Background
In
2014, Nigeria’s economy witnessed immense growth, with a GDP of US$568.5
Billion, thereby becoming the largest economy in West Africa. This was
attributed mainly to an unprecedented increase in certain industries, such as
Telecommunications, Retail, Film and Entertainment Industry. However, in 2015 there
was a seismic shift as the country was heading towards recession due to a crash
in global oil prices.
2014, Nigeria’s economy witnessed immense growth, with a GDP of US$568.5
Billion, thereby becoming the largest economy in West Africa. This was
attributed mainly to an unprecedented increase in certain industries, such as
Telecommunications, Retail, Film and Entertainment Industry. However, in 2015 there
was a seismic shift as the country was heading towards recession due to a crash
in global oil prices.
The
state of the economy led the newly inaugurated Buhari administration to take
certain far-reaching measures to revive the economy, as a crucial part of the
government’s economic transformation policy in 2016, the Presidential Enabling
Business Environment Council (PEBEC) was established to remove bureaucratic
constraints to doing business in Nigeria and create a favourable environment
for growing business; specifically the council has as part of its mandate the
task of improving Nigeria’s ranking in the ease of doing business. On February
21, 2017, the council approved a 60-Day National Action Plan detailing actions
to be performed by certain Ministries, Departments and MDAs.
state of the economy led the newly inaugurated Buhari administration to take
certain far-reaching measures to revive the economy, as a crucial part of the
government’s economic transformation policy in 2016, the Presidential Enabling
Business Environment Council (PEBEC) was established to remove bureaucratic
constraints to doing business in Nigeria and create a favourable environment
for growing business; specifically the council has as part of its mandate the
task of improving Nigeria’s ranking in the ease of doing business. On February
21, 2017, the council approved a 60-Day National Action Plan detailing actions
to be performed by certain Ministries, Departments and MDAs.
Certain
reforms have been introduced by the council in key areas such as-
reforms have been introduced by the council in key areas such as-
Starting
a business- company name searches on the CAC portal has been introduced, a single
incorporation form has also been adopted by the CAC to save time and reduce
costs; documents can also be uploaded for submission on the CAC website, FIRS
e-payment solution has been integrated into the CAC portal.
a business- company name searches on the CAC portal has been introduced, a single
incorporation form has also been adopted by the CAC to save time and reduce
costs; documents can also be uploaded for submission on the CAC website, FIRS
e-payment solution has been integrated into the CAC portal.
Dealing with Construction Permits- there is an
operational e-planning platform which allows tracking of applications, payment
of fees and uploading of architectural designs.
operational e-planning platform which allows tracking of applications, payment
of fees and uploading of architectural designs.
Getting
electricity-there has been a reduction in the number of procedures and time
lines at the Nigerian Electricity Regulatory Commission (NERC).
electricity-there has been a reduction in the number of procedures and time
lines at the Nigerian Electricity Regulatory Commission (NERC).
Getting
credit-online searches have been introduced at the National Collateral Registry
credit-online searches have been introduced at the National Collateral Registry
Registering
a property- sworn affidavits are no longer required at the registry and there
is an on-going streamlining of the registration process.
a property- sworn affidavits are no longer required at the registry and there
is an on-going streamlining of the registration process.
Trading
across borders- the palletisation of imports has become mandatory to enable
physical inspection of goods at the import, vessels importing into Nigeria are
now required to provide an advance cargo manifest for risk assessment and cargo
placement, the Nigerian Custom Service is required to coordinate physical
examination of goods, certain agencies such as the Central Bank of Nigeria, Nigerian
Customs Service (NCS) and commercial banks are now mandated to accelerate pre-export
documentation procedures and there is a reduction in container placement notice
time.
across borders- the palletisation of imports has become mandatory to enable
physical inspection of goods at the import, vessels importing into Nigeria are
now required to provide an advance cargo manifest for risk assessment and cargo
placement, the Nigerian Custom Service is required to coordinate physical
examination of goods, certain agencies such as the Central Bank of Nigeria, Nigerian
Customs Service (NCS) and commercial banks are now mandated to accelerate pre-export
documentation procedures and there is a reduction in container placement notice
time.
Entry
and Exit of people- The process for obtaining visa on arrival has been
simplified including the submission process. There are new immigration
regulations; arrival and departure forms have been consolidated, there is also 48-hours
visa processing time, and other infrastructural improvements at the Abuja
Airport.
and Exit of people- The process for obtaining visa on arrival has been
simplified including the submission process. There are new immigration
regulations; arrival and departure forms have been consolidated, there is also 48-hours
visa processing time, and other infrastructural improvements at the Abuja
Airport.
