By Aderinsola Fagbure
The month of March was characterised by several events including those tailored towards celebrating the rights and well-being of women as business leaders and company founders. Significant among the March outings was the much talked about launch of the mobile application (app) focused on the ease of doing business in Nigeria, designed by the Presidential Enabling Business Environment Council (PEBEC).
The launch of this application has been applauded in many quarters, as it is aimed at ensuring that small, medium and micro scaled businesses in the country experience ease in doing business, as a result of the reduction in the already identifiable bottlenecks which characterise the Nigerian business clime. Speaking on the PEBEC app, the current Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, was quoted as saying “it was launched to create better enabling environment for the businesses, citizens, and SMEs operation in Nigeria.”
In essence, the recently launched PEBEC app serves as a tangible mobile tool for achieving the important objective of better interaction, communication and feedback mechanism from the users of government services. It is unarguable that a mobile application provides are more interactive and responsive feedback mechanism when compared to a website or a portal which requires a cumbersome login procedure.
The launch of the mobile application is only one of the numerous achievements of the PEBEC team which was founded by President Muhammadu Buhari in 2016, with a mandate to implement three short-term National Action Plans aimed at jumpstarting reforms and promoting accountability within the Nigerian business environment.
The PEBEC operating model is structured such that it forms an integral part of the National Agenda, it initiates reforms with a view to resolving bureaucratic bottlenecks and it works actively with Ministries, Departments and Parastatals, as well as state governments to implement economic reforms. The initiative is supported by Executive Order 001 (EO1) which was signed by the President in 2017.
It is particularly instructive that through the efforts of PEBEC, the country’s competitive index has improved. With regard to registration of companies, the positive use of technology has reduced the time it takes for entrepreneurs to register their business names and incorporate their companies at the Corporate Affairs Commission (CAC).
Name searches and reservations can conveniently be done on the CAC portal. A remarkable reduction in the frequency in downtime of the CAC portal/servers, has been recorded such that physical visits to CAC locations will be eliminated during company registration process. The improved Twelve (12) hour timeline for name reservations which would be included in the updated Companies Regulations scheduled to be published by the CAC within the next thirty (30) days, must be commended. However, greater efforts need to be made to improve the timelines on post incorporation activities.
The Company registration process has been simplified through the integration of Federal Inland Revenue Services (FIRS) e-payment solution into CAC online portal. Further, the fact that the Tax Identification Number (TIN) for Companies is instantly generated, upon incorporated saves a great deal of man hours and founders of newly incorporated companies no longer have to pay a visit to the tax office to obtain their TIN numbers.
The reduction in the processing time for Value Added Tax (VAT) Payment and Companies Income Tax (CIT) payment from 2 weeks to 8 hours is also a step in the right direction and has been applauded by entrepreneurs who are known to be very time conscious. Time saving processes are embraced in a fast paced economy and the procedure for obtaining Governor’s Consent has been described as most gruelling.
However, the processing time for obtaining governors consent has been reduced significantly, that is by 50% in 2 major economic cities, locally. An applicant for registration of title to property will only have to make a single payment as opposed to several payments which had to be made prior to the reforms. Also, the cumbersome legal process/ requirement for conducting due diligence on properties at the Land Registry with the elimination of the sworn affidavit requirement. It is therefore expected that many more property owners, particularly entrepreneurs with an eye on perpetuity and succession planning, would have the title to their property duly registered.
Notable reforms have been made in the area of access to credit. The proactive steps taken by PEBEC were instrumental towards the establishment of the Nigerian Collateral Registry. The existence of an integrated or unified legal framework for secured transactions in movable property is equally commendable.
Though a primary initiative of the Central Bank of Nigeria, it is expected that the registry would improve access to finance for small businesses through the use of immovable and movable property as collateral for loans. In practical terms, farmers can now use their livestock as collateral for expanding their farms, manufacturers on the other hand can present their stock of finished products as collateral.
In commending the steps taken in this direction, it must be mentioned that not all Nigerian financial institutions are inclined to accepting movable properties such as cattle as a form of collateral. It is therefore important for greater efforts to be made in providing interest rate friendly loans with flexible terms to local entrepreneurs. PEBEC may take a cue from other climes that encouraging the use of non-traditional financing methods alongside the well-known fundraising methods, with the aim of unlocking capital in all sectors.
It is an established fact that law reforms are necessary towards improving Nigeria’s global competitiveness. John Hawksworth, the Chief Economist at PricewaterhouseCoopers (PwC) during his speech at the 2015 Nigerian Bar Association Section on Business Law Annual Conference drew attention to the need to build strong institutions for economic growth and investment, political stability, law enforcement and accountability and the rule of law.
In order to attract foreign investors and remain global business hubs, countries are constantly improving their regulations. In recognition of the nexus between law reform and economic development, PEBEC has made notable strides in its legislative advocacy drive, one of which the amendment of the extant Companies Act, which have been well-received.
It must be mentioned that for almost three decades, the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004 (CAMA) has remained the legislative lifeblood for the regulation of business organisations in Nigeria, be it companies, business names or incorporated trustees, with the Corporate Affairs Commission (Commission) occupying the status of the apex regulatory body. The promulgation of CAMA is unquestionably a remarkable departure from the then stringent system of corporate administration and governance under the Companies Act, 1968 (Companies Act).
However, the CAMA became anachronistic with the passage of time in view of various economic developments, social changes and technological breakthroughs, thereby necessitating major amendments. In the wake of this, there was the consistent and vociferous call from concerned stakeholders for a comprehensive review of the provisions of the CAMA 1990 with a view to align same with global best practices and prevailing corporate realities.
Consequently, a number of amendments were discovered and subsequently inserted in the draft bill. The changes are significant and represent a bold move by the Nigerian government towards putting in place a favourable corporate environment for the growth of MSME businesses and increasing Nigeria’s ranking on the World Bank’s Ease of Doing Business Index.
The story of the amendment process would be incomplete without mentioning the advocacy efforts and research drive of the PEBEC Secretariat. Equally deserving of mention is the efforts being made with respect to the Omnibus Bill on business facilitation which seeks to amend provisions in at least 30 existing commercial laws.
The efforts made by PEBEC are indeed commendable. However greater stakeholder engagement is required at all levels. The judiciary also has a role to play in ensuring that the court system is efficient, bearing in mind that law reform cannot be effective without strong institutions. Further, greater awareness is necessary to ensure that small business founders understand the changes being made towards improving the local business environment.
The responsibility of improving Nigeria’s ranking on the World bank Ease of Doing Business Index is not only that of PEBEC it is also that of all the MDAs who have an obligation to keep abreast of these reforms and improve their attitude to work such that bureaucratic bottlenecks are significantly reduced. Conclusively, it must be mentioned that it behoves on you and I to assist in the reform process by providing objective criticism on our interactions with these government agencies. The best way to do this is by making use of the PEBEC application.
Have you downloaded this app?
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.