#1BUSINESS MADE EASY PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) ENABLING BUSINESS ENVIRONMENT SECRETARIAT PRESENTATION OF THE SUBNATIONAL BUSINESS ENVIRONMENT SURVEY - KEY FINDINGS NEC MEETING | JANUARY 2021#2BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) For Council's Consideration and Action For Consideration ■ The key opportunities identified in the Subnational Baseline Environment Survey for improving the business climate across the States of the Federation are presented for council's consideration and approval. For Action Implement report findings through business climate reforms PAGE: 2 NEC MEETING | JANUARY 2021#3BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Content Subnational Baseline Environment Survey - Background Survey Methodology and Objectives Key Findings Next Steps PAGE: 3 NEC MEETING | JANUARY 2021#4BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Subnational Baseline Survey - Background & Approval 鳳 In July 2017, the National Economic Council adopted and approved PEBEC recommendations on the replication of the PEBEC model across State Governments and the implementation of ease of doing business reforms across the States of the Federation. • Led to partnership with States to identify and implement reforms at the subnational. A Subnational Technical Working Group was set up to coordinate the subnational reform implementation process. • . • As a result, Nigeria, for the first time, recorded 100% participation of states in the Right of Reply data verification exercise. Nigeria's Subnational governments continue to play a critical role in business environment. Exclusive responsibility for some areas where urgent reforms are required to unlock the Nigerian economy - property registration, issuance of construction permits. PAGE: 4 NEC MEETING | JANUARY 2021#5BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Subnational Baseline Survey: Background & Approval May 2018 - The NEC approved the development of a baseline Business Environment Survey across all Nigerian states and regions. The key objectives of the report are to: • . • provide a status report on the current attractiveness of States' business climates. provide a baseline on the business climate of each State for State EoDB reform agendas. showcase success stories of SMEs and clusters across States and regions benefiting from an enabling business environment as a result of implemented EoDB reforms. serve as an informative resource document for businesses and investors at home and abroad. Prepare states ahead of the 4-yearly World Bank Subnational Doing Business report on Nigeria. After inauguration in October 2017, the Subnational Technical Working Group commenced work on: Conceptualizing the project • Finalizing the methodology Identifying suitable consultants PAGE: 5 • . The groundwork was completed in Q2 2018 and presented to the NEC for approval. The survey was initially due for release in 2019 but was delayed due to funding constraints and the election cycle. PEBEC MEETING | JANUARY 2021#6BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Cost of Compliance Survey - Background & Approval 鳳 • • ● • The understanding of the subnational baseline will enable evidence-based recommendations on how to improve the business environment and position Nigeria to reap the gains of AfCFTA. The survey was initially due for release in 2019 but was delayed due to funding constraints and the election cycle. The project is being implemented under the Policy Development Facility (PDF) Bridge programme funded by DFID. KPMG emerged as the preferred bidder on the competitive selection and the survey was commissioned in October 2020. PAGE: 6 NEC MEETING | JANUARY 2021#7BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) KPMG Consultants' Profile Ms Ngozi Chidozie Engagement Partner & Partner in KPMG Management Consulting Extensive experience in market studies and transformational projects for SMEs. Leads Nigeria's foremost annual banking industry customer satisfaction survey (BICSS) involving more than 28,000 retail customers and over 4,000 SMES and large corporate organisations Mr Wole Adelokun • Associate Director, Management Consulting at KPMG • Professional experience advising clients across the private and public sector. • Part of the team that developed the Economic Growth and Recovery Plan (ERGP). • Supported the development of the National Industrial revolution plan (NIRP) and the Nigeria Industrial Policy and Competitiveness Advisory Council (NIPCAC). Mr Lanre Adepoju Associate Director & Head, International Development Assistant Services (IDAS) at KPMG Leads KPMG International Development Advisory Services (IDAS) practice. Over 18 years' experience in business advisory services covering public policy advisory and sector reform, and strategy and transformation projects. Ms Adaobi Ikeh • Manager, Management Consulting at KMPG ⚫ Deep expertise in feasibility