Financial Services Cluster in Nigeria
Assessment of the Business Environment in Nigeria
THE NATIONAL DIAMOND
Factor Conditions: Despite Nigeria’s substantial natural resources its infrastructure is inadequate, particularly its road and electricity networks, which are a significant obstacle to economic growth.
Only 30% of the population7 has access to electricity and only 31% of the road network is paved.
Shortcomings in operations and safety have given both the ports and air space a reputation as the most unsafe in the region. Although insufficient, the government has made some progress in addressing these issues. For example, a legal framework was set for private-sector investment in the energy sector; however progress in building new generation plants has been slow. In 2005, US$150m was set aside to improve the airports and new minimum capital requirements for airline companies were set to improve standards. Virgin Nigeria, a privately owned airline was launched to replace the defunct Nigeria Airways. In the telecoms sector, state controlled Nitel was privatized and two new mobile telephony licenses were issued. As a result, subscriptions rose from 450,000 in 2001 to 24.4 million in 20068.
Besides infrastructure, corruption is also a major concern. Nigeria has been ranked in the bottom 20 most corrupt countries in the world9 and despite the prosecution of several high-profile government officials, corruption remains high and it undermines the credibility of the business sector. In terms of human capital, the country has a labor force of 48 million10. The labor is largely unskilled but a core of highly skilled workers exists. The trade union movement (Nigeria Labour Congress), once a powerful force, has been weakened by rising unemployment and poor leadership. In 2005 the government introduced legislation to end the NLC’s monopoly.
Nigeria generally has good relations with neighboring countries and is a member of the Economic Community of West African States (ECOWAS). Although
THE NATIONAL DIAMOND
Factor Conditions: Despite Nigeria’s substantial natural resources its infrastructure is inadequate, particularly its road and electricity networks, which are a significant obstacle to economic growth.
Only 30% of the population7 has access to electricity and only 31% of the road network is paved.
Shortcomings in operations and safety have given both the ports and air space a reputation as the most unsafe in the region. Although insufficient, the government has made some progress in addressing these issues. For example, a legal framework was set for private-sector investment in the energy sector; however progress in building new generation plants has been slow. In 2005, US$150m was set aside to improve the airports and new minimum capital requirements for airline companies were set to improve standards. Virgin Nigeria, a privately owned airline was launched to replace the defunct Nigeria Airways. In the telecoms sector, state controlled Nitel was privatized and two new mobile telephony licenses were issued. As a result, subscriptions rose from 450,000 in 2001 to 24.4 million in 20068.
Besides infrastructure, corruption is also a major concern. Nigeria has been ranked in the bottom 20 most corrupt countries in the world9 and despite the prosecution of several high-profile government officials, corruption remains high and it undermines the credibility of the business sector. In terms of human capital, the country has a labor force of 48 million10. The labor is largely unskilled but a core of highly skilled workers exists. The trade union movement (Nigeria Labour Congress), once a powerful force, has been weakened by rising unemployment and poor leadership. In 2005 the government introduced legislation to end the NLC’s monopoly.
Nigeria generally has good relations with neighboring countries and is a member of the Economic Community of West African States (ECOWAS). Although