By Toyin Bashir
Growing up, I never liked mathematics. However, it was also clear in my mind that I was going to be a professional and Law was the most appealing choice for me at the time. It wasn’t really until senior secondary school that I made a conscious decision to pursue a career in Law. This journey took me to the University of Lagos where I graduated Top 5 in my class of over 150 students in 1999. I was later called to the Nigerian Bar in January 2001 as a Barrister and Solicitor of the Supreme Court of Nigeria and I have practised ever since. I’m currently a partner in the Corporate Securities and Finance Practice group at Banwo & Ighodalo and I work out of the firm’s Abuja office.
As a private sector player, the ease or otherwise of doing business has a huge influence on how I service my firm’s clients efficiently and effectively. Also, as a Nigerian, I realized that the economy is influenced by how friendly the business environment is to international investors, so as to attract the much needed FDIs which will, in turn, improve the economy. It was clear to me that a targeted intervention was required by the government in this regard. These were compelling reasons for me from a professional as well as a social standpoint to volunteer to support the Federal Government of Nigeria in such a laudable initiative. One of the founding partners of my firm, Mr Asue Ighodalo, pitched the idea to me and it didn’t take me long to agree to provide technical support with the ease of doing the business project. I joined EBES, that is, Enabling Business Environment Secretariat shortly after the Presidential Enabling Business Environment Council (PEBEC) was established by President Muhammadu Buhari in 2016. My role at the time was to facilitate the reforms in the entry and exit of goods indicator thus, improving the ease of importing and exporting goods. While I had extensive experience working with ministries, departments and agencies from a private sector position, this was the first time I would be engaging them as a partner working towards common goals. My role would involve interfacing with the Nigerian Customs Service, Nigerian Port Authority, NIMASSA, Nigerian Shipping Council and many others, to bring them to ‘a consensus at Eden or a meeting of minds’ as we, lawyers, like to call it, where they all realize that they are working towards the same goals and that it is more effective and efficient for them to collaborate. In that reason, I worked with these agencies in improving transparencies of some of their processes through the publication of steps and documentation relating to such processes where they had to do so on a dedicated website making some of the interaction points with the public more efficient. For instance, I had to work with them on improving timeline for physical examination of cargo through the introduction of a more coordinated and structured approach whereby the Nigerian Customs Service led the inspection exercise and carried the other Government Stakeholders along. Also, we worked on reducing the documentation requirement in importing and exporting. So, speaking broadly, the reforms were targeted at infusing international best practice elements towards improving the import and export experience for Nigerians so I supported EBES in this area for about a year and it was upon completion of the reform cycle for that year that Nigeria moved up 24 places on the World Bank Ease of Doing Business Index and this was a very proud moment for the team.
So one key aspect of the work that my colleagues and I are undertaking at EBES is the fact that we, of course, are collaborating with World Bank doing business team to ensure that we are entrenching global best practices in all spheres of our work and we also enjoyed a wealth of guidance and technical support from World Bank, so, in the following year, that is, following the year that I worked on improving the experience for Nigerians on import and export of goods in Nigeria, in the following year, there were several legal refunds that PEBEC sought to implement and I was assigned to support EBES on such legal reforms as the Reform Leader and Head of the Legal Cluster so this is the role which I have occupied till date.
Now, a second legal reform area was in response to how difficult it was for small businesses to recover money owed to them in the Nigerian Court and how difficult it was to file a case in court and to get a judgement by a small business. It took them a long time to receive judgement and it was also costly because you then had to get a lawyer who would appear for you and draft your processes and appear in court for the duration of the period that your matter will be in court. This area is generally referred to as ‘Enforcing Contract’ by the Doing Business Team of the World Bank. It was for this particular reason that EBES supported the Lagos and Kano State Judiciaries with the establishment of the small claims court in Lagos State in April 2018 and subsequently, in Kano state in January 2019. The small-claims court in both states is specialized commercial courts where SMEs can file claims for recovery of liquidated money debt of five million Naira and below. The process of filing and making claims at a Small-Claims Court has been made to be so easy that persons of businesses can file their application themselves, the forms are so simple that if you are educated, you probably will not require a lawyer to fill the form. The constitution provides that everyone has a right to self-representation, you also have a right to employ a lawyer to represent you in court but – looking at other jurisdictions – we find that provided the processes are simple, people were happy to actually file these cases themselves without having to employ a lawyer and this was what we were trying to achieve with the Small-Claims Court.
