At a radio interview in Lagos last month, the host was astounded to hear that we expect Nigeria to move 20 places up in the World Bank ‘Doing Business’ Rankings by October 2017 and to be in the top 100 by the year 2019. This is not idle posturing. It is an ambition guided by the strength of our resolve to make business work in this country.
On February 21, 2016, the Presidential Enabling Business Environment Council (PEBEC), chaired by the vice president, Professor Yemi Osinbajo (SAN) took a significant step towards making it easier for Micro, Small and Medium Enterprises (MSMEs) to do business in Nigeria. PEBEC approved a 60-Day National Action Plan on the Ease of Doing Business with clear deliverables and timelines for the Ministries, Departments and Agencies (MDAs) responsible for implementing each line item in the Plan.
Accounting for almost half of Nigeria’s Gross Domestic Product (GDP), MSMEs play a key role in the Nigerian economy and employ over 80 percent of the country’s labour force. It is, therefore, to enterprises like these that we should look to provide the endless possibilities for Nigeria’s economic growth. Think about multinationals like Facebook or Apple, for example, that started as small, two-man enterprises, or a home-grown example like IrokoTV, which was launched in December 2011 by two young men who met whilst at university and, today, makes an estimated $2 million monthly. The ability of these enterprises to innovate and open up new streams of potential is critical to economic development. So it is beyond argument that Nigeria will not accomplish its socio-economic aspirations if its MSMEs are struggling to flourish because of unnecessary and sometimes superfluous bureaucratic and regulatory constraints. If for nothing else but their important contributions, MSMEs deserve greater focus and commitment and this is the role PEBEC seeks to play.
As secretary to PEBEC and coordinator of the Enabling Business Environment Secretariat (EBES), which implements the PEBEC’s reform agenda, I’ve been asked in different fora to explain what exactly the Buhari administration hopes to achieve with this National Action Plan. My response has been consistent. We want to make business work in Nigeria! By that, we want Nigeria to be a progressively easier place to do business for domestic and international investors alike. That is our mandate; that is what drives us.
Not unexpectedly, Nigerians have engaged with us on the Plan’s contents from a range of perspectives. Some recognise that the work ahead is vital and hope that we can get it right this time; some are cynical and skeptical due to the perceived failure of similar efforts in the past, and everyone has an opinion on how it should work, whether or not they believe it will work. Does the Plan have the answers to all the problems that small businesses face in this country? No, it doesn’t. However, it is an important step that makes a strong statement of intent and conviction. An immediate-term Plan that focuses on the quick wins that will set us on the path to making business in Nigeria work.
How do we plan to do this? The Plan prioritises some key reform areas: Starting a Business, Getting Credit, Paying Taxes, Getting Construction Permits, Registering Property, Trading across Borders, Getting Electricity, and Entry and Exit of People. One of the overarching themes is Government Transparency across the board.
These priority areas cut across several MDAs because making business work cannot be achieved by any single arm or level of government on its own. That is why His Excellency, President Muhammadu Buhari inaugurated PEBEC as an inter-ministerial, inter-governmental council, chaired by the vice president and comprised of no less than 10 ministers, each leading reforms in the departments and agencies under their supervision; the head of the civil service of the federation; the governor of the Central Bank of Nigeria, representatives from the National Assembly, state governments and the private sector. This structure ensures that we tackle each priority area through the concerted efforts of the key decision makers.
At this mid-point in the Plan’s implementation, let me share a few examples of the direction PEBEC is working and some of the gains we’re pleased to have recorded over the last 30 days.
Another area key to making business work is facilitating the smooth entry, exit and movement of people. Sadly, the state of our international airports leaves a lot to be desired. With faulty carousels and elevators; litter, unclean, unsanitary toilets whose smells waft out into common areas, the suffocating heat in nearly every part of them…
Registering a business is usually the first step taken by any entrepreneur ready to formalise his or her idea. The feedback is that this is conventionally the first point of frustration. From the difficulties experienced interfacing with the Corporate Affairs Commission’s (CAC) online portal, to the time-consuming and often unavoidable need to physically visit the CAC offices in order to progress one’s application; to the number of forms potential business owners have to navigate to incorporate their companies. Many would-be entrepreneurs felt as though the system was deliberately designed to prevent them from achieving their dreams.
Gradually, with the collaborative initiative and commitment of the Honourable minister of Industry, Trade and Investment, the CAC’s leadership and PEBEC, progress is being made. We received gratifying first hand feedback at the EBES Stakeholders Forum in Kano last month, when a female entrepreneur informed us that it took her only a week to register her business in January this year. Two years ago, when she registered her first business, she said it took her six months. As welcome as that feedback was, we do realise that there is still much more work to be done. In true reformer spirit, the goal is a moving target of a progressively easier business climate and we are merely at the beginning of the journey.
CAC’s target is to register businesses within 24-hours once all required documents have been confirmed submitted. This is certainly within reach. To meet this goal, CAC is working hard to improve the reliability of its portal to eliminate frequent downtime and has introduced online submission via the uploading of registration and incorporation documents. In addition, CAC no longer makes it mandatory for applicants to use a lawyer, thereby reducing costs; and has consolidated the seven forms that were previously required for the incorporation of a limited liability company into just one form. The FIRS e-payment portal has now been integrated with the CAC portal, so that applicants can pay stamp duty directly to the FIRS as they register their businesses. There is still quite some way to go, but we are confident that progress is being made.
