Top Banner
Global Competitiveness Index 2013 - 2014 NIGERIA
25

Nigeria global competitive index 2014

Aug 17, 2014

Download

Economy & Finance

statisense

Nigeria Global Competitive Index (2013/2014) as released by the World Economic Forum (WEF)
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Nigeria global competitive index 2014

Global Competitiveness

Index 2013-2014

NIGERIA

Page 2: Nigeria global competitive index 2014

The World Economic Forum

(WEF) measures Nation’s

competitiveness using 12 Pillars.

How Competitive is Nigeria(and Nigerians) compared with Africa

and the rest of the World?

Page 3: Nigeria global competitive index 2014

WEF define COMPETITIVENESS as

the set of institutions, policies, and

factors that determine the level of

PRODUCTIVITY of a country.

The level of PRODUCTIVITY, in turn, sets the

LEVEL OF PROSPERITY that can be reached by

an economy. The productivity level also

determines the rates of return obtained by

investments in an economy, which in turn are

the fundamental drivers of its growth rates. In

other words, a more competitive economy is one

that is likely to grow faster over time.

Page 4: Nigeria global competitive index 2014

WEF uses 12 Pillars derived from 3 COMPONENTS to assess

the competitiveness of Nations:

Global Competitiveness Index (GCI)

BASIC

REQUIREMENTS

EFFICIENCY

ENHANCERS

INNOVATION &

SOPHISTICATION

INSTITUTIONS

HIGHER EDUCATION

AND TRAINING

TECHNOLOGICAL

READINESS

INFRASTRUCTURE

GOODS MARKET

EFFICIENCY

MARKET SIZE

MACROECONOMIC

ENVIRONMENT

LABOR MARKET

EFFICIENCY

BUSINESS

SOPHISTICATION

HEALTH AND

PRIMARY EDUCATION

FINANCIAL MARKET

DEVELOPMENTINNOVATION

Page 5: Nigeria global competitive index 2014

These 3 COMPONENTS are also regarded as being In line with

well-known Economic Theory of Stages of Development:

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).

Page 6: Nigeria global competitive index 2014

The GCI takes the Stages of Development into account by attributing higher

relative weights to those pillars that are more relevant for an economy

given its particular stage of development. That is, although all 12 pillars

matter to a certain extent for all countries, the relative importance of each

one depends on a country’s particular stage of development.

To implement this concept, the pillars are organized into three

COMPONENTS, each critical to a particular stage of development.

The innovation & sophistication factors COMPONENT includes

the pillars critical to countries in the innovation-driven stage.

FACTOR-

DRIVEN

STAGE

EFFICIENCY-

DRIVEN

STAGE

INNOVATION

-DRIVEN

STAGE

The basic requirements

COMPONENT groups

those pillars most critical

for countries in the

factor-driven stage.

The efficiency enhancers COMPONENT includes those

pillars critical for countries in the efficiency-driven stage.

Page 7: Nigeria global competitive index 2014

The 12 Pillars are broken down into INDICATORS; Find below

each Pillar and their respective Indicators.

INFRASTRUCTURE

Quality of overall infrastructure

Quality of roads

Quality of railroad infrastructure

Quality of port infrastructure

Quality of air transport infrastructure

Available airline seat kms/week, millions

Quality of electricity supply

Mobile telephone subscriptions/100 pop

Fixed telephone lines/100 pop

INSTITUTIONS Property rights

Intellectual property protection

Diversion of public funds

Public trust in politicians

Irregular payments and bribes

Judicial independence

Favoritism in decisions of government officials

Wastefulness of government spending

Burden of government regulation

Efficiency of legal framework in settling disputes

Efficiency of legal framework in challenging regs

Transparency of government policymaking

Gov’t services for improved business

performance

Business costs of terrorism

Business costs of crime and violence

Organized crime

Reliability of police services

Ethical behavior of firms

Strength of auditing and reporting standards

Efficacy of corporate boards

Protection of minority shareholders’ interests

Strength of investor protection, 0–10 (best)

Government budget balance, %

GDP

Gross national savings, % GDP

Inflation, annual % change

General government debt, % GDP

Country credit rating, 0–100 (best)

