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Ease of Doing Business: Tackling imminent challenges

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At last year’s annual Nigerian Institute of Public Relations’ (NIPR) Presidential Award Dinner in Lagos, the issue of Ease of Doing Business in Nigeria was exhaustively discussed TAIWO HASSAN reports

 

It is saddening that over 50 years after independence, the Nigeria of today cannot be compared to that of 1960 in terms of attracting investment.
Then the country had selfless leaders who created the enabling environment for investment to thrive.
Different industrial estates were created across the country to bolster trade and industrialisation. For instance, Nigeria had Ikeja Industrial Estate in Lagos, Trans-Amadi Industrial Estate in Port-Harcourt, Enugu Industrial Estate, Kano and Kaduna Industrial Estate, Umuahia Aba and Onitsha Industrial Estate, among others.
Also, in the sixties and seventies, employers went round universities in search of talents.
Invariably, Nigeria demonstrated at the time that it had potential for growth and the capacity to raise the quality of life of its citizens.
Unfortunately, Nigeria could not sustain the thriving business environment created by the country’s selfless leaders for long.
President, Business Education Examinations Council (BEEC), Mazi Mike Okereke, said: “We took investors for granted. We felt that we were doing them a favour by allowing them operate in Nigeria. We harassed investors in our midst.”
In short, there was the first and second “enterprises promotion decrees,” which took over 40 per cent and then 60 per cent of the shareholding of foreign business.
Later, government then repelled the decrees but it was too late as the damage had been done already.
Indeed, Nigeria made the operating environment uncomfortable for them (foreigners) through kidnapping, poor infrastructure, corruption, erratic power supply, poor security of life and property, over taxation and high interest rates.
The resultant effect was the investors closing shops for good in search of greener pasture elsewhere.
Post-independence
Following the collapse of the past, discussions on recreating the business environment had dominated every forum.
With the Nigerian economy at crossroads, the President Muhammadu Buhari-led administration was concerned with the deplorable state of the country’s economy.
Indeed, the Nigerian Economic Summit Group (NESG) has been advocating restructuring of the country’s economy through its numerous recommendations to the Federal Government.
The current administration heeded the call by implementing some of the recommendations made over the years.
Indeed, the Federal Government’s ease of doing business policy has become a solution to revamping the ailing economy.
Under the Presidential Enabling Business Environment Council on ease of doing business in Nigeria, the Vice President, Professor Yemi Osinbajo, has worked to tackle the problems associated with investing in the country.
Global ranking
On the ease of doing business, Nigeria was ranked 125th by the World Bank on the 2017 and 2018 index out of 137 countries.
Nigeria only moved two steps-up to improve on its 2016-2017 ranking.
This means that more work is needed as measures taken so far by the Federal Government to improve ease of doing business in Nigeria is yet to make the desired impact.
According to the report, some countries such as Mauritius, Rwanda, South Africa and Botswana are occupying 45th, 58th, 61st and 63rd respectively.
Others are Namibia (90th), Kenya (91st) and Senegal (106th).
Action plan
For the organised private sector (OPC) to reposition Nigeria for prosperity, there is urgent need for government to incorporate in its planning and strategy, the following reforms:
Enabling environment for business, the private sector believes that the current global rating is unacceptable.
They said: “We must take immediate action to reposition and rebrand Nigeria; transform Nigeria into an investment friendly country.
“Take immediate step to invest, enhance and rebuild the country’s social and physical infrastructure, roads, airports and ports.
“Provide reliable power supply, it is the key to investors. Notably, the country’s industrial sector has virtually gone out of business.
Improve security and protect life and property.”
Other recommendations are creation of job opportunities for school learners, immediate enactment of the Petroleum Industry Bill, among others.
It also noted that state government should steer clear of corporate taxes except employee income tax as businesses are currently being harassed.
They said: “There is need for the country to learn from USA and other countries. Government should reduce drastically corporate taxes. Nigerian banks’ interest rate is the highest in the world.
“Most banks in Nigeria charge 26 per cent for loan to business. Britain six per cent and USA two per cent. Which business can make a profit after paying 26 per cent interest rate?”
Budgetary process
One of the key factors that is likely to hinder this year’s ease of doing business in Nigeria is the continued delay in passage of the 2018 appropriation bill.
For Nigeria to make impact on its ease of doing business programme, ensuring that the national budget is delivered on schedule and ready for implementation on every January 1 is important.
So, the country cannot be serious about instituting the ease of doing business policy when national budget, which is the engine for national growth, is five to six months late each year.
President, Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, noted that “our budget, which should be operational on the first of January each year, is approved in May or June.
“Fund release are also delayed after approval of the budget.
“For example, funds released for capital project for 2017 was still being discussed in October 2017.
“Businesses attach a great deal of importance to government budget. It gives business the strategic direction of government. Budget delay gives a wrong signal to investors.
“It creates an impression that this is not a serious country to do business with. When government’s budget is delayed, business activity is also delayed. Most countries ensure that the budget approval and implementation take place on scheduled date.”
Last line
The ease of doing business will grow and prosper the business environment and the economy in general if only those in charge handle the process with the diligence it deserves.

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Business

Telecoms’ GDP leaps to 1.8% growth

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From a decline of -3.28 per cent in the fourth quarter of 2017, Gross Domestic Product (GDP) growth rate in Nigeria’s telecommunications sub-sector jumped to 1.8 per cent in the first quarter of this year, New Telegraph has learnt.

This, according to latest data from the National Bureau of Statistics (NBS), shows a general improvement in the Information and Communication sector.

