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.