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Why Nigeria Needs To Urgently Pass and Sign The CAM Bill 2018

Doing Business in Nigeria	5596 VIEWS
Doing Business in Nigeria
5596 VIEWS

Monday, March 24, 2019 5.00PM / Proshare Business & WebTV

Executive Summary

“The CAM Bill 2018 is one of the biggest piece of legislative review in the history of the National Assembly. The Legislation will ensure the ease of starting and growing businesses in the country, facilitate appropriate regulation for MSMEs; enhance transparency and shareholder engagement as well as align regulatory framework with international best practices for competitiveness”.- Lady Azuka Azinge, Ag Registrar-General, Corporate Affairs Commission

Legislations on how businesses operate constitute part of the key drivers for attracting investments and growth in an economy. From India, United Arab Emirates, Rwanda, Sweden to even Mauritius, nations understand that there is a nexus between effective business laws and economic development.

An investor is more concerned with the provisions of the legal framework of a business environment, than all the interesting adverts and diplomatic moves the nation in question presents. Understanding this, countries that seek to attract and retain investors ensure to review their business laws periodically to reflect the economic realities and shifts that have occurred in the globe.

Going through the annual World Economic Forum Global Competitive Index, it is clear that the top 10 countries are those with robust, dynamic, progressive and strategic business legislations.

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Since 1990, Nigeria has taken 28 years to reform its business laws contained in the Company and Allied Matter Act, which explains why the “ease of doing business” in the country has been a challenge.

A cursory review of other economies revealed that reviews their business laws are done every 4-5 years in order to ensure that the reforms align with the current realities and changes.

One clear example is the fourth industrial revolution, which is driven by digital technology. No nation can assert that it is making progress while it still operates with a business law that does not recognize the developments in technology which is of huge interest to the “Generation Z” and the “Millennials”.

A basic process like registering a company in Nigeria, has been so cumbersome and rigorous that a lot of vibrant Nigerian entrepreneurs are frustrated, whereas with technology what used to take 2 weeks or a month can be done in 24 hours. With the advent of the digital technology, issues around navigating through the developments becomes paramount for nations that take their business law reforms seriously.

The 8th National Assembly under the leadership of Senate President Dr. Bukola Saraki promised in June, 2015 to be a Pro-Business NASS passing legislations that will improve and transform the Nigerian business environment landscape.

It is therefore not surprising that after 2 decades the 8th NASS is making history in the country, by passing a comprehensive review of the CAM Bill 2018 which has been long overdue in the country.

In this article we will explain why Nigeria must not delay the passing and signing into Law of the CAM Bill 2018. To further buttress this, we explore the nexus between the bill and an enabling business environment.

CAM Bill 2018: World Bank Doing Business Index

· Enhancing Nigeria’s Doing Business Index in the World Bank

The urgency of signing the CAM Bill 2018 is critical to improving Nigeria’s ranking in the Doing Business Index developed by the World Bank. This signals a pathway to reforms that makes the country an attractive zone for business and industrialization.

African Countries like Rwanda, Djibouti, Togo, Kenya and Cotedvoire made the list of the top 10 improved economies in the 2019 WB Index. The aforementioned countries have demonstrated remarkable commitment to reforming their business legislations, to accommodate the current socio-economic realities.

Nigeria has been very proactive since 2016 in the area of seeking to improve its ranking in the World Bank Doing Business Index.

In 2018 Nigeria moved 27 places up from 169 to 145 out of 190 countries, but moved one place down to 146 in 2019.

A summary of Nigeria’s ranking and score in key indicators from the 2019 World Bank Doing Business report include;

·         Starting A Business – 120
·         Dealing With Construction Permits - 149
·         Getting Electricity - 171
·         Registering Property - 184
·         Getting Credit – 12
·         Protecting Minority Investors - 38
·         Paying Taxes - 157
·         Trading Across Borders - 182
·         Enforcing Contracts - 92
·         Resolving Insolvency - 149

From the report one area that needs urgent attention is the process of starting a business, which is currently poor in ranking.

