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Nigeria global competitive index 2014

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Nigeria Global Competitive Index (2013/2014) as released by the World Economic Forum (WEF)

Nigeria Global Competitive Index (2013/2014) as released by the World Economic Forum (WEF)

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  • 1. Global Competitiveness Index 2013-2014 NIGERIA
  • 2. 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?
  • 3. 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.
  • 4. 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 DEVELOPMENT INNOVATION
  • 5. 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).
  • 6. 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.
  • 7. 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
  • 8. The 12 Pillars are broken down into INDICATORS; Find below each Pillar and their respective Indicators….(contd.) TECHNOLOGICAL READINESS MARKET SIZE LABOR MARKET EFFICIENCY FINANCIAL 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 SOPHISTICATION INNOVATION  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
  • 9. DEFINITION OF PILLARS The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. INSTITUTIONS INFRASTRUCTURE Well-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 INNOVATION Innovation 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.
  • 10. GCI BASIC REQUIREMENTS EFFICIENCY ENHANCERS INNOVATION & SOPHISTICATION 3 12 22 9 5 10 8 8 8 7 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
  • 11. GCI 3 COMPONENTS 12 PILLARS 111 INDICATORS
  • 12. 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
  • 13. 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
  • 14. 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 REQUIREMENTS 2014 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.
  • 15. EFFICIENCY ENHANCERS 2014 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.
  • 16. INNOVATION & SOPHISTICATION 2014 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.
  • 17. 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.
  • 18. 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
  • 19. IDENTIFIED COMPETITIVE INDICATORS NIGERIA MACROECONOMIC 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
  • 20. NIGERIA & AFRICA Total country reviewed Nigeria is placed40 19th AFRICA AVERAGE GCI NIGERIA GCI EFFICIENCY ENHANCERS EFFICIENCY ENHANCERS 3.59 115th 3.57 120th INNOVATION & SOPHISTICATION INNOVATION & SOPHISTICATION AFRICA AVERAGE GCI vs NIGERIA GCI BASIC REQUIREMENTS BASIC REQUIREMENTS 3.80 114th 3.40 136th 3.40 116th 3.90 83rd 3.19 107th 3.44 82nd
  • 21. 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 82 115 114 116 107 60 60 60 63 OVERALL BASIC REQUIREMENT EFFICIENCY ENHANCERS INNOVATION & SOPHISTICATION GCI Ranking Nigeria Africa World 3.57 3.40 3.90 3.443.59 3.80 3.40 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
  • 22. 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)
  • 23. 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 AFRICA NIGERIA EFFICIENCY ENHANCERS INNOVATION & SOPHISTICATION BASIC REQUIREMENTS RWANDA 2014 POSITION & GCI
  • 24. Institutions Infrastructure 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
  • 25. Data Source: - The Global Competitiveness Report 2013–2014 Analysis by: Wale Micaiah e: walegate@yahoo.com m: 08078001800 b: walemicaiah.blog.com w. www.statisense.com