MACROECONOMIC

ENVIRONMENT

HEALTH AND

PRIMARY EDUCATION

Business impact of malaria

Malaria cases/100,000 pop

Business impact of tuberculosis

Tuberculosis cases/100,000 pop

Business impact of HIV/AIDS

HIV prevalence, % adult pop

Infant mortality, deaths/1,000 live births

Life expectancy, years

Quality of primary education

Primary education enrollment, net %

HIGHER EDUCATION

AND TRAINING

GOODS

MARKET

EFFICIENCY

Secondary education enrollment, gross % Tertiary education enrollment, gross % Quality of the educational system Quality of math and science education Quality of management schools Internet access in schools Availability of research and training

services Extent of staff training

Prevalence of foreign ownership Business impact of rules on FDI Burden of customs procedures Imports as a percentage of GDP Degree of customer orientation Buyer sophistication

Intensity of local competition Extent of market dominance Effectiveness of anti-monopoly policy Extent and effect of taxation Total tax rate, % profits

No procedures to start a business No days to start a business Agricultural policy costs Prevalence of trade barriers Trade tariffs, % duty

Page 8: Nigeria global competitive index 2014

The 12 Pillars are broken down into INDICATORS; Find below

each Pillar and their respective Indicators….(contd.)

TECHNOLOGICAL

READINESS

MARKET SIZE

LABOR MARKET

EFFICIENCYFINANCIAL MARKET

DEVELOPMENT

Cooperation in labor-employer relations

Flexibility of wage determination

Hiring and firing practices

Redundancy costs, weeks of salary

Pay and productivity

Reliance on professional management

Brain drain

Women in labor force, ratio to men

Availability of financial services

Affordability of financial services

Financing through local equity market

Ease of access to loans

Venture capital availability

Soundness of banks

Regulation of securities exchanges

Legal rights index, 0–10 (best)

• Availability of latest technologies

• Firm-level technology absorption

• FDI and technology transfer

• Individuals using Internet, %

• Broadband Internet subscriptions/100 pop

• Int’l Internet bandwidth, kb/s per user*

• Mobile broadband subscriptions/100 pop

Domestic market size index, 1–7 (best)

Foreign market size index, 1–7 (best)

BUSINESS

SOPHISTICATIONINNOVATION

Local supplier quantity

Local supplier quality

State of cluster development

Nature of competitive advantage

Value chain breadth

Control of international distribution

Production process sophistication

Extent of marketing

Willingness to delegate authority

Capacity for innovation

Quality of scientific research institutions

Company spending on R&D

University-industry collaboration in R&D

Gov’t procurement of advanced tech

products

Availability of scientists and engineers

PCT patents, applications/million pop

Each INDICATOR are measured on a scale of 1 – 7; the higher the better

Page 9: Nigeria global competitive index 2014

DEFINITION OF PILLARSThe institutional environment is determined by the legal and administrative framework

within which individuals, firms, and governments interact to generate wealth.INSTITUTIONS

INFRASTRUCTUREWell-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.

MACROECONOMIC

ENVIRONMENT

The stability of the macroeconomic environment is important for business and, therefore,

is significant for the overall competitiveness of a country

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.

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.

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.

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.LABOR MARKET

EFFICIENCY

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.

TECHNOLOGICAL

READINESS

MARKET SIZEThe size of the market affects productivity since large markets allow firms to exploit economies of scale.

BUSINESS

SOPHISTICATION

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.

In today’s globalized world, technology is increasingly essential for firms to compete and prosper.

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.

Page 10: Nigeria global competitive index 2014

GCI

BASIC

REQUIREMENTS

EFFICIENCY

ENHANCERS

INNOVATION &

SOPHISTICATION

3 12

22

9

5

10

8

887

9

7

111

COMPONENTS PILLARS INDICATORS

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 2

16

Page 11: Nigeria global competitive index 2014

GCI3 COMPONENTS

12

PILLARS

111

INDICATORS

Page 12: Nigeria global competitive index 2014

GLOBAL COMPETITIVE INDEX 2014 REPORT

Total country reviewed in 2014 is 148, against 44 in 2013

The top three countries in the world in terms of Global

competitiveness are Switzerland (5.67), Singapore (5.61),

Finland (5.54)

The remainder of the top ten are Germany (5.51), United

States (5.48), Sweden (5.48), Hong Kong SAR (5.47),

Netherlands (5.42), Japan (5.40), United Kingdom (5.37)

The top 3 African countries are Mauritius (4.45), South

Africa (4.37), Rwanda (4.21)

Mauritius is ranked 45th in the World, South Africa (69th),

Rwanda (66th)

