Business performance and government economic flaws

Government is the group of people either elected or selected or appointed by the members of a community to serve and organise the people – their activities and their businesses, primarily to ensure their security and welfare in the community. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) said the difficult business environment in Nigeria has forced many industrialists to shut down their factories and resort to importation. According to the National Bureau of Statistics (NBS), Nigeria recorded a N1.94 trillion trade deficit in 2021.

The performance of businesses, using key performance indicators (KPIs) in Nigeria, in the last decade, has little to be impressed about. Key performance indicators refer to a set of quantifiable and evaluable measurements used to measure a company’s overall long-term performance. These are the factors considered in assessing a business entity which has been in operation for a minimum of ten years. The indicators specifically help to determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector.

These indicators include business financial statements, customer satisfaction assessment, rate of entry of new customers’, rate of return of other businesses in the same sector, value of goodwill and brand, gearing and the ratio of a company’s financial expectation and financial achievement. The financial statements of businesses show the volume of turnover, profit and loss of the businesses, value of the goodwill and the rate of financial growth. Customer satisfaction is a measure of the acceptance level of customers of a business. Rate of entry of new customers is the rate of customers’ acceptance of the business. For a country, business performance will be determined by the number of corporate organisations, balance of trade, rate of new business start-ups, rate of unemployment, etc.

Inflation is eroding the gains of businesses and is a deterrent to business customers’ satisfaction globally! The World Bank has criticised the approach of the federal government of Nigeria in curbing inflation which now stands at about 20 percent! The World Bank stated that the government’s measures in curbing inflation in the economy are too slow. It also said the federal government did not take any concerted action towards curbing inflation in 2021 despite inflation shock pushing an estimated eight million Nigerians below the poverty threshold. Double-digit inflation rates depress economic activities and exacerbate poverty.

Rising food prices are eroding household purchasing power, while basic needs are out of the reach of the common man. These should not be the plight of an oil producing nation with arable land and numerous human and mineral resources. The cause can only be the lack of good leaders! Hard and soft infrastructure provision like roads, electricity, industrial estates, security, policies and principles, enabling laws, warehousing, friendly taxation system, mobility as a service (MaaS), education, housing, medical service and good governance (leadership function) are important for the good performance of businesses in any nation.

The World Economic Forum (WEF) scored Nigeria low in its global infrastructure assessment, placing the country in 125th position out of 137 countries assessed in 2021. Companies like Dunlop, Michelin and others have relocated to Ghana because of the unfavourable business environment in Nigeria, especially lack of electricity, insecurity, high cost of foreign exchange, high cost of raw materials and lack of motorable roads. Foreign direct investors (FDIs) depend highly on the security of their investments climate and culture. The security situation of Nigeria is inimical to investment. COVID-19 pandemic did a great havoc to the business environment of Nigeria starting from March 2020.

This development has made risk managers in Nigeria to urge the federal government to deploy strategic recovery measures that will assuage the sufferings of the masses. In the “Ease of Doing Business in Nigeria” report (2021), corruption was ranked highest in the list of the major bane of doing business, while Nigeria was ranked 131st nation to do business in the world in 2020! Nations like Rwanda, Seychelles, United Kingdom, Greece and Portugal are beginning to see the importance of business in their economic development and are now putting extra efforts to develop it.

Nigeria’s federal government continues to falter on business development programmes because of over-reliance on crude oil revenue. But also, an over-dependence on imported petroleum products has led to the abandonment of the four refineries in Nigeria. There are many things the government can do differently to develop businesses in Nigeria. The first is curbing corruption. Corruption is a double-edged sword that causes the corrupt to have undue advantage over the others and makes the masses to become indolent and see corruption as the only means of survival.

Lack of rule of law, which has set impunity at a record high, is another bane of business development in the country. Poor human capacity development is also a challenge to business development that must be improved if we want to be among the league of business-friendly nations. Generally, the Nigerian masses have low purchasing power because of the high rate of unemployment. There are little signs that the Nigerian government is ready for business!

The urban and regional planning concentric zone model or Burgess model and the sector model or Hoyt model stipulate that in communal land use, areas must be dedicated to different land uses like residential, agricultural, industrial, business usages etc.

While Burgess suggested different land uses to be in different circles (concentric zones), Hoyt suggested different land uses to be in different sectors. These areas must be in specific and relative locations to each other using critical path maps and precision mapping techniques. Though “government has no business being in business,” government’s business is organising the people in a state to succeed in business. Mass establishment of industrial estates are the first step in any business-oriented state. It is only a bad government that will depend solely on foreign goods and products.

The benefits of a government ensuring a good business environment in a state include, employment creation for the people; income earning for individuals, corporate and governments in form of duties, rates, levies, charges and taxes; foreign exchange earnings; provision of manufactured goods and services; wealth creation and provision of corporate social services to the community. No community can thrive without local business activities. No nation with the level of unemployment in Nigeria and without adequate rent and royalty from mineral resources can survive the onslaught of poverty occasioned by high rate of corruption and mass unemployment.