Ap­prais­ing the 60-Day Ac­tion Plan on Ease of Do­ing Busi­ness in Nige­ria

Financial Nigeria Magazine - - Contents - De­tail Com­mer­cial So­lic­i­tors is dis­tinct as Nige­ria's first com­mer­cial so­lic­i­tor firm to spe­cial­ize ex­clu­sively in non-court­room prac­tice. Based in La­gos, Nige­ria’s busi­ness cap­i­tal, DE­TAIL is to­tally com­mit­ted to its clients’ busi­ness ob­jec­tives and repu

The Pres­i­den­tial En­abling Busi­ness En­vi­ron­ment Coun­cil (PEBEC) on Fe­bru­ary 21, 2017, ap­proved a 60-day Na­tional Ac­tion Plan on Ease of Do­ing Busi­ness in Nige­ria. The Ac­tion Plan is an in­ter-min­is­te­rial, in­ter-gov­ern­men­tal plan that will be im­ple­mented by var­i­ous Min­istries, De­part­ments and Agen­cies (MDAs) across Nige­ria. The man­date of the Ac­tion Plan is to: “re­move crit­i­cal bot­tle­necks and bu­reau­cratic con­straints to do­ing busi­ness in Nige­ria” and “move Nige­ria 20 steps up­wards in the World Bank Ease of Do­ing Busi­ness Index.” This ar­ti­cle will con­sider the im­ple­men­ta­tion strat­egy of the Ac­tion Plan based on a com­par­a­tive anal­y­sis of the busi­ness and reg­u­la­tory prac­tices across ju­ris­dic­tions such as New Zealand and Sin­ga­pore (which are ranked high on the World Bank's Ease of Do­ing Busi­ness Index).

1. The Strat­egy The Ac­tion Plan has eight fo­cus ar­eas, namely: Start­ing a Busi­ness, Con­struc­tion Per­mits, Get­ting Elec­tric­ity, Reg­is­ter­ing Prop­erty, Get­ting Credit, Pay­ing Taxes, Trad­ing Across Borders and En­try and Exit of Peo­ple. How­ever, the Ac­tion Plan only pro­vides ini­tia­tives to be im­ple­mented across six of the eight fo­cus ar­eas, which are high­lighted be­low: A. Start­ing a Busi­ness

Nige­ria is cur­rently ranked 138th out of 190 coun­tries with re­spect to “Start­ing a Busi­ness” on the World Bank Ease of Do­ing Busi­ness Index (DB Index). This is be­cause start­ing a busi­ness in Nige­ria can be dif­fi­cult and usu­ally re­quires twice as many pro­ce­dures, and three times the amount of time, as it takes to do a sim­i­lar ac­tiv­ity in de­vel­oped economies. In New Zealand for in­stance, reg­is­tra­tion of a busi­ness is an on­line pro­ce­dure that takes less than one day. (http:// www.do­ing­busi­ness.org/data /ex­ploreeconomies/new-zealand) The Ac­tion Plan there­fore seeks to stream­line the process of start­ing and reg­is­ter­ing a busi­ness in Nige­ria from ten to two days by in­tro­duc­ing the fol­low­ing ini­tia­tives: En­able on­line sub­mis­sion of reg­is­tra­tion doc­u­ments; Im­prove re­li­a­bil­ity of Cor­po­rate Af­fairs Com­mis­sion (CAC) on­line por­tal; Con­sol­i­date in­cor­po­ra­tion forms into one form; and In­te­grate Fed­eral In­land Rev­enue Ser­vice (FIRS) e-pay­ment so­lu­tion into CAC’s on­line por­tal. B. Con­struc­tion Per­mits

Nige­ria is ranked 174th out of 190 coun­tries with re­spect to “Deal­ing with Con­struc­tion Per­mits” on the World Bank DB Index. In view of the fact that con­struc­tion con­trib­uted 3.20% to nom­i­nal GDP in the fourth quar­ter of 2016, lower than the rate of 3.36% it con­trib­uted a year ear­lier, and real es­tate in turn con­trib­uted 8.48% in the same quar­ter (lower than the 9.40% re­ported in the cor­re­spond­ing quar­ter of 2015) (Na­tional Bureau of Sta­tis­tics); it is im­por­tant that the time­lines for ob­tain­ing con­struc­tion per­mits are re­duced. Sin­ga­pore, for