It is expected that as part of the political will to improve the ease of doing business, the CAM Bill 2018 will be duly signed into law by the President, when it is received from the National Assembly

· The Nigerian Business Community

Recall that in 2012, the Nigerian business community in an article CAMA: Shareholders urge FG to review obsolete sections” published by Proshare stressed the need for the Federal Government to review the CAM Bill legislation and do away with obsolete sections.

From 2012 -2017 the private sector and economic advocacy groups like the Nigeria Economic Summit Group have been pressurizing the government on reforming the laws guiding the business environment.

Through the effort of the NESG in partnership with the National Assembly, a National Assembly Business Enabling Roundtable (NASSBER) was set up to calibrate pro-business bills, that will address issues of concern in the business space.

CAM Bill 2018: What Is New

We have heard repeatedly that this is one of the biggest business reforms in Nigeria’s history, so what is new in the bill;

With CAM Bill 2018, one person can now open and run a company – unlike before when you needed two or more people. This is especially good for start-ups and young entrepreneurs.
It promotes the use of technology in the registration of businesses
It creates another new category of legal identity for Nigerian businesses.
The CAM Bill 2018 removes all the unnecessary regulatory provisions for small companies.
It ensures that Nigerians can now register their businesses from anywhere in the country through the e-registration system that the senate’s amendment gives legal backing.
It reduces the minimum share capital for companies and start-up in Nigeria.

Read More on the Changes to CAMA

This Legislation when it becomes law, will further strengthen the pro-business stance of this present administration, and will require full adherence by the concerned regulatory agencies and policy makers.

Nigeria will now be able to track its profile as a leading nation in the area of promoting business and investments in the globe.

CAM Bill 2018: Current Status

In May, 2018 the Senate of the Federal Republic of Nigeria passed the CAM Bill 2018, describing it as a single largest business reforms carried out in the country, in over 2 decades.

After the passage by the Senate, the House of Representatives in the principle of cooperation also passed the legislation through third reading which signified progress from the part of the National Assembly.

The expectation now is that the CAM Bill 2018 will be transmitted to the President for his assent and signing into law, which will be a game-changer for Nigeria’s business environment.

The Nexus between CAMA Bill 2018 And An Enabling Business Environment

In further buttressing why it is of utmost importance to sign the CAM Bill 2018 into law, we explore the nexus between the bill and an enabling business environment.

· Enabling Environment for MSMEs

The passage of the CAM Bill 2018 will fast-track the processes for creating an enabling environment for businesses from the seamless process of registering a business t0 the removal of all unnecessary regulatory provisions that hinder the growth of small companies.

· Signalling to International Community

This will signal to global investors that Nigeria is serious when it comes to doing business and will help scale the ongoing reforms carried out to attract investments into the country.

Just like Rwanda and Mauritius, the nation should begin to experience a dynamic and reduced time and process for doing business. This will incentivize real-time investors from private equity to institutional.

It will also be an opportunity for the World Economic Forum to assess the progress and developments in Nigeria.

· Enhancing Nigeria’s Doing Business Index in the World Bank

Nigeria has been very proactive since 2016 in the area of seeking to improve its ranking in the World Bank Doing Business Index.

In 2018 Nigeria moved 27 places up from 169 to 145 out of 190 countries, but moved one place down to 146 in 2019.

The current administration of President Muhammadu Buhari is showing political will to drive business reforms in the country, through the establishment of the Presidential Enabling Business Environment Council, PEBEC to drive business reforms in Nigeriaand it will be remarkable to see the council attain its goal to move Nigeria into the top-100 on the 2020 World Bank Doing Business Index. It is thus critically necessary for the CAM Bill to be passed into law before April 30, 2019 in order to prevent a delay in achieving this feat.

