Osinbajo’s tall order on ease of doing business

Even the most ardent critic of the Buhari administration would admit that it has been making the right noises, and saying the right things, on the ease of doing business in Nigeria. In his inaugural speech in February last year, the minister of industry, trade and investment (MITI), Okechukwu Enelamah, rebranded MITI as “the ministry of enabling environment”, and promised to introduce measures aimed at “dismantling the many obstacles that stand in the way of business and business innovation in Nigeria”. This was, of course, a bold and ambitious commitment. But the minister has formed a strong partnership with the vice president, currently acting president, Yemi Osinbajo, to champion and beat the drum for the ease of doing business agenda.

But this is not just about words and rhetoric. At an institutional level, the administration set up the Ease of Doing Business Committee and the Presidential Enabling Business Environment Council (PEBEC). In February this year, PEBEC launched the “60-day national plan” to improve the ease of doing business in critical areas. The government’s Economic Recovery and Growth Plan (ERGP) sets out even more detailed agenda, with a commitment to improve Nigeria’s ranking in the World Bank’s Doing Business index from 169 to 100, by 2020! Nigeria’s ratification of the WTO’s Trade Facilitation Agreement has also been trumpeted as signalling a commitment to “rapidly implement the government’s initiative on creating an enabling environment for business”.

The executive order on the ease of doing business recently signed by Acting President Osinbajo has certainly bumped up the agenda at least a notch. Executive orders are usually directed at staff and agencies of government. Given that it is government that mainly puts regulatory burden on businesses, that makes doing business difficult, it’s essential that every government should constrain itself.

Now, my interest and involvement in business-facing regulatory reforms date back nearly 15 years. Several years ago, as a senior adviser in the UK Government, I was responsible for advising on the legal and policy processes for reforms to reduce regulatory burdens on businesses. More specifically, I developed and drafted the statutory code that established, for the first time, binding conditions for UK government agencies on how they should regulate and enforce regulations against businesses. Earlier, as an academic at the London School of Economics, I ran, with other colleagues, training sessions for government officials on domestic and international regulatory issues. As a regulatory and trade lawyer and academic, I have both intellectual and professional interests in the Buhari government’s regulatory reform efforts to improve the business environment in Nigeria, which was why I read the executive order with some keenness.

For me, the order is interesting for three reasons: first, what it says; second, what it fails to say; and third, what it assumes or takes for granted. On the first, well, the order is bold, surprisingly bold, on transparency, particularly the publication of requirements for obtaining goods and services from MDAs, as well as the approval process itself. For instance, the order says the list of conditions, including fees and timelines, for processing an application must be published on the MDA’s website. If an application is not approved or rejected within the stipulated timeline, it would be deemed approved and granted! If an MDA needs a document from another MDA in order to process an application, it must accept a photocopy from the applicant, and, if necessary, verify its authenticity itself with the issuing MDA. All MDAs at the airports must merge their departure and arrival counters into one single customer counter within 30 days of the issuance of the order; and all agencies at the seaports must do the same within 60 days of the order being issued.

This is really interesting. The order seems to take power from MDAs and their staff and put it in the hands of those seeking approvals for products and services. Unless, its rationale and working are carefully communicated and explained to all interested parties, the order risks creating tensions between MDAs, and mistrust between public servants and those approaching them for services.

But does it even go far enough? Well, what is clear about the executive order is that it focuses more on process and less on substance. Surely, publishing the requirements for processing an application and sticking to the timelines are fine, but it makes little difference if the requirements are disproportionate and unnecessarily burdensome to businesses in the first place. Similarly, asking agencies at the airports and seaports to harmonise their business-facing activities is right. But without multiple agencies, there would be little   problems of excessive regulations and heavy-handed inspection and enforcement regimes. When regulations or regulators impose unnecessary burdens on businesses they stifle enterprise and undermine economic progress.  Yet the activity of every regulatory agency should support economic progress.

In 2005, when the Nigerian Ports Authority was introducing port concession, I was approached to write a report on Nigerian ports aimed at international investors. In researching for the report, entitled “Port and harbour development in Nigeria”, I gained valuable insights into the challenges of Nigerian ports, ranging from extraordinarily high costs for imported containers to the problem of multiple agencies. There were 29 government agencies involved in the inspection and clearance of goods. A Presidential order to reduce the number of agencies to five was ignored, because many of the agencies operated under different statutes, and eliminating them required changing the laws that created them. Sadly, those problems of prohibitive costs, overlapping and inconsistent regulations, multiple agencies, disproportionate inspection and enforcement regimes etc still exist today, and the ease of doing business executive order doesn’t address them.

Now, is the executive order deliverable? Well, in my view, that’s a tall order! This is because the order makes assumptions about resources and capacity in the public sector that can’t be justified. The order says that any official that fails to act on any application within the stipulated timeline would be subject to misconduct and disciplinary actions. Really? Well, the government must be prepared for an avalanche of disciplinary proceedings. In 2014, the then head of civil service of the federation, Danladi Kifasi, said that the government had to resort to using consultants to do civil servants’ work because of capacity deficit and poor performance. Another former head of service, Yayale Ahmed, once said that “about 70% of the Nigerian civil servants belong to the unskilled, non-graduate levels”. What’s more, words like “liable to lateness”, “truancy”, “lukewarm and shoddy attitude to the discharge of duties” and “indiscipline” are frequently used to describe Nigerian civil servants. The acting president said when he introduced the executive order: “Usually, we blame the system. But the system is men and women, not machines”. That’s true, but any system would be unworkable when wrong men and women are in charge. And no executive order can change that!

Even worse, the government lacks the infrastructure to deliver on the commitments in the order. Last week, the Vanguard newspaper published an embarrassing report that exposed the digital technology weaknesses of MDAs. The report showed that virtually all the MDAs have no functional telephone numbers and websites. How, in the 21st century, do you want to improve the ease of doing business without functional modern technology? It’s not enough for the government to pay a fortune to set up websites for the MDAs, if most civil or public servants lack competence to use and maintain them. A few years ago, a head of service had to urge civil servants “to begin to have a rethink” about developing IT skills. Nigeria has analogue public servants in a digital age!

Surely, the ease of doing business directive is a meaningful effort, but it is a tall order in terms of delivery. Furthermore, it doesn’t go far enough. Nigeria needs radical reforms, across the board, not some tinkering at the edges.

Olu Fasan