How To Reform Nigeria’s Business Environment By Olushola Bello

The Nigerian business environment has been described as one of the most challenging in Africa as industry experts look at regulatory environment in creating an enabling environment for businesses to strive. OLUSHOLA BELLO, writes.

The regulatory environment is crucial to the operations, viability and profitability of businesses in the country, a lot of business owners face grueling situations in complying with some of the harsh government policies that exist in Nigeria’s business clime.

There have been call for regulatory actions to be consistent with the ease of doing business agenda of the federal government. Some of these borders on high regulatory compliance costs, lack of clarity in regulatory requirements, overlapping regulatory functions, among others. It is imperative to minimise the burden of regulator on investors if the private sector must play the desired role of wealth job creation.

Regulatory Agencies

Business is regulated by different laws and some of these laws govern social and economic matters which may include business income or payroll taxation. Others may be environmental laws, occupational health and safety laws, employment laws, criminal laws, and laws that are specifically related to your industry. Some of the key regulatory institutions are Corporate Affairs Commission (CAC), Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration & Control (NAFDAC), Consumer Protection Council, among others.

Developing SMEs

Federal Government

The present government has been doing a lot to change the narrative of the ease of doing business in the country. In the past three years, Nigeria has implemented more than 140 reforms to make doing business in Nigeria easier. The World Bank reported in 2018 that 32 states of Nigeria improved their Ease of Doing Business environment led by Kaduna, Enugu, Abia, Lagos and Anambra states.

In 2019, Presidential Enabling Business Environment Council (PEBEC) set a goal to move Nigeria into the top-100 on the 2020 World Bank Doing Business Index (DBI).

To achieve this, the government said “we will be pursuing the continued implementation of reforms across all indicators, including the implementation of legislative reforms, specifically the passage of the new Companies and Allied Matters Act and the Omnibus Bills; the expansion of the regulatory reform programme which started with NAFDAC and National Insurance Commission (NAICOM) and now to include other regulators; the establishment of a National Trading Platform for ports; and the concession of our major international airports.

Some of the focus areas that the government has achieved are driving registration for utilisation of the National Collateral Registry to facilitate access to credit for SMEs, clearance of all pending NAFDAC registration applications to improve efficiency; and creation of a strengthened single joint cargo examination interface in all airports & seaports for import and export to reduce the time spent at the ports.

In a release by the Senior Special Assistant to the President on Media & Publicity Office of the Vice President, Laolu Akande said that PEBEC has now commenced the fourth 60-day National Action Plan (NAP 4.0) on Ease of Doing Business. NAP 4.0 is running from the March 1 to April 29, 2019. It aims to deepen the reforms delivered over the past three years and drive institutionalisation of the whole reform process.

According to the release, we have highlighted key action items in all of the focus areas to ensure that they do not unravel, and to ensure we drive sustainability.

“Some of the targets achieved in the last NAP 3.0 include, driving registration for utilisation of the National Collateral Registry to facilitate access to credit for SMEs, clearance of all pending NAFDAC registration applications to improve efficiency and creation of a strengthened single joint cargo examination interface in all airports and seaports for import and export to reduce the time spent at the ports.

“NAP 4.0 will focus on initiatives such as enforcing compliance with SLAs across all indicators/focus areas, driving the passage of the CAM Bill 2018 for improved effectiveness of company law in Nigeria (and as you have heard, what we are waiting for is the signing into law of the bill), enhancing efficiency in the small claims court, and enhancing the application and approval system for visas on arrival, to mention a few.”

LCCI Stands

The president of Lagos Chamber of Commerce and Industry (LCCI), Mr Babatunde Ruwase said acknowledged that National Agency for Food and Drug Administration and Control (NAFDAC), Standard Organisation of Nigeria (SON), Consumer Protection Council, among other agencies have been in the fore front of promoting standards and protecting the country from the incidence of substandard and fake products over the years.

He noted that these are sensitive and enormous responsibilities that are critical to the growth and survival of the economy.

He however, said that there are some regulatory actions that are not consistent with the ease of doing business agenda of the federal government, saying that some of these borders on high regulatory compliance costs, lack of clarity in regulatory requirements, overlapping regulatory functions, among others.

He pointed out that it is imperative to minimise the burden of regulation on investors if the private Sector must play the desired role of wealth job creation as prescribed in the Economic Recovery and Growth Plan (ERGP).

He explained further that businesses are generally burdened with the challenges of infrastructural deficiencies and macro-economic shocks.  According to LCCI president, most investors are saddled with huge cost for the provision of electricity, access road, security and other industry specific facilities in the midst of poor access to affordable credit, multiple taxation and high exchange rate.

