Regulation is money. Regulation is sustainability

Are Nigerian businesses overregulated? Most people will say yes, but the answer – in my humble opinion and based on experience – is negative. In fact, Nigerian businesses are hardly regulated. They are all over the place and can hardly make a mark on the international stage. If we aren’t careful, not even at the African level with AfCFTA (African Continental Free Trade Agreement) that recently kicked off.

The reason for this writeup is the recent statement from the Vice President the other day, that companies are over-regulated in Nigeria and that over-regulation is killing businesses in Nigeria. While not wishing to join issues with the honourable VP, I urge caution on such statements for these reasons:

1. Businesses in Nigeria are largely unregulated.
2. Bad, toxic regulation especially as a result of bribery and corruption is the problem and is what needs to be dealt with. And most times, it is simply Nigerians frustrating Nigerians.
3. Regulation is about standardization. Nigerians need to learn more about standards and order, global standards that enable our products to match others around the world. We may not get there in one day, but we must start, strive and improve our standards considerably.
4. Nigerians usually get into trouble abroad when they want to do things the way we do here (regulation-free or bribing regulators).
5. Regulation itself is assured money for people who are professionals and can conform to standards set as entry or participation barriers.
6. Our hurry to make money and to show results must not distract us from the need for standardization
7. Such statements estrange Nigerians from government, from the need to pay taxes and get organized, formalized and stick to standards, or to perform their side of the societal bargain, no matter how populist it sounds and how much mileage those who repeat them gain politically.
8. We need to build nationalism, without which we will never develop cohesively. For as long as we convince Nigerians that businesses are ‘overregulated’, this forecloses the chance that our regulating bodies may reform. They will continue to be held in disdain by the people and this only sets the nation up for clashes. Also, the regulators may never attain the level of self-confidence that they require and that the country deserves. Lastly, such statements deepen angst and alienate people from the country.

Many myths have become cliched for too long in Nigeria and we do like our myths that moonlight as reality. One of those I believed in the past – when I used to work in banks and before I chose to be on my own (with God’s help of course) – is that there was too much regulation of businesses in Nigeria. I believed that, alongside the idea that if you worked for yourself, you will have more time for yourself. But I am a fast learner, and because one takes the same attitude you have as a worker into running your own business, in a short while I realized that you tend to work all hours as a businessperson, and also that most of Nigeria’s businesses were unregulated, or corruptly and loosely regulated.

It is bad regulation that is responsible for our business failures and the uncontrollable business space where we roll in confusion and make peanuts. At the end of the day, for most businesses in Nigeria, it is:

1. Impossible to scale and grow the business or the industry at large.
2. Impossible to maintain standards and keep out fakes, piracy, quacks, and other unprofessional tendencies
3. Impossible to compete internationally.
4. It is often impossible to run sustainably and pass on businesses across generations. Most businesses or industries here peter out after an initial growth spurt.

It is even more interesting to note that the Vice President mentioned over-regulation with regards to our export industry. We should ask why Nigerian yams are only exportable through Ghana. Ditto most of our cassava, and hibiscus flowers, among so many other products. We may also wish to learn from the packaging industry in Ghana – much more standardized and internationally acceptable than ours. We may have the size, and a number of Nigerians do have money, but we are not known to be very organized. In time, the world had learned to look away from Nigeria, because it is where people add stones to beans and rice, and sticks to flowers so that they weigh more.

Our problem is actually our Jaga Jaga-ness if I may use that colloquy. And Jaga Jaga-ness is the direct opposite of regulation. No, we are not over-regulated. We are under-regulated, even unregulated in many industries. But we are certainly mal-regulated wherever the government has set structures to regulate an industry – like having 10 different agencies in one spot feigning regulation but actually extorting businesses. I think the distinguished VP should have spoken to the Nigerian question. What is really wrong with us as a people?

The other day, the Cocoa Board which incorporates Ghana and Cote D’Ivoire reached out to assist Nigerian cocoa farmers by integrating them into the board. Nigeria lost her cocoa board and other commodity boards to Babangida’s wrong-headed, premature, crippling and debilitating romance with one-track liberal economics (the same sin that the VP wants to commit in real-time and across several spectra today). Since we lost our cocoa boards (regulation), our cocoa farmers have been all over the place, losing grounds, losing productivity, and losing money. The greed which Babangida and his World Bank aficionados like Chu SP Okongwu, Kalu Idika Kalu, among others promised will take over and spur untold productivity in that and every other sector simply failed to deliver. And here we are. Cote D’Ivoire took over the number 1 position from Nigeria, and with just a quarter of Nigeria’s landmass (with many of its regions not for cocoa-growing), that country now produces almost 10 times the cocoa that Nigeria produces. Ghana too retained her board and produces thrice our cocoa today. Regulation is not stupid. Regulation is money. See these links for what is going on with our ‘deregulated’ cocoa industry today. Tales of woe.