Also, to make the process more efficient and faster, we noticed that in the Superior Court, one of the causes of the delay was getting an adjournment. So, one of the best practice element that was infused in the Small-Claims Court was to limit the adjournment to only one instance. Therefore, in a case where a court will, wherever a litigant, either by himself or by his lawyer will require an adjournment, they were restricted to having only one adjournment and it had to be for an exceptional circumstance. Events in the court were time-based so, for instance, each magistrate of the Small-Claims Court was expected to conclude the hearing of a matter and to deliver judgement in such a case within the maximum period of 60 days.
Legal Reform Agenda of PEBEC
The first area which I supervised relates to making it easier for Nigerians and foreigners to formalize their businesses in Nigeria, by registering same at the Corporate Affairs Commission, that is CAC, in a timely manner. This is, otherwise, usually referred to as starting a business indicator by the Doing Business team of the World Bank. EBES works directly with the CAC to provide technical support to the CAC in improving its pre-registration, registration and recently their post-registration processes. Recent statistics from the National Bureau of Statistics suggest that more than 17 million small businesses in Nigeria operate in the informal sector. This number constitutes 99.87% of small businesses in Nigeria, this means that over 90% of small businesses are locked out of receiving benefits which can only be derived from being a legally registered business such access to finance whether in form of depth or equity and even access to incentives which are usually available to businesses operating in specific industries. It was, therefore, very important for the process of migrating such a staggering amount of informal businesses to the formal sector to be simpler and cheaper to undertake by the promoters of such businesses. So some of the reform highlights that we supported CAC in deploying for making it simpler and cheaper for Nigerians to register their businesses include; creation of a company registration portal whereby a general user profile was created on the company registration portal (CRP). The CRP is a web-based portal where any Nigerian can create a profile for himself or herself and undertake the registration of a company without the use of what is termed an accredited agent. An accredited agent can either be a lawyer or a chartered accountant who is registered with CAC to undertake registration and post-registration activities at the commission. These lawyers and chartered accountants had to be licensed – using that word very loosely – by the CAC to undertake those activities and this was basically limiting. So instead, on this web-based portal, this CRP, a general user profile was created whereby anybody can then log on that website and create their profile and undertake the registration by themselves since the manual process for registration had now being phased out and the only way anybody could actually undertake a registration of a company was online on this CRP.
Another reform which we supported the CAC in introducing was in reducing the timeline for reservation of a unique name from a period of about 12 hours to less than 4 hours, this means when any Nigerian is interested in setting up a business and has an idea about a name, he can simply just go online to the CRP and create a profile and whatsoever name that he is interested in registering, he can just put it on application and get the result in less than 4 hours. Another reform, which was geared at just basically making CAC more efficient was to ensure that completion of a registration of a company can be completed within a maximum period of 24 hours from the time the completed documents are submitted to the CAC on the CRP, that’s on the Company Registration Portal.
We also supported the CAC and the Federal Inland Revenue Service (FIRS) in collaborating together to share the information which has enabled FIRS to generate Tax Identification Numbers immediately after every company is registered by the CAC. This Tax Identification Number (TIN) is then forwarded to the new company by email. So previously, after registering the company, they would have to visit the Tax Office with an application for TIN. In order to make the process more efficient and less burdensome for Nigerians, it meant that since CAC has all the information FIRS needs, the information can be used to generate TIN in the spirit of one government. We facilitated a collaboration between the two agencies whereby that information can be shared with FIRS and this basically birth the reform.
We have also supported the CAC by facilitating adherence to the timelines that they sculpt out in their service level agreement with customers. A lot of the agencies have come up with service-level agreement whereby they detail each of their processes and the timeline that the public should expect such processes to be completed once an application is lodged. So, we worked with CAC to ensure that their promises to the public in relation to those timelines are kept most of the times or all of the times.