Of the 21 countries that scored less than GCI of 3.5

(which is the mid of 7), except Pakistan, Venezuela, Timor-

Leste, Myanmar, Haiti and Yemen, all are African countries

Page 13: Nigeria global competitive index 2014

Total Country in 2014 Total Country in 2013148 144

Global Competitive

Index 2014

120th

3.57

115th

3.67

BASIC REQUIREMENTS BASIC REQUIREMENTS

EFFICIENCY

ENHANCERS

EFFICIENCY

ENHANCERS

136th

3.40

130th

3.52

83rd

3.90

78th

3.96

INNOVATION &

SOPHISTICATION

82nd

3.44

73rd

3.53

NIGERIA

Global Competitive

Index 2013

INNOVATION &

SOPHISTICATION

Page 14: Nigeria global competitive index 2014

As shown, Nigeria has lost competitiveness in each category. Which

of the Pillars are most affected?

BASIC

REQUIREMENTS

1st Pillar: Institutions

2nd Pillar: Infrastructure

3rd Pillar: Macroeconomic Environment

4th Pillar: Health and Primary Education

BASIC REQUIREMENTS2014 2013

Rank Score Rank Score

INSTITUTIONS 129 3.08 117 3.33

INFRASTRUCTURE 135 2.28 130 2.29

MACROECONOMIC ENVIRONMENT 46 5.25 39 5.17

HEALTH AND PRIMARY EDUCATION 146 3.20 142 3.04

The Ranking is a function of Country’s performance based on number of countries

reviewed, however, the Score is irrespective and therefore carries more weight as

regards Nigeria’s competitiveness.

Pillar 1: INSTITUTIONS and Pillar 4: HEALTH & PRIMARY EDUCATION accounted for

the most loss of 0.25 and 0.16 points respectively.

This shows that our INSTITUTIONS are getting WEAKER and the QUALITY of our

HEALTH & PRIMARY EDUCATION systems are dropping.

Page 15: Nigeria global competitive index 2014

EFFICIENCY ENHANCERS2014 2013

Rank Score Rank Score

HIGHER EDUCATION & TRAINING 120 3.03 113 3.31

GOODS MARKET EFFICIENCY 93 4.09 88 4.16

LABOR MARKET EFFICIENCY 52 4.48 55 4.50

FINANCIAL MARKET DEVELOPMENT 66 4.04 68 4.07

TECHNOLOGICAL READINESS 108 3.08 112 3.08

MARKET SIZE 32 4.66 33 4.63

EFFICIENCY

ENHANCERS

5th Pillar: Higher Education & Training

6th Pillar: Goods Market Efficiency

7th Pillar: Labor Market Efficiency

8th Pillar: Financial Market Development

9th Pillar: Technological Readiness

10th Pillar: Market Size

Pillar 5: HIGHER EDUCATION & TRAINING, is where we experience the highest

weakness. It is a direct effect of the lack of QUALITY of our PRIMARY EDUCATION

System. Our TECHNOLOGY READINESS remains as it was in 2013.

Also, Pillar 10: MARKET SIZE is the only Pillar where our current

Score surpass that of the previous year.

Page 16: Nigeria global competitive index 2014

INNOVATION & SOPHISTICATION2014 2013

Rank Score Rank Score

BUSINESS SOPHISTICATION 75 3.89 66 3.96

INNOVATION 100 3.00 78 3.10

INNOVATION &

SOPHISTICATION 11th Pillar: Business Sophistication

12th Pillar: Innovation

Nigeria dropped on both INDICATORS

1st Pillar: Institutions

4th Pillar: Health and Primary Education

5th Pillar: Higher Education & Training

These 3 Pillars are key contributors to a Nation’s

competitiveness; evidently as shown in the analysis, Nigeria

is weak on these Pillars and they amount to Nigeria not

being one of the Competitive economy in the World.

Page 17: Nigeria global competitive index 2014

STAGE OF DEVELOPMENT

NIGERIA

FACTOR-

DRIVEN

STAGE

Based on the

foregoing, Nigeria is

currently a FACTOR-

DRIVEN economy;

primarily dependent

on UNSKILLED

LABOR and

NATURAL

RESOURCES.