studies & market assessments. Supported the NIPCAC and the NEC Mr Wale Abioye Project Manager, Management Consulting at KMPG • Deep expertise in feasibility studies and market assessments. • Provided support to the NIPCAC and the NEC on issues requiring State Government intervention. PAGE: 7 NEC MEETING | JANUARY 2021#8BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Content Subnational Baseline Environment Survey - Background Survey Methodology and Objectives Key Findings Next Steps PAGE: 8 NEC MEETING | JANUARY 2021#9BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Framework of the baseline Subnational Business Environment survey Objectives, process and methodology Objectives ■ ■ Home grown Subnational indicators To provide a status report on the attractiveness of states in terms of business climate reforms as a reference resource for SMEs and the general business community. To showcase regional attractiveness backed up by success stories of SMEs across the states. 1 2 區 Infrastructure & security Transparency & accessibility to information Methodology State Proxy: Most commercially viable city within the state No. of Indicators: 4 Homegrown Indicators Data Sources and Instruments: Focus Group Discussions - discussions with representatives of different types of firms in each state Secondary sourcing from NBS, NCCN, NIPC, NEPC,... 3 Regulatory environment 4 Skills and labour Publish the Nigeria Subnational Business Climate Report (baseline edition). PAGE: 9 NEC MEETING | JANUARY 2021#10BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Framework of the baseline Subnational Business Environment survey Objectives, process and methodology What are we measuring? Infrastructure and security Indicator measures: Home grown Subnational indicators 1 3 INFRASTRUCTURE & SECURITY 2 TRANSPARENCY & ACCESSIBILITY TO INFORMATION Electricity - the connection of households to the grid and what percentage of business operating costs are spent on power. Transportation - triggers the introduction of more efficient transportation systems and highlight the importance of transportation cost and accessibility to business. Primary Health Care - highlights the achievements of universal health coverage. REGULATORY ENVIRONMENT SKILLS AND LABOUR Security report of incidents of regular business crime - burglary. PAGE: 10 NEC MEETING | JANUARY 2021#11BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Framework of the baseline Subnational Business Environment survey Objectives, process and methodology What are we measuring? Home grown Subnational indicators 3 INFRASTRUCTURE & SECURITY 2 區 TRANSPARENCY & ACCESSIBILITY TO INFORMATION Transparency & Accessibility to Information Indicator measures: Investment promotion - the existence of an investment promotion agency and the ability of the state government to actively plan to attract investments and spur growth. State Information Structures - existence of a state website that collates government information, processes, taxes and ensures that businesses and investors can find information easily and quickly. REGULATORY ENVIRONMENT SKILLS AND LABOUR PAGE: 11 NEC MEETING | JANUARY 2021#12BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Framework of the baseline Subnational Business Environment survey Objectives, process and methodology What are we measuring? Home grown Subnational indicators 3 INFRASTRUCTURE & SECURITY 2 Regulatory Environment Indicator measures: TRANSPARENCY & ACCESSIBILITY TO INFORMATION Paying Taxes - Greater adoption of technology and Harmonization of taxes/ development of one tax schedule publicizing legal taxes, rates, tariffs and levies payable for State and local governments. Starting a Business business names registration processes; additional steps by states. REGULATORY ENVIRONMENT SKILLS AND LABOUR PAGE: 12 Enforcing Contracts - Small claims courts, speed and ease of judicial process. Land, property acquisition and development cost, procedures and timelines for registering properties. E.g., time for Governor's consent. NEC MEETING | JANUARY 2021#13BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Framework of the baseline Subnational Business Environment survey Objectives, process and methodology What are we measuring? Home grown Subnational indicators INFRASTRUCTURE & SECURITY 2 4 TRANSPARENCY & ACCESSIBILITY TO INFORMATION Skills and Labour Indicator measures: Technical and professional skills - existence of a job centre/labour directory of registered skilled, semi skilled and unskilled persons to reduce time and cost of sourcing employees. REGULATORY ENVIRONMENT SKILLS AND LABOUR PAGE: 13 NEC MEETING | JANUARY 2021#14BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Subnational Business Environment Survey: Project Scope S/N Scope of service (Terms of Reference) 1 Develop a data collection model for future data collection 2 Identify reputable and objective secondary data sources