall, Nigeria ranks 135 of 142

countries in Infrastructure, with no

competitive advantage in any of it’s

metrics.

It is impossible for a Nation to experience

economic turn-around without:

� Electricity (constant supply)

� Transportation and

� Communication - telecoms

Nigeria is about the only country of her status without an efficient rail system!

3: Macroeconomic Environment3: Macroeconomic Environment3: Macroeconomic Environment3: Macroeconomic EnvironmentThe stability of the macroeconomic environment is important for

business and, therefore, is important for the overall competitiveness

of a country. The government cannot provide services efficiently if it

has to make high-interest payments on its past debts.

Overall, Nigeria ranks 121 of 142 countries in Macroeconomic

Environment, with competitive advantages in Gross national savings, %

GDP and General government debt, % GDP.

4: Health 4: Health 4: Health 4: Health and Primary and Primary and Primary and Primary EducationEducationEducationEducationA 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. Poor health leads to significant costs to business, as sick workers

are often absent or operate at lower levels of efficiency. In addition to

health, this pillar takes into account the quantity and quality of basic

education received by the population, which is increasingly important in

today’s economy.

Overall, Nigeria ranks 140 of 142

countries in Health and Primary

Education, with no competitive

advantage in any of it’s metrics.

The Health of a Nation, is her Wealth!

5: Higher 5: Higher 5: Higher 5: Higher Education & TrainingEducation & TrainingEducation & TrainingEducation & TrainingQuality higher education and training is crucial for economies that want to

move up the value chain beyond simple production processes and products.

In particular, today’s globalizing economy requires countries to nurture

pools of well-educated workers who are able to adapt rapidly to their

changing environment and the evolving needs of the production system.

This pillar measures secondary and tertiary enrollment rates as well as the

quality of education as evaluated by the business community.

Overall, Nigeria ranks 114 of 142

countries in Higher Education &

Training, with no competitive

advantage in any of it’s metrics.

Similarly, the Wealth of a Nation, is highly dependent on

her Citizens’ level of education!

6: Goods 6: Goods 6: Goods 6: Goods Market EfficiencyMarket EfficiencyMarket EfficiencyMarket EfficiencyCountries 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. The best possible environment for the exchange of

goods requires a minimum of impediments to business activity through

government intervention.

Overall, Nigeria ranks 73 of 142

countries in Goods Market Efficiency,

with competitive advantages in

Extent of market dominance, Extent

and effect of taxation and Total tax

rate.

7: Labor 7: Labor 7: Labor 7: Labor Market EfficiencyMarket EfficiencyMarket EfficiencyMarket EfficiencyThe efficiency and flexibility of the labor market are critical for ensuring that

workers are allocated to their most efficient use in the economy and

provided with incentives to give their best effort in their jobs. Labor markets

must therefore have the flexibility to shift workers from one economic

activity to another rapidly and at low cost, and to allow for wage

fluctuations without much social disruption.

Overall, Nigeria ranks 73 of 142

countries in Labor Market Efficiency,

with competitive advantages in

Flexibility of wage determination,

Rigidity of employment index and

Hiring and firing practices.

Efficient labor markets ensure:� Clear relationship between worker incentives

� Promotion meritocracy at the workplace

� Equity in the business environment between women and men

8: Financial 8: Financial 8: Financial 8: Financial Market DevelopmentMarket DevelopmentMarket DevelopmentMarket DevelopmentAn 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. It channels resources to those entrepreneurial or

investment projects with the highest expected rates of return rather than to

the politically connected.

Overall, Nigeria ranks 86 of 142

countries in Financial Market

Development, with competitive

advantages in Financing through

local equity market and Legal

rights index.

Trust and Transparency!

