Commitment to business growth in Nigeria

Bukola Saraki

It all started with the National Assembly Business Environment Roundtable (NASSBER), a public-private platform established in March 2016 and promoted by the National Assembly. NASSBER was primarily established to bring critical stakeholders from the private sector, legislature and executive to debate, deliberate and advocate a coherent legal framework to advance business environment legislation through the National Assembly. In other words, it is the legislature’s version of the executive’s PEBEC aimed at promoting the ease of doing business in Nigeria. And contrary to the usual unending disagreements between the two organs of government, it is encouraging to see unity of purpose from the legislature and executive on the need to make Nigeria more attractive for investors.

On March 21, 2016 the NASSBER held its inaugural forum with key stakeholders from the private and public sectors present. Prior to the inaugural roundtable, the National Assembly had conducted a  Business Environment Legislative Review, which led to the Business Environment Legislation Review Report that identified institutional, regulatory and legal instruments currently constraining and impeding business activity in Nigeria. The report was debated at the roundtable and further recommendations were made. The final report after a thorough peer appraisal identified the need to review 54 existing Acts and 50 bills that should be passed by the National Assembly for the nation to better attract investments and experience economic growth. The Companies and Allied Matters Act (CAMA), theInvestments and Securities Act (ISA) and eleven other laws were designated as priority Acts for review.

Following the report, in May 2017, the Senate President, Dr.BukolaSarakiswung into action and inaugurated an 18-man Technical Committee, headed by a renowned legal practitioner, Mrs.OzofuOgiemudiato begin the process of reviewing the Company and Allied Matters Act (CAMA) and the Investment and Security Act (ISA). In a statement signed by the Special Assistant on Print Media, ChuksOkocha, the Senate President said “A reform of these laws is of utmost importance and that is why, in keeping with our commitment to employing the right resources at our disposal in developing the right legislation for our economy, we are constituting you – experts in the field,  regulators,  operators and practitioners alike, into a technical committee to neutrally apply your experience to advice the Senate through relevant committees on the best legislative options to enhance the quality or these bills.” Beyond the constitution of the technical committee, the Senate President had at different times reiterated the commitment of the upper legislative chamber to review and repeal important acts guiding business practice in the country.

And in keeping to that promise, the senate last week passed the reviewed version of the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004, which the Senate President described as “by far the biggest and one of the most far-reaching legislation ever passed in any legislature in our country.” “We have now put in place a regulatory framework to promote the ease of doing business and reduce regulatory hurdles” he said. The assertion by the Senate President may not be far from the truth because the latest law provides the much need legislative support for policies that can potentially promote business growth and development in the country. Some of the provisions in the law are already in practice propelled by federal government policies. However, without a legislative and regulatory framework, it may be difficult to institutionalise such reforms. Hence, what the Senate has done is to provide the essential legal backing for far-reaching reforms, some of which are already in operation. It is also a landmark reform that reflects the current business realities in the world and places Nigeria in the league of advanced countries in terms of business openness. Before now, the country was operating on the Companies and Allied Matters Decree No. 1 of 1990, which was a repeal of the Companies Act of 1968. In essence we have been regulating business practice in our country using a law that was enacted more than two decades ago, which explains why our business processes have not sufficiently reflected globalisation and changes in international business environment.

The repealed Act introduces the possibility of Single Member Companies as obtainable in other developed and business friendly countries. This provision allows single person to form a private company unlike in the past when two or more people were required by law.This is perhaps the most appealing provision for the huge population of entrepreneurs in Nigeria. Similarly, the new law also allows for Limited Liability Partnerships (LLP), which aids the modification of general partnership where all partners share liability for any issue that may arise in the course of the partnership business.This is a new form of legal identity for businesses in Nigeria, targeted at increasing foreign investment in the country. In LLP, an individual partner is not responsible or liable for another partner’s wrongdoing or negligence.It is obviously not a common business structure in Nigeria because the law that guides the formation and operations of business in Nigeria failed to provide for such arrangements

Admirably, the new law will make it easier for people to form partnerships with individual liability limited to the proportion of investment as indicated in the partnership agreement. LLP also provides for easy entry and exit in the partnership arrangement. This is truly a timely provision because are certain professions that are best practiced in the business climate using the LLP model. Additionally, the new law recognises and promotes the use of technology in the process of registering a business in Nigeria. Willing investors can now register their businesses in Nigeria from any part of the world. Recently, the Corporate Affairs Commission, CAC, introduced the online registration system, with which individuals can conveniently get their businesses registered online within 48 hours.However, the new law now provides the legal framework for this innovation from CAC. Essentially, by law, businesses are to be registered within the shortest possible time in Nigeria. This is a huge achievement for Nigeria and will undoubtedly lead to better ranking in international ratings.

To further quicken the process for business registration, the new law removes all the unnecessary regulatory provisions for small companies such as requirement for annual general meetings and company secretaries; and reduces the minimum share capital for all companies and start-ups in Nigeria. These and many more are the commendable provisions in the repealed CAMA.

The Senate has taken the lead, and now all eyes are on the House of Representatives to pass their version of the law before the final harmonised version is forwarded to the President for assent. There is no gainsaying that the new law when finally signed by the President will usher a new era in Nigeria’s business environment. The short term impact will be increase in the number of businesses in the country. And of course, Nigeria can expect significant upward movement in the next ease of doing business ranking by the World Bank.

Since the repeal of the act is aimed at improving the ease of doing business in the country, it may be instructive to remind the Senate and entire National Assembly of pending matters that require their intervention. In the last ease of doing business report, Nigeria ranked poorly in Resolving Insolvency and Trading across Borders metric. This is an area the Senate must look into and address holistically. Our current business environment does not encourage export and we need intervention from all arms of government in this regard. This also requires a review of international convention that Nigeria is currently a signatory to. Some of these conventions are not beneficial to us whilst they provideavenues for other countries to exploit us.

The 8th Senate deserves nothing but commendation in their approach to law making. The lawmakers will be remembered for the landmark achievement. On the whole, the two arms of government – executive and legislature – have visibly shown that the country can make enviable progress when there is harmony of direction and unity of purpose in our approach to governance. With the Presidential Enabling Business Environment Council (PEBEC) headed by the Vice President, and the National Assembly Business Environment Roundtable (NASSBER) working together, there is no doubt that the business climate in our country will soon experience a significant leap. Perhaps, the passage of the law will spur into action the Ministry of Trade and Investment, which appears to have receded into a coveringin recent months. By the same token, it is important for the Corporate Affairs Commission (CAC) to see the new law as an opportunity to promote a business friendly environment being the first point of contact for investors. This also requires the employment and training of the right personnel in the Commission. The best of laws depend on committed and competent people to achieve intended purpose. The success of this law will largely depend on the personnel at the CAC and the leadership team headed by the Ag. Registrar-General/CEO, Lady Azinge, AzukaObiageli.

 

 

 

 

 

 

 

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