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Nigeria

World Bank Doing Business Index (NG0005)

Overview

At-a-Glance

Action Plan: Nigeria National Action Plan 2017-2019

Action Plan Cycle: 2017

Status: Inactive

Institutions

Lead Institution: Federal Ministry of Industry, Trade and Investment

Support Institution(s): Corporate Affairs Commission, Nigeria Investment Promotion Council, Federal Inland Revenue Service, Bank of Industry, Nigerian Export Promotion Council, National Food and Drug Administration and Control, Federal Ministry of Power, Works and Housing, Transmission Company of Nigeria, Nigerian Energy Regulatory Commission, Standard Organization of Nigeria, Nigerian Information Technology Development Agency, Nigerian Communication Commission, Central Bank of Nigeria, Nigerian Customs Service, Federal Ministry of Water Resources, Federal Ministry of Transportation. Open Alliance, Financial Institutions, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, National Association of Small and Medium Enterprises, National Association of Small Scale Industrialists, Electricity Distribution Companies, Nigerian Economic Summit Group, Manufacturers Association of Nigeria, Bankers Committee

Policy Areas

Fiscal Openness, Infrastructure & Transport, Land Rights & Spatial Planning, Legislation & Regulation, Private Sector, Public Service Delivery, Tax

IRM Review

IRM Report: Nigeria Implementation Report 2017-2019, Nigeria Design Report 2017-2019

Starred: No

Early Results: Did Not Change

Design i

Verifiable: No

Relevant to OGP Values: Access to Information

Potential Impact:

Implementation i

Completion:

Description

This commitment seeks to initiate and implement reforms that will make it easier for the private sector to engage with government agencies involved with business process-related services by streamlining the existing processes using innovative technology. The commitment will encourage improvements in infrastructure that is critical to the success of businesses and promote timely and efficient service delivery in all business process-related services including business registration, licensing, taxation, applying for credit, extending credit facilities etc.

IRM Midterm Status Summary

5. To improve the ease of doing business and Nigeria’s ranking on the World Bank Doing Business Index.

Language of the commitment as it appears in the action plan:

“This commitment seeks to initiate and implement reforms which will make it easier for the private sector to engage with government agencies involved with business process-related services by streamlining the existing processes using innovative technology. The commitment will encourage improvements in infrastructure that is critical to the success of businesses and promote timely and efficient service delivery in all business process-related services including business registration, licensing, taxation, applying for credit, extending credit facilities etc.”

Milestones:

5.1 Move Nigeria up by at least 20 points on the World Bank Ease of Doing Business Index

5.2: Make process of Land documentation / obtaining titles easier

5.3: Improved coordination and collaboration between agencies of government involved in business process related services

5.4: Downward review of business registration and fees

5.5: Improve critical infrastructure including power transmission and distribution by establishing more power transmission and distribution and licensing fees stations, rail lines, inland waterways, etc.

5.6: Establish a registry of credit information to be accessible by financial institutions

5.7: Enact laws that allow lenders to access borrowers’ data in the credit bureau or credit registry

5.8: Develop road map for improving sectoral value chains for MSMEs

Start Date: January 2017 End Date: June 2019

Action plan is available here:

Context and Objectives

This commitment aims to improve the ease of establishing and operating a business in Nigeria.

“Ease of doing business” indicates how favorable an economy is for business operations. In the past, investors were easily turned away by the difficult process of registering a business, filing returns, and other business administration matters in Nigeria. This is evidenced by Nigeria’s poor ranking; Nigeria ranked 169 on the World Bank’s Ease of Doing Business Index in 2017 and 170 in 2016. [61] Prior to 2017, promoters of a business name were required to engage a Corporate Affairs Commission (CAC) accredited, chartered accountant, chartered secretary or lawyer to register such company on their behalf. [62] According to the director of compliance at the CAC, [63] the cost of setting up a business in terms of getting electricity, land, or rent is very high. There are also nine steps for getting new electricity connections to the national grid, all within a timeline of 198 days. [64] Obtaining land documentation within the time limit is not an easy task, as property usually takes about 77 days to register, coupled with submitting a sworn affidavit for conducting a title search. [65]

This commitment is relevant to the OGP value of access to information. The commitment supports the Presidential Order of May 18, 2017, requiring all government agencies to publish all necessary requirements to conduct businesses via online and paper format. [66] However, Commitment 5 does not seem to be relevant to the OGP values of public accountability and civic participation, as it is unclear how the milestones will positively affect government openness or improve government accountability, participation or engagement.