Thankfully, the federal government recently set a limit (like in South Africa), to the bulk purchase of commodities from the farm gate. Since we lost our commodity boards, poor farmers have been cheated, especially by foreigners. With this new move, we are trying to go back to the days of old. We have realized our mistakes. Of course, every policy has a potential downside. But with this policy, and the proposed reintroduction of cooperatives and boards, at least there will be bodies to advocate for these poor farmers. There are also palliative funds for them to tap into to cushion periods of volatility.

Let me tell my story. So, the other day in conversation with one of the people I respect the most in the consulting and capacity-building business; Omagbitshe Barrow, he turned to me and said: “Tope, sometimes I get frustrated and think I should have remained in a regulated business. I would have made much money by now”. I was shocked that how he amplified what had been coursing through my mind so casually. Gbitse and I then discussed how guys who went into the regulated financial sector after their stints in banking (like us), were billionaires around town today – in insurance, pensions, even microfinance, private equity, venture capital, fintechs and such like.

The regulation gives them cover to make money for just being one of those who managed to scale the hurdles set for industry entrants. A bank for example is a license to print money, and if not for utter recklessness that afflicts some who suddenly come into money, there is no reason why a bank should fail. It is protected, for no one can legitimately wake up tomorrow and form themselves into banks if they are not licensed and regulated. We can see what is happening today in Nigeria’s financial sector, with the onset of all sorts of financial options and how billions are being lost to supposed FX traders, ‘investment companies’, and such. No regulation in that segment of the sector. The regulators – CBN, SEC, FCCPC, NITDA and the rest – are now scrambling to bring the Philistines who are trying to hijack people’s monies and their data, into conformity. Regulation is important.

When I rounded up my master’s degree as a mature student in London in 2006, I was sure I did not want to go back to the banking sector as a worker. I formed my company – Global Analytics – and co-opted one of my lecturers, Duncan Hughes. I had to properly incorporate the company in the UK Company House. It was a seamless affair to register. But immediately after I did that, I got a letter in the mail from Her Majesty Revenue and Customs (HMRC), warning me very sternly of the consequences of dodging taxes or not paying my fair share as due. This had to be done at end of the year before your license would be renewed by the company house. Non-submission of your company house returns meant that your company account will be closed by your bank. So, there was a connection between the company house (like our own Corporate Affairs Commission) and their HMRC (like our Federal Inland Revenue Service). Unlike here in Nigeria where the CAC stated the other day that only 196,000 out of 3.1 million registered companies in their records had filed returns, in the UK, all active companies must file returns and pay taxes. No begging.

And once we were registered in the UK and ready to do business, the rule for our sector (training and capacity development changed in the year 2007). The UK insisted that any such company as ours needed to be registered with the British Accreditation Council (BAC). In the BAC they had the typical old school inspector types. Very grounded, focused old folks, who visited every company in that sector at least twice a year, checking your environment (they are big on health and safety), ensuring you had a first aid box and had trained one of your staff on first aid administration, checking your curriculum and past presentations and courses, your training environment, your faculty members, and even viewing your training programs in real-time. And you had to pay them for doing their work. If I recall correctly, we paid the BAC 4,000 pounds a year, in two instalments. No begging. Look, Nigeria does not understand regulation and it is a tragedy that even our leaders do not have the requisite exposure to the essence, structure and power of regulation. I think a lot of the folks in our business sector think that free-market economics is all about waking up any day and setting up any business you want. In developed economies, every sector is tightly regulated. They will never tell you until you go there to do business. There is a regulator for every sector, and they are hands-on. They also suffer serious repercussions if anything goes wrong, and lapses are found in their regulatory work.

