Regulatory Regimes And The Ease Of Doing Business In Nigeria

Again, the NIPC’s Pioneer Status Incentive Regulations 2014 levy a “service charge” to be paid by a company applying for this incentive. The charge is to be determined by the NIPC at 2% of the company’s estimated tax savings derived from the five-year financial projections. This charge is also compulsory regardless of profitability such that, where a company records losses in its financial projections, it will be calculated based on either its net assets at 0.5% or the turnover at 0.25%. In effect, applying for pioneer status in many instances actually results in additional costs to companies and undermines the benefit of tax holiday that is sought in the first place.

In order not to defeat the primary purpose for instituting pioneer status as an investment incentive, it is imperative for the NIPC to streamline its eligibility criteria and develop a stable, workable and well publicized body of rules that will guide investors and the business community as a whole.

THE NIPC ONE-STOP-INVESTMENT-CENTER

The One-Stop-Investment-Center (“OSIC”) is an initiative of the government to enhance the ease of doing business and facilitate investments in Nigeria, by bringing relevant government agencies/regulators to one location; where all statutory approvals and documents required to set up enterprises or invest in the Nigerian economy can be processed and obtained seamlessly without having to visit the agencies/regulators separately. The OSIC is located at the NIPC, which is established under section 1 of the NIPC Act and empowered under section 4 thereof to encourage, promote and coordinate both domestic and foreign investments in the Nigerian economy.

In theory, the OSIC is to enhance the ease of doing business in Nigeria but in practice has failed, more often than not, to add any value to the investment-chain. Over the years, the OSIC too has relapsed into the typical public service bureaucracy and inefficiency.

Ostensibly, in order to achieve the objective of setting up the OSIC, each of the government agencies relevant to doing business in Nigeria maintains a desk at the center; such as the CAC, NIPC, NOTAP, Central Bank of Nigeria (“CBN”), Federal Inland Revenue Service (“FIRS”), Nigeria Immigration Service (“NIS”), Nigeria Customs Service (“NCS”), and National Agency For Food and Drug Administration and Control (“NAFDAC”) etc. Therefore, a foreign company seeking to operate in Nigeria, for example, should ordinarily visit the OSIC to incorporate a Nigerian associate company at the CAC desk; register the Nigerian company with the NIPC; and obtain the statutory and immigration documents such as business permit, residence permits and expatriate quota at the Ministry of Interior (NIS desk). But poor service delivery and lack of proper coordination among the agencies render the OSIC inefficient. So, while investors who visit the OSIC should ordinarily take the advantage of localisation of services, they are still forced to visit the agencies separately after leaving the NIPC-OSIC.

In other to salvage the OSIC initiative from becoming a disincentive to investments, the various regulatory agencies operating from the center must invest more time and effort in training their personnel, automate and upgrade their services to provide online-real-time access, prioritize the applications filed at their OSIC desks slightly over the ones at their regular offices, and embark on appropriate synergy among their various operating systems. Furthermore, all sector-specific regulators that have the duty of licensing registered business entities before they can commence operations in the specific sectors in Nigeria should be directed by their supervising ministries or authorities to maintain offices/desks at the OSIC; if they do not operate one currently.