“In recent years, we have received complaints from companies bordering on regulations, monitoring and compliance at the states and federal levels.”

He added that the real sector and SMEs are critical to national economic development, especially with regards to job creation and poverty reduction as government alone cannot generate the desired jobs needed to gainfully engage the teeming unemployed youths, saying that the private sector and especially the SMEs should be empowered and supported.

MAN Views

The President, Manufacturers Association of Nigeria, Mr. Mansur Ahmed, recently said that in 2019 and the years ahead, the association aimed to increase the contribution of the manufacturing sector to the Gross Domestic Product above the current 9.5 per cent.

He noted that the association also aimed to further influence the modulation of economic, industrial, trade and other policies that were germane to the survival of the manufacturing sector in Nigeria.

He said, “I want to use this medium to reiterate some areas of our activities that we shall be giving greater attention to soon. “We shall substantially improve the contribution of the manufacturing sector to the Gross Domestic Product from the current paltry 9.5 per cent; appreciably increase the capacity utilisation of member-companies by promoting policy consistency in a manner that the gains already made are not pulled back while ensuring the revival of sectors that are currently struggling.”

He said the association would also, among other things, promote a more inclusive economy among all categories of companies in the membership of MAN, through the establishment of structured and mutually beneficial linkages between the large corporations and small and medium industries, expand the scope of strategic partnership with relevant organisations within Nigeria, West Africa and the African continent.

Fixing infrastructure, funding

Meanwhile, national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Alaba Lawson, called for the fixing of infrastructure, especially roads and power.

She also urged the government to focus on the implementation of the ease of doing business initiatives to make them more effective this year. Lawson reiterated the importance of the agricultural sector to the growth of the economy and called on the government to mediate in the area of providing funding and inputs at cheaper rates to farmers.

“We are of the view that the challenges arising from poor road infrastructure and difficulties in ease of doing business and acquisition of land may be responsible for the slow growth experienced in the agricultural sector.

“To improve the performance of the agriculture sector, more is required in the areas of research, financing for farmers, infrastructure, technology, logistics, quality and standard management,” Lawson said.

Challenges facing Businesses

Several factors affect business environment, these factor make Nigeria’s business environment unfriendly and unsafe for investment. Analysts at Nairametrics said no matter how creative or life changing an idea is, the operating environment has to be conducive in order for businesses to thrive.

They said Nigeria is a harsh country for businesses to scale, as there are serious challenges holding the country back, saying that despite being blessed with natural resources, the business environment lacks basic social amenities and infrastructure that should help businesses grow.

According to them, erratic power supply, poor transportation, political instability, inadequate technology, social unrest all raise business costs, increase the difficulty of expanding to different states and decrease profits in the short/long run.

Activities Of Regulatory Agencies

Speaking the director-general, Standard Organisation of Nigeria (SON), Mr. Osita Aboloma represented by head, Customer feedbacks and collaboration, SON, Mrs. Mosunmola Samuel said the SON has done a lot since the directive by the presidency in other to make businesses thrive, saying some main milestones to ensure ease of doing business includes transparency, simplification, harmonisation.

“We look at feasibility of products to ensure they comply with the standard, we developed flow charts in other to ensure the consumers has access to information and they are able to interpret the information. In trying to ease business it is very important that we build the manufacturing sector.

“Therefore from 2016 to date we concentrated on the MSME in making business easy for them. In terms of harmonisation we have been working with other agencies such as NAFDAC and try to harmonise with them,” she said.

Technical Assistant to NAFDAC, Mrs. Simidele Onabanjo said to promote ease of doing business NAFDAC has made their website more robust, we can now be reached electronically.

She said that there has been improvement of the laboratory to meet the ISO standards, purchase of new equipment, pesticide and agro chemical monitoring as been encouraged through field test, saying that NAFDAC is undergoing restructuring to improve efficiency.

In conclusion, a lot still has to be done in creating a conducive business environment. Stakeholders called on government to improve the quality of infrastructures in the country especially the power sector so that the cost of production can reduce, there should be encouragement of the use of local inputs and their availability be encouraged to aid local production, efforts should be intensified at all levels to ensure that funds are available for manufacturing activities through budget provision and in the bank and the fund should be monitored and used only for the purpose and will go a long way to reduce corruption.

Others are double taxation is discovered to be one of the impediments to industrialisation and as matter of fact, government should establish double taxation monitoring unit under ministry of trade and investment and other related agencies to avoided this as well as unnecessary cargo tracking and delay for industrial inputs, government through legislation should encourage patronage of local products and prohibition of foreign goods that have substitute in the country.

With all these in place and among other things that are healthy for the growth of the SMEs, the sector can take its rightful place in developing the economy of the country.