ex­am­ple, made deal­ing with con­struc­tion per­mits eas­ier by stream­lin­ing pro­ce­dures and im­prov­ing the on­line one-stop shop for this process. In Nige­ria, in­di­vid­ual states is­sue con­struc­tion per­mits. There­fore, it is im­per­a­tive that each state buys into the ob­jec­tives of the Ac­tion Plan to re­duce the num­ber of days re­quired to pro­cure con­struc­tion per­mits from 42 to 20 days. La­gos State, for ex­am­ple, plans to launch an e-plan­ning plat­form, which will make the plan­ning ap­proval process more ef­fi­cient. This ini­tia­tive should be mod­elled across the 35 other states in Nige­ria. C. Reg­is­ter­ing Prop­erty

Nige­ria is cur­rently ranked 182nd out of 190 coun­tries with re­spect to “Reg­is­ter­ing Prop­erty” on the DB Index. The Ac­tion Plan seeks to re­duce the num­ber of days re­quired to reg­is­ter prop­erty from 77 to 30 days by the in­tro­duc­tion of the fol­low­ing ini­tia­tives: Con­sol­i­da­tion of sev­eral pay­ments into one; Con­sol­i­da­tion and pub­li­ca­tion of a com­plaint mech­a­nism as it is cur­rently dif­fi­cult to pro­vide con­struc­tive feed­back on the ti­tle reg­is­tra­tion process; Re­duc­tion in time re­quired for ob­tain­ing Gover­nor's con­sent; and Elim­i­na­tion of the re­quire­ment for sworn af­fi­davit in land's reg­istry search. These ini­tia­tives are com­pa­ra­ble to those of Sin­ga­pore where trans­fer of prop­erty was made eas­ier by the in­tro­duc­tion of an in­de­pen­dent mech­a­nism for re­port­ing er­rors on ti­tles and maps. In view of the fact that the Nige­rian sit­u­a­tion is a lit­tle dif­fer­ent and prop­erty reg­is­tra­tion is ob­tained at the state level, it is im­por­tant that these ini­tia­tives are op­er­a­tional in each state of the fed­er­a­tion to en­sure con­sis­tent im­ple­men­ta­tion of the Ac­tion Plan ob­jec­tives in this re­gard. D. Get­ting Credit

Nige­ria is cur­rently ranked 44th out of 190 coun­tries with re­spect to “Get­ting Credit” on the DB Index. The Ac­tion Plan is specif­i­cally tar­geted at en­abling Mi­cro, Small and Medium Scale En­ter­prises have bet­ter ac­cess to credit, ul­ti­mately at cheaper rates. To achieve this, the fol­low­ing ini­tia­tives have been in­tro­duced: Na­tional As­sem­bly (NASS) pass­ing rel­e­vant leg­is­la­tion (NASS is con­sid­er­ing two pri­or­ity bills to ease ac­cess to credit: Se­cured Trans­ac­tions in Mov­able As­sets (Col­lat­eral Reg­istry) Bill and Credit Bureau Ser­vices Bill); Sup­port of credit bu­reaus to ex­pand cov­er­age across Nige­ria and pro­vide credit scor­ing to in­crease credit in­for­ma­tion shar­ing be­tween credit bu­reaus and lenders; and En­able on­line searches for mov­able as­sets to en­able on­line reg­is­tra­tions, amend­ments and can­cel­la­tions by lenders. The Ac­tion Plan ini­tia­tives on get­ting credit are cen­tred around im­prov­ing credit data and in­for­ma­tion shar­ing, ef­forts that are com­pa­ra­ble to other ju­ris­dic­tions such as New Zealand, which im­proved ac­cess to credit in­for­ma­tion by be­gin­ning to dis­trib­ute both pos­i­tive and neg­a­tive credit in­for­ma­tion. E. Trad­ing Across Borders

