Ease of Doing Business: Need to Intensify Reforms

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Nigeria moved up 15 places up the ladder from 146th to 131st position in the latest World Bank ease of doing business ranking, eliciting plaudits from stakeholders, who are calling for efforts to intensify reforms, writes Ndubuisi Francis

By the latest World Bank ranking, Nigeria is currently among the top ten most improved places to do busines in the world, jumping 15 spots from 146 to 131 out of the 190 countries surveyed.

The Doing Business Index is an annual ranking which objectively assesses prevailing business conditions across 190 countries based on 10 ease of doing business indicators.

Nigeria’s improved rating was influenced specifically by some key areas, including improvements in ease of getting electricity, trading across borders, enforcing contracts and business registration.

The Reforms

The Buhari administration in 2016 initiated the Presidential Enabling Business Environment Council (PEBEC), chaired by Vice President Yemi Osinbajo with 13 ministers as members, among others.

The council, through the Enabling Business Environment Secretariat collaborated with ministries, departments and agencies (MDAs), the National Assembly, judiciary, state governments and the private sector to carry out over 140 reforms so far, in a bid to remove bureaucratic constraints to doing business in Nigeria and make the country a progressively easier place to start and grow businesses.

It is therefore instructive that in rating Nigeria, the latest World Bank ease of doing business report acknowledged reforms spearheaded by the PEBEC in the areas of operationalising a new electronic platform that integrates the tax authority and the Corporate Affairs Commission (CAC). It also acknowledged reforms carried out in some of the World Bank Doing Business indicator areas such as starting a business, registering property, getting construction permits, getting electricity, enforcing contracts, and trading across borders.

In 2017, in the World Bank Doing Business Ranking, Nigeria moved up 24 places and was also listed among the top ten reforming economies in the world. This year, the World Bank also named Nigeria one of the top-20 improvers in doing business out of 190 countries.

Among the notable results of the reforms, besides the better ranking by the World Bank Doing Business Rankings and commendations include that the Federal Inland Revenue Service (FIRS), launched a centralised e-payment channels contributing to a 20 per cent reduction in time businesses spent on documentation and payment of taxes.

There was also the launching by the Immigration authorities of a fully digitised e-visa process guaranteeing visa approvals in 48 hours; the National Agency for Food and Drug Administration and Control (NAFDAC’s) re-engineered registration processes and reduced processing time from 12 to less than three months, and the Federal Airports Authority of Nigeria (FAAN) improved user experience at airports by eliminating passenger service charge stickers and manual check-in bag searches.

Some of the other results recorded include the Corporate Affairs Commission (CAC) simplified company registration processes, resulting in 50 per cent reduction in processing time and the passage by the National Assembly of the Credit Reporting Act 2017, among others.

Stakeholders’ Reaction

Reacting to the latest ranking, Vice President Yemi Osinbajo, said the Buhari administration would continue its determined pursuit of reforming Nigeria’s business environment until the full attainment of the objectives, which will bring dramatic changes in the country’s economy.
According to the him, the government would keep updating itself on the progress of the ease of doing business reforms, noting that some of the progress already recorded in the last three years since the commencement of the ease of doing business reforms.

Similarly, the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo stated that, “the steady improvement in Nigeria’s ease of doing business score and rank is a testament to the reforms implemented by this administration over the past four years in line with the reform agenda being implemented at national and sub-national levels across the country since the establishment of PEBEC by President Muhammadu Buhari in July, 2016.

“The PEBEC works towards the fulfillment of the projections of the Economic Recovery and Growth Plan (ERGP 2017-2020), which is striving to deliver sustainable economic growth in Nigeria by restoring growth, investing in our people, and building a competitive economy as we work towards delivering Buhari’s mandate of bringing 100 million people out of poverty.”

He emphasised that the 2020 Doing Business report from the World Bank was a reaffirmation of the commitment of the newly-constituted PEBEC to making Nigeria a progressively easier place to do business as well as removing the bureaucratic constraints to doing business in the country.

Also, the Special Adviser to the President, Ease of Doing Business, Dr. Jumoke Oduwole noted: “The movement of 15 places to 131 as well as the recognition being given to Nigeria as one of the top 10 most improved countries, who have implemented the most reforms this year, is significant because we were not even able to achieve some of the key reforms we had pursued, but what we have done so far is being recognised. This validation confirms that our strategy is working and we will continue to push even harder to deliver more impactful reforms

“The private sector remains the fulcrum of the ease of doing business interventions. We are committed to more engagement between reform-implementing organs of government and the private sector players and we are happy to see that this has resulted in a more favourable validation of the reforms by the private sector. This result will serve as encouragement to sustain the deepening of these reforms and make it even more tangible for businesses and the citizenry. The PEBEC is focused on delivering even more substantive reforms for the improvement of the general business climate.”