Page 18: Nigeria global competitive index 2014

THE MOST PROBLEMATIC

FACTORS FOR DOING BUSINESS

NIGERIA

1) Inadequate supply of

infrastructure

2) Corruption

3) Access to financing

4) Policy instability

5) Inefficient government

bureaucracy

6) Inadequately educated

workforce

7) Poor work ethic in national

labor force

8) Crime and theft

9) Tax regulations

10)Inflation

11)Insufficient capacity to

innovate

12)Foreign currency

regulations

13)Tax rates

14)Government

instability/coups

15)Poor public health

16)Restrictive labor

regulations

Page 19: Nigeria global competitive index 2014

IDENTIFIED COMPETITIVE INDICATORS

NIGERIAMACROECONOMIC

ENVIRONMENT

Government budget balance, % GDP

Gross national savings, % GDP

General government debt, % GDP

HIGHER EDUCATION

AND TRAINING

Extent of staff training

LABOR MARKET

EFFICIENCY

Hiring and firing practices

Effect of taxation on incentives to work

Country capacity to attract talent

FINANCIAL MARKET

DEVELOPMENT

MARKET SIZE

Legal rights index

Domestic market size index

Foreign market size index

GDP (PPP$ billions)

There are the INDICATORS for which Nigeria achieved a rating of 50th or better

Page 20: Nigeria global competitive index 2014

NIGERIA & AFRICATotal country reviewed Nigeria is placed40 19th

AFRICA AVERAGE GCI NIGERIA GCI

EFFICIENCY

ENHANCERS

EFFICIENCY

ENHANCERS

3.59

115th

3.57

120th

INNOVATION &

SOPHISTICATIONINNOVATION &

SOPHISTICATION

AFRICA AVERAGE GCI vs NIGERIA GCI

BASIC REQUIREMENTS BASIC REQUIREMENTS3.80

114th

3.40

136th

3.40

116th

3.90

83rd

3.19

107th

3.44

82nd

Page 21: Nigeria global competitive index 2014

Nigeria performed relatively better than Africa average (Ranking &

Score) in terms of EFFICIENCY ENHANCERS and INNOVATION &

SOPHISTICATION, however, in BASIC REQUIREMENTS (Institutions,

Infrastructure, Macroeconomic Environment, Health and Primary

Education), Nigeria is placed 136th of 144 in the World and 32nd of 40

in Africa.

120

136

83 82

115 114 116107

60 60 60 63

OVERALL BASIC REQUIREMENT

EFFICIENCY ENHANCERS

INNOVATION & SOPHISTICATION

GCI Ranking

Nigeria Africa World

3.57 3.40 3.90

3.44 3.59 3.803.40 3.19

4.40 4.80

4.28 3.92

OVERALL BASIC REQUIREMENT

EFFICIENCY ENHANCERS

INNOVATION & SOPHISTICATION

GCI Score

Nigeria Africa World

Ranking is over 144 Countries Score is from 1 – 7, the

higher the better

Page 22: Nigeria global competitive index 2014

AFRICA SUMMARY The top 3 rated countries in Africa are; Mauritius,

South Africa, and Rwanda

The top 3 rated countries in provision BASIC

REQUIEMENTS are; Mauritius (42nd), Seychelles

(52nd), and Botswana (66th)

The top 3 rated countries in provision

EFFICIENCY ENHANCERS are; South Africa

(34th), Mauritius (61st), and Kenya (73rd)

The top 3 rated countries in provision

INNOVATION AND SOPHISTICATION are;

South Africa (37th), Kenya (53rd), Mauritius (57th)

Page 23: Nigeria global competitive index 2014

TOP 3 COUNTRIES - AFRICA

3rd

4.21

19th

3.57

4.55 3.40

3.73 3.90

3.65 3.44

MAURITIUS

2nd

4.37

4.24

4.54

4.06

1st

4.45

4.97

4.18

3.76

SOUTH

AFRICANIGERIA

EFFICIENCY

ENHANCERS

INNOVATION &

SOPHISTICATION

BASIC REQUIREMENTS

RWANDA

2014 POSITION & GCI

Page 24: Nigeria global competitive index 2014

InstitutionsInfrastructure

Macroeconomic Environment

Health & Pry Education

Higher Education & Training

Goods Market Efficiency

Labor Market Efficiency

Financial Market Development

Technological Readiness

Market Size

Business Sophistication

Innovation

1

2

3

4

5

6

7

Page 25: Nigeria global competitive index 2014

Data Source:

- The Global Competitiveness Report 2013–2014

Analysis by: Wale Micaiah

e: [email protected]

m: 08078001800

b: walemicaiah.blog.com

w. www.statisense.com