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Nigeria was not known to have a culture of and/or practice of independent regulatory regime until the beginning of this century. What used to exist until 1999 was the practice whereby, a federal government agency doubles both as a sectoral service delivery agency and at the same time, as that particular sector’s regulatory authority. For example, the public utility entity better known as the National Electric Power Authority (NEPA), which was re-named Power Holding Company of Nigeria (PHCN) not long ago, is still today, the nation’s almighty generator, transmitter and distributor of electricity nationwide (and to the neighboring Republic of Niger).
It is a public-owned enterprise that controls and manages all of Nigeria ‘s public electricity supply infrastructures (i.e., Hydro-electric dams and thermal power stations, national grid transmission network and over 80 percent of the distribution network). In a nutshell, NEPA was designed as an electric power sector self-regulatory public monopoly; being the sole market player in the sector (except of course, the ubiquitous importers of electricity generators that by law, are statutorily regulated by NEPA via licensing and inspection routines. These functions were recently transferred to a newly established independent Nigerian Electricity Regulatory Commission (NERC)).
Before I go any further with my analysis of the subject under review, I would like to explain what independent regulatory agency stands for and what it does. A simple definition of a public or government regulatory agency or commission is that entity charged by the legislature with setting and enforcing standards for specific industries and/or businesses in the private sector or public sector as the case may be. In general, the regulatory agency functions outside executive supervision. The concept has its roots in the United States of America (USA) where it was invented and exclusively used by the U.S. government since 1887. For example, the Interstates Commerce Commission (ICC) was the first regulatory agency established by the U.S. government in 1887. The principle behind its creation is that an agency or commission of experts on the industry being regulated is better equipped to regulate it than the legislature or executive arms of government.
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Thus, designed to operate with a minimum of executive or legislative supervision, a public regulatory agency or commission has executive, legislative, and judicial functions, and its regulations have the force of law. Since then, several key regulatory agencies have been established. These include amongst others, the Food and Drug Administration (FDA), the Federal Communications Commission (FCC), and the Securities and Exchange Commission (SEC).
Many other developed nations copied the U.S. tradition by establishing similar agencies due to the successes recorded in their operations in the U.S. economy. No wonder therefore, developing countries such as Nigeria are late imitators of this free-market innovation. Hence, since 1999, the Nigerian government during the eight-year tenure of Obasanjo’s presidency, the prebendalism regime of public monopoly self regulation regime was jettisoned for a more independent, transparent, and accountable regulatory framework. This was made possible following the concerted efforts by the Nigerian Government to liberalize the Nigerian economy in line with neo-liberal economic paradigm.
Therefore, one of the transformative measures put in place in the process of liberalizing the Nigerian economic space include the establishment of U.S.-styled independent regulatory agencies or commissions for the various sectors of the economy. For example, the Nigerian Communications Commission (NCC), the Nigerian Electricity Regulatory Commission (NERC), the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC), and the Independent National Electoral Commission (INEC) were amongst the pioneer independent regulatory agencies established by legislative Acts in order to set standards, rules and regulations in a specific field of activity, or operations, in both the public and private sectors of the Nigerian economy and to then enforce those measures for the common good.
However, over the past decade since 1999, the composition, behaviour, and overall performance of these agencies in Nigeria leave a lot to be desired as they are more often than not, quite out of tune with international best practices. Second, is the situation when the appointed board allows its activities to be externally influenced by vested interests from the industry, activity or sector being regulated. For instance, the situation experienced by the Nigerian Securities and Exchange Commission (SEC) not too long ago. The SEC, for example, was alleged to be highly influenced by the leadership of the Nigerian Stock Exchange (NSE).
In the academic literature, if any or both of these two situations occur, the independence and integrity of the agency are said to have been compromised. The situation is generally termed as Regulatory Capture. It generally occurs when a public regulatory agency created to act in the public interest instead acts in favor of the commercial, private or special interests that dominate in the industry or sector it is charged with regulating.
In conclusion therefore, one can say that what is currently going on at the Corporate Affairs Commission (CAC), as graphically chronicled by its workers against its embattled board chairman, who the workers accused of unwholesome meddling into the day-to-day affairs of the management of the Commission for his personal advantage and putting his private businesses’ interest and those of his cronies first (and in addition to his current and immediate past record of open partisan political activities) to the detriment of collective common good, is an excellent example of a national regulatory disease, which like the cholera epidemic currently ravaging the country, needs to be eradicated soonest.
It is only by doing the right things while appointing board members of our burgeoning regulatory agencies that Nigerians will have full confidence in the activities of Corporate Nigeria and other public sector agencies. This plea needs to be taken into account by the government while constituting and/or reconstituting the board of any regulatory agency in future.
