A World Bank investment assessment report which assessed the experiences of over 3,000 businesses in 26 states of Nigeria stated that about 80 per cent of businesses in the country paid bribes to government officials in 2011. However, the World Bank also said Nigeria is the most attractive investment destination in Africa; despite the high rate of corruption and other challenges in the country.
The report which was presented in Abuja by Mr. Wong, the Lead Private Sector Development specialist at the World Bank also revealed that the biggest problems entrepreneurs face in Nigera are epileptic power supply, access to finance and corruption.
Mr. Wong said, "The report showed that companies in the manufacturing sector lost 2.3 per cent of their revenue to corruption while those in the service sector lost about 2.2 per cent. The poor performance of Nigerian firms reflects many factors. This study focuses on constraints in the business climate and the serious costs they impose on Nigerian firms. The biggest reported problem is the unreliable power supply. About 83 per cent of all managers surveyed considered electricity outages to be a serious problem more than any other constraint."
Regarding corruption that businesses face in Nigeria, the report said, "One-third of micro-enterprises reported that informal payments/gifts to government officials were commonplace, suggesting that registered firms confront more requests for such bribes. Only 20 per cent of micro-enterprise firms reported having advance knowledge of the amount of the payment required to 'get things done. Informal payments/gifts represented approximately 1.2 per cent of annual sales for all micro-enterprises."
The report also noted that government contractors pay approximately 4.3 per cent of the contract value to secure and maintain contracts and about one-third of the micro-enterprises surveyed agreed that they make â€śinformal payments/gifts to government officialsâ€ť, suggesting that registered companies get much more requests for bribes.
The World Bank also said that despite the challenges facing Nigeria, it remains the most attractive place, in Africa, for both local and foreign investors. The Country Director for the World Bank in Nigeria said that â€śNigeria has the most attractive environment for investment because Nigeria is a large market in the continent; it is the second largest economy in the continent. It is a market that any investor cannot ignore with over 160 million people and a gateway to ECOWAS.â€ť
â€śFor me, while we say the countryâ€™s current investment climate could be better in terms of providing electricity, access to finance and other things, you should also look at the huge opportunities for investment in Nigeriaâ€ť
"The basic lesson from the World Bank Assessment Report is that there are critical constraints in Nigeria that impede the development of the non-oil sector. Some of the critical issues include electricity, which affects the productivity and competitiveness of enterprises."
However, the labour cost in Nigeria is actually lower than most of Nigeria's competitors such as Brazil and South Africa. So, there is need for Nigeria to address some of the constraints in order to take advantage of the huge investment opportunities that exist in the country."