Fixing Nigeria’s chaotic business regulations

By Bashir Ahmed

Since the return of democracy to Nigeria in 1999, each and every administration that has been put in charge of our affairs in this country by the electorate has regurgitated the now tired cliché of “creating a business friendly environment for private establishments to thrive”. It is ever more glaring that politicians make this promise without giving critical thought to how or what to do to ensure that their promises to business men and women are actualized.

The Annual World Bank “Ease of Doing Business” report for 2016 ranks Nigeria at number 169, below other African Countries such as Botswana (72nd), Zambia (97th), Namibia (101st), Mali (143rd) etc. The report measures and evaluates countries on several indices such as ease of starting and registering a business, obtaining construction permits, registration with respective tax agencies, processing and payment of business levies, getting electricity etc. Engage in discussion, any entrepreneur who has gone the whole nine yards in establishing a business in this country and you will easily understand why we attained such a low ranking. The bureaucratic bottlenecks, policy implementation hurdles, integrity of government employees etc can be very discouraging.

While the World Bank’s report investigates the ease of starting a business, it hardly gives any insight into what I would term “the ease of running or sustaining a business”. I can bet my little money that Nigeria would not fare much better in the rankings should a similarly extensive report on sustaining a business be commissioned by the World Bank.

This brings me to my topic for today which is the proverbial elephant in the room when discussing “ease of doing business” as it concerns complying with government regulations in Nigeria. Government regulations and regulators are a necessary ingredient in any sane country to ensure that businesses carry out their operations in line with certain standards, provide fair playing ground for all stake holders, and also to protect the interest of customers, clients and anyone associated with these businesses. However, when government regulations become ridiculously copious and practicably impossible to comply with, they have the unfortunate effect of not only stifling business growth, but also becomes one that breeds and one could argue, promotes corruption.

This problem is not a nascent one in Nigeria. It doesn’t matter which sector of the economy you operate in, the moment you set up shop, you realize that you have a multitude of government agencies calling for your head on a million and one regulatory requirements. It becomes even more frustrating when you discover that some of these agencies are duplicating responsibilities or bizarrely implementing policies that are contradictory in nature. One is then tempted to ask if all these regulatory bodies are indeed working for the same federal government.

I will use two examples to highlight my points above, one from the petroleum industry and the other from the agricultural sector.

Barite is a mineral which often is used as a drilling fluid (or drilling mud) by oil field service companies during drilling operations. Barite-ore which is the raw material required to produce finished barite products can be found (and mined) in Benue, Plateau, Nassarawa States and a few other States in Nigeria. Barite-ore is sometimes imported to augment the quantity or quality of in-country mined barite.
The oil servicing companies who are the end-users of this product have to comply with extant government regulations and procedures while purchasing and deploying this product especially when there is an emergency situation requiring the deployment barite within the shortest possible time frame. Whenever there is a shortage of Nigerian mined barite to meet the demands of the industry and end users have to import the product, things start to get a bit messy. The end users need to get approval from the Federal Ministry of Mines and Steel Development (FMMSD) before they can import barite. Similarly, the Nigerian Content Development & Monitoring Board (NCDMB) must also give its consent before importation of barite for use in the Nigerian oil and gas industry can go ahead. Another regulatory body, the Nigerian Custom Service (NCS) has banned the importation of processed barite but allows importation of barite-ore provided all import duties are paid.
But that is not all. At the point of importation, the National Agency for Food and Drug Administration and Control (NAFDAC) also has to inspect and certify the product before it is cleared by the NCS. This brings the number of agencies end users have to contend with to four (4) for just one product. When you consider the bureaucratic channels, and the inevitable delays and bottlenecks involved in receiving the needed approvals from each of these agencies, the potential nightmare businesses go through stares you back in the face.

Secondly, for those into poultry business, it is not unusual to import Poultry Concentrates — a necessary ingredient in poultry feed. This process as expected requires NCS clearance at the point of importation. The importing entity also requires permits from NAFDAC, Standards Organization of Nigeria (SON) and Nigerian Agricultural Quarantine Service (NAQS) — an agency under Ministry of Agriculture). It doesn’t end there. If the company is one that also trades in frozen chicken, it requires another NAFDAC permit certifying that the product is fit for public consumption which is issued after an inspection by NAFDAC officials. SON must also give approval for the same finished product before it is allowed into the market in line with the regulator’s mandate “to ensure that locally manufactured products in Nigeria give the required degree of satisfaction to consumers”. Though the task to ensure that goods are fit for consumption before they are allowed into the market is a necessary one, we must ask the question why we need two agencies to execute this task. Since NAFDAC is already required to certify all edible products (foods and drugs) before they are displayed for sale, would it be too much for businesses to ask that SON need not be required to issue similar certification for this group of goods (i.e edible goods)?

Replicas of the above examples can be found in other spheres of our lives in this country. For instance, in December 2015, Kaduna State residents welcomed news of the dissolution of the Vehicle Inspection Office (VIO) in the State by Governor Nasir El-Rufai. The overlapping roles of VIO and the Federal Road Safety Commission (FRSC) were a constant source of irritation for the State’s motorists.

If one agency can do the job effectively there is no need having two, three or more agencies duplicating almost the same function, as it only frustrates businesses and also wastes tax payers’ money.

The National Assembly must take the lion share of the blame for this chaotic administration of regulations. These regulators are established by Acts of parliament, therefore thorough investigations and research ought to have been carried out by the National Assembly to ensure that before a new law is passed and a new agency is created, there isn’t already an extant law or existing agency that is already carrying out a similar function to that for which the new law is being enacted.

A lot of the problems highlighted in this piece can be avoided by simply reviewing, amending, repealing and streamlining already existing laws instead of adding to our already over bloated civil service.
In a nutshell, simplicity should be the watch word. What can be done by one person effectively, does not require two persons. Legislative prudence is required to ensure that regulations which can be effectively enforced by one agency are not be duplicated and modified for the mere sake of establishing new agencies.
If a government agency recognizes that its responsibilities seem to always clash with that of another regulator, or that its policies are contradictory and counterproductive relative to others, the honorable thing to do would be to approach the National Assembly with a view of amending their respective enabling statutes in order to achieve better synergy and save businesses tons of headache.

In the end, it is imperative for Government regulators to put ego aside and work for the common good of the country by always keeping their eyes on the larger goal which is effective implementation of government regulations irrespective of who carries out the task. Perhaps when this is done, the regulatory nightmares that our businessmen and women face will disappear, and precious time and resources will be freed up and the result will be a more prosperous Nigeria for us all.

@DarwinsChaplain