Lastly, we’ve been supporting the Kano State Government in relation to this starting a business indicator in the introduction of an electronic process whereby businesses can procure business premises permit online. Previously, people had to visit the Ministry of Commerce in Kano State to make an application and make payment in the bank to be able to procure a business premises permit but with the introduction of this electronic process, all they need to do is visit the Ministry of Commerce’s website in Kano State, lodge their application and even the certificate is also sent electronically to the applicant within the 24 hour period.
Concerning the CAM bill and omnibus bill in 2016, the National Assembly had collaborated with PEBEC towards the passage of two key bills on credit (Access to Credit); the two bills which are now laws (the Secured Transaction Immovable Asset of 2017 and the Credit Reporting Act of 2017). The passage of these two bills into Law resulted in Nigeria having a more effective Legal Framework for Access to Credit by SMEs and it also resulted in Nigeria been ranked as 6th in the World by the Doing Business Team of the World Bank. So, there was precedent for the relationship with the National Assembly and in this particular reform cycle, PEBEC was looking at legislative reform since there has been a precedent of successful collaboration with the National Assembly, it was then deemed important and pertinent to also take advantage of that collaborative relationship that was now existing between PEBEC and National Assembly to push for more legislative reforms.
The CAM bill has to do with first how you undertake; so this is pre-registration, sort of like pre-registration reforms, you know, making it easier for one person like I mentioned earlier, making it easier for one person to actually set up a company by reducing the minimum number of persons that can register a company from 2 to 1, that is , one person can do it by himself/herself, also removing the requirement for seeking the consent of the Attorney General of the Federation before one can register a company limited by guarantee which is a non-profit company. It is important that non-profit related companies can also be registered quickly, timelessly and also easily because these are people who are providing interventions in different areas, supporting the Federal Government on the deployment of interventions which improve Nigerians in terms of their lifestyle, health, education, governance, and so many areas.
Also, there is a form called Declaration of Compliance that is completed at the pre-registration stage which requires a lawyer to sign it and it also requires a notary public, a commissioner of oaths who sits in a court to sign. The proposed amendment in the CAM Bill is for that form to be replaced by a Statement of Compliance; this Statement of Compliance will not require a lawyer to sign it, the person who is registering his business can simply sign the form and also does not require a notary public or a commissioner of oath to notarize a document so making it basically easier and simpler for any person to just complete the form online on the Company’s Registration Portal and sign it without requiring the engagement of a lawyer and without requiring the engagement of a Commissioner for Oath or a notary public, the essence of this reform is just to make the pre-registration processes easier.
When CAMA was passed over 28 years ago, what was envisioned was a manual process for registration, now that technology has been introduced for the registration process, it was also important that such technological processes are captured in the CAM Bill, so there are provisions relating to processes being done using technology just so that it is backed up by law. There are also provisions which will lead to protecting minority investors so that when the company is in existence, their interests are also protected. In the CAM Bill, we have provisions which have increased disclosure requirement by Directors of Conflict of interest, so, Disclosure of Conflict of Interest in property transactions by Directors and Controlling Person has also been introduced in the CAM Bill.
Also, a requirement for shareholders’ approval, when the majority of shares in a company is been sold, there is now a mandatory requirement for that shareholders’ approval. There is also a move to separate the office of the Chief Executive Officer, that is the CEO, from the Chairman of the company because in some cases you’ll find that in some companies, the Chairman is also the CEO, so, for a more effective corporate governance structure, there are now provisions in the CAM Bill which makes it mandatory for the offices should be separated, so a separate person for the CEO and a separate person as the Chairman of a company.
