Enhancing Investment Climate through Effective Regulatory Reforms


In this analysis, James Emejo examines the relevance of strong regulatory reforms to reflect current global economic realities as well as enhancing the investment climate in Nigeria, particularly at a period when emphasis is on ease of doing business and economic diversification from oil to non-oil revenue prospects

Like many other obstinate English laws in Nigeria, the companies Act of 1968 took after the English law system without giving cognisance to the peculiarity of the Nigerian system and its people. In order to correct the inherent anomalies however, the Companies and Allied Matters Act (CAMA) No. 1 of 1990 was promulgated in the aftermath of the directive of the federal government in March 1987 that better set of laws that would take care of the peculiarities of the society be enacted. This stemmed from the determination of the federal government to reform the law regulating the affairs of companies and its administration in the country.

The law reform commission recommended an independent, well-funded and well-staffed body to administer companies regulations and related matters, thus the Corporate Affairs Commission (CAC) was birthed on February 14, 1991 and charged with the responsibility of registering companies, business names and incorporated trustees (NGOs).

But, the commission has not been immune to challenges and like any other government-owned parastatals as there were issues ranging from inefficiency and too much time and resources wasted on registration of businesses, a development which had ranked the country among global destinations where it is difficult to easily register and commence business.

Nigerians have variously had to contend with touts who paraded themselves as intermediaries between customers of the commission and the commission itself. It was therefore not strange to see lots of jobless youths milling around the premises of the commission in a bid to desperately hijack customers who wanted to register their businesses, often times defrauding unsuspecting prospective business owners.

These nefarious acts were often time done in collaboration with unscrupulous staff of the commission- an unfortunate scenario which made the commission appear ineptitude and backward in computer skills; at the time, the incorporated process was very slow because of the manual mode of operation coupled with touting that reigned supreme and incidences of duplicated business registration numbers were a common feature while names of companies were often wrongly spelt.

Although the commission had previously been steered by two substantive registrar generals, the appointment of the current Registrar General of the Commission, Bello Mahmud on October 9, 2009 ushered in a new era, both in the administration and efficiency of the organisation.

Therefore, repositioning the commission on the path of greatness wasn’t difficult for having being a director of compliance previously.

One of his first major breakthroughs was the dislodgment of the touting regime which had become endemic in the commission while accredited lawyers, chartered accountants and secretaries were engaged in partnership to do business registration on behalf of customers.

This arrangement, was however, not without challenges as lawyers’ fees are not easy for customers to come by and their charges were even higher than the amount CAC charges for business registration, a situation which also led to concern by the World Bank in its Doing Business Report that the cost of doing business in Nigeria is outrageous.

The CAC was severally faulted by Nigerians and accused of only trying to create avenue for some ‘charge and bail lawyers’ to make ends meet.

But Mahmud repeatedly denied the accusation, describing them as baseless, maintaining that the commission would not deliberately mount financial pressure on its customers all in the creating wealth for lawyers.

He said the desire to bring sanity and sanctity to the operations of the commission informed the idea of using lawyers and chartered accountants and secretaries.

According to him: ’It is a mistake to say that we are doing business with lawyers just to create avenue for them to make money. If you know our system before, the way things were being done, there were lots of touts who come to do business for their supposed clients and in most cases, and they dupe these clients. So we said things cannot continue like that and we decided to make things cleaner, neater and tidier. So we accredited people who can deal with us, lawyers, accountants and chartered secretaries.

“So they do business with CAC on behalf of their clients and that is why you can see a neater CAC now, before now, every Tom, Dick and Harry comes in; now it is only the people we accredited that can come in and even at that, government felt that arrangement was not good enough and that we should give opportunity to those who feels that they can handle their business registrations themselves without the services of lawyers or other accredited people, that was why the e-registration portal was launched but if you feel you still need lawyer, why not, it is now a matter of choice.”

But there were other challenges on the e-registration platform launched by the commission to speed up registration processes for customers as well as customer reportedly hot stocked in the process of registering their businesses online.
Some prospective customers claimed that the e-registration platform fluctuated in the process of registration.

A customer also believed the failure of the e-registration platform was a deliberate connivance between CAC and lawyers.
“According to him: “You know there are lots of jobless lawyers out there now, a lot of them do charge and bail or manage houses for people, they need to survive and CAC is just creating an avenue for them to do so. The platform is slow and one gets frustrated, they want you to go back to lawyers for the service.”

However, Mahmud described the allegations as laughable and that anyone who is conversant with the way internet works will appreciate the fact that the commission has no infrastructure to operate the e- business registration platform.

