Highlights of the 60–day national action plan on ease of doing business in Nigeria

For many years, Nigeria has fared poorly in the global rankings for both ease of doing business and economic competitiveness. The Word Bank in its Doing Business 2017 Report ranked Nigeria 169^th out of 190 countries while the country was similarly, poorly placed in the 127^th position among 138 economies covered in The Global Competitiveness Report 2016–2017 by the World Economic Forum. These unfavorable business and economic indices have greatly affected the country’s capacity to attract sufficient investments from both domestic and foreign investors and consequently retarded national productivity and economic development. In light of the fall in crude oil prices and the Nigerian government’s current drive to diversify the economy through development of non-oil related sectors such as agriculture and mining, it has become imperative for Nigeria to create an enabling environment for doing business.

As part of efforts to reform the business climate in Nigeria and pull the country out of the current economic recession, the Federal Government (“FG”) established in July 2016 the Presidential Enabling Business Environment Council (“PEBEC”), chaired by the Vice President, His Excellency, Mr. Yemi Osinbajo, SAN, with the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah as Vice Chairman. PEBEC is composed of nine (9) other Ministers, the Head of Civil Service of the Federation, the Governor of the Central Bank of Nigeria (“CBN”) and representatives from the National Assembly and the private sector. Further to the establishment of the PEBEC, the Enabling Business Environment Secretariat (“EBES”) was set up in October 2016 with the mandate to implement the reform agenda of PEBEC, which centers on the removal of critical bottlenecks and bureaucratic constraints to doing business in Nigeria and by so doing; “move Nigeria 20 steps upwards in the World Bank Ease of Doing Business Index” which would be published by the World Bank later this year. This newsletter highlights the reforms being driven by the various stakeholders with the support of PEBEC and EBES; as well as some of the successes that have so far been recorded during the 60 days implementation timeframe.

THE 60–DAY NATIONAL ACTION PLAN

On February 21, 2017, PEBEC approved a 60-Day National Action Plan on Ease of Doing Business in Nigeria (“National Action Plan”). The National Action Plan, which is an inter-ministerial, inter-governmental plan, is being driven by EBES for implementation by various Ministries, Departments and Agencies of government (“MDAs”). The key stakeholders who are collaborating on this initiative and have clear deliverables include the National Assembly, the Governments of Lagos and Kano States, and the private sector. The National Action Plan has now entered into its 30^th day of implementation and focuses on the following eight (8) areas as the “Strategy” for achieving results (Notably, the eight areas form part of the indicators included in the World Bank’s measurement of the Ease of Doing Business Index):

Starting a Business;
Construction Permits;
Getting Electricity;
Registering Property;
Getting Credit;
Paying Taxes;
Trading Across Borders; and
Entry and Exit of People

The EBES identified six (6) broad challenges affecting ease of doing business in Nigeria, all of which are to be frontally dealt with, within the 60 days implementation timeframe. The challenges were stated to include the following:

Starting a business in Nigeria can be difficult, requiring two (2) times as many procedures and three (3) times the amount of time as in developed economies;

Obtaining construction permits in Nigeria involves manual submission of several documentations, higher fees and longer procedures than most countries;

Registering property in Nigeria requires two (2) times the cost and number of procedures, and three (3) times the amount of time as in leading countries;

Whilst the strength of legal rights to credit in Nigeria is admirable, the country’s Collateral Registry is under-utilized and Credit Bureau coverage is below average;

Exporting from Nigeria can require almost ten (10) times the amount of time and five (5) times the cost as leading nations, with similar gaps for importing;

Visiting and working in Nigeria – from getting travel documentation to using Nigeria’s international airports – are not up to par with similar economies and leading countries.

THE INITIATIVES

To address the challenges stated above, different arms of government particularly the Legislature and specific MDAs formed alliances and formulated initiatives which are targeted towards streamlining processes as well as cost (in terms of fees and time) of doing business in Nigeria. These stakeholders include the Corporate Affairs Commission (“CAC”); Lagos State Government (“LASG”), the Kano State Government, the National Assembly (“NASS”); CBN; Federal Inland Revenue Service (“FIRS”); Nigeria Customs Service (“NCS”); Nigerian Ports Authority (“NPA”); Nigeria Immigration Service (“NIS”); Federal Airports Authority of Nigeria (“FAAN”) and; the Federal Ministry of Finance (“FMF”).