The
National Assembly aligning with the objective of improving the ease of doing business
launched its own initiative in 2016 called the National Assembly Business
Environment Roundtable which is a partnership between the National Assembly and
private individuals seeking to introduce legal and constitutional reforms in
order to facilitate the ease of doing business in Nigeria. In its
“Comprehensive Review Of The Institutional, Regulatory, Legislative &
Associated Instruments Affecting Businesses In Nigeria”, it recommended the
review of several Bills such as the Federal Competition and Consumer Protection
Bill, 2015, Federal Roads Authority
Bill, 2015, National Inland Waterways Authority Bill, 2015, National Roads
Funds Bill, 2015, National Transport Commission Bill, 2015 and the Nigerian
Ports & Harbours Authority Bill, 2015, Nigerian Postal Commission Bill,
2015 and establishment of a Federal Legislative Clearing House for cohesion and
consistency.
National Assembly aligning with the objective of improving the ease of doing business
launched its own initiative in 2016 called the National Assembly Business
Environment Roundtable which is a partnership between the National Assembly and
private individuals seeking to introduce legal and constitutional reforms in
order to facilitate the ease of doing business in Nigeria. In its
“Comprehensive Review Of The Institutional, Regulatory, Legislative &
Associated Instruments Affecting Businesses In Nigeria”, it recommended the
review of several Bills such as the Federal Competition and Consumer Protection
Bill, 2015, Federal Roads Authority
Bill, 2015, National Inland Waterways Authority Bill, 2015, National Roads
Funds Bill, 2015, National Transport Commission Bill, 2015 and the Nigerian
Ports & Harbours Authority Bill, 2015, Nigerian Postal Commission Bill,
2015 and establishment of a Federal Legislative Clearing House for cohesion and
consistency.
Fortunately,
the Federal Competition and Consumer Protection Bill 2016 has been passed by
the government, its main objective is to promote a competitive market and
protect consumer rights
the Federal Competition and Consumer Protection Bill 2016 has been passed by
the government, its main objective is to promote a competitive market and
protect consumer rights
Executive
Orders
Orders
In
July 2016, the President signed the first executive order on doing business in
Nigeria. The main objective of the order was to promote transparency and
efficiency in the Business Environment. Certain key changes were introduced,
and they are as follows:
July 2016, the President signed the first executive order on doing business in
Nigeria. The main objective of the order was to promote transparency and
efficiency in the Business Environment. Certain key changes were introduced,
and they are as follows:
Transparency-MDAs
were directed to make information on the procedure for obtaining licences,
permits and approvals including fees and timelines immediately available to the
public in their premises and on their websites.
were directed to make information on the procedure for obtaining licences,
permits and approvals including fees and timelines immediately available to the
public in their premises and on their websites.
Default
Approvals- MDAs were directed to ensure that approvals are communicated in a
timely manner to members of the public, failure to do so will result in the
application being deemed granted.
Approvals- MDAs were directed to ensure that approvals are communicated in a
timely manner to members of the public, failure to do so will result in the
application being deemed granted.
One
Government- this was introduced to facilitate cooperation between MDAs in the
event that a customer requires input requirements and documentation from
another MDA.
Government- this was introduced to facilitate cooperation between MDAs in the
event that a customer requires input requirements and documentation from
another MDA.
Entry
Experience of Visitors and travellers- Ordinary visas and tourist visas are to
be issued or rejected within 48 hours. A list of visa requirements should be
provided, regarding port operations- all agencies represented at the ports have
been advised to streamline their operations into a single interface and Apapa
port should be operating for 24 hours. Importantly, each Port in Nigeria has
been directed to designate an existing export terminal for the exportation of
agriculture produce.
Experience of Visitors and travellers- Ordinary visas and tourist visas are to
be issued or rejected within 48 hours. A list of visa requirements should be
provided, regarding port operations- all agencies represented at the ports have
been advised to streamline their operations into a single interface and Apapa
port should be operating for 24 hours. Importantly, each Port in Nigeria has
been directed to designate an existing export terminal for the exportation of
agriculture produce.
Other
Executive orders aim to address the following pertinent issues namely, timely
submission of annual budgetary estimates by all statutory and non-statutory
agencies, including companies owned by the Federal Government, support for
local content in public procurement by the Federal Government and improve local content in public procurement
with science, engineering and technology components.
Executive orders aim to address the following pertinent issues namely, timely
submission of annual budgetary estimates by all statutory and non-statutory
agencies, including companies owned by the Federal Government, support for
local content in public procurement by the Federal Government and improve local content in public procurement
with science, engineering and technology components.