He said: “It is a new portal and it’s been developed by a local vendor, we did that on purpose in order to give Nigerians chance to grow instead of going to look for an offshore company to come and do it for us. The portal is working, it’s being tested still and many innovations are being done every day. It is not that it is perfect but it is a work in progress. I also need to point out that, most times the problem may not be with the portal but the network which we don’t have control over. For instance, payment is done online and the service for this is not done by the portal’s vendor but another platform, so let’s say there is a challenge with the payment platform, people will conclude that the CAC portal has issues. But like i said, it is still being tested and we will get there, the upgrade is a continuous process.”

According to him: “The target is not only Nigerians residing inside the country but for people in the Diaspora and foreigners alike, the e-registration would serve their purpose because they would be able to transact business with the CAC and get their businesses registered wherever they are around the globe in the comfort of their offices and homes. The idea is to ensure that people are able to register their businesses anywhere in the world. We felt that it is not fair for people living outside the country not to be able to do business with us, and don’t forget that the world is now a global village. If you are in UK or Asia for instance and you are able to do your stamp duty electronically and get your business registered.”

He said the general idea was to ensure accountability as no money paid for business registration enters any private pocket adding that due diligence in registration of businesses has, in no small measure, put the activities of phony firms siphon money and also deny government its revenue by evasion of tax.

Mahmud said it is with the view to getting companies to pay tax that they are made to file their annual return with the commission such that there won’t be any hiding place for tax defaulters.
According to him, “The issue of taxes is not done by us, it is under the purview of the FIRS, they are based on the turn over filed by company in the accounting year, the only thing CAC does is that when you come to file your annual return, you are asked to file it along with the annual accounts of these companies. We are optimistic that we would be able to increase the revenue accrue to government when people who are still doing business informally are captured. Once they are registered with us, the revenue automatically increases.

In order to further pull down the perceived barrier between it and its customers, the commission has introduced a public search window in its website that allow customers and members of the public to search for existing registered companies and those undergoing registration at no cost.
It further developed a document upload interface that will allow customers to upload all registration documents for both pre and post incorporation fillings. This, he said, has reduced processing time and human traffic in the commission.

All these are laudable in-house reforms, but more reforms are still imperative on the national scale, for instance, CAMA is twenty six years old and unlike CAC’s peer regulators that had secured amendments of their enabling acts, the commission is still not able to change some of the provisions in CAMA which is impeding contemporary business practices in the light of national and global reforms.

It is noteworthy that the Financial Reporting Council Act, 2011, Federal Inland Revenue Service Act, 2007, Pension Reform Act, 2004, Investment and Securities Act, 2007 among others had all undergone some key amendments to reflect globalisation and contemporary business practices.
Experts believe the amendment of CAMA will see to the strengthening of CAC’s regulations and enforcement powers as well as review of penalties.

Apart from the inhibitions occasioned by the archaic nature of CAMA, Mahmud expressed concern on the state of insecurity of documents due to their storage pattern.
Mahmud said that the fact that most of the commission’s records are still in paper form makes access difficult for both staff and customers while there are also records of frequent incidence of pilferage and mutilation of records.

He said his dream was to have a well computerised and digitised CAC that would be theft-proof.
According to him: “I want to see a digitised CAC where documents will be 100 per cent safe. Sometimes we find out that some of our customers connive with some of our lawless staff to falsify records, this is because records are still kept manually. The first business that was registered in Nigeria was done in 1914 and we still have the records, as a matter of fact, we have all the records of all businesses that had ever gone through the commission for registration, they are there for verification. However we are moving away from manual record keeping, we want to see how we can scan the entire existing one and keep away from paper document. The essence of this is to guide against their being tampered with. Once we are able to achieve this, tampering with document will be a thing of the past’’.

It is truly incomprehensible that such an important vehicle for investment attraction and promotion-the CAC would be left to still operate on primordial laws, which inhibit technological transformation needed to truly hasten business registrations and ignite the industrial base of the economy as well as boost employment generation for millions of Nigerians.
Today, the quest to reduce business registration to only 24 hours as obtained in most climes is still elusive, thanks to delays in amending the commission’s laws to fast-track progress in that respect.

And until the CAC act is amended, expecting a world-class breakthroughs in terms of the kind of innovation and protectiveness required to leapfrog the country into the global nations with enviable ease of doing business, especially as it concerns registration of firms, will be unrealistic, as the commission’s major challenge to innovation is currently that of tardiness in the review of its enabling laws.