The Commitment’s activities will better facilitate establishing a business in Nigeria by enhancing the infrastructure required to enhance business performance and making government involvement in business processes more efficient and transparent. Although Milestone 5.1 is clearly verifiable, most of the other commitment’s milestones lack specificity. For example, Milestone 5.2 does not explain how the land documentation would be made easier to obtain, and it was unclear who would undertake a downward review of business registration and fees (Milestone 5. 4).

The commitment should have a minor potential impact. According to Ayokunu Ojeniyi (Enabling Business Environment Secretariat), the commitment has the potential to bring about change. Improvement in the World Bank’s Ease of Doing Business ranking, coupled with adequate, transparent, credit information available to financial institutions are expected to encourage the overall climate business, which in turn may incentivize the government to be more transparent. [67] The milestones addressed factors previously identified as hampering conducting business in Nigeria (critical infrastructure, business registration, access to credit), but the lack of specificity (specifying responsible agencies) mitigates the commitment’s potential impact.

Next Steps

This is an important policy goal which could be part of the country’s agenda.

If this is considered in future action plans it should have broader implementation. The government could form work plans that clearly indicate responsible agencies and the strategies for removing red tape during implementation. The government could also consider providing citizens with a platform to give opinions and make queries, and to hold the government accountable on the various elements that affect the country’s ease of doing business ranking.

[61] The World Bank Ease of Doing Business Index measures the regulations that enhance business activity and those that constrain it. World Bank, Doing Business 2017: Equal Opportunity for All (2017), https://openknowledge.worldbank.org/bitstream/handle/10986/25592/WP-DB17-PUBLIC-Nigeria.pdf?sequence=1&isAllowed=y.
[62] Damilare Odusanya, “The Ease of Doing Business in Nigeria,” http://saharahub.com/the-ease-of-doing-business-in-nigeria/.
[63] A.G. Abubakar (Director, Compliance (CAC)), interview by IRM researcher, 8 Mar. 2019.
[64] “NERC reduces number of days for access to electricity in new buildings”, Nigerian Electricity Regulatory Commission (NERC), https://www.energymixreport.com/nerc-reduces-number-days-access-electricity-new-buildings/, 17 May 2017.
[66] Federal Republic of Nigeria, Open Government Partnership (OGP) Nigeria Mid-Term Self-Assessment 2016-2018 (3 Oct. 2017), 36, opengovpartnership.org/wp-content/uploads/2017/10/Nigeria_Mid-Term_Self-Assessment_2016-2018.pdf.
[67] Ayokunnu Ojeniyi (Enabling Business Environment Secretariat (EBES)), interview by IRM researcher, 20 Nov. 2018.

IRM End of Term Status Summary

5. To improve the ease of doing business and Nigeria’s ranking on the World Bank Doing Business Index

Language of the commitment as it appears in the action plan:

“This commitment seeks to initiate and implement reforms which will make it easier for the private sector to engage with government agencies involved with business process-related services by streamlining the existing processes using innovative technology. The commitment will encourage improvements in infrastructure that is critical to the success of businesses and promote timely and efficient service delivery in all business process-related services including business registration, licensing, taxation, applying for credit, extending credit facilities etc.”

Milestones:

5.1 Move Nigeria up by at least 20 points on the World Bank Ease of Doing Business Index

5.2 Make process of Land documentation / obtaining titles easier

5.3 Improved coordination and collaboration between agencies of government involved in business process related services

5.4 Downward review of business registration and fees

5.5 Improve critical infrastructure including power transmission and distribution by establishing more power transmission and distribution and licensing fees stations, rail lines, inland waterways, etc.