Ease
of Doing Business
of Doing Business
Undoubtedly,
the reforms introduced by the government led to an improvement in Nigeria’s
ranking in the Ease of Doing Business. On November 8th 2017, the World Bank
Country Director, Rachid Benmessaoud, presented the Report on the Ease of Doing
Business to Vice-President Yemi Osinbajo, according to that report; Nigeria
moved up by 24 points from the 169th position on the 2017 ranking to 145th
and was included in the 10 most reformed economies.
the reforms introduced by the government led to an improvement in Nigeria’s
ranking in the Ease of Doing Business. On November 8th 2017, the World Bank
Country Director, Rachid Benmessaoud, presented the Report on the Ease of Doing
Business to Vice-President Yemi Osinbajo, according to that report; Nigeria
moved up by 24 points from the 169th position on the 2017 ranking to 145th
and was included in the 10 most reformed economies.
Graph
Depicting Nigeria’s Progress in the Ease of Doing Business
Depicting Nigeria’s Progress in the Ease of Doing Business
Source:
Invest Advocate available at
https://investadvocate.com.ng/2018/03/02/improving-nigerias-business-operating-environment-enhance-economic-growth/
Invest Advocate available at
https://investadvocate.com.ng/2018/03/02/improving-nigerias-business-operating-environment-enhance-economic-growth/
What
is the Ease of doing business?
is the Ease of doing business?
The
Ease of Doing Business is an index published by the World Bank which measures
by way of performance indicators the extent to which a particular country’s
processes encourage foreign investment in comparison with other countries. Specifically
it “provides objective measures of
business regulations and their enforcement across 190 economies and selected
cities at the subnational and regional level.”
Ease of Doing Business is an index published by the World Bank which measures
by way of performance indicators the extent to which a particular country’s
processes encourage foreign investment in comparison with other countries. Specifically
it “provides objective measures of
business regulations and their enforcement across 190 economies and selected
cities at the subnational and regional level.”
We
will now examine some key findings of the Ease of Doing Business report below:
will now examine some key findings of the Ease of Doing Business report below:
Starting
a business:
a business:
The report
using Lagos and Kano as case studies states that it would take approximately 15
days to register a company in Nigeria. Specifically, for a private company it
would cost N5000 for every 1Million share capital. Additional costs include: N
500 for incorporation forms, N 3,000 for certified true copy of Memorandum and
Articles of Association, N 2,000 for certified true copy of form CAC 1.1. On
average lawyers would charge N60,000.00 for incorporation depending on the size
of the firm. Companies are also required to register at the Federal Inland
Revenue Service; this can be completed in one day according to the report.
using Lagos and Kano as case studies states that it would take approximately 15
days to register a company in Nigeria. Specifically, for a private company it
would cost N5000 for every 1Million share capital. Additional costs include: N
500 for incorporation forms, N 3,000 for certified true copy of Memorandum and
Articles of Association, N 2,000 for certified true copy of form CAC 1.1. On
average lawyers would charge N60,000.00 for incorporation depending on the size
of the firm. Companies are also required to register at the Federal Inland
Revenue Service; this can be completed in one day according to the report.
Building
and Construction Permits: In Lagos, obtaining the relevant licenses for a new
building according to the report would take approximately 116 days and cost
approximately N6.4 Million to complete. In Kano however it would take about 91
days and cost about N377,566.
and Construction Permits: In Lagos, obtaining the relevant licenses for a new
building according to the report would take approximately 116 days and cost
approximately N6.4 Million to complete. In Kano however it would take about 91
days and cost about N377,566.
Getting
Electricity: To calculate the cost of obtaining electricity in Nigeria, the
report uses a warehouse as a case study. The process would be completed in at
least 166days and cost approximately N336000. In contrast, in Kano it takes
about 94 days and costs about N328000.
Electricity: To calculate the cost of obtaining electricity in Nigeria, the
report uses a warehouse as a case study. The process would be completed in at
least 166days and cost approximately N336000. In contrast, in Kano it takes
about 94 days and costs about N328000.
Registering
Property: According to the Ease of Doing
business report registering a property in Lagos takes 76 days and cost
approximately N2,723,874 Million but in Kano it takes about 45days with a
charge of N3,182,347 Million.
Property: According to the Ease of Doing
business report registering a property in Lagos takes 76 days and cost
approximately N2,723,874 Million but in Kano it takes about 45days with a
charge of N3,182,347 Million.
