From the 1856 Act when the U.K. created the first codification of business law (in company law) regular revisions have been adopted to modernise and simplify the codes to promote trade, enterprise and to create an enabling environment for investment to thrive.
Within a 10 year space after enacting the largest 1300 section review of its laws, the U.K. government in 2016 updated the legal rules again. This is in contrast to the slow pace at which Nigeria’s business laws have evolved. Like grandee village elders searching for spectacles perched on their noses, Nigerian law makers have frozen the country’s business codes in an age and space that is little but a distant memory. Not only do the laws lag emerging developments, they equally turn to issues whose precedence have been made irrelevant by the nature of fundamental changes in business dynamics and the nexus between enterprise, technology, labour and management. In a world where entrepreneurship thrives on the premise of a business landscape that is flat, fast and deep, the laws that govern the interlocking relationships should not be far behind.
It is very troubling to note that, hitherto, Nigerian business statutes have undergone review after 14 or so years. This means that the business rules that guide the relationships that drive entrepreneurial growth are changed after every three legislative assembly cycles are completed. This partly explains why foreign direct investors (FDIs) will be wary of investing in the country given the legal arthritis that has constrained timely legal amendments to promote growth of the economy’s various sectors ranging from power (pricing regime) to construction (land use act) and the oil and gas sector (state capture of the local production process and wholesale and retail pricing).
In 2018, Nigeria passed a repeal and re-enactment to the Company and Allied Matters Act 2004, 14 years after. Indeed the delayed reviews were as below:
● 2018 - 14 years after
● 2004 - 14 years after
● 1990 - 22 years after
● 1968 - 20 years after the adopted 1948 UK Act
With the new CAM Bill when signed by the President, Nigeria has an opportunity to drag itself into the modern era of laws preempting potential changes in the business landscape. Laws are essentially tools for socio-economic development and not paint brushes to beautify old and outmoded statutes in a vain attempt at appearing modern. The laws around business must be sensitive to nuances of society and the dynamics of technology. For example payments and settlements have increasingly become digital, so laws relating to cheques and other payment orders may require reworking as cheques become less of a medium of transfer of value. New prevailing transfer mediums need to have statutes that protect the respective parties to expanding digital transactions. In an era of digitalization and agency banking the laws that guide customer-banker relationship need to be expanded in scope and depth.
Besides, broad business rules relating to setting up particular types of enterprises need to be change to allow for a younger, fervent and idiosyncratic demography find purpose in setting up their own businesses with minimum legal constraints. Nigeria’s fastest growth sector is services and a lot of this has to do with technology and its applications. A single individual in quietude of his or her bedroom could produce Nigeria and indeed Africa’s Ali Baba, Amazon, Netflix and a tribe of other digital retail platforms on a B2C and B2B basis. The signing of the CAM Bill will liberate Nigeria’s creativity, hence unlocking the entrepreneurial beast in a wonderfully vibrant generation of tech savvy youths who already trade soft and hard commodities on line.
Signing the CAM Bill now will:
● Break the cycle of laws lagging business evolution
● Redress defects in previous laws that hindered young entrepreneurs from starting viable businesses (with unemployment and underemployment at a combined 43.2% this is crucial)
● Uncork the stops created by a declaration of compliance being of necessity an affirmation by a legal practitioner. The documents required for submission at the Corporate Affairs Commission (“CAC”) in relation to the incorporation of companies under the 1990 Act included a statutory Declaration of Compliance by a Legal Practitioner. This requirement has been replaced in section 40(1) of the CAM Bill with a Statement of Compliance which can be signed by an applicant or his agent, confirming that the requirements of the law as regards to registration have been complied with by the applicant
● Replace the frontloading of fees with a more tolerable cost of registration. Authorised Share Capital has been replaced with Minimum Issued Share Capital, meaning that an investor do not need to raise his authorized share capital to high levels to accommodate potential future rounds of fund raising beyond the initial agreed equity. This means that the cost of Stamp Duty and Filing Fees payable will be friendlier on the budding entrepreneurs pocket.
Senate President, Dr. Olubukola Saraki, CON , Chairman of the 8th Assembly promised Nigerians that under his leadership, the senate would be pro-business and it is commendable that the Assembly has lived up to expectation by passing important bills friendly to business.
The CAM Bill 2018 presents another opportunity for the 8th NASS to leave a legacy as reformers of the business environment.
Table 1 Evolution of Nigeria’s Business Laws
|Year||Business Law Formation|
|1948||First Company Law Provision|
|1968||Review and Repeal|
|1990||Review and Repeal|
|2018||Review and on the Verge of Repeal|
We commend the Senate and House of Representatives for their doggedness and commitment towards creating a friendlier business environment, through legislations and the passage of the CAM Bill 2018.
Our expectation is that the 2018 Bill will be transmitted to the President for his assent into law. The CAM Bill 2018 will have tremendous impact on the following;
● MSME’s (about 37m of them accounting 50% or 64% (informal) to GDP and accounting for 84% of jobs.
● FDI flows
● Diaspora Remittances
Also the larger issues on the CAM Bill 2018 and the Ease of Doing Business, is how business legislation can achieve the following purposes;
● Serve as an enabler of cohesion
● Act as a Vehicle for Alignment of multiple regulatory provisions that sometimes run at cross purposes with central sovereign goals
● Play the role of a Facilitator of Enterprise, innovation and competitiveness
● Serve as a Facilitator of reforms, and
● A Reward for risk
Djibouti, Togo, Kenya, South Africa and Rwanda have made remarkable progress in the area of the ease of doing business; Nigeria cannot afford to saunter behind; as the rate of growth of any economy is directly proportional to the rate of reforms in its business-related legal statutes.
This would underscore the remarkable work of the Presidential Enabling Business Environment Council (PEBEC) Chaired by Vice-President Professor Yemi Osinbajo and other members including Dr Jumoke Oduwole the Senior Special Assistant to the President on Industries, Trade and Investment who serves as Secretary.
The next step is for the National Assembly and the Presidency to expedite action in ensuring that the CAM Bill 2018 is signed into law now.
Senior Special Assistant to the President on Industry, Trade and Investment (OVP) /Secretary, Presidential Enabling Business Environment Council