Again, the provisions restrict multiple directorships in public companies to a specific number. So, if one person is Director of a Public Company, there is a maximum number of similar public companies that the person can act in the role of a Director. Then, there are also mandatory requirements for public companies to have a specific number of independent directors, this is also to facilitate good corporate governance and this is in line with the International Best Practice. In addition, from a review of the current provisions of CAMA, it was apparent that the provisions relating to insolvency were grossly inadequate; there were very few options available to companies which encountered distress during the life of their business so the entire legal framework, introduced, for the first time, business rescue provisions, that is administration and company voluntary arrangement as an alternative to liquidation of such companies was included in the CAM Bill, so, building on the gains recorded from such an effective collaboration with the National Assembly at least as regards improving access to finance, it was still necessary to also support the then ongoing effort to amend the Companies’ and Allied Matters Act, otherwise known as CAMA. So, CAMA is an enabling law which regulates the registration, structure and operations of companies in Nigeria and this particular law have not been amended in over 28 years, so, as a result, a lot of provisions contained in CAMA have become obsolete, they were not in tandem with the economic realities of the present day, they were also not in line with the International Best Practices and of course this had a direct impact on Ease of Doing Business in Nigeria, so, in order to address this gap, this lachrymal, this issue, the PEBEC then took active and deliberate steps to collaborate with the National Assembly and other key stakeholders both in the Public and Private Sectors, and in this regards worked with the likes of CAC, the National Assembly; Business Environment Round-table (NASBER), the Nigerian Investment Promotion Commission (NIPC), the Securities and Exchange Commissions (SEC), the Nigerian Bar Association; Social and Business Arm (NBASBARM), the Nigerian Stock Exchange, the Nigerian Economic Summit Group amongst others, we worked together in order to review the provisions of CAMA which were deemed as not been in line with the International Best Practice
So, another reform which is being introduced through the CAM Bill is expunging the requirement for seeking prior approval of the Attorney-General of the Federation before companies limited by guarantee can be registered, so companies limited by guarantee are companies registered in Nigeria for non-profits, that is, they are non-trading companies, there is a requirement under CAMA for such that in order to complete the registration, you must first obtain a consent from the Attorney-General of the Federation, the impact on this has been tremendous in terms of timing from the timing perspective, it takes, you know, eight months sometimes for a registration to be completed because one has to seek for prior approval from the Attorney-General of the Federation Office, and looking at jurisdictions that are peer jurisdiction across the world, there wasn’t any such requirement from other countries for prior approval before such companies could be registered, so, one of the reforms has been introduced into the CAM Bill is for the removal of the requirement for the Attorney-General’s consent and this has been replaced instead by a process whereby details of such companies will be published in Newspapers so that the public is aware that XY&Z are setting up a company limited by guarantee and where there are any objections, they can then table such objections to the CAC.
For the first time, an entire legal framework introducing Business Rescue Provisions are now in CAMA. These Business Rescue Provisions relates to what is termed Administration and Company Voluntary Arrangement, which is an alternative to liquidation. Liquidation is a situation whereby when a company is in distress, essentially, it folds up. In this case, with these new provisions, when a company is unable to pay its debt, it can now explore alternative arrangements which are geared towards saving the viable aspects of the business, so, there are safeguards in the proceedings which ensure that the business continues to run and that a viable business is able to survive once the processes are followed. So, the current status of the CAM Bill is that it has been passed by both chambers of the National Assembly and the bill has now been forwarded to Mr President for assent so we are currently awaiting assent of the President to sign it into law.
So, the other legal reform which is of a legislative nature relates to the Omnibus Bill. The Omnibus Bill is a legislative tool which has been applied by countries all over the world to amend several legislations using a single legislative bill. So, the Omnibus Bill on Business Facilitation in Nigeria is intended to be a single all-encompassing legislation whereby provisions in existing legislation in Nigeria which have been deemed as bottlenecks to doing business in Nigeria are amended and there were also introduced new provisions which are targeted at making it easier to do business in Nigeria. So, in addition, new provisions which will accentuate Ease of Doing Business are also being included in the Omnibus Bill. We enjoy the support from the NBASBL under the leadership of the former chairman; Mr Olumide Apata and also the current chairman; Mr Sheni Adio (SAN). They coordinated technical support from about 40 professional firms in identifying and drafting the relevant provisions of the Omnibus Bill. It was also supported by Miss. Fola Olusanya who is a private legal practitioner, as well as the drafting team at the Federal Ministry of Justice. So, the fallout from all of these interventions and reviews and drafting was about 30 different legislation, existing legislation have been amended in the Omnibus Bill and the amendments cut across several areas such as tax trade, immigration and several others, the focus is on introducing international best practice element through amendment of provisions in specific laws which has been deemed as inimical to doing business in Nigeria so the impact is to be felt in all these industries in different degree but essentially geared towards making it easier to do business in Nigeria.