The telecoms and information services, which come under the Information and Communication sector in the NBS’ categorisation of economic activities, had in the last three quarters recorded negative growth rate as it fell by 1.9 per cent in second quarter 2017. In the third quarter of same year, it also went down by -5.68 per cent. By fourth quarter, the sector still went down by -3.28, even at the time when the overall GDP growth rate of the country looked positive.

However, the telecoms sector has shown remarkable signs of growth since the beginning of this year as subscriber data continue to surge.

Analysis of active mobile subscriptions in the first three months of the year shows that the telecom operators added 4.2 million subscribers within the period. Data subscriptions on the four GSM networks also crossed the 100 million mark in January and have maintained a steady growth.

The Information and Communication sector is composed of the four activities of Telecommunications and Information Services; Publishing; Motion Picture, Sound Recording and Music Production and Broadcasting. In nominal terms, the first quarter of 2018 saw the sector grow by 1.79 per cent (year-on-year) , a 7.25 per cent points decrease from the rate of 9.04 per cent recorded in the same quarter of 2017. However, it is 2.34 per cent points higher than rate recorded in the preceding quarter. The quarter-on-quarter growth rate was 3.58 per cent. The Information and Communications sector contributed 10.64 per cent to total Nominal GDP in the 2018 first quarter, lower than the rate of 11.43 per cent recorded in the same quarter of 2017 but higher than the 10.04 per cent it contributed in the preceding quarter.

The sector, in the first quarter of 2018, recorded a growth rate of 1.58 per cent in real terms, year-on-year. From the rate recorded in the corresponding period of 2017, there was a decline by 1.15 per cent points. Quarter on quarter, the sector exhibited a growth of –4.15 per cent in real terms. Of total real GDP, the sector contributed 12.41 per cent in 2018 first quarter, lower than in the same quarter of the previous year in which it represented 12.46 per cent but higher than the preceding quarter, in which it represented 11.35 per cent.

Analysts see the growth rate as a positive sign of more economic activities in the sector, leading to job creations and increased contribution to the economy.

Citing the NBS statistics, Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof. Umar Danbatta recently disclosed that the telecoms sector in the first quarter of 2017 contributed N1.45 trillion to the GDP, adding that in the second quarter, the figure rose to N1.549 trillion.

“This performance at a period of recession is very remarkable,” he said. “We are keeping dates with the NBS to identify and track how these trends progress. On the aggregate, the telecoms industry’s contribution to GDP in Nigeria stands at 10 per cent.

“But the figures may not tell the entire story. Investments in the sector, in human and material resources, have continued to soar. In 2001, the telecom sector could boast of a mere $50 million worth of investments but as at September 2017, we have investments worth $70 billion. The Value Added Services (VAS), segment of the telecom market in Nigeria today is worth $200 million and is estimated to grow to $500 million by 2021. The industry has provided both direct and indirect employment opportunities, accentuated growth and expansion.”

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Reps probe Pencom over alleged financial mismanagement

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The House of Representatives has resolved to investigate the National Pension Commission (PENCOM) over alleged reckless financial management of retirees’ funds and infraction on the public procurement Law. The House has consequently mandated its committee on public procurement and pensions to carry out a comprehensive investigation on alleged monumental fraud ongoing at the commission.

 

The decision followed the passage of a motion sponsored by Hon. Zakariya Galadima on the “need to investigate the alleged violation of provisions of the public procurement Act and financial mismanagement by the National Pension Commission (PENCOM)” During debate, the legislators faulted the commission over several financial infractions as against the principles and objectives of the provisions of the Pension Reform Act, which required the commission to collect and utilize fees, levies and penalties prudently in accordance with its regulatory and compliance roles. For instance, part of the 2014 Act authorizes PENCOM to invest the retiree funds in order to generate revenue but the lawmakers are worried that such investments powers of the agency have been grossly eroded by financial abuses.

 

In his lead debate, Galadima faulted the agency over several financial mismanagement while expressing worry that PENCOM engaged in fraudulent practice by investing N1billion into Aso Savings and Loans Plc under its investments portfolio at a ridiculously low interest rates and further directed Aso to lend the money to MGSL Mortgage Bank Limited where a top PENCOM management staff has interest.

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Confectionery firm hosts BBNaija ex-housemates

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Infusion Cakes & Cafe, a Lagos-based confectionery firm, has hosted ex-housemates of the reality TV show, Big Brother Nigeria (BBNaija), in a meet and greet session in Lagos recently.

Founder and chief executive of Infusion Cakes & Cafe, Mrs. Ibigbeye Okobi, in a statement, said the company decided to host the BBNaija ex-housemates because: “We really enjoyed the free spirit they exhibited, how natural they were and how they were able to get Nigerians to actually get engaged in everything they did while in the house.”

Okobi said the management of Infusion Cakes & Cafe also felt that the location of the company in the highbrow Lekki area of Lagos would serve as an excellent platform for Nigerians who were keen to meet the ex-housemates, get to know and interact with them in a friendly and hospitable environment to really appreciate them.

Infusion Cakes & Cafe is a modern bakery and cafe where customers can get a combination of international and locally made cakes, coffee, pastries and desserts for refreshment, weddings and special occasions like birthdays and anniversaries, among others.

The highlight of the event was a competition for the decoration of cakes. Participants in the competition included the reigning Miss Nigeria, Miss Mildred Peace Ehiguese; one of the BBNaija ex-housemates, Anto; and a representative of Team Definition, a band of musical artistes which entertained guests at the session.

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