Nigeria dropped from the second-best country to invest in Africa in 2014 to number fourteen in 2021, the recent data from Rand Merchant Bank has revealed. The country dropped from its 5.62 scores in 2014 to a 5.13 score in 2021.
However, despite the drop-in point for the country in the latest ranking, trend analysis shows Nigeria has had it worse and the 2021 scores mark an increase in ranking. Nigeria moved from 4.1 in the 2020 ranking to 5.1 in the latest ranking.
In the latest ranking released by the RMB, Egypt moved sixth place in 2014 to first in 2021. Its fellow North African country, Morocco, moved from fourth place to second place. Rwanda moved from ninth in 2014 to fourth in 2021.
South Africa and Ghana also dropped places in the latest ranking compared to their ranks in 2014. Whereas South Africa dropped from first to third, Ghana dropped from third to sixth.
Among the top 10 countries, four are from Eastern Africa, while North, West, and Southern Africa had two countries each.
Nigeria is recognized to have significant growth potentials, which have attracted great investments over the years. This is based on its population size and the presence of natural resources.
However, the country is exposed to significant risk due to its broad economic activities. The heavy dependence on oil poses a significant threat to the country’s finances as the country has no control over the price of crude oil.
Also, the country’s bureaucratic approach to accepting and implementing reforms and the constant security challenges across all its 6 geo-political zones unsettled the country tremendously. Other factors identified are poverty, mass unemployment, and a persistent double-digit inflation figure. This has affected the different aspects of the economy, resulting in the country’s drop in rank.
In the 2021 report, Nigeria scored 4.3 on a scale of 10 in the operating environment index. This score shows a below-average performance, ranking 30 out of 54 African nations. Though the performance is considered low, it is an improvement from the 3.9 score in the previous year.
The operating environment comprises various components whose performance determines the final score. These are global competitiveness, economic freedom index, and corruption perception index. Nigeria scored 51.6 on a 100 scale for the economic freedom index. On the corruption perception index, the country scored 3.4. While it recorded an average performance in the economic freedom index, its performance on the corruption perception index was poor.
Nigeria scored 6.2 on the economic activity index, ranking 12th in Africa. This score comprised a good 8.7 point on market size and below-average performance on other indices. It recorded a 4.4 point on the growth index and a fiscal score of 4.2 points.
The low score on fiscal stability was primarily on the country’s per capita expenditure. Nigeria recorded an above-average rating (6 -7) on the expenditure per capita score. This greatly affected the fiscal score despite low debt-to-GDP and expenditure-to-GDP ratings. On the two indexes, the country fell between the 2-3 points category.
The country’s healthcare is considered inadequate by the ranking. Facts on the country’s healthcare show that Nigeria has six medical personnel for every 10,000 persons (0.3 per 1000 persons). The country ranked 27th out of 34 countries assessed.
Nigeria not only has poor medical personnel-to-population statistics, but it also spends very little on health. Nigeria’s health expenditure per capita is less than $100 ($84). This affects the country’s overall ranking in the year’s report. A dataphyte report had earlier pointed out that per the 2022 budget, provision for healthcare per capita is N 3,453.
Broadly, three sectors are considered to have a great influence on economic activities – transport, tourism, and trade. Transportation enhances logistics and the efficient supply of goods and services. Tourism is described to have a relative impact on the economy.
It is assumed that the larger the tourism sector relative to the size of the economy, the more vulnerable the economy would be.
The gross added value of the transport and tourism sector to the GDP in the year under review was 31.1%.
Trade makes up the last part of the economic activities scores. It was believed that a great reliance on trade relative to the economic size exposes the country to a downturn. Nigeria’s primary export remains primary products and manufactured goods are its primary import. Nigeria recorded a negative net export percentage to GDP. The country fell between the -15 to -20 category of the ranking.
All the above indices played a key role in Nigeria’s overall ranking, dropping from second in 2014 to number fourteen in 2021.