Can Nigeria End Its Business Nightmare?
WHY YOU SHOULD CARE
Because the economy of the world’s most populous Black nation desperately needs reform.
As a single mother of two with little support from the family of her late husband, 32-year-old Stella Ekpenyong needed her own income to provide for her young ones. And yet it took her more than a month to register her fashion design business with the Lagos offices of the Corporate Affairs Commission — a process that takes just six hours in Rwanda.
Ranked 169 out of 190 countries on the World Bank’s Ease of Doing Business index in 2016 (Rwanda is ranked 62), Nigeria is infamous for its murky, sluggish business environment. This reputation is accentuated by red tape bureaucracy coupled with the notorious nonchalance of government and civil service officials who request bribes as casually as moving a cursor across a computer screen. But there’s a new economic sheriff in town looking to clean up Nigeria’s act and tell the world that the country is open for efficient, transparent business.
Reform in Nigeria is like taking two steps forward and one step back — it’s a slow, grinding process.
Amaka Anku, West Africa analyst, Eurasia Group
Africa’s largest economy is in the middle of its worst recession in 25 years, and the government is desperate to attract more foreign direct investment. To this end, President Muhammadu Buhari’s administration instituted the Presidential Enabling Business Environment Council in July 2016 with a mandate to move Nigeria to a top-100 ranking on the World Bank index by 2019. The council is made up of at least 10 ministers, the head of civil service, the governor of the Central Bank of Nigeria and representatives of the legislature and other stakeholders, including the private sector. The council chair is professor Yemi Osinbajo, vice president and current acting president of Nigeria.
“The reason for having diverse stakeholders on board is to help us pull in the same direction and understand all the bottlenecks as we look to tackle them,” says Jumoke Oduwole, the council’s secretary and coordinator of the Enabling Business Environment Secretariat, which implements the council’s agenda. “The leadership … is committed to passing laws to operationalize reforms that the council has approved so we can move forward.”
The Stanford alumni and former Cambridge scholar stresses that the body’s role is to increase competitiveness by improving infrastructure and the regulatory environment. To do so, the council works in tandem with ministries, departments and agencies (MDAs). Consequently, it has released a 60-day national action plan that gives MDAs responsibility for implementing each line item, with clear deliverables and time lines. “It is one thing to say these things, but another to make sure they trickle down to the people,” she says. “We are organizing workshops to help [the agencies] support each other and be nicer.”
Council chair Osinbajo has already signed two executive orders to ease access to loans and to expand the sharing of information between lenders and credit bureaus in determining creditworthiness. If the executive orders are properly implemented, the council’s ambitious reforms could whittle away at corruption in the public sector and break down major barriers — like macroeconomic policy and tax and customs systems — that hobble the growth of small businesses as well as multinationals. “Before signing the executive orders,” Oduwole says, “the acting president spoke with civil servants and explained why it is in our general self-interest to be customer-friendly and transparent.”
It may be early days for the new sheriff in town, but there are signs of quick wins. Business travelers who apply for visas 48 hours in advance now obtain their necessary documentation on arrival in the country. “The number of documents needed to import items into Nigeria has also been reduced, from 14 to eight,” Oduwole adds, “while that for exports has been reduced from 10 to seven.”
The presidential council has been viewed with skepticism in many quarters, given the country’s seemingly obsessive predilection for establishing committees. “The council itself is a good initiative, but we’ve had several similar councils since 1999,” says Amaka Anku, West Africa analyst at the Washington-based Eurasia Group. She refers to former President Obasanjo’s Honorary International Investors Council, which also aimed to improve the ease of doing business. “Like that council, and others since, the new council may make some limited progress, but is unlikely to revolutionize doing business in Nigeria. Reform in Nigeria is like taking two steps forward and one step back — it’s a slow, grinding process.”
To sustain any progress and see benefits trickle down to entrepreneurs like Ekpenyong will require strong enforcement, warns Gillian Parker, a Lagos-based analyst at Control Risks. One example: Arinze (last name withheld on request for fear of victimization) is a freight-forwarding agent who has to pay multiple levies for the same thing to both the Nigerian Ports Authority and the Nigerian Maritime Administration and Safety Agency, a parastatal organization under the Ministry of Transport. “The manual processing system will continue to facilitate bribery, while theft often involves collaboration between criminal syndicates, security guards and customs officers, further complicating enforcement,” Parker says. “Previous efforts to reduce the number of authorities working at the ports have also failed …”
But Oduwole believes that the business environment could change permanently for good this time. Servicom, a service tracker set up by the Obasanjo administration and long abandoned, is to be dusted off, she explains. “Servicom already has a system incorporated with federal MDAs, and they have been mandated to brush up their template to fit the executive orders so they can measure the results.”
Ekpenyong remains hopeful but skeptical. “Let us wait and see,” she says. “It is hard to trust the government in Nigeria.” She and her fellow entrepreneurs are all hoping that the country doesn’t revert to business as usual.