387 views | Chinemerem Nnawuihe | September 22, 2020
The Ease of Doing Business (EODB) index is a ranking system established by the World Bank Group. It ranks countries against each other based on how the regulatory environment is conducive to business operations and stronger protections of property rights. It is a yearly ranking that assesses the business environment in 190 countries using various indicators including paying of taxes, starting a business, protecting minority investors and trading across borders. Economies with a high rank, that is, between 1 and 20 have simpler and more friendly regulations for business.
Nigeria is currently ranked 131 among 190 economies according to the latest annual ranking of the World Bank – World Bank’s Doing Business 2020 index, which was released on the 24th of October 2019.
Nigeria is Africa’s most populous country with abundant natural and human resources; this easily makes it attractive to foreign investors. However, the state of Nigeria’s economy and its business/economic policies are two key factors that would determine how conducive it is for foreigners to invest, establish and carry on businesses in Nigeria.
The closure of Nigeria’s land borders in August 2019 is seen as a counter productive business/economic policy which has affected the ease of doing business in Nigeria because it has adversely affected trading across its borders; it has also heightened the apprehension of investors (and potential investors) due to sudden change(s) in the country’s economic policies which may negatively affect their businesses. Even though the aim of closing Nigeria’s borders with Chad, Benin, Niger and Cameroon is to protect Nigeria’s economy from the activities of smugglers, the closure has erased trade worth millions of Dollars. It has also affected Nigerian businessmen in neighbouring countries especially in Ghana. Recently, the Ghanian government through some regulatory policies have made it difficult for Nigerians to establish and carry on businesses in Ghana. The Ghanaian government has cited the closure of Nigeria’s borders as the major reason behind its actions; this could also result to Ghanian businessmen and companies (as well as those of other neighbouring countries) being sceptical about doing business in Nigeria.
In July 2016, the Federal Government established the Presidential Enabling Business Environment Council (PEBEC) with the aim of minimising the constraints that come with running businesses in the country. The council is chaired by Nigeria’s Vice President, Prof Yemi Osinbajo SAN, GCON; other members of the council are ten (10) ministers, the Head of Civil Service of the Federation, the Governor of the Central Bank of Nigeria (CBN), representatives of: Lagos and Kano State Governments, the National Assembly and the private sector.
In 2017, the Nigerian Immigration Service (NIS), reviewed the requirements for Nigerian visas to make them more user-friendly. This was done as part of plans to improve the country’s business climate.
One of the key indices for assessing the ease of doing business in Nigeria is “how to start a business” in Nigeria; therefore, the Federal Government has undertaken some business reforms which are geared towards removing some of the bottlenecks that hitherto prevented the ease of establishing businesses in Nigeria. This has come in the form of the repealing of the Companies And Allied Matters Act (CAMA)1990, a piece of legislation that has regulated business affairs in Nigeria for over there decades. It has been replaced with the Companies And Allied Matters Act (CAMA) 2020, which is supposed to address the challenges of doing business in the 21st century whilst ensuring adherence to international best practices. Under the CAMA 2020, new provisions have been introduced to promote business development and a friendly business climate (for investors) in Nigeria.
Some of the new provisions introduced to promote the ease of doing business in Nigeria are as follows:
These innovations will no doubt enhance the growth, management and sustainability of businesses in Nigeria. They will ensure global competitiveness as Nigerian businesses and companies would be managed according to international best practices.
What remains to be seen is how these business reforms would be implemented for the ease of doing business in Nigeria. The bureaucratic bottlenecks that usually frustrate the process of establishing businesses in Nigeria must be removed in order to ensure the effective implementation of these reforms. The registration of companies, incorporated trustees and the novel Limited Liability partnerships must be seamless; all electronic channels must be efficient and accessible 24 hours daily. Mechanism(s) for due diligence must be established where the services of lawyers have been dispensed with under the current reforms.