Getting
Credit: This indicator measures the effectiveness of the credit reporting
systems and collateral/bankruptcy laws in Nigeria. Concerning legal rights
Lagos scored 10 out of 12 while on the depth of information about credit, it
scored 8 out of 8.
Credit: This indicator measures the effectiveness of the credit reporting
systems and collateral/bankruptcy laws in Nigeria. Concerning legal rights
Lagos scored 10 out of 12 while on the depth of information about credit, it
scored 8 out of 8.
Paying
Taxes: The Ease of Doing Business report considers the taxes a small or medium
sized company would need to pay annually. The findings are that in Lagos about
59 payments need to be made yearly requiring a total of 366 hours.
Taxes: The Ease of Doing Business report considers the taxes a small or medium
sized company would need to pay annually. The findings are that in Lagos about
59 payments need to be made yearly requiring a total of 366 hours.
Trading
across borders: The report considers the time and cost implications of
exporting and importing goods. The procedures examined in detail include
documentary compliance, border compliance and domestic transport. Additional
parameters include the availability and status of implementation of Electronic
Data Interchange (EDI) and Single Window (SW) systems. According to the study
it will take at least 135 hours to export and cost approximately $786.
across borders: The report considers the time and cost implications of
exporting and importing goods. The procedures examined in detail include
documentary compliance, border compliance and domestic transport. Additional
parameters include the availability and status of implementation of Electronic
Data Interchange (EDI) and Single Window (SW) systems. According to the study
it will take at least 135 hours to export and cost approximately $786.
Enforcing
Contracts: The amount of time spent resolving a commercial dispute from the
court of first instance and the quality of the judicial process is another
indicator examined in detail in the report. It concluded that in Lagos a claim
with a value of N1,010,472.00 instituted
at the Magistrate Court would be resolved in about 447 days and cost at least
N424,398.
Contracts: The amount of time spent resolving a commercial dispute from the
court of first instance and the quality of the judicial process is another
indicator examined in detail in the report. It concluded that in Lagos a claim
with a value of N1,010,472.00 instituted
at the Magistrate Court would be resolved in about 447 days and cost at least
N424,398.
Conclusion
Irrespective
of the fact that significant strides have been made in the ease of doing
business in Nigeria, a lot of work still needs to be done by various government
institutions and agencies. First and foremost infrastructural deficits need to
be addressed for example the Apapa Gridlock caused by bad roads and unruly
behavior of tanker drivers has had an adverse impact on the import and export
industry. In spite of the executive order on the decongestion of the ports
there is still a long way to go. Port congestions and delays have made it
difficult for parties to meet their contractual obligations and foster
corruption at the ports.
of the fact that significant strides have been made in the ease of doing
business in Nigeria, a lot of work still needs to be done by various government
institutions and agencies. First and foremost infrastructural deficits need to
be addressed for example the Apapa Gridlock caused by bad roads and unruly
behavior of tanker drivers has had an adverse impact on the import and export
industry. In spite of the executive order on the decongestion of the ports
there is still a long way to go. Port congestions and delays have made it
difficult for parties to meet their contractual obligations and foster
corruption at the ports.
Importantly, to ensure the sustainability of
the ease of doing business reforms, the National Assembly should quickly pass
the Omnibus Bill which consolidates all the ease of doing business reforms by providing
a robust legal framework.
the ease of doing business reforms, the National Assembly should quickly pass
the Omnibus Bill which consolidates all the ease of doing business reforms by providing
a robust legal framework.
In addition, Government should mitigate the
cost of doing business. For example in Lagos there are issues of multiple
regulation and taxation specifically, the new Land use Charge Law seems to be
worsening the situation. Going forward a uniform fiscal policy that is investor
friendly should be applied to all states.
cost of doing business. For example in Lagos there are issues of multiple
regulation and taxation specifically, the new Land use Charge Law seems to be
worsening the situation. Going forward a uniform fiscal policy that is investor
friendly should be applied to all states.
Finally,
there needs to be a drastic change in the area of settling disputes. To this
end, government should design and implement proper case management procedures
in the various courts; furthermore modern infrastructure is urgently required
at all levels. Concerning arbitration, there should be a limit to the challenge
of arbitral award in the courts this can be done by conducting an enlightenment
campaign for judges on international arbitration.
there needs to be a drastic change in the area of settling disputes. To this
end, government should design and implement proper case management procedures
in the various courts; furthermore modern infrastructure is urgently required
at all levels. Concerning arbitration, there should be a limit to the challenge
of arbitral award in the courts this can be done by conducting an enlightenment
campaign for judges on international arbitration.
Olisa
Agbakoba Legal
Agbakoba Legal