that adequately already covers the areas of interest 3 Provide status report on the attractiveness of states and success stories of SMEs across the regions in 4 Determine and rank constraints to competitiveness in the four homegrown indicator areas across the States of the Federation 5 Identify and rank opportunities for enhancing business competitiveness CO 6 Highlight success stories of regional attractiveness across all 6 geopolitical zones 7 Provide an update on the general business climate condition in the leading commercial city in each state 8 Highlight success stories of SMEs and clusters benefiting from the business environment within the state 9 Compile list of Agencies (both federal and state) most relevant to the four home-grown indicator areas 10 Assess SMART metrics by which we can track improvement of the business environment PAGE: 14 NEC MEETING | JANUARY 2021#15BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Content Subnational Baseline Environment Survey - Background Survey Methodology and Objectives Key Findings Next Steps PAGE: 15 NEC MEETING | JANUARY 2021#16BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Over the last few months, we have evaluated the ease of doing business across the country using the homegrown indicators 998 SME respondents across the country* North West Katsina 157 (16%) Niger North Central North East Jigawa Yo 85 Kano (9%) Bauchi Gomb Kwara 180 (18%) Plateau South West 314 (31%) Osu South n East 134 (13%) An am Delta Bayel sa Rivers Ibo m bra South South 128 Imo (13%) Taraba e Adamawa *Survey respondent distribution aligned with national distribution of SMEs 25+ Case study features highlighting the business environment 40+ H Developed a data collection model for future data collection Determined constraints to competitiveness in the four homegrown indicator areas across the all states Identified opportunities for enhancing business competitiveness In-depth interviews with respondents PAGE: 16 NEC MEETING | JANUARY 2021#17BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Key Findings Infrastructure & Security 1 Power supply remains a key challenge for businesses - SMEs report that only two states provide an average of 10 or more hours of electricity per day 4.94/10 2 Transparency & Accessibility Ineffective communication among agencies involved in multi-agency interactions negatively impact the ease of transactions with them of Information 4.72/10 3 Tax policies need to be clearer, and communication between agencies improved to eliminate multiple taxation 4 4.92/10 In 26 states and the FCT, many SMEs are either not aware of any investment-friendly and funding strategies or say they have not benefited from them Regulatory Environment B Skills & Labour 5 5.32/10 Provision of formal structures such as a talent database would improve access to talent, reduce the cost of hiring talent and improve business effectiveness PAGE: 17 NEC MEETING | JANUARY 2021#18BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Infrastructure & Security 9% Of business revenue is spent on electricity costs It takes an average of 31 days to connect to the national grid and an average of 49 days to set up + 38% of business covered by either or both NHIS and private Health Insurance 17% of businesses are registered with the NHIS nationwide. and receive a meter. 9% Proportion of business income spent on transport costs 5/10 Satisfaction with transport infrastructure. SMEs in the North East report 177 receiving public power for the longest period (7.98 hours per day), while SMEs in the South South report receiving only 5.37 hours of electricity. 27% Reported an occurrence of a security incident (%) H (1+7 26% reported a disruption from state agencies.* SMEs in North East report spending the highest on transport at 11%, while SMEs in the North West report spending the lowest at 7%. Only 13% of SMEs in the North East reported security incidents while, 32% in the South West reported at least one business- related security incident in the last year. *Business disruptions by state agents range from multiple taxation to extortion by policemen, and threats to seal a business premises, to seizure of goods, and to locking a market. PAGE: 18 NEC MEETING | JANUARY 2021#19BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Infrastructure & Security - Key Opportunities Commission private players to use available land to build small-scale solar grids, using locally-produced inputs Design incentives for private companies to invest in alternative transport modes. Incentives may include tax breaks for a defined period of time Roll out cost-effective alternative modes such as affordable rates for trains and public transportation Roll out incentivised registration on the NHIS; accelerate expansion and coverage of state health insurance schemes Adopt an integrated platform that provides a full view of business taxes across all relevant state agencies to avoid multiple taxation PAGE: 19 NEC MEETING | JANUARY 2021#20BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Transparency & Accessibility of Information 10% of businesses are aware of any funding/credit alternatives 4% of businesses have benefitted from investment- friendly strategies. 