CAMA Bill 2018: The Role of PEBEC

· Reforms by PEBEC

The Presidential Enabling Business Environment Council, PEBEC established under the Buhari administration, has Vice-President Professor Yemi Osinbajo as Chairman and Mrs Jumoke Oduwole, Senior Special Assistant on Industries, Trade and Investments as Secretary.

PEBEC through the Enabling Business Environment Secretariat, EBES has carried out about 140 reforms in three years since 2016, touching critical areas that affects the business environment.

Through PEBEC activities and reforms, we have seen an Executive Order 001 focused on reforming business processes in Nigeria with the Ministries, Departments and Agencies (MDAs) actively involved.

PEBEC also played a key role in the CAM Bill 2018 business legislation, working with the National Assembly.

It has also carried three (3) National Action Programmes (with a 60-day period) to accelerate reforms and recently launched its 4^th stage of action.

To improve interaction between MDAs and the Nigerian public in the area of the ease of doing business, PEBEC launched an App “REPORTGOV.NG”

· Cooperation Between MDAs and Regulatory Agencies

In Nigeria things can work and the CAM Bill 2018 has shown the power of synergy in the country.

From PEBEC, the National Assembly, the MDAs and regulatory agencies like Securities and Exchange Commission, Corporate Affairs Commission, Ministry of Industries, Trade and Investment, Nigeria Custom Service, Nigeria Immigration Service and advocacy groups like the Nigeria Economic Summit Group, .

From the synergy displayed it isshows that it is possible for policies and reforms to be achieved in Nigeria, if there is cooperation and understanding amongst relevant government agencies and parastatalss. For these stakeholders, it will be quiet rewarding and encouraging to see the CAM Bill 2018 passed into law as an acknowledgement and commendation for all the efforts put into same.

CAM Bill 2018: What Nigeria Stands to Gain

· Competitiveness

With the signing of the CAM Bill 2018 Nigeria will be well positioned to boost its competitiveness ranking in the World Economic Forum, which has “Enabling Environment” as one of its core pillar rankings.

From the 2018 WEF Global Competitiveness Index, Nigeria was ranked 127 out of 140 countries in the area of “Institution”.

The Reformed CAM Bill 2018 should improve Nigeria’s ranking and perception in the area of institutions and enabling environment

· Policy Environment

The Policy environment should improve as the government and regulatory agencies will be equipped to implement the initiatives that improves the business environment.

· Legal Framework for Business

CAM Bill 2018 provides a robust legal framework for businesses in Nigeria to thrive. Prior to now it has been classified a difficult nation to do business, but in years to come the story of businesses will be different.

· MSME Development

MSMEs account for over 80% of the economic activities in Nigeria, and constitute the highest employer of labour.

With the proposed signing of the CAM Bill 2018 MSMEs will achieve scale in their operations while young entrepreneurs will be encouraged to venture into new frontiers.

This will definitely boost economic activities and empower more Nigerians, through job creation and wealth creation.

Conclusion

Nigeria has come a long way as a nation and its pathway to achieving productivity as an economy , will come through enterprise development.

As a Nation of resilient and courageous entrepreneurs, the best gift from government will be an enabling business environment.

This is why the passage and signing of the CAM 2018 Bill should be treated with top priority.

The quest to make the top 100 best reformed economies in the globe by 2020, is an audacious but laudable step by the current administration.

This is not too hard to achieve but the enabling laws must be put in place to catalyze business activities in the country.

Nigeria as the largest economy in Africa, must also lead in the areas of “Doing Business”. It is therefore imperative that the CAM Bill 2018 beis treated with the urgency it deserves. This is how Nigeria will reposition itself to be among the league of nations with progressive business laws.

Beyond the signing of the CAM Bill 2018, it is expected that a continuous review of the business law will occur in every 4-5years.

Following the third reading and passage by the National Assembly, the business community is keen on seeing that further processes to ensure the bill is signed into law is fast tracked.