And so, we evolved such that our regulatory report is one of the documents we needed to show at the Company House before our yearly renewal. Alongside that, we needed to show evidence of remittance of our company income tax and the Pay-As-You-Earn and national insurance deductions made from our staff, including the company’s contribution, else our license will be withdrawn and we will be thrown out of the United Kingdom. In Nigeria, large organizations in the public and private sector deduct taxes, housing fund payments, health insurance payments and all sorts from their staff and simply refuse to remit. Yet we complain about regulation? No, we are certainly not overregulated. I recall reporting from Ghana just months ago, how, in addition to 17.5% VAT in a restaurant, they also charged 2.5% National Health Insurance, 2.5% Tertiary Education Tax, 1% COVID fees and 1% tourism fees. Nigerians go there and pay gladly with a grin on their faces, but it is only in our country that we think we should do nothing, and behave anyhow. Every drink sold in the market had a QR code on it. They don’t joke with their taxes. No wonder we have the lowest per capita taxation in Africa

In my same sector in Nigeria, there is a regulator, the Centre for Management Development, but the regulator competes with other trainers by publishing its own training schedule for the year and tapping from the same market. If they don’t, they will probably starve to death. Failure number 1. But more importantly, the large organizations that should respect the CMD accreditation do not. They set their own rules, bring on board their own standards, or more preferably, they have none at all, because those who run them believe that the training business is what you give as political patronage, including for family and girlfriends, after all, anybody can train. What is the effect? A disrespect of intellectual capital. And once you disrespect intellectual capital as a society, everything else goes downhill. The inability to regulate that sector means that despite the compounded inflation of almost 1,000% since 2006 when we started the

business, it has been impossible to increase fees beyond what we charged in 2006. Best believe it. Nigerians just don’t believe knowledge should be worth anything worthwhile. No wonder we are here today.

And the same goes for most other industries. Our financialization story continues at the expense of our industrialization. We import masons and tilers from Cotonou and export our commodities through Ghana. Our Standards Organization of Nigeria (SON) is tooled and parades some very knowledgeable professionals but in truth, ‘egunje spoil Lagos’. The same goes for our police. We produce crude oil with the assistance of international oil companies, but we import refined petrol from everywhere. It is bad regulation, not ‘overregulation’ that led to the importation of bad fuel into Nigeria. In fact, it is under-regulation. We have only half-standardized our financial sector but even that one is caving in under our usual rudderlessness. We think lawlessness is hip; like it means being smarter than other people. Our youths – especially from southern Nigeria – are only interested in how to ‘Japa’ to foreign lands. But no sooner than they get there than they realized that for them, it is hell on earth. Most of them start to curse Nigeria for putting them in a bad situation (like a child cursing his mum for becoming wayward). Only a tiny few appreciate Nigeria for the freedom it gave them to do and undo. Life is full of paradoxes. This regulation matter, as well as the idea that western countries are ‘freer’ than African ones, are just two out of the many.

Let me close with my experience in the UAE. You cannot run a business account except you renew your license with the relevant company house on a yearly basis and pay your rent. All information is gridded. Visit anywhere to do any little transaction, with your phone number they call up your face and corroborate who you are with your Emirates ID card before proceeding. Unlike here where you can walk into any shop and produce a company stamp, without passing the information test which links several agencies and is available to all shops and relevant businesses, you cannot get past first base. Anyone wishing to forge their ways through in the UAE is only kidding. That is why many Nigerians get into trouble there. I wish someone will teach us these things. We are too deluded in this country.

As I round this article up, I had cause to participate in a seminar organized by a friend, Emma Ohiomokhare of AIT. The discourse was about societal values, but at some point, participants expressed their concerns about the content that gets shown on social and traditional media these days which seems to be shaping values in the wrong way. They asked representatives of the National Broadcasting Commission who were present, about how the media industry could be better regulated. The work of NBC is interesting, but what was more intriguing was what the NBC rep said. She reminded the audience of the power of regulation; that it was because the NBC and Nigerian Film and Video Censors Board, among other government agencies, insisted on good airtime for local content that those industries became a global phenomenon today. Wow! I never thought of that.

I’m not sure that regulation gets the due credit for some of that as well. I believe we need to regulate, but to regulate right. Regulation is an impetus, and facilitation for business growth and sustainability, to ensure we stay on the straight and narrow and remain in business. The cost of regulation to business should be low, but we cannot hope to get rid of regulation, belittle, castigate or demonize regulators while hoping to play globally. May we get it right one day soon, and may the world not leave us behind entirely.