Creating a Better Business Environment in Nigeria

09.04.2014 | Case Studies | Teodora Mihaylova

Introduction

Since 2008, the Center for International Private Enterprise (CIPE) in Nigeria has focused on fostering a better business environment through regional public private dialogue initiatives in the North Central Zone and Southeastern parts of the country, encompassing a total of seven states. Nigeria’s federal system of governance has allowed CIPE and local partners to focus their work on regional and local level advocacy initiatives as they create the best opportunity for reform. CIPE’s work has built the capacity of coalitions of business and professional associations (COBPAs) at the sub-national level, representing 130 business and trade associations and more than a million individual entrepreneurs. These coalitions are active advocates for policy reforms that improve their state’s business environment at the local level and strengthen the relationship between the private sector and local governments.

The federal system of governance makes the passage of any national legislation a very challenging and long-winded process in Nigeria. Grassroots work by coalitions of professional and business associations and engagement with government officials at the regional level allows the private sector to identify barriers to business and engage public officials in direct dialogue. These efforts yield legislative changes that improve local level governance and the business environment.

CIPE and its local partners have addressed the need to educate parliamentarians through training sessions that provide public sector officials with the knowledge and tools required to legislate for a better business environment. These efforts have changed officials’ attitudes towards the business community and increased trust between the public and private sectors leading to tangible impact results. For example, multiple taxation has been reduced for small and medium-sized enterprises in Niger State. Public hearings for all legislative bills have been introduced in Kogi State to gather input from the business community and civil society before bills are passed in the House of Assembly. Additionally, in Enugu State there has been a reduction in the length of time it takes to process property registration and illegitimate fees for business permits have been eliminated.

Southeastern Nigeria: Enugu Chamber of Commerce, Industry, Mines and Agriculture

Since 2008, CIPE has been working with the Enugu Coalition of Business and Professional Associations (ECOBPA) and its secretariat, the Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA) to identify and advocate for solutions to business challenges in South East Nigeria. Consequently, structured public private dialogue is now the preferred forum of engagement between the business community and the public sector.

CIPE supported ECOBPA to conduct a written survey of 100 businesses in the six states of the South East Zone to obtain firsthand information on the experiences of business operators in the region based on six indicators: starting a business, registering property, obtaining a construction permit, enforcing contracts, tax administration, and security. Next, CIPE and ECOBPA developed a policy paper that reflected the survey findings and provided policy recommendations. The publication was distributed to 1000 senior government executives, legislators, and members of the private sector. CIPE and ECOBPA then hosted a public private dialogue summit in Enugu titled “South East Business Environment: The Case for Reforms and Regulations,” which drew 210 representatives from the public and private sectors in the six regional states. A communiqué with recommendations was distributed to the regional governors and the permanent secretaries of the Ministries of Lands and Surveys, Commerce and Industry, Justice, the Economic Planning Commissions.

The most notable outcome of these efforts has been the institutionalization of public private dialogue as the preferred forum of consultation between the business community and the regional government in Enugu state. Additional examples of impact include:

  • The Governor of Enugu State signed the Certificate of Occupancy to the Commissioner of Lands, to facilitate more efficient registration of property;
  • Enugu State is working to publish all required payments to register property and obtain a construction permit;
  • The Attorney General of Enugu agreed to partner with ECCIMA to establish an Alternative Dispute Resolution mechanism to improve the process of settling business disputes; and
  • The Corporate Affairs Commission in Enugu state computerized its operations reducing the period required for business registration to 48 hours.

CIPE Initiatives in North Central Zone: Training Coalitions of Business and Professional Associations

CIPE has worked in six states in the North Central Zone – Nasarawa, Plateau, Benue, Kwara, Kogi, and Niger – providing technical assistance and building the capacity of the private sector through the formation of COBPAs. The membership of these associations represents nearly one million individual entrepreneurs in the North Central Zone who collectively engage with local authorities to improve the climate for economic growth and strengthen democratic participation in policymaking. Prior to CIPE’s partnership with these COBPAs, private sector associations throughout the region had not held a formal dialogue with their state government officials or engaged in policy reform processes.

Based on earlier work in Southeastern Nigeria with the Enugu Coalition of Business and Professional Associations, CIPE proceeded to apply the coalition-building and training model to other areas of Nigeria. Initially, CIPE worked with local level coalitions in Nasarawa, Plateau, and Benue states, gradually incorporating coalitions in Niger, Kwara, and Kogi states to cover the entire North Central Zone. CIPE contracted the Jos Business School (JBS), based in Plateau State, to help support program planning and implementation.

CIPE and JBS conducted diagnostic assessments of 70 leading private sector associations in Niger, Kwara, and Kogi states. These assessments informed the curriculum for two sets of training programs that aimed to build the organizational capacity of 60 business associations in these states. The first training program for 30 representatives of business associations focused on association management with topics such as strategic planning, the role of business associations in a democratic society, membership development, and association governance. The second training program focused on advocacy basics, Nigerian lawmaking procedures, project design and proposal writing, and coalition-building. During the second training program, the participating associations formed coalitions through the election of a secretariat and steering committees.