Also, in his reaction, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, commended the government on the attainment of the feat which he said, also reflects the efforts of PEBEC

He added that with this report, Nigeria has moved 39th places in five years, from 170th position in 2015 up to 131st position.
Acccording to him, Nigeria’s ranking in the West African sub-region is 5th position, adding that the country can do much better as the economic powerhouse of the region.

Yusuf pointed out that, “as noted by the World Bank’s report on Doing Business for 2019, efficient design and poor implementation are just two factors that explain why some reforms succeed while others fail.
“It stated further that there is a significant positive association between the availability of training programmes for public officials and streamlined business regulation,” he said.

He therefore stated that there was the need for government to ensure constant training of public officers as improved understanding, clarity and trust in regulatory requirements are associated with more efficiency in the regulatory framework.

He added that the present administration had unfolded its intention to be among top 70 countries on the ranking by 2023, saying that this was laudable but would only be achieved when the government addresses the major issues around infrastructure, policy, regulation, quality of institutions and insecurity.

The Director-General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir also explained that the country’s latest global position on ease of doing business came at a time the African Continental Free Trade Area (AfCFTA) agreement was in place, saying that the country would benefit a lot in attracting investments into the economy which incidentally will have positive impact on the country’s gross domestic product

Ajayi-Kadir, stated that the latest World Bank report on ease of doing business was a positive validation that the present administration was working assiduously to give a new face lift on the country’s business environment situation which has impeded lots of business growth and setbacks to manufacturers.

Acccording to him, the Organised Private Sector (OPS) have been engaging government during the Presidential Ease of Doing Business Council (PEBEC) constraint posed by over-regulation of businesses in the country and why there is need for them to improve the country’s business environment to enable businesses to thrive since government has nothing to do with business in the country rather than creating good conducive business atmosphere.

He noted that manufacturing constraints caused by over-regulation have forced some of its members to adopt cost- effective measures in line with their sustainable business strategies with the aim of achieving improved efficiencies and boosting production capacities.

He listed the manufacturing challenges as infrastructure deficit, multiplicity of taxes, policy contradictions, exorbitant cost of clearing and transporting raw materials from ports to the factories, poor access to Lagos ports, weak port infrastructure to increasing incidences of smuggling and counterfeiting as well as high unsold inventory of locally-made goods.

He stated that all have jointly constrained the manufacturing sector from attaining its full potential.
Commending the World Bank for its faith in the country’s business environment, he said the latest report on ease of doing business would further change things for good in the economy.

Registration of Businesses

Before now, the Corporate Affairs Commission (CAC) did not have a functional online/electronic platform for prospective business owners to register their businesses. This led to unnecessary queues and congestion at the CAC offices. In addition, the manual registration involved filing seven different forms. There was also a separate process of visiting the stamp duties office for assessment and payment of stamp duties. These challenges often resulted in undue delays, as much as six weeks, to register a company. The average time globally is about two days.

PEBEC set an objective to make it possible to set up a business in 24 to 48 hours. To achieve this, the following measures were introduced: online name searches, allowing online registration of businesses, improving the reliability and user interface experience of the online portal, reducing the forms from seven to one and integrating the payment for stamp duties with the registration process

Currently, the registration process has greatly improved such that it is now possible to register a business in four to five days.
Registrar-general, CAC, Azuka Azinge, said, “The forum is held periodically in furtherance of efforts towards deepening communication with our customers and other stakeholders.

It provides an opportunity for stakeholders and members of the public to have a one -on- one interaction with management of the Commission on service delivery
She added that the Commission in line with its statutory mandate has deliberately embarked upon several reform initiatives aimed at easing business registration in Nigeria.

“This explains the Commission’s strategic policies like decentralisation of its operations; deployment of the Company Registration Portal (CRP) and the integration of the Company Registration Portal (CRP) to the Stamp Duty Portal of the Federal Inland Revenue Service (FIRS) to further ease the process of company registration.

According to her, the goal is to ensure that every Nigerian has access to online registration especially the Micro, Small and Medium Enterprises (MSMEs) to enable more businesses to come into the formal sector with all the attendant benefits. This is in tandem with the reform agenda of the federal government aimed, among others, at growing the Nigerian economy through increased economic activities, employment creation, provision of infrastructure and making Nigeria one of the world’s top investment destinations.
The CAC Chairman, Dapo Abiodun, expressed the board’s determination to pursue its mandate vigorously for the benefit of the Nigerian economy.

Areas Impeding Ease of Doing Business

Government efforts have proved effective given the results contained in the latest World Bank report. However, some key areas of concern that still pose difficulty include access to credit, tax system and protection of minority investors.

Stakeholders believe that while the survey projects a rosy picture, the index failed to capture the true state of things, given that the survey was conducted only among locally-owned limited liability companies in Lagos and Kano. Similarly, the basis for defining easy access to credit, in which Nigeria was ranked 15th globally, is only limited to the strength of credit reporting in the country and the effectiveness of its collateral laws.

However, at the 131st position globally, there is a need for concerted efforts by stakeholders, especially the government, to continue to build strong business-friendly institutions to further ease the cost of running a business in Nigeria.