NEWS
Nigeria’s Economy Improves on Index of Economic FreedomAdejuwon Soyinka
The Punch,
January 17, 2007
Nigeria’s economy has been rated 52.6% free and world’s 131st freest country in 2006. This is good news as the assessment is to be 3.8 percentage points higher than last years.’
The assessment is part of the findings of the 2007 Index of Economy Freedom report.
Published annually by United States-based The Wall Street Journal and The Heritage Foundation, the index stated that Nigeria’s "over score is 3.8 percentage point higher than last year, partially reflecting new methodological detail."
It added, "Nigeria is ranked 30th out of 40 countries in the sub-Saharan Africa region, and its overall score is slightly lower than the regional average."
On the whole, the report said "Economics freedom broadly declined last year in Sub-Saharan Africa, an area that remains home to more "repressed economies than any other region."
The Heritage Foundation and The Wall Street Journal have published the index for 13 consecutive years. But the 2007 index incorporated the best and latest economy information, including World Bank Data, previously unavailable to outside researchers. It also used a new rating system in which economies were ranked on a 100-point scale, with a higher score representing greater freedom.
The report pegged the Sub-Saharan African region’s overall level of economic freedom at only 54.7, which is well below the 60.6 world average and identifies the region as the world’s least economically free.
Yet, the report said, "One economy advanced: Nigeria moved from "repressed" to "mostly unfree."
In explaining this, it said Nigeria ranked moderately well in fiscal freedom and labour freedom and fairly well in business freedom. Also, it said. "The top income and corporate tax rate were moderate, and overall tax revenue was low as a percentage of GDP.
It added that "regulatory commercial burden existed, and inflation is fairly high, but the government did not distort market prices with subsides (except for rail transport). The labour market is fairly elastic, and while firing an employee can be difficult, other factors are more flexible."
In its breakdown, the report awarded Nigeria 63.1 percent in the area of business freedom; 66.6 percent in trade freedom; 89.5 percent in fiscal freedom; 75.2 percent for labour freedom as well as 70.5 percent monetary freedom.
But then the report said Nigeria was still faced with significant economic challenges. It explained that trade freedom, from government, investment freedom, property rights, freedom from corruption still needed significant improvement.
"Non-tariff barriers are high, and regulations are enforced inconsistently. As in many other sub- Saharan African nations, judicial enforcement is rudimentary, corrupt and subject to the political whim of the executive. Corruptions substantial throughout the civil service," it says.
For these reasons, the report awarded Nigeria 41.7 percent for freedom of businesses from government control; 50 percent for financial freedom; 30 percent for property right as well as 19 percent for freedom from corruption.
As in previous years, the index rating reflected an analysis of dozen of economic variables, grouped into 10 categories, although these year those categories were revised.
The 10 freedoms measured were; business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property right, free from corruption and labour freedom. Ratings in each category were averaged to produce the overall index score.
Worldwide, the average rating for economic freedom was essentially steady, "but there is much room for improvement."
Mauritius is said to lead in Africa with a score of 69.0, good enough for a 34th place ranking worldwide. This score classifies Mauritius’ economy as "moderates free." Its closest regional competitor is Botswana, 38th in the world and also "moderately free". The report’s editor noted that the regions lack of economic freedom is a source of poverty.
They added that the "average GDP per capita is only $1,984 the lowest of any region and barely one-tenth of the average incomes in Europe and Americas.
According to the report, "a majority of the nations in Sub-Saharan Africa are ranked "mostly unfree," with the balance split evenly between "moderately free" and "repressed". Eight sub-Saharan economies were classified as "repressed" the index lowest category."
The report showed that compared to the previous year, scores improved for 15 countries in the region and the declined in 25 others. Botswana, Kenya and Cape Verde all dropped a category. The first slipped from "mostly free" to "moderately free," while the others fell from "moderately free" to "mostly unfree."
©Punch Newspapers Limited