CIPE awarded sub-grants to the secretariat of each of the six coalitions in the North Central Zone and worked with each coalition to develop and refine their advocacy plans and budgets. Each coalition identified and prioritized one or two of the most pressing policy concerns of their members, forming the foundation for their advocacy plans. A central component of CIPE’s work in each region was a public private dialogue event at which the COBPAs engaged members of their state Houses of Assembly, executive branch, and relevant state ministries on policy issues.

The six associations in the North Central Zone developed a mission statement and vision, strategic plan, and a Local Coordinating Committee that is subject to elections on an annual basis. Committees were established to implement their mission and vision in the areas of planning, marketing and public relations, advocacy implementation and evaluation, membership development, and finance and budget.

The COBPAs engaged local governments in public private dialogue in order to highlight business community concerns and improve regional economic conditions:

  • The Kogi Coalition of business and professional associations (KOCOBPA) held a forum to address issues related to infrastructure and taxation, which was attended by representatives of select Kogi government ministries and members of parliament. The forum led to the creation of a tripartite committee that meets regularly to address multiple taxation issues. The House of Assembly also established an Independent Budget Monitoring Committee to allow the business community to provide oversight on the effective execution of government projects. Acting on KOCOBPA’s recommendation, the Kogi Parliament has instituted the practice of holding public hearings for all legislative bills before they are passed in order to incorporate input from the business community and civil society. Thus far, 10 such public hearings have been held in Kogi State.
  • The Niger Coalition of business and professional associations (NICOBPA) efforts focused on reducing multiple taxation on businesses in their state. Following NICOBPA’s recommendation at the public private dialogue roundtable, the Niger State government has revised tax collection methods so that businesses can pay their taxes directly to the bank accounts of tax agencies instead of to individuals posing as tax collectors. In instances when in-person payment of taxes is required, tax collectors wear state-issued uniforms and possess official photo identification. These changes make paying taxes more transparent and easier and decrease the opportunities for fraud and corruption in the collection process. The consultation process resulted in Niger State tax authorities conducting periodic consultative meetings with NICOBPA and others to review and improve tax policies and the collection process. The improved relationship between the state government and the private sector also means that businesses are more likely to pay their taxes on time. For example, the Niger Chamber of Commerce instituted PAYE (Pay as You Earn) tax on their staff. NICOBPA has become a leader on taxation and provides advice to business owners on the issue.
  • The Nasarawa coalition of business and professional associations (NACOBPA) engaged the state authorities in an advocacy campaign highlighting the negative impact on local businesses of energy shortages. NACOBPA considered the issue of electricity availability and persuaded the government to increase power supply allocations to businesses from 17 megawatts to 33 megawatts, and to install 80 new electrical transformers. These measures have decreased the cost of doing business in the state and allowed for more productivity in the energy-intensive sectors of the regional economy.
  • As a result of the Benue coalition of business and professional associations (BENCOBPA) sponsored roundtable on Access to Credit, the Benue Ministry of Commerce and Industries re-activated the Small Scale Industries Credit Scheme, which provides access to loans for businesses in the state.

Training Programs for Parliamentarians

Public private dialogue involves consultations between the business community and state governments in order to resolve issues that hinder business activities. CIPE’s experience shows that an effective consultation process requires an informed public sector that understands the conditions needed for businesses to develop and operate successfully. CIPE and the Center for Entrepreneurship, Skills Acquisition and Sustainable Development, the non-profit arm of the Jos Business School, have worked to strengthen the capacity of public sector officials to draft effective economic legislation, improve dialogue with the private sector, and promote private sector-led growth in their states. CIPE provided training to members and staff of both the executive and legislative branches in the six states of the North Central Zone to help them better understand the democratic process and their role in improving the local business environment. CIPE sponsored workshops addressing a plethora of issues including economic and democratic reforms in Nigeria, the role of the state government, government policy support for the Nigerian private sector and state economies, and the legal and regulatory environment for business. Over 150 executive staff and elected officials have attended these workshops.

Following each training workshop, CIPE hosted a mock public private dialogue session, where the newly-trained parliamentarians met and networked with business colleagues to build relationships. Participants acquired a better understanding of the role of business in a democratic society, challenges faced by the private sector in different states, and opportunities for policy reform to create a better business environment. House of Assembly representatives in Kogi and Kwara states pledged to work more closely with the business community either to review any laws that are impeding business growth or pass new laws that will encourage more private sector development. These sessions have built mutual trust and increased the inclination of public officials to engage in regular dialogue with the private sector.

Conclusion

CIPE and its local partners have supported and engaged in regional-level public private dialogue in seven states in Nigeria to improve the business environment and promote inclusiveness in the policymaking process. CIPE has focused on building the capacity of regional coalitions to effectively engage local authorities in public private dialogue. The coalitions, which represent more than one million individual entrepreneurs, now regularly engage with governments to identify solutions that improve the legal, regulatory, and security environment in their states and regions.

 

This case study was published in CIPE’s “Strategies for Policy Reform Volume 3: Case Studies in Achieving Democracy That Delivers Through Better Governance,” click through to download and read more.