PEBEC and Urgency of Institutionalising Business Reforms

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Yemi Osinbajo

By Chukwuemeka Uwanaka

The extant 1999 Constitution of the Federal Republic of Nigeria, and previous Nigerian constitutions, identifies the economic development of Nigeria as one of the primary responsibilities of the government. Section II of the 1999 Constitution makes it the responsibility of government to promote national prosperity, and make policies that promote economic development.

Nigeria is classified as one of the low human development countries of the world, ranking 158 out 189 in the Human Development Index of the United Nations Human Development Programme.

With an understanding of the country’s economic history, as well as the collapse of the communist bloc led by the defunct Soviet Union in 1991, the Nigerian government has become more conscious of the role of the private sector in job creation and economic development.
This appreciation of the private sector influenced the establishment of the Presidential Enabling Business Environment Council (PEBEC) by government in July 2016. The Council has a mandate of proposing and coordinating reforms that will remove bureaucratic constraints, and make it easier and more enabling for organizations, businesses and investors to do business in Nigeria, as measured by the World Bank Doing Business Index.

This inter-ministerial and intergovernmental Council is chaired by the Vice President of Nigeria and comprises 10 ministers, the Head of Civil Service of the Federation, Governor of the Central Bank of Nigeria, the National Assembly, some state government representatives and the private sector.

The Enabling Business Environment Secretariat (EBES) is the operational arm of the Council, and is headed by the Special Adviser to the President on Ease of Doing Business.

PEBEC’s reform propositions are contained in its National Action Plans (NAP), and five of such have been launched since the establishment of the council. They include NAP 1.0 for February – April 2017 with a revised success rate of 82 percent; NAP 2.0 for October 3 – December, 2017 with a success rate of 52 percent; NAP 3.0 for February 5 – April 5, 2018 with 68 percent success rate; NAP 4.0 for March 1 – April 29, 2019; and NAP 5.0 for February 5 – April 4, 2020. The methodology for the work the council does is closely aligned with the ‘Ease of Doing Business Rankings’ (EoDBR) published annually by the World Bank.

The indices used in assessing how easy and enabling it is to do business in a country include starting a business; dealing with construction permits; getting electricity; registering property; and getting credit. Other indices are protecting investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.

From her ranking of 169 out of 190 countries on the EoDBR for 2016 when PEBEC was established, Nigeria’s ranking has moved to 145 in 2017, 146 in 2018 and 131 out of 190 countries surveyed in the EoDBR for 2019. Nigeria has also moved from the ‘very difficult’ category on the Index in 2016, to the “medium” category in 2019- which represents significant improvement.

While Nigeria’s improvement on the EoDBR is appreciated, it is important to note that reforms require time for traction to be gained and sustained. The nature of reforms contained in the NAPs cut across different sectors and ministries such as Transport, Aviation, Finance, Communications, Industry, Trade and Investment.

Registering a business now takes a shorter time and can also be done electronically, and chances of access to credit and resources for especially MSMEs that constitute a larger part of the economy are enhanced by both the Credit Reporting Act and Collateral Registry Act of 2017.

On the other hand, the use of Nigerian ports, especially the Lagos Port Complex, remains tedious and inefficient, making it less competitive for businesses to import and export raw materials and finished goods. Contracts enforcement and access to electricity also remain challenges. It therefore becomes imperative for the efforts made by PEBEC to be institutionalised, for increased chances of sustainability. This is especially so, as policy inconsistency remains one of the impediments to business development and investment promotion in Nigeria, and a lot of these inconsistencies occur when new administrations assume office.

An assessment of some of the socioeconomic development policies of previous governments demonstrates how inconsistency can be a challenge for attaining similar goals of government. Peoples Bank of Nigeria of 1989, Better Life Programme for Rural Women of 1987 (though not officially government owned), Directorate of Food, Roads and Rural Infrastructures of 1987 and National Poverty Eradication Programme of 2001 have similar objectives as the Development Bank of Nigeria and some of the current National Social Investment Programmes (NSIPs). Many are repetitions, and would have been more impactful if sustained by law. Indeed, some effective and efficient entrepreneurial schemes from a previous government such as YOUWIN have been discontinued.

To further appreciate the importance of institutionalising reforms, some reform efforts by previous governments will be assessed, especially in the critical sectors of communications, finance and education.

The liberalisation of the communications sector can be traced to the Decree 75 of 1992 that led to the establishment of the Nigerian Communications Commission.

