When the World Bank released the Doing Business Report 2017 last October, the 14th in a series of annual reports measuring the regulations that enhance economic activity and those that constrain it, the Nigerian government must have shifted uncomfortably in their seats as the country placed a dismal 169 out of a benchmark of 190 countries across the globe.
The data set covers 48 economies in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in East Asia and the Pacific, 25 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 32 OECD high-income economies.
For a country that prides itself as the giant of Africa and a land of investment opportunities, something needed to be done urgently to bring down the high numbers and give investors appealing indices that’ll justify loosening their tight grips on investment capital and expanding brand footprint across the country through new branches and production lines.
Doing Business report measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation.
Starting a New Business
Nigeria for instance stands at 138 in the ranking of 190 economies on the ease of starting a business.
Economies around the world have taken steps making it easier to start a business—streamlining procedures by setting up a one-stop shop, making procedures simpler or faster by introducing technology and reducing or eliminating minimum capital requirements. Many have undertaken business registration reforms in stages—and they often are part of a larger regulatory reform program. Among the benefits have been greater firm satisfaction and savings and more registered businesses, financial resources and job opportunities
What does it take to start a business in Nigeria? According to data collected by Doing Business, starting a business there requires 8.7 procedures, takes 25.2 days, costs 31.0 per cent of income per capita for men, and requires 8.7 procedures, takes 25.2 days, costs 31.0 per cent of income per capita for women. A requirement of paid-in minimum capital of 0.0 per cent of income per capita is legally mandatory for both men and women.
Dealing with Construction Permits
Where does Nigeria stand today?
What does it take to comply with the formalities to build a warehouse in Nigeria? According to data collected by Doing Business, dealing with construction permits there requires 16.1 procedures, takes 106.3 days and costs 23.6 per cent of the warehouse value.
Globally, Nigeria stands at 174 in the ranking of 190 economies on the ease of dealing with construction permits.
Access to reliable and affordable electricity is vital for businesses. To counter weak electricity supply, many firms in developing economies have to rely on self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for a customer is always to gain access by obtaining a connection. What do the indicators cover? Doing Business records all procedures required for a local business to obtain a permanent electricity connection and supply for a standardized warehouse, as well as the time and cost to complete them. These procedures include applications and contracts with electricity utilities, clearances from other agencies and the external and final connection works. In addition, this year Doing Business adds two new measures: the reliability of supply and transparency of tariffs index and the price of electricity
Where does Nigeria stand today?
What does it take to obtain a new electricity connection in Nigeria? According to data collected by Doing Business, getting electricity there requires 9.0 procedures, takes 195.2 days and costs 422.8 per cent of income per capita.
Globally, Nigeria stands at 180 in the ranking of 190 economies on the ease of getting electricity.
Swinging into Action
The government however claims that the actual the number of days required for registration of a new business in Nigeria is 10 and says it has further reduced that to two courtesy of a reform agenda of the President Muhammadu Buhari administration.
This was disclosed in a press release issued by the Senior Special Assistant to the Vice President on Media & Publicity, Laolu Akande recently in Abuja.
He announced a new 24-hour timeline for company registration from when application form is completed and all required documents made available.
Prospective business owners can now search on Corporate Affairs Commission (CAC) portal (www.cac.gov.ng) to avoid duplication of names and prevent selection of prohibited names, while company registration no longer requires lawyers as it is now optional for SMEs to hire lawyers to prepare registration documents.
These were among highlights of a report presented at a Presidential Enabling Business Environment Council, PEBEC, at the Presidential Villa, marking the end of the 60-day Action Plan on Ease of Doing Business in Nigeria reforms.
According to the report, CAC has introduced single incorporation form (CAC1.1) to save time and reduce costs while the agency has introduced document upload interface on its website to enable e-submission of registration documents.
Other aspects of the reforms now actualized in the last 60 days include the Integrated FIRS e-payment solution into CAC portal to enable e-stamping while the reform empowers CAC internal lawyers to certify company incorporation forms and conduct statutory declaration of compliance for a fixed fee of N500 ( Sign the declaration of compliance (Form CAC 4) before a Commissioner for Oaths or notary public for N50).
A declaration must be sworn by: (i) a barrister or solicitor engaged in the formation of the company or (ii) a person named in the memorandum and articles of association as a director or secretary of the company. This procedure can be done before a notary public or filed at the State or Federal High Court. The common practice is for this declaration to be sworn before a Commissioner of Oaths at the State High Court.
According to the report, the PEBEC listed “Dealing with construction permits, Getting electricity, Registering Property, Getting Credit and Paying Taxes,” as some of the areas where the council has recorded progress in the past 60 days.
The report also highlighted the completed reforms on the “Entry and Exit of People,” indicator which includes Simplified Visa-on-Arrival process, Infrastructural improvements at the Abuja airport, and the new Immigration Regulation 2017.
It also indicated that the completed reforms are being closely monitored to ensure diligent implementation with minimal disruption while pending reforms are being escalated to ensure completion in the coming weeks.
On Trading across Borders, some of the completed reforms include palletisation of imports, advanced cargo manifests, reduction in documentation requirements and scheduling of Joint Physical Examination by the Customs Service.
The National Action Plan contained initiatives and actions implemented by responsible Ministries, Departments and Agencies (MDAs), the National Assembly, a number of State Governments, as well as some private sector stakeholders.
The Council emphasised that with the conclusion of implementation of the Action Plan, the next phase would involve “deepening existing reforms; completing and implementing pending initiatives; engaging with the public; validating completed reforms and kicking-off medium-term reforms.”
The Council would also kick-start “sub-national reforms across Nigeria’s 36 states; trading within Nigeria; kick-off of initiatives and reforms improving business processes and regulations within Nigeria; and ease of movement of goods within and across regions in Nigeria.”
All these hopefully, will help Nigeria look better on the next World Bank Doing Business Report expected later in the year. If the reforms are not merely rhetoric to make politicians appear to be working, it should be a major boost to job creation and enable more value addition in an economy that is in dire need of a diversified revenue base.
According to the initiators of the Report, it is useful for policy makers to know where their economy stands in the aggregate ranking on the ease of doing business. Also useful is to know how it ranks relative to comparator economies and relative to the regional average Region. To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.
Markets thrive because of competitiveness, if Nigeria doesn’t do enough to reduce the negative numbers, even existing businesses will keep shutting down in the country and opening up next in neighboring countries.
Just recently the International Finance Corporation (IFC) hosted a high-level dialogue to share the World Bank Group’s global expertise and best practice on the ease of doing business in Ghana, Nigeria’s fiercest competitor for business incorporation.
The session was also a platform to help participants better understand the new government of President Nana Akufo-Addo reform priorities.
Opportunities to leverage ICT to enhance the business environment; and importance of business reform leadership and championing and communications to sustain the country’s reform momentum were discussed.
Vice President and General Counsel, IFC, Ehthiopis Tafara said the IFC is ready to support Ghana’s reforms efforts through investments, mobilizing capital from other investors and counsel if need arises.
“New governments with fresh mandates often have a window of opportunity for reform, so the time is ripe to implement immediate and long-term reforms that can improve the business environment in Ghana and attract new investment,” Tafara added.
Nigeria also must look to external professional bodies to liaise with in enacting and implementing economic reforms, considering what the country’s economy stands to gain or further lose.