Small Claims Court
As noted earlier, the small claims court was established in Lagos in April 2018 by the Chief Judge of Lagos State, Honorable Justice Opeyemi Oke. Upon the establishment of the courts, 15 magistrate courts located in Ikeja, Lagos Island, Yaba, Epe, Apapa, and Ebute Metta were designated as small claims court. Now since the establishment of the small claims court, eight hundred and fifty claims have been filed across the 15 courts, out of which judgements have already been delivered in over 530 of such cases. So these statistics show that 64.15% of the judgement which has been delivered by magistrates of the small claims court was delivered within a period of sixty days. This is a remarkable improvement on the timeline of about 442 days which had been recorded in previous years by international observers. This has actually not been done in any court before in Nigeria whereby members of the public are guaranteed a 60-day period.
When you speak with people who have an action in court, they will tell you and lawyers would also say this…when you engage a lawyer for a case and you ask them how long do you think this case would last? It is a very difficult question for a lawyer to answer because time can run between a year and ten years in some cases. But with a small claims court, the timeline for conclusion has been determined in the practice directions and this has been adhered to by the magistrate of the small claims court. So this has been a remarkable achievement by the Lagos State judiciary.
Another remarkable spinoff from the introduction of the small claims court is the high statistics of the consent judgement. Over a hundred and fifty of the judgements which were delivered by the small claims court were consent judgements. When I say consent judgements, this means that parties could discuss the claim in court and agree on mutually acceptable terms which would then be enforced by the court because it would then be deemed a judgement of the court. It was a win-win situation for both parties in such cases because it had to be mutual. The person who is owing would then have to agree to the fact that he is owing, and they would discuss payment terms, and whatever is agreed by both parties becomes binding as a court judgement which can be enforced legitimately by the claimant. The high level of consent judgement meant that parties were actually discussing and agreeing on mutually acceptable terms, which was again a remarkable development.
In addition, the Lagos State judiciary recently took steps to publish details of the performance of the small claims court on its website. This information includes number of matters…by just visiting the website of the Lagos state judiciary, and looking at the small claims court section, you can easily tell how many matters have been filed in each of those small claims courts, the clearer’s rate i.e. the rate at which each matter is determined, how fast the rate, the time to disposition, the timeline between hearing and judgement and the age of the pending matters. So for each of the matters that government haven’t been delivered by the courts, by just going on the website, you would see the information on the cases which are still pending and how long they have been pending.
In terms of transparency, this reform affords the general public to review the performance of each small claims court, therefore, engendering some kind of confidence in the reform because by seeing all of this information you are encouraged to take your claim to the small claims court because you are able to determine how well the small claims court is doing. The court provides judgements within a sixty-day period and then enforces such judgement by leveraging on the court’s enforcement procedure to get money. For instance, if a bank account for a debtor is identified and you have judgement, you can actually file an application such that the bank where the debtor has a bank account will be mandated to make the money available in that debtor’s account to satisfy the judgement. That can happen essentially by seeing all of this information on the website, the idea is that it will engender confidence which means that more people would be encouraged to file their claims at the small claims court and this must be within the financial threshold of five million and below.
In addition, all judgements of the small claims court are also published regularly on the Lagos judiciary website. So if it is even in doubt about how effective it is, apart from the statistics and information that any person can view by logging on the website, you can actually also download the judgement, read the judgement and see who filed a case, how the case was determined and what was the judgement in such cases. You can download it and there is no access fee or anything. All of these is to engender confidence in the system, be more transparent and to ultimately, encourage more people in Lagos State to file their claims at the small claims court.
Although the small claims court was only established in Kano in January 2019 by the Chief Judge of Kano State, Hon. Justice Nasir Sagir Umar, we have also seen remarkable progress recorded. While the statistics are not as high as Lagos state, it is progressively on the rise. Kano state judiciary also embraced transparency as a best practice for engendering confidence for the people of Kano state in the operations of the small claims court. A website was recently launched for this purpose whereby all the information relating to the small claims court is published on a regular basis. The idea is to publish the judgement as soon as it is recorded.