Nige­ria is cur­rently ranked 181st out of 190 coun­tries with re­spect to “Trad­ing across Borders” on the DB Index. The Ac­tion Plan seeks to re­duce ex­port and im­port time by 50%, by man­dat­ing the use of pal­lets to en­able quicker phys­i­cal ex­am­i­na­tion of im­ports; pro­vid­ing ad­vance cargo man­i­fest to ter­mi­nal op­er­a­tors; en­sur­ing that the Nige­ria Cus­toms Ser­vice (NCS) sched­ules ex­am­i­na­tion of cargo; and op­ti­mis­ing pre­ship­ment process for ex­ports. In view of the fact that the Ac­tion Plan seeks a sub­stan­tial re­duc­tion of ex­port and im­port time, ini­tia­tives specif­i­cally tar­geted at stream­lin­ing doc­u­men­ta­tion pro­cesses in this re­gard may be re­quired. In France, for ex­am­ple, (which ranks 1st with re­spect to “Trad­ing Across Borders”) cus­toms clear­ance pro­ce­dures were made faster by the in­tro­duc­tion of elec­tronic cus­toms dec­la­ra­tion and elim­i­nat­ing the need to sub­mit cer­tain doc­u­ments. Such ini­tia­tives may prove use­ful to­wards cur­tail­ing the cur­rent bu­reau­cra­cies as­so­ci­ated with trad­ing across borders in Nige­ria. F. En­try and Exit of Peo­ple

Part of the ob­jec­tives of the Ac­tion Plan is to achieve a 48-hour visa pro­cess­ing time­line and all-round im­proved trav­eller ex­pe­ri­ence with re­gards to the en­try and exit of peo­ple in Nige­ria. As such, the Ac­tion Plan seeks to in­tro­duce the fol­low­ing ini­tia­tives: Sim­pli­fi­ca­tion of visa on ar­rival and sub­mis­sion pro­cesses; Con­sol­i­da­tion of ar­rival and de­par­ture forms; Elim­i­na­tion of manual bag­gage searches; and Up­grade of La­gos and Abuja air­ports.

2. Crit­i­cal Suc­cess Fac­tors Laud­ably, a num­ber of the ini­tia­tives prof­fered in the Ac­tion Plan are cen­tred around stream­lin­ing pro­cesses by em­ploy­ing on­line plat­forms to re­duce phys­i­cal in­ter­face and in turn curb cor­rup­tion and the bu­reau­cra­cies cur­rently as­so­ci­ated with do­ing busi­ness in Nige­ria. From our re­view of the above im­ple­men­ta­tion strat­egy, we have iden­ti­fied the fol­low­ing crit­i­cal suc­cess fac­tors to help de­liver the man­date of the Ac­tion Plan. A. Need to Fo­cus on the use of In­for­ma­tion Com­mu­ni­ca­tion Tech­nol­ogy:

It is very crit­i­cal that the Gov­ern­ment takes cog­ni­sance of the fact that sub­stan­tial in­vest­ment in In­for­ma­tion and Com­mu­ni­ca­tions Tech­nol­ogy (ICT) in­fra­struc­ture would be re­quired if these ini­tia­tives are to be ef­fec­tive. Ex­perts have as­serted that Nige­ria needs a stag­ger­ing $25 bil­lion an­nu­ally over the next ten years to build and de­velop the nec­es­sary in­fra­struc­ture to take Nige­ria's ICT to the next level. (This­day News­pa­per, Novem­ber 24, 2016) The Fed­eral Gov­ern­ment Eco­nomic Re­cov­ery and Growth Plan (20172020) (ERGP) may re­spond to this is­sue as the Plan pro­vides for ac­cel­er­ated in­fra­struc­ture de­vel­op­ment in the area of broad­band.

In New Zealand and Sin­ga­pore (where a num­ber of pro­cesses have been stream­lined us­ing e-por­tals), there is an es­ti­mated 91.2% and 81.3% in­ter­net pen­e­tra­tion re­spec­tively com­pared to Nige­ria's es­ti­mated 51.1% in­ter­net pen­e­tra­tion (In­ter­net­world­stats.com). The Gov­ern­ment of New Zealand has also planned a to­tal of $2 bil­lion in­vest­ment into ma­jor ini­tia­tives that will de­liver qual­ity in­ter­net con­nec­tiv­ity to New Zealan­ders, in­clud­ing those in ru­ral com­mu­ni­ties. (New Zealand's Min­istry of Busi­ness, In­no­va­tion and Em­ploy­ment)

The above ex­am­ple but­tresses the fact that an im­prove­ment in the World Bank DB Index can­not oc­cur in iso­la­tion and the Gov­ern­ment must be ready to part­ner with pri­vate sec­tor par­tic­i­pants to in­vest in crit­i­cal ICT in­fra­struc­ture such as sub­ma­rine ca­ble sys­tems, and fi­bre op­tics net­work, not only in Nige­ria's ur­ban cities, but also in ru­ral com­mu­ni­ties in Nige­ria. B. Need to Sen­si­tize and Ed­u­cate Gov­ern­ment Agen­cies and Paras­tatals: In view of the fact that the Ac­tion Plan is in­tended to be an in­ter-min­is­te­rial, in­ter­gov­ern­men­tal plan to be im­ple­mented by var­i­ous MDAs, it is very im­por­tant that these in­sti­tu­tions are prop­erly sen­si­tised to ex­punge un­nec­es­sary ad­min­is­tra­tive bot­tle­necks. In or­der to en­sure that the Ac­tion Plan does not merely pay lip-ser­vice