ON STARTING A BUSINESS

There are ongoing reforms implemented by the CAC with the cooperation of the FIRS to address the challenges people face in the process of registering businesses, such as the risk of reserving already existing names, inability to upload documents on the CAC online portal, frequent server breakdown, filling seven (7) incorporation forms, stress and delay in making payment for stamp duty and physical submission of documents for stamping and, the multiple websites operated at the same time by the CAC which tend to confuse people as to which one to visit for current information on business registration.

Work is in progress to operationalize name search and online submission on the CAC portal and relocate the server for a better and more reliable service. Currently, the reform process has produced the following results:

Twelve (12) hour timeline for name reservations which would be included in the updated Companies Regulations scheduled to be published by the CAC within the next thirty (30) days;
Introduction of twenty-four (24) hour timeline for determination of applications for consent to use restricted names;
Upload functionality is now available on the CAC online portal to enable e-submission of registration documents resulting in increased confidence in CAC online process;
Physical visits to CAC locations will be eliminated while uptime is expected to be greater than 99% with the introduction of a single form for incorporation and simplified application process;
Quick and convenient FIRS e-payment and e-stamping solutions have been integrated into CAC online portal while harmonization of the multiple websites into one with improved content and layout have made the CAC website more user friendly; and
Consequential reduction of statutory fees payable for e-registration of companies.

The overall impact which the above reforms are expected to have is to reduce the “number of days” required for registering companies from ten (10) days to one (1) day (24 hours).

ON OBTAINING CONSTRUCTION PERMITS

Currently, construction permits’ procedures require manual submission of a large set of documents and there is lack of clarity on applicable rules, fees, procedures as well as on qualifications of architects and engineers who are empowered to supervise construction activities. Similarly, before the reform process began, criteria for waiver of requirement for soil tests and environmental tests were unclear and this appeared to be the time-consuming portion of the process of getting permit. The ongoing reforms being driven by the Lagos State Physical Planning Permit Authority (LASPPPA) are aimed at,

operationalizing e-planning platform for Lagos State;
limiting soil tests and Environmental Impact Assessment (EIA) only to specialized cases. For instance, soil tests for constructions below four (4) storeys which are not in marshy areas have been eliminated while EIA test requirement for low scale construction has been eliminated;
publishing applicable rules, fees and procedures. Presently, the laws relating to qualification of architects and engineers who are legally empowered to supervise construction activities have been published on the LASPPPA website;
ensuring seamless online application and predictable costs. Ability to submit and track applications online has now reduced time to secure permits while predictability of fees during application has also been achieved.

The overall impact which the above reforms is expected to have is to reduce the time required to procure construction permits from forty-two (42) days to twenty (20) days and ease the process of getting title to properties in the nation’s commercial capital.

ON REGISTERING PROPERTY

To ease the process of getting title to properties in the nation’s commercial capital, the LASG is working to address the challenges people face in the process. Presently, different fees are required to be paid at different stages of title registration. The applicant would therefore be required to undertake several visits to the land registry before the registration is completed. Also, it is currently difficult to provide constructive feedback on the title registration process and advocate for changes while processing time for issuance of Governor’s Consent in Lagos State exceeds those of other countries with similar laws, and the governor is regularly presented with a large number of applications. Similarly cumbersome, is the legal process/ requirement for conducting due diligence on properties at the Land Registry.

The ongoing reform process targets consolidation of the present payment of several fees into one payment, initiation of e-signing of Governor’s Consent and delegation of consent powers to Commissioners to reduce time spent in processing and obtaining Governor’s Consent, as well as the streamlining of the process for conducting search on properties. At the moment, the requirement for a sworn affidavit for a property search at the Land Registry has been eliminated while a Complaints mechanism is now available for providing feedback with guaranteed acknowledgment and information on the Complaints Unit has been published.