3 in 5 Businesses are not aware of any state website that collates relevant information on operating a business in the state 4 in 10 businesses report that the information shared on the state website is relevant. 17 Key Opportunities Leverage the network of agencies within the state to disseminate information on the existence, activities and initiatives of the state IPAS Increase awareness of the availability of digital options through offline and online ads, sponsorships, radio jingles, etc. Update website with modifications to regulation, processes, policies, practices, etc. on an ongoing basis Develop alternative financing strategies for businesses with an effective collection strategies 35% of SMEs in the North East reported receiving the greatest support from IPAs, while no business in the South East report receiving any support from IPAs. PAGE: 20 NEC MEETING | JANUARY 2021#21BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) N N N Regulatory Environment 8% of Business Income paid as Tax 00 9 It takes an average of 19 days to receive a TIN and 20 days to receive a TCC. N 21 days Average days to complete business registration N Registering a new business costs #89,000 on the average nationwide. *National average is 20 days to register property with a state government N 6% Proportion of business income spent on court costs 17 SMEs in the North West report spending the highest to register a business, while SMEs in the North East report spending the lowest. The longest time to receive a C-of-O was recorded in the North Central region (94 days), while the shortest time was recorded in the South East (14 days). 6 On average it takes 28 days to initiate & conclude the judicial process. T 49% Businesses nationwide that own their business premises 00 6 It can take as long as 4 months to register property with the state government, compared to less than a week in some states.* PAGE: 21 NEC MEETING | JANUARY 2021#22BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Regulatory Environment - Key Opportunities Enable the end-to-end completion of tax processes via digital platforms Outline additional registration activities required by the state and their costs on the state website and other channels Produce downloadable copies of fliers, pamphlets and checklists that provide holistic information on registering a business in the state Establish a small claims court in every state to reduce the time taken in larger courts Create a digital path for completing the property registration processes end-to-end PAGE: 22 NEC MEETING | JANUARY 2021#23BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Skills & Labour 43% Proportion of talent pool sourced from within the state Key Opportunities Collaborate with developers/founders of talent databases to train and onboard local talent onto the platform to improve ease of access of employers to such talent 74% are satisfied with availability of talent In the South West, 61% of employees are sourced from within the state, while only 16% of employees in the South East are sourced from within the state. Develop and roll out state-sponsored, privately-managed training and capacity building programmes/ institutes for different skillsets for talent Establish/optimise a state vocational training institute to upskill willing talent. Register graduates of the institute on the digital employment platforms PAGE: 23 NEC MEETING | JANUARY 2021#24BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Content Subnational Baseline Environment Survey - Background Survey Methodology and Objectives Key Findings Next Steps PAGE: 24 NEC MEETING | JANUARY 2021#25BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) Next Steps Distill findings for each state Support state governments with articulating initiatives to identify gaps Roll out implementation of initiatives/interventions PAGE: 25 NEC MEETING | JANUARY 2021#26BUSINESS MADE EASY Driven by: PRESIDENTIAL ENABLING BUSINESS ENVIRONMENT COUNCIL (PEBEC) For Council's Consideration and Action For Consideration ■ The key opportunities identified in the Subnational Baseline Environment Survey for improving the business climate across the States of the Federation are presented for council's consideration and approval. For Action Implement report findings and embrace the opportunities identified in the report PAGE: 26 NEC MEETING | JANUARY 2021#27THANK YOU PEBEC/EBES Office: 4th Floor, Nigeria Investment Promotion Commission (NIPC), Plot No. 1181 Aguiyi Ironsi Street, Maitama, Abuja T: +234 803 208 2832 | Email: [email protected] | www.businessmadeeasy.ng | @EBESnigeria facebook.com/EBESnigeria