9: Technological 9: Technological 9: Technological 9: Technological ReadinessReadinessReadinessReadinessIn today’s globalized world, technology is increasingly essential for firms to

compete and prosper. The technological readiness pillar measures the agility

with which an economy adopts existing technologies to enhance the

productivity of its industries, with specific emphasis on its capacity to fully

leverage ICT in daily activities and production processes for increased

efficiency and competitiveness.

Overall, Nigeria ranks 106 of 142

countries in Technological Readiness,

with no competitive advantage.

There is high correlation between infrastructure & Technology!

10: Market 10: Market 10: Market 10: Market SizeSizeSizeSizeThe size of the market affects productivity since large markets allow firms to

exploit economies of scale. In the era of globalization, international markets

have become a substitute for domestic markets, especially for small

countries. There is vast empirical evidence showing that trade openness is

positively associated with growth.

Overall, Nigeria ranks 34 of 142

countries in Market Size, with

competitive advantages in the only

two metrics - Domestic market size

index and Foreign market size index.

Population does matter!

11: Business 11: Business 11: Business 11: Business SophisticationSophisticationSophisticationSophisticationBusiness 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. These factors are particularly

important for countries at an advanced stage of development, when, to a

large extent, the more basic sources of productivity improvements have

been exhausted.

Overall, Nigeria ranks 64 of 142

countries in Business Sophistication,

with competitive advantages in State

of cluster development and

Willingness to delegate authority.

12: Innovation12: Innovation12: Innovation12: InnovationInnovation is particularly important for economies as they approach the

frontiers of knowledge and the possibility of integrating and adapting

exogenous technologies tends to disappear.

Overall, Nigeria ranks 82 of 142

countries in Innovation, with

competitive advantages in Company

spending on R&D.

Summary GCI RankSummary GCI RankSummary GCI RankSummary GCI RankNo. Pillar Rank/142 Score* G.A.S*

1 Institutions 111 3.31 4.04

2 Infrastructure 135 2.21 3.98

3 Macroeconomic Environment 121 3.96 4.81

4 Health and Primary Education 140 3.28 5.45

5 Higher Education & Training 114 3.18 4.10

6 Goods Market Efficiency 73 4.18 4.23

7 Labor Market Efficiency 70 4.36 4.33

8 Financial Market Development 86 3.89 4.07

9 Technological Readiness 106 3.08 3.88

10 Market Size 34 4.59 3.69

11 Business Sophistication 64 3.96 3.99

12 Innovation 82 3.01 3.36

Score – measured on a scale of 1 – 7; the higher the better G.A.S – Average of Score for all 142 countries

Apparently, the only competitive advantage Nigeria have is

in Market Size which is partly due to her population size.

The farther we are from the GAS the more precarious that

sector of the economy is; Infrastructure being the worst of

all requiring urgent attention.

No. Pillar Rank/142 Score* G.A.S*

1 Institutions 111 3.31 4.04

2 Infrastructure 135 2.21 3.98

3 Macroeconomic Environment 121 3.96 4.81

4 Health and Primary Education 140 3.28 5.45

5 Higher Education & Training 114 3.18 4.10

6 Goods Market Efficiency 73 4.18 4.23

7 Labor Market Efficiency 70 4.36 4.33

8 Financial Market Development 86 3.89 4.07

9 Technological Readiness 106 3.08 3.88

10 Market Size 34 4.59 3.69

11 Business Sophistication 64 3.96 3.99

12 Innovation 82 3.01 3.36

A realistic goal for Nigeria would be:

- Strive to reach get those pillars with less than 3.5 score

to 3.5 which is the average of the scale (1 – 7)

- Next is to target the respective GAS value for each Pillar

- Then we can decided to reach for higher marks

3.5

StatiSense ® - Wale Micaiah ©

Freely share, freely use and freely acknowledge the

source – © Wale Micaiah

Data source:

- The World Economic Forum https://www.weforum.org/

- WEF_GlobalCompetitivenessReport_2011 - 2012

Analysis by: WaleWaleWaleWale MicaiahMicaiahMicaiahMicaiah

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