As regards timeline for other states, I am aware that some other states like Edo, Ogun and Jigawa state are working towards setting up the small claims jurisdictions and we expect this to take off before the end of the year. It is noteworthy to also mention that the PEBEC has a sub-national project which is aimed at driving reforms across all the states of the federation, including the FCT. In this regard, as part of its subnational project, PEBEC is also focused on supporting the establishment of small claims court in all the states of the federation, including the FCT. I think over the course of the next one year, we would actually see the small claims court being established in more states and this would progressively, over the next course of a year or two, probably cut across all the states of the Federation, including the FCT.
PEBEC, Legacy and Career Journey
From a professional standpoint, it means I am able to contribute directly to making it easier for my firm, corporate clients to do business in Nigeria through the implementation of reforms to bring about such improvements. I was professionally aware of all these issues as a private sector player so to be able to be part of the team that are interrogating, putting in place more efficient processes, more improved legislation, to me is remarkable because then I am able to see how this translates into my client operating in a more enabling environment. Also, from a social standpoint, it is also quite humbling to be a direct agent for change in the Nigerian business environment, thereby contributing both directly and indirectly in improving the global outlook for Nigeria both from a domestic and international standpoint.
It has really been a privilege for my firm, Banwo and Ighodalo to provide technical support to the Federal Government over the years, through the ease of doing the business project and even more for me individually in my capacity as reform leader and head of legal cluster at Ibis.
Impact of the Reforms
In real terms, it would make it easier for businesses in the informal sector to migrate to the formal sector and that is easily around all the reforms which make it easier for those informal businesses to register their businesses at the CAC. And also by reducing the compliance burden on SMEs through the provision in the CAMA bill, such as provisions relating to exemptions for SMEs for small companies from appointing a company secretary, the exemptions from appointing an editor, the exemptions from holding annual general meetings. Reductions in these compliance procedures mean they have to spend less of their money on compliance and instead focus on using such money for the operations of their businesses, for expanding their businesses, for growing their businesses.
Also, the provisions in the CAMA bill which reduces the cost in the provisions of charges. Charges have been when businesses borrow money from banks. Now, the requirement of the law is that those charges are to be registered at the Corporate Affairs Commission and the obligation to pay for this registration is usually borne by the borrower i.e. by the business entity. By reducing the cost significantly by over 50%, as contained in the CAMA bill, it then means that financing would be cheaper for such businesses; so less money is spent on this registration process.
The provisions in the CAMA bill promote a more effective corporate governance structure and when you have an effective corporate governance structure, international investors are more comfortable in investing in such companies; because when they see that international best practice is being adhered to by those Nigerian companies; when they do their due diligence and find that the companies have robust corporate governance structures in place, they are interested in investing in such companies, access to funds become easier for such companies that have robust corporate governance structures which is why these best practice structures are required and why those provisions have been included in the CAMA bill. This essentially means SMEs have been formalized and can also thrive in a more enabling environment thereby contributing to GDP growth.
This is a very tricky question. Over the last year, during my spare time, I have taken to mentoring younger professionals by supporting them on how to achieve their career goals and I have found this to be quite interesting because I have found the experience which has been garnered so far enlightening for me as a person, as well as the fact that I am able to also support such young professionals in achieving whatever goals that they set for themselves at each period. More recently, I have spent quite a number of time supporting some nongovernmental organizations which are focused on interventions in education in socially disadvantaged areas in Abuja, as well as interventions on gender-specific social issues which relates to girls and women. I found out that I enjoy those activities really and when I have the opportunity to do so, I usually enjoy volunteering for such activities. Save for those moments when I am volunteering for one activity or the other, I like to spend time reading autobiographies of some of the world leaders that I admire, some of the world leaders in business, as well as in leadership, and governance. I like reading some of the books they have written and I also of course, very much like spending time with my family, my husband and my two kids, as well as my friends and colleagues.
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.
Toyin Bashir is one of twelve (12) partners in the law firm of Banwo & Ighodalo. She has advised several local and international companies on matters pertaining to the legal and regulatory framework for doing business in Nigeria. Her core areas of legal practice include Corporate and Commercial Law, Company Secretarial and Regulatory Compliance.