Over 70 percent of businesses in Nigeria are informally run. But an interactive forum tagged ‘Running a business in Nigeria’ aimed to get more businesses formalised. Joe Agbro Jr. reports
Popularly acknowledged as being the drivers of economies, small businesses across the world have attracted attention. However, in Nigeria, confronted with a myriad of developmental as well as infrastructural deficiencies, the odds against the survival of smaller businesses was very high.
However, it is not a totally gloomy picture as a Public Private Dialogue/Market Traders Meeting organised by Growth and Employment in States 3 (GEMS3) in Lagos last week sought to sensitise business owners on how they can reap from their efforts.
Towards this end, an intervention, ‘Running a business in Nigeria’ campaign was rolled out.
“Your ability to survive in business today will depend on some form of formalisation,” said Obinali Egele, team leader of GEMS3.
Though the highlight of the event pivoted around registration of businesses by Corporate Affairs Commission (CAC), on hand were members from NACCIMA and Lagos Chambers of Commerce and Industry, and the Bank of Industry (BOI).
Representing the CAC Registrar General, Bello Mahmud, Alhaji Garuba Abubakar said the CAC is working to ensure registration of businesses is faster, cheaper and less cumbersome.
Reacting to the claim that it was expensive and frustrating registering businesses, Abubakar said that what jacked up the costs of registering were the professional costs charged by consultants, a scenario which he said the CAC now frowns against.
“Since January 2012,” Abubakar said, “any individual that wants to register a company or business name can approach any of our offices, obtain the forms, declare his memorandum of association and article of association and make the application directly. The only requirement that we will not dispense with is the provision in CAC 1 that requires that a legal practitioner must review the documents.”
The cost of registering a business name is N10, 850 and it costs N27, 500 to register a limited liability company while applicants must come along with two passport-sized photographs and a valid means of identification such the national ID, drivers licence, international passport and voters card. He also said that all business registration could be started and finished in CAC offices in Lagos.
Saying these reforms were targeted at small businesses, Abubakar said the CAC can register businesses in less than 24 hours and at most in 48 hours. He said, “our target is to register businesses in two hours.”
Giving the opening address on behalf of Mrs. Olusola Owuru, the Lagos State Commissioner for Commerce and Industry, a director in the ministry, Jafar Sanuth, commented the initiative and said it is in line with the Lagos State government’s programme to reform the informal sector which started in 2012.
Giving reasons why reforming the informal sector will be beneficial to all concerned, Sanuth said, “You have expanded market operation whereby you don’t need to move from your place and you’re still trading with somebody elsewhere in the world. Equally, by the time you start trading formally, you have an identity by yourself. And when you have an identity, people can know you and how credible you are.”
He also said the state government was putting in place policies to ensure a more business-friendly environment. One is these, he said, is the compilation and harmonisation of all state levies, taxes, and charges so that “you will know without leaving your office what you are supposed to pay and how you are going to pay it.”
He also highlighted that the state government was also working on land reforms for approvals of property within the state.
According to the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede, “before you talk of business registration, you have to talk about business formation.”
Highlighting the need for formalisation at every stage of production, Isemede said it is not just enough to have a piece of land. “That land must have C of O (Certificate of Occupancy),” he said. “The man who is running a business on a land where he does not have C of O, how do you expect a bank to support him?”
He also said, whether one decides to run a local or international business, one has to register it with the Corporate Affairs Commission (CAC). Highlighting that CAC has offices across the country, a situation which was not the case in times past, Isemede said, “now, people have no excuses whatsoever that they cannot register their businesses.”
Speaking on why a business needs to be registered, Isemede offered some examples.
“In Nigeria today, people write letters using a plain sheet in the hope that they will get a feedback,” he said. “They will not get. If you have, put a post office box. Even if you have a mobile line, some people still insist that you put a land line. People want to know that you have land line. So that when I call you and you say you’re in Yaba, I can now say go, because if you call me on my mobile line, I can tell you I’m in Kano whereas I’m in Lagos. So, when you talk of business registration, it is not just going to CAC, other things have to follow.”
He continued: “You must have a letter-headed and the names of directors must be there.” He decried the practice whereby some people just enter business centres to print documents arbitrarily. “That is not how to run a business,” he said.
Today, most private and public organisations ask for proof of registration with the CAC from businesses before conducting any business with them.
Isemede also urged business owners to register with appropriate bodies so as to derive incentives and advantages inherent from such registrations. He said those interested in international trade “must register with the Nigeria Export Promotion Council” and attributed the long delays in clearing goods at Nigerian Ports to a “lack of documentation.”
It is on record that Nigeria has signed various treaties, some which include that with the Economic Community of West African States (ECOWAS) and the World Trade Organisation (WTO) which should facilitate foreign trade in different aspects, but not many Nigerians seem to benefitting from these agreements. Isemede attributed these to lack of ignorance and improper documentation.
“A lot of people would now tell you ‘after all, we’re in ECOWAS,’” he said. “They end up going to Ghana, going to Benin Republic without papers. There is no law that says you must load your goods and cross the border without papers. You must have all the things required in line with the protocol of movement of goods and services. Why do we have trailers? Why do we have goods abandoned at the borders? It is just because Nigerians don’t know what to do.”
He said, “the incentives are there but people don’t know how to enjoy it.”
He also decried the way of doing business in the informal sector of “not having records, of not paying taxes, of not filing returns, at the end of the day, you go to the bank, what are you going to present before your bankers to enable them process your loan and support you. People are crying about, looking for brothers and sisters when there are billions of naira in NEXIM, BOI and commercial banks.”
Growth and Employment in States (GEMS) is a partnership with the federal government, the Department of Foreign International Development (DFID) and the World Bank.
GEMS 3 aims to promote the benefits of formalisation to increase business registrations, create awareness of regulatory reforms that make it easier, faster, and cheaper to register a business, and increasing new company registration by at least 6% by June. To achieve this, GEMS is working with CAC on a software to further reduce the time, cost, and number of procedures required to register a business in Nigeria.
The programme which was held in support with the Federal ministry of industry trade and investment, also had members of audience which consisted stakeholders, business owners and intending entrepreneurs interact together.
