Firms
in Nigeria
face atypically very high transaction costs which make them highly
uncompetitive. The sources of the high transaction costs and inefficiency are
many and varied, and from diverse surveys, many factors have been highlighted.
The
private sector firms suffer from high costs and lack of competitiveness.
Relative to other African countries (evident from a survey of international
businesses working in Africa), Nigerian firms
face atypical challenges in the following areas:
• Infrastructure:
Roads, railways, ports and airports were given the least satisfactory
assessment of twenty-four African countries by the business community;
• Customs: The
average customs clearance time reported by firms is 25 days, putting Nigeria
twenty-second out of 24 countries surveyed;
• Telecommunications:
Nigeria
is ranked 20 out of 24 African countries (twenty-second in internet access and
twenty-third in terms of telephone price);
• Hidden import barriers: lack of availability of export
credit, multiple licensing and regulation requirements and the overvalued exchange
rate reduced Nigeria’s rating in these areas by businesses to 23 (out of 24);
• Security: Negative perceptions of security and organized
crime remain strongly evident among businesses, with Nigeria ranked twenty-third out of
24 countries;
• Education: Quality
of university education is seen by businesses as among the lowest quintile in
the sample of countries; and
• Policy: Finally, Nigeria was seen as the third most
problematic country in the sample in terms of policy volatility.
There
appears to be a trend in Nigeria
toward centralization of industry. The production of consumer goods seems to be well
establ18hed. But there is a growing need, particularly in the
urban centers, for service industries. But right now the government is mainly
interested in the diversification and increase of industry and the introduction
of heavy industry. The latter has been embodied in the
Six-Year-Development Plan. This plan was
inaugurated in 1962. Its expressed aim is a diversified economy with sufficient
income and savings to finance its own rate of growth. In order to achieve the
4% aimed at, about 15% of the estimated gross national product will have to go
into productive sectors of the economy. Of a total planned expenditure of 676.8
million pounds, the largest amounts will be spent on transportation (including
ports) and electricity.
Three
multi-purpose dams will be built; the first at Kainji on the Niger, the
other two at Jebba and Shiroro Gorge. Another large amount has been allocated
for trade and industry. The two chief projects will be an iron and steel mill
and an oil refinery. The mill is expected to be in operation by 1966 at the
earliest. The refinery is now under construction at Port Harcourt. Since Nigeria can supply one one-half of the money
needed, she hopes to get the rest from the U. S. and other friendly nations, the
International Bank for Reconstruction, and from private investors. It is
hoped that once the public improvements have begun, that private foreign
capital will be attracted more readily. Nigeria's economic situation has
shown definite improvement in recent years.
The trade deficit was sharply
reduced in 1962, and the production of all major exports increased. Although
not impressive yet, the number of factories is increasing steadily. And perhaps most
important of all is the fact that the government continues to be stable. Nigeria hopes
to be in a position by 1977, to be able to generate capital to the extent that
foreign assistance will not be needed to finance economic growth. Foreign observers
generally say that it will take longer than this, perhaps a generation. But no
one has said that it cannot be done.