5.6 Establish a registry of credit information to be accessible by financial institutions

5.7 Enact laws that allow lenders to access borrowers’ data in the credit bureau or credit registry

5.8 Develop road map for improving sectoral value chains for MSMEs

IRM Design Report Assessment

IRM Implementation Report Assessment

●        Verifiable: Yes

●        Relevant: Yes

o   Access to Information

●        Potential impact: Minor

●        Completion: Substantial

●        Did it Open Government? Did not change

This commitment aimed to enact reforms to improve the ease of establishing and operating a business in Nigeria. Prior to the commitment, Nigeria ranked 169th on the World Bank’s ease of doing business index in 2017 and 170th in 2016. [62]

Implementation of the commitment was substantial. In 2018, Nigeria moved up 24 points in the World Bank index as a result of actions taken by the Presidential Enabling Business Environment Secretariat (PEBEC) between 2016 and 2017. [63] For example, PEBEC piloted improvements in land title documentation in Lagos and Kano. [64] Membership of PEBEC included at least 10 agencies involved in business procedures. The PEBEC benefited from high-level support from the Offices of the President and Vice President. As a result of implementation, Nigeria rose 39 points in 2019 to be ranked 131, surpassing the goal set in the commitment. Nigeria has since been recognized as one of the most improved economies for doing business in the world. [65]

The government made notable progress in strengthening the ease of doing business beyond PEBEC efforts. The Corporate Affairs Commission (CAC) and Federal Inland Revenue Service (FIRS) reduced the time to register a business and pay taxes. In 2018, CAC reduced the cost for business registration from N10,000 to N5,000 with a window period of 90 days. [66] Importantly, the Central Bank of Nigeria licensed credit bureaus and created a registry of credit information accessible to financial institutions. [67] This registry was supported through two laws passed in 2017, the Secured Transactions in Moveable Assets Law and the Trading Reporting Act, that allow lenders to access borrowers’ data. [68]

This commitment did not change open government practices in regards to Nigeria’s business environment. The commitment simplified government processes and opened a feedback loop for businesspeople seeking redress. It also created a legal and institutional structure for information sharing among financial institutions. However, the commitment is only tangentially connected to open government as it does not affect public participation or accountability and its transparency component is limited to the financial sector. Therefore, this commitment did not increase citizens’ access to information. This commitment would have been relevant to OGP values if, for example, implementation had led to the public disclosure of information on land titles, infrastructure projects, or business information that had previously been withheld.

[62] The World Bank’s ease of doing business index measures regulations that enhance business activity and those that constrain it. World Bank, “Economy Profile 2017 Nigeria” in Ease of Doing Business 2017 (2017), https://openknowledge.worldbank.org/bitstream/handle/10986/25592/WP-DB17-PUBLIC-Nigeria.pdf?sequence=1&isAllowed=y
[63] Vanguard, “Nigeria moves up 24 points on World Bank Ease of Doing Business” (31 Oct. 2017), https://www.vanguardngr.com/2017/10/nigeria-moves-24-points-world-bank-ease-business/.
[64] Open Alliance, “Behind Closed Books- A Case Study of Nigeria' OGP Fiscal Transparency Commitment” (2019), https://openalliance.ng/resources/documents/.
[65] Aisha Salaudeen, “Nigeria improves in World Bank ease of doing business ranking, but is it easier to do business there?” (CNN, 24 Oct. 2019), https://edition.cnn.com/2019/10/24/africa/nigeria-improves-in-world-bank-ranking/index.html
[67] Central Bank of Nigeria Abuja, Guidelines for the Licensing, Operations and Regulation of Credit Bureaus in Nigeria (Oct. 2008), https://www.cbn.gov.ng/OUT/CIRCULARS/BSD/2008/GUIDELINE FOR LICENSING CREDIT BUREAU IN NIGERIA.PDF. 
[68] Open Alliance, "Behind Closed Books- A Case Study of Nigeria' OGP Fiscal Transparency Commitment." https://openalliance.ng/resources/documents/

Commitments

Open Government Partnership