It further enabled the National Telecommunications Policy (NTP) of 2000, which was given legal backing by the Nigerian Communications Act (NCA) of 2003 that brought the NTP into legal force. Due to these reforms, Nigeria has moved from 400,000 fixed phone lines and less than less than 200,000 regular internet users in 1999, to 190million phone users and 122million internet users in 2019. Also, the sectors’ contribution to GDP has risen from 0.67 percent in 2001 to 11.48 per cent in 2019, with the attendant increase in number of jobs, tax revenue and contribution to the effectiveness and efficiency of other critical sectors of the economy.

The financial sector liberalisation reforms under the same Babangida administration led to the emergence of ‘new generation banks’, which were more tech savvy and innovative, and provided good competition to older banks. The branch expansion approach of many of the newer banks enhanced the real estate sector of the economy, as well as the ability of Nigerian banks and financial institutions to finance major economic and business undertakings.

With industry staff strength of 77,690 employees in 2017, the reform towards the independence of Central Banks and backed by the Banks and Other Financial Institutions Act 1991 (and amended in 1997, 1998, 1999, 2002 and 2004) ensured that the regulator was able to make good and independent decisions that have enhanced the growth and performance of the financial sector.

Pension reforms were backed by law with the Pension Reform Act of 2004 (amended in 2014), which led to the establishment of the PENCOM. The Act also led to the significant resolution of embarrassing pension delays.

During the tenure of one of the recent Director-Generals of PenCom, the number of pension contributors rose from five million to about eight million, while assets under management grew from $19.3 billion to a record $42 billion.

For the media, similar liberalizing reforms such as the partial commercialization of public media stations in the 1980s and the Decree No. 38 of 1992 establishing the National Broadcasting Commission, have endured. This has led to the expansion of the media space, job creation, social enlightenment, democracy, free speech and liberty, with spin-offs in broadcast revenue for sports and entertainment. This is in contrast to days of only government owned media such as Daily Times and NTA, which allowed for too much government interference. Similar reforms also occurred in the education sector following the promulgation of Education (National Minimum Standards and Establishment of Institutions) (Amendment) Decree No. 9 of 1993, which repealed Decree No. 19 of 1984, and stipulated new guidelines on establishment of private universities, thereby increasing access to education for Nigeria’s growing population, Research and Development, as well as providing alternatives and much needed healthy competition for public schools.

These liberalised sectors contributed to making Nigeria the largest economy in Africa, after the rebasing of GDP in 2014, with increase in aggregate output from $270billion to $510billion. Telecoms accounted for more than a quarter of the increase, and the policies when given more life from May 1999, also contributed to reverse migration.

Given the circumstances under which the Babangida administration had to ‘step aside’ from office in 1993, it is most unlikely that these beneficial economic reforms in communication, finance, media and education would have been sustained, if they had not been institutionalised by law or decrees.

As the Vice President of Nigeria constitutionally leads on the economy, the PEBEC structure facilitates inter-agency cooperation, which is required to sustainably resolve such business inhibiting challenges, as against the inter-agency rivalry that may and sometimes plays out. The slim PEBEC bureaucracy is ideal and PEBEC should be passed into law, possibly as a commission.

Not every policy should and can however become law. The declining state of public finance in Nigeria is responsible for the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies, and the report of the committee, otherwise known as ‘Oronsaye Report’ of 2014 recommended a scrapping and merging of 220 out of 541 government agencies. A cost benefit analysis of PEBEC however demonstrates its very significant positive contribution to the Nigerian economy, and therefore should be backed by legislation to continue its work.

“Though Nigeria’s ranking on the World Bank Doing Business Index has improved, there is still a lot more work for PEBEC to do, in supporting the actualization of Nigeria’s socioeconomic aspirations. Appropriate legislation to support and strengthen the Council will therefore be adroit.

While there is some concerned perception about the appropriateness of the relationship between the executive and current national legislature, especially when conceived within the classic framework of separation of powers, this ‘cordiality’ between both arms of government however offers a strategic opportunity for economic reforms to be institutionalized. The urgency of seizing the ‘diplomatic moment’ is occasioned by the fact that such moment may not last for too long.

Already, the recent disagreements between some members of the executive arm of government and members of some parliamentary committees may have begun to test the cordiality between both arms of government.

With the leadership contests in the ruling political party and political moves towards the 2023 general elections starting rather too prematurely- events Professor Assisi Asobie will describe as the ‘intensity of politics’, the window of opportunity required to institutionalise PEBEC reforms may the smaller than thought- hence the need for urgency.

The PEBEC and executive arm of government, should quickly initiate the necessary executive bill(s) that will be sent to the National Assembly, possibly utilising the National Assembly Business Environment Roundtable (NASSBER). Time, as the legal term says, is of the essence.

Uwanaka, a policy and management analyst, writes from Abuja and can be reached through chukweks@yahoo.com