Ap­prais­ing the 60-Day Ac­tion Plan on Ease of Do­ing Busi­ness in Nige­ria

to the World Bank's ex­pec­ta­tions on ease of do­ing busi­ness in Nige­ria, it is im­por­tant that MDAs that con­tin­u­ally in­ter­face with po­ten­tial for­eign and lo­cal in­vestors, are ad­e­quately sen­si­tized to ex­e­cute the aims and ob­jec­tives of the Gov­ern­ment vis-à-vis the Ac­tion Plan. C. Ad­her­ence to the Aims, Ob­jec­tives and Man­date of the Ac­tion Plan by Each State in Nige­ria:

A crit­i­cal suc­cess fac­tor is en­sur­ing that each state in Nige­ria signs a pro­to­col of ad­her­ence to the Ac­tion Plan. This is be­cause cer­tain in­di­ca­tors such as pro­cure­ment of con­struc­tion per­mits and reg­is­tra­tion of prop­erty will be op­er­a­tionalised at the state level. Each state gov­ern­ment is there­fore crit­i­cal to en­sur­ing that the ini­tia­tives of the Ac­tion Plan are en­forced to the let­ter. It is im­per­a­tive that each state, and the Fed­eral Cap­i­tal Ter­ri­tory col­lab­o­rate with the Fed­eral Gov­ern­ment to en­sure that the wellthought-out strate­gies of the Ac­tion Plan are im­ple­mented. 3. Need to Fo­cus on Other In­di­ca­tors Crit­i­cal to Nige­ria's Ease of Do­ing Busi­ness As pre­vi­ously high­lighted, al­though the Ac­tion Plan iden­ti­fies eight fo­cus ar­eas on ease of do­ing busi­ness, it only pro­vides ini­tia­tives to be im­ple­mented across six of the eight fo­cus ar­eas, which have been elu­ci­dated in Sec­tion 1 above. The fol­low­ing in­di­ca­tors still need to be ad­dressed as high­lighted be­low: a. Pay­ing Taxes:

Nige­ria's rank of 182nd out of 190 coun­tries with re­spect to “Pay­ing Taxes” on the DB Index in­di­cates that more work is re­quired in this area. Sim­ple ini­tia­tives such as pro­mot­ing public aware­ness on the use and ad­van­tages of the cur­rently un­der-utilised e-Tax Pay So­lu­tion sys­tem (this sys­tem was in­tro­duced by the Fed­eral In­land Rev­enue Ser­vice (FIRS) in 2015) may be use­ful to­wards im­prov­ing Nige­ria's rank­ing in re­spect of tax pay­ment. We, how­ever, note from a pre­sen­ta­tion by the PEBEC Co­or­di­na­tor (Dr. Jumoke Odu­wole, Se­nior Spe­cial As­sis­tant to the Pres­i­dent on In­dus­try, Trade and In­vest­ment) to the Nige­rian Amer­i­can Cham­ber of Com­merce, that the gov­ern­ment in­tends to in­tro­duce the re­moval of in-per­son re­quire­ments for Tax Iden­ti­fi­ca­tion Num­bers with com­pany reg­is­tra­tion and also E-fil­ing and E-pay­ment pro­cesses are to be in­tro­duced to im­prove tax ad­her­ence and ease of pay­ment. b. Get­ting Elec­tric­ity

No­tably, Nige­ria ranks 180th on the DB Index. In view of the cur­rent over-re­liance on on-grid gen­er­a­tion, and its at­ten­dant role in sti­fling the growth of busi­ness in Nige­ria, ini­tia­tives which en­cour­age the use of of­f­grid so­lu­tions, in­clud­ing cre­at­ing an en­abling en­vi­ron­ment for de­cen­tralised en­ergy gen­er­a­tion, through dis­trib­uted gen­er­a­tion and mini-grids in the short and medium term, whilst the chal­lenges with on-grid gen­er­a­tion are still be­ing re­solved, need to be ex­pe­dited in or­der to im­prove the ease of do­ing busi­ness in Nige­ria.