Another area key to making business work is facilitating the smooth entry, exit and movement of people. Sadly, the state of our international airports leaves a lot to be desired. With faulty carousels and elevators; litter, unclean, unsanitary toilets whose smells waft out into common areas, the suffocating heat in nearly every part of them and the unsavoury incidence of touting, it is little wonder that our airports have been described as national embarrassments that are most unbefitting of Nigeria. So this is one of PEBEC’s major focuses
Last month, Nigerians were pleasantly surprised to learn that the vice president had paid an unscheduled visit to inspect the facilities at the Murtala Mohammed International Airport in Lagos. The fact that there was absolutely no foreknowledge of His Excellency’s visit meant that he could see and experience first hand what the problems are. This is the type of proactiveness that characterises PEBEC’s efforts to make business work in Nigeria by creating an enabling environment. Our airports need to provide a more positive welcome to visitors and as part of that initiative, work is currently being done at the Nnamdi Azikwe International Airport, Abuja and the Murtala Mohammed International Airport, Lagos. Even before the launch of the National Action Plan, improvements were being made and are still ongoing at the Abuja airport, taking advantage of its temporary closure. Similar improvements are being implemented in Lagos, which would last through the next coming months.
The visa-on-arrival and 48-hour visa processing procedure have both recently commenced as part of the initiatives of the Nigeria Immigration Service (NIS) to aid the ease of doing business in Nigeria. Part of the work to be done in the second half of the 60-Day National Action Plan is to simplify these procedures to include the e-submission of applications and ensuring of full compliance across Nigerian missions abroad. We are working closely with the NIS on this and the honourable minister of Interior recently announced a new immigration policy in line with these objectives.
The one true indicator will be the testimonials from business owners across Nigeria confirming that they now spend less time navigating bureaucratic landmines and more time strategising on how to break new grounds and enter new markets; the Nigerian business owners who will be able to access the credit they need to improve their processes and employ more people…
The Nigerian Customs Service (NCS) and the Nigerian Ports Authority (NPA) are driving key initiatives to progressively ease the difficulties encountered in the import and export processes at our nation’s ports. Last year, the World Economic Forum (WEF) and the Global Alliance for Trade Facilitation ranked Nigeria 127th out of 136 economies in its Enabling Trade Index. This Index rates countries based on their capacity to facilitate the flow of goods through borders to their various destinations. As part of our commitment to turning this tide around, Nigeria ratified the WTO’s Trade Facilitation Agreement (TFA) in January 2017 – a strong signal to the world that we are indeed ready for business. The TFA has the potential to reduce trade costs by as much as 20 percent and implementing it will help “streamline, simplify and standardise customs procedures” and reduce the time and costs of moving goods across borders.
As we wait for the TFA to fully kick in, the NPA, NCS and the terminal operators, amongst others, are implementing reforms to ease cross-border trading. Our target on this indicator, as noted in the National Action Plan, is to reduce export and import times by half, compared to what is currently obtainable. The honourable minister of Finance has also issued directives to increase the effectiveness of inspection agencies by establishing timelines for pre-shipment inspection. Terminal operators will also start receiving the cargo manifest in advance so that they know what cargoes require physical examination, in order to sort them accordingly. Presently, goods are haphazardly stacked, making the use of machines and forklifts impractical. To make physical examinations of imports faster and more efficient therefore, the use of pallets will now be mandatory.
In the medium term, a National Single Window (NSW) is expected to become operational by Q4, 2017. The NSW is an electronic one-stop portal for Nigeria’s cargo clearance procedures, which will significantly reduce the amount of time needed to clear cargo. The initiative will also include sufficient scanners and a ports community system. This project’s Steering Committee, which is co-chaired by the Comptroller-General of Customs and the Managing Director of the Nigeria Ports Authority, has already finalised its business plan and operating model and reported to the Council in keeping with PEBEC’s results focused approach to making business work.
The list goes on. Our 60-day National Action Plan contains 504 different actions, including collaboration with the National Assembly to pass two of their 11 priority bills on the Ease of Doing Business. These two bills are especially critical to the Plan because of their role in improving entrepreneurs’ accessibility to credit are also a priority – the Secured Transactions in Movable Assets (aka the Collateral Registry) Bill and the Credit Bureau Services Bill. The Plan also contains specific deliverables in our collaboration with the Lagos and Kano state governments on registering property and getting construction permits, which are state responsibilities. The governors, their excellencies, Akinwunmi Ambode and Abdullahi Ganduje of Lagos and Kano states respectively, have been eager reformers and worthy partners. In the coming months, we intend to take our partnership to more states across the country.
At a radio interview in Lagos last month, the host was astounded to hear that we expect Nigeria to move 20 places up in the World Bank ‘Doing Business’ Rankings by October 2017 and to be in the top 100 by the year 2019. This is not idle posturing. It is an ambition guided by the strength of our resolve to make business work in this country. As Peter Drucker says, “The best way to predict the future is to create it.” There is strong commitment at the highest levels of government that this can and will be done.
However, as much as the World Bank ranking will bring about the much needed confidence in our economy, it is not our main gauge for measuring success. The one true indicator will be the testimonials from business owners across Nigeria confirming that they now spend less time navigating bureaucratic landmines and more time strategising on how to break new grounds and enter new markets; the Nigerian business owners who will be able to access the credit they need to improve their processes and employ more people; and the Nigerian business owners who will begin to see government MDAs as real partners in progress, rather than as competitors, adverse regulators or tax collectors. It is their “rankings” that matter the most to us.
Jumoke Oduwole is senior special assistant to the president on Industry, Trade and Investment in the Office of the Vice President and secretary to the Presidential Enabling Business Environment Council (PEBEC).