An independent assessment of Nigeria’s Ease of Doing Business activities by @yomitheprof
On campus students have several strategies for academic success. For subjects that are easy to read, understand and pass, they may approach the examination with all the confidence in the world. However, for subjects that are difficult to read, understand or comprehend, students may use another tactic… They focus only on passing the examinations and may even engage God in prayer. The prayer is not for God to make them understand the subject, the prayer is that God should let the examination questions come from the part of the notes they read!
At the root of that prayer are two critical issues. One, understanding the subject is not important. Two, getting a pass mark in the examination is more critical than understanding.
It seems that is the scenario that’s playing out with government recent attempt on our Ease of doing Business.
Nigeria currently ranks 169 out of 190 economies in the World Bank Doing Business Rankings. The 2016 Enabling Trade Report put Nigeria’s overall rank at 127 of 136. Government is concerned and took a series of action to change these poor rankings:
First, to focus on the task of improving the ease of doing business, the Presidential Enabling Business Environment Council (PEBEC), was established. The vice president of Nigeria, Professor Yemi Osinbajo (SAN) is the chair of the council with membership from the relevant ministries and government departments.
Second, PEBEC on February 21, 2016, 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. This was a clear statement of commitment and opportunity for monitoring and evaluation. (However the Minster for Aviation seems to be the gold standard. He set a target for a project and promised to resign if he didn’t meet the target. The PEBEC folks didn’t offer to resign though). It is believed that all these will make it easier for Micro, Small and Medium Enterprises (MSMEs) to do business in Nigeria.
This plan targeted some priority areas: starting a business, dealing with construction permit, getting electricity, registering property, getting credit, trading across borders, entry and exit of goods, entry and exit of people, payment of taxes as well as government transparency and procurement. The plan covered specific actions between February 21st and April 21st, 2017.
Third, a target was set to improve Nigeria’s ranking in the World Bank Doing Business Index by 20 points from the current 169 to 149.
I think the 60-day plan may be the most significant part of this process. The PEBEC seem to have two characteristics that makes it stands out from several government initiatives.
One, The PEBEC seems to have a system and research based approach to their work. They seem to have scoped the issues very well and identified where its most easy to start from.
Second, the multi-disciplinary nature of the PEBEC allows for the best of brains including the implementing agencies
What is clear is that PEBEC is using the world Bank Ease of Doing Business (EODB) assessment as its methodology. Thus, the council seems to be focused on initiatives that will ensure Nigeria gets a better ranking at the next survey. Unfortunately, while Nigeria may have a better ranking on the EODB it doesn’t necessarily mean it’s gotten easier to do business in Nigeria. This is very like the scenario I earlier painted of the student who sets passing as the target and not understanding.
Having concluded the 60-day window, what’s next?
Time to introduce another 180 day plan of action
I think the PEBEC should start another 180- plan of action. This is to sustain the pace and drive accountability. I also want to suggest the below initiatives for the next the 180-days.
One, PEBEC should continue all that has been and develop institutions to deepen it. Some of the changes happened because of external influences and now is the time to raise internal champions and advocates to sustain the changes in the various organizations. Also, having some rules and administrative procedures to ensure we don’t lapse back into bad practices is also important.
Second, PEBEC should widen its network, recruit and engage more stakeholders in his assignment. It’s very important to engage the state and local governments. The involvement of other critical stakeholders including professional bodies should also be enlisted. The Lagos state planning process is now online which makes it easy to access and seek planning approval. This will ease the process of getting construction approvals. However, a week after this was implemented, The Nigerian institute of Survey increased land survey fees by over 150% in Lagos! Unfortunately, you need a survey before you seek for planning permission. This higher cost will therefore frustrate the advantage of planning the planning process online.
Third is to tackle is for the committee to start to focus on what the average businessman in Oke arin or ariara market sees as ease of doing business. These will include a whole lot of initiatives like approvals, harassment in business premises, multiple taxation, government magic etc. The situation of informal business owners like tricycle operators, hawkers, petty traders is more precarious. They are made to pay numerous associations, local governments and in some cases touts and also suffer severe hardship. They need to be engaged to understand and ensure they can carry out their businesses easily.
Fourth, the issue of multiple taxation needs a lot of attention. The Joint Tax Board is meant to harmonize taxes but I am not sure how effective they have been.
A lesson from a hotel operator
In an article titled “The Cost of Doing Business in Nigeria — Hotels Edition”, the author listed various fees and charges payable by hotels in Abuja. I distilled a couple of issues from the article.
One, many agencies collect fees from businesses: local government (AMAC), the Federal Capital Development Authority (FCDA), the Consumer Protection Council (CPC), the Copyright Society of Nigeria (COSON)
Two, there is no harmonization between these agencies on what is to collect what. Thus, businesses are charged by more than one organization for the same fee. For example, both the local government (AMAC) and the Federal Capital Development Authority (FCDA) charge hotel owners for sign boards
Three, Professional associations and trade unions also impose their numerous charges on the businesses.
Four, there are charges that are plain ridiculous. For example, you pay a fee for having a parking lot. These fees are demanded for regardless of if the business is making a profit or not
Fifth, there is a need to change the mindset of the Nigerian government and regulators about their role as facilitators of businesses. Sometimes, you see acts that shows that government doesn’t care about businesses. Laws that stifle businesses are made, bills and fees are charged and business owners are harassed if they default. Some governments even have enforcement teams who go out daily to harass and intimidate business owners.
Sixth, PEBEC needs to develop an effective feedback system. What’s working? What’s the root cause of success? What’s being done to circumvent it? The need for an effective, accessible and prompt feedback system cannot be overemphasized.
Seventh, the leadership commitment to improving the ease of doing business needs to be sustained. The Vice President clearly showed his seriousness and commitment to reforms when he made an unscheduled and unannounced visit to inspect the facilities at the Murtala Mohammed International Airport in Lagos. This airport is the critical entry point into Nigeria and a focus for the 60-day plan. Such visits, pronouncement and similar gestures must be frequent and sustained
Finally, we need to Incentivize ease of doing business in Nigeria. Everyone should see it as the moral imperative. And in the case of government, there should be consequences for improving the ease of doing business. This can come in the form of adding a head of claim on ease of doing business in the VAT allocations or in the determination of derivation payment.
In conclusion, Nigeria needs to remember that virtually all countries are seeking to improve their ranking in the Ease of doing Business. The competition is fiercer as countries like Ghana and Cote d’Ivoire have shown a lot of aggression in making their countries leading lights in the West African sub-region. Cote d’Ivoire moved 11 places between 2014 and 2015 (Nigeria only moved 5 places). And for Ghana, ranked 70th in the 2015 EODB (Nigeria was ranked 170th) we have a more severe competitor because Ghana is much closer to us.
We can’t afford to rest on our oars. We need to heighten our pace to make a difference for businesses in Nigeria.
This article was contributed by Yomi Fawehinmi. Yomi is a development consultant and social entrepreneur.