In the on-grid space, the ERGP pro­vides for other so­lu­tions such as greater use of re­new­able en­ergy as a means to im­prov­ing elec­tric­ity. The Gov­ern­ment has also un­veiled a power sec­tor re­cov­ery pro­gramme specif­i­cally to boost elec­tric­ity sup­ply in the coun­try. The plan in­tends to ad­dress the vi­a­bil­ity of elec­tric­ity dis­tri­bu­tion com­pa­nies and im­prove­ment of power sec­tor gover­nance. We also note from the PEBEC Co­or­di­na­tor's pre­sen­ta­tion that the Gov­ern­ment in­tends to re­duce the pro­ce­dures re­quired to get con­nected to the grid and a shorter time for La­gos and Kano's elec­tric­ity dis­tri­bu­tion com­pa­nies to get con­nected. c. En­forc­ing Con­tracts and Re­solv­ing Insolvency

Nige­ria cur­rently ranks 139th and 140th re­spec­tively in re­spect of “En­forc­ing Con­tracts” and “Re­solv­ing Insolvency” on the World Bank Ease of Do­ing Busi­ness Index. These in­di­ca­tors are par­tic­u­larly im­por­tant as in­vestors of­ten seek out ju­ris­dic­tions that not only safe­guard the sanc­tity of con­tracts but also pro­vide speedy re­course in the event of insolvency. Recog­nis­ing this, Sin­ga­pore for in­stance made en­forc­ing con­tracts eas­ier by in­tro­duc­ing a new elec­tronic lit­i­ga­tion sys­tem that stream­lines lit­i­ga­tion pro­ceed­ings. It is also im­per­a­tive that the Na­tional As­sem­bly con­sid­ers the en­act­ment of leg­is­la­tion specif­i­cally tai­lored to insolvency and insolvency pro­ceed­ings in Nige­ria. The pro­vi­sions of the Com­pa­nies and Al­lied Mat­ters Act (CAMA), as they re­late to insolvency, are in­ad­e­quate and out­dated. There is a need for a proper reg­u­la­tory frame­work for insolvency. In Mace­do­nia, for ex­am­ple, re­solv­ing insolvency was made eas­ier by chang­ing vot­ing pro­ce­dures and al­low­ing cred­i­tors greater par­tic­i­pa­tion in insolvency pro­ceed­ings. Sim­ple mea­sures such as these will also go a long way in pro­vid­ing in­cen­tives that will boost the ease of do­ing busi­ness in Nige­ria.

4. Con­clu­sion

The Ac­tion Plan is a laud­able ini­tia­tive of the Fed­eral Gov­ern­ment to en­sur­ing that Nige­ria re­moves crit­i­cal bot­tle­necks and bu­reau­cratic con­straints to do­ing busi­ness in Nige­ria and move Nige­ria 20 steps up­wards on the World Bank Ease of Do­ing Busi­ness Index. How­ever, a con­sis­tent and ef­fi­cient im­ple­men­ta­tion of the Ac­tion Plan is heav­ily de­pen­dent on (a) in­vest­ment in crit­i­cal ICT in­fra­struc­ture, (b) sen­si­ti­sa­tion of the MDAs in­volved in ac­tual op­er­a­tional­i­sa­tion of the Ac­tion Plan, (c) ad­her­ence to the aims and ob­jec­tives of the Ac­tion Plan by each state and (d) de­vel­op­ing the Ac­tion Plan fur­ther to fo­cus on crit­i­cal ar­eas such as pay­ing taxes, get­ting elec­tric­ity, solv­ing insolvency and en­forc­ing con­tracts. An en­abling busi­ness en­vi­ron­ment will not only en­cour­age do­mes­tic in­vest­ment in dif­fer­ent sec­tors of the econ­omy, it will also go a long way in sig­nif­i­cantly im­prov­ing Nige­ria's for­eign di­rect in­vest­ment, cur­rently recorded as 1,348.23 USD mil­lion be­tween 2007 and 2016. (www.tradinge­co­nomics.com/ nige­ria/for­eign-di­rect-in­vest­ment)

Nige­ria’s Min­is­ter of In­dus­try, Trade and In­vest­ment, Okechukwu Enelamah

Of­fice of the Fed­eral In­land Rev­enue Ser­vice, Abuja

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