Nigeria pushes to improve investment climate

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A recent round of executive orders in Nigeria should help streamline business processes at ports and boost transparency.

On May 18 the vice-president, Oluyemi Osinbajo – acting in lieu of President Muhammadu Buhari during the latter’s absence for medical leave – signed several executive orders aimed at improving transparency and efficiency, targeting improvements in port, visa and business registration procedures under the authority of the Presidential Enabling Business Environment Council (PEBEC).

Streamlining port administration

A key provision in the orders is a move to tighten operations at Nigeria’s ports, by reducing the number of agencies involved, creating single checkpoints for goods in transit, and banning off-duty or non-official personnel from port sites in a bid to tackle corruption. 

In accordance with the directives, the government halved the number of agencies approved to handle and clear cargo from 14 to seven: the Nigeria Customs Service, Nigeria Immigration Service, Nigeria Police Force, Nigeria Maritime Administration and Safety Agency, Department of State Services, Nigerian Drug Law Enforcement Agency, and Port Health.

Under the new law, the agencies will be required to harmonise operations under a single task force at a central location, which should cut down on lengthy delays.

In a move designed to curb bribery, payments will in future be made through the Corporate Affairs Commission (CAC) website, while only on-duty, uniformed staff will be allowed in secured areas at ports and airports.

This should come as welcome news to investors. According to a report conducted last year by the US-based Centre for International Private Enterprise, the high number of state agencies involved with transiting goods are partly to blame for bottlenecks and corruption that have cost Nigeria more than $3bn a year.

Business processes

Among the other orders is a series of directives aimed at information management, transparency and timeliness that could help speed up the pace of business processes.

Business registration will now be automated through the CAC website via an online payment platform, and all state agencies are mandated to publish a list of requirements and fees for business registration and licence applications on their websites.

Agencies must also establish, and publish, a timeline for responding to applicants. If a response is not given within the set period of time, an application will be considered approved by default.

Meanwhile, residence permits should be processed more quickly with the opening of 28 new immigration offices around the country. Temporary work permits will also be issued from now on by e-mail.

Doing business rank

These developments are all part of a broader government push to attract investment, improve the country’s business climate and increase its position on the World Bank’s “Doing Business 2017” rankings.

Having fallen from 120th place to 170th out of 189 countries in the eight years to 2016, Nigeria improved slightly in the 2017 report, to 169th out of 190 economies.

The executive order should also shore up progress made under a 60-day National Action Plan launched on February 21. The PEBEC approved the plan with the aim of speeding up a cumbersome business registration and permit approval processes – a key factor in Nigeria’s low rankings, according to the World Bank. In its most recent report, the country ranked 138th for starting a business, 174th for getting a construction permit and 182nd for registering property.

The action plan listed eight areas of focus in line with World Bank criteria: starting a business, construction permits, getting electricity, registering property, getting credit, paying taxes, trading across borders, and the entry and exit of people. A scorecard released by PEBEC in late April highlighted 31 completed reforms across the eight priority indicators.

Praise for reforms

The IMF lauded the action plan as a positive move to boost investment inflows, additionally noting the central bank’s foreign-exchange trading window created over the 60-day period. Investors needing to settle trade-related obligations in US dollars can now trade them by phone and at rates set by buyers and sellers, as opposed to the bank itself or the parallel market, a step that should support higher inflows of dollars into the country, according to a bank circular released in April.

The IMF said both moves had helped reinvigorate portfolio inflows, curb the parallel market premium and push foreign reserve levels above the $30bn mark as of March.

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