The unending debate on the overbearing attitude of regulators as it concerns ease of doing business in Nigeria has never been as contentious as it is today. Unfortunately, most of the stifling policies churned out by regulatory authorities in the country have over the years effectively succeeded in restricting or hindering innovation, investment opportunities and economic growth, leading to a situation where bureaucrats dictate the pace of growth of the economy or retard the process outright.
No doubt, any country that prioritises ease of doing business is almost on a sacred quest for the solution that will create growth and open new vistas of prosperity and well-being. However, like many things called holy, the concept of innovation is invoked ritually and ceremonially more than it is embraced in practice. This is why amid all the rhetoric of allowing organisations the enabling environment to thrive and in return grow the economy, regrettably, many regulatory authorities in the country knowingly and unknowingly stifle it through some of their actions. They say they want more growth and innovation, but at the same time they seem to operate by a set of hidden principles designed to prevent innovations from surfacing or succeeding. It is akin to wanting a fire that does not burn.
This is perhaps what the Lagos Chamber of Commerce and Industry (LCCI) means when it says that the activities of regulatory agencies have the capacity to overburden growth of companies which are critical to job creation in the economy. Indeed, more often than not, regulation takes the law in its hands rather than follow due process, a situation that negatively affects investment inflows.
The recent Consumer Protection Council (CPC) vs. Coca-Cola Nigeria saga over “two half-filled cans of Sprite” exemplifies this scenario. A consumer had made a complaint to CPC regarding “two half-filled cans of Sprite” manufactured by NBC Limited under the licence and authority of Coca Cola Nigeria Limited. In reaction, a hefty civil penalty of N100 million (including a whopping N60 million cost of investigations) was slammed on Coca-Cola Nigeria by CPC after an administrative panel it set up to investigate the matter indicted them. Ironically, a review of the CPC Act shows that a fine of N50,000 is the highest penalty such an infraction should attract.
In the face of this, many well-meaning Nigerians in the know have been speaking up. Emeka Ohanyere, an economist, recently observed that “the current Coca-Cola/CPC issue which has raged on for a while occupying the centre stage in media discourse is one that is giving investors course for concern”.
Similarly, the Nigerian Employers Consultative Association (NECA), the umbrella organisation of employers in the Organised Private Sector, said in a recent statement that “The Consumer Protection Council, in its bid to survive in a dispensation of tight fiscal policy and diminishing budgetary funding, has resorted to sleazy and untoward methods that are inimical to the sustenance of the real sector.” But should this be the case in an economy that currently needs all the investments it can attract as the 35 percent slump in crude leads to investor exodus from the Nigerian financial markets?
Also worrisome is that beyond regulatory recklessness, entrepreneurs and executives are complaining that businesses are being squeezed by multiple taxes and increasing red tape as many state governments struggle to shore up internally generated revenues (IGR) in the face of dwindling revenues occasioned by falling oil prices in an economy that relies over 75 percent on oil for its revenue. No wonder the World Bank has observed that Nigerian businesses spend valuable time and resources trying to comply with a myriad of local regulations.
But there is always a way out. According to Rita Ramalho, 2015 Doing Business report lead author, World Bank Group, “Removing burdensome regulations is an essential step toward a stronger private sector. Although Nigerian enterprises face regulatory obstacles, implementing business-friendly reforms will allow local entrepreneurs use their time and resources more efficiently and thus become more competitive.”
Another way is for Nigeria’s economic managers to wake up and recognise that as oil prices fall, it becomes imperative to do the right things as regards reforming the economy and easing burdens on businesses. It is sad, and dangerous for the economy too, when regulatory agencies and government bureaucracy are allowed to operate as toll roads and view businesses as cash cows to be milked. Such recklessness has the capacity to send the wrong signals to would-be investors.
As Ohanyere further observed, “It cannot be overemphasized that Nigeria needs as much Foreign Direct Investments (FDIs) as it can get, particularly with the recent transformation agenda set in motion by the Federal Government, intended to ensure rapid growth and far-reaching economic prosperity.” Needless to stress, Nigeria cannot afford to toe the path of India, which has lost huge FDIs due to its stifling policies that can best be described as regulatory rascality.
In concluding this piece, one cannot but agree with Kayode Omosebi, analyst with UBA Capital, that “Nigeria needs to do more to make its economy attractive to foreign investors and likewise catch up with other developing countries. It needs to shed itself from stifling policies that might bring about the needed enabling environment that would attract investors and likewise deepen their level of presence.” The time to act is now.
Nnanna Nwafor