The expected overall impact of the above reforms is the reduction of the number of days for registering property from seventy-seven (77) days to thirty (30) days.

ON GETTING CREDIT

The following reforms are being driven by both the NASS and the CBN to enhance credit transactions secured by movable property in Nigeria. The NASS is set to pass relevant legislation to ease access to credit, such as the Secured Transactions in Movable Assets (Collateral Registry) Bill and the Credit Bureau Services Bill in order to,

enhance the legal framework and hence, boost Nigeria’s presently undeveloped and underutilized use of movable assets in securing credit transactions,
support credit bureaus to expand coverage and provide credit scoring so as to solve the problem of many Nigerians not having their credit history/profiles captured for lenders to have enough data to make informed decisions. This will be done through expanded coverage of adult population regarding credit data/history to enable credit decision making, increased credit information sharing between Credit Bureaus and lenders, and increased sensitisation and utilisation of Credit Bureau Services;
improve the use of the National Collateral Registry by financial institutions, which currently is under-utilized despite the fact that it has been operational since May, 2016. This will be done by enabling online searches of movable assets by members of the public, particularly interested parties, and the digital collateral registry made fully operational to enable online registrations, amendments and cancellations by lenders, seamlessly.

The overall impact of the above reforms is that Micro, Small and Medium Enterprises will have more access to credit and ultimately at cheaper rates.

ON TRADING ACROSS BORDERS

The following initiatives are being implemented through the collaboration among various agencies such as the NCS, NPA, CBN, and the FMF:

Quicker physical examinations through the use of pallets and utilisation of modern equipment for effective and efficient examination of cargo;
Optimised placement of containers and improved risk assessment;
Single point of contact for examination and same day sign-off of examination by the NCS and relevant agencies;
Up to 50% reduction in the processing time for export documentation and automated scheduling of inspections by pre-shipment inspection agents; and
Reduction in time for import and export through reduction of documentation requirements.

The above reforms are targeted at solving the myriad of problems presently affecting cross-border trading in Nigeria such as haphazard stacking of goods without pallets making physical examination impractical; sub-optimal offloading of cargo due to absence of Manifests prior to arrival of ships; poor scheduling of dates for examination of cargo by the NCS and other relevant agencies such as the Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration and Control (NAFDAC) etc.; manual and inconsistent timelines for processing pre-shipment documentation; and too many documents required for import and export in Nigeria than in other African countries.

ON ENTRY AND EXIT OF PEOPLE

The following initiatives are being implemented through synergetic relationships among federal government agencies, such as the NIS and FAAN, which are involved in the administration of inward and outward movement of people in Nigeria:

Consolidation of arrival and departure forms into a single form for departure and arrival (for non-Nigerians only) to provide proper clarity for travellers;
Simplification of application and submission processes for Visa on Arrival requests. In this regard, the following have been put in place: submission of applications and receipt of approval letters can now be done electronically via a dedicated email address (oa@nigeriaimmigratio.gov.ng), 48-hour timeline for pre-approval, and website improvement for increased transparency around application process;
Elimination of manual baggage searches through upgrade of relevant equipment to reduce delay which passengers go through at departure points at the airports, which is intrusive and time-consuming;
Upgrading infrastructure at the Lagos & Abuja airports (such as decrepit elevators, escalators and chillers) with clearly defined maintenance schedules;
Enforcement of a 48-hour timeline for issuance of visas at Nigerian missions abroad to end the current practice whereby no timeline exists resulting in delays with processing of visa applications.

The overall impact of the above reforms is to achieve a 48-hour visa processing timeline & improved traveler experience at Nigeria’s international airports.

CONCLUDING REMARK

The 60–Day National Action Plan is, in our considered opinion, a step in the right direction. We believe that if the current efforts of the FGN and the respective stakeholders in driving and implementing the promised reforms are sustained, the overall goal to “move Nigeria 20 steps upwards in the World Bank Ease of Doing Business Index”, in the short to medium term, would be achieved.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo

DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.