Public, private sectors meet on running business in Nigeria
One of the challenges entrepreneurs claim they face in running a business in Nigeria is the formalisation of the business by registering with the Corporate Affairs Commission (CAC). As a result, majority of businesses operate in the informal sector. This however limits opportunities that such businesses can avail themselves of.
To address some of these difficulties entrepreneurs experience in running their businesses in the country, Growth and Employment in States (GEMS3) brought stakeholders from the public and private sectors to address some of the issues.
Some of the core issues include the fact that electronic registration of companies has actually started in the country and a legal practitioner is not needed in the registration of businesses. A.G. Abubakar, special assistant to the director-general, CAC, said all activities of CAC had been decentralised, so registration can now be completed at a zonal office of CAC in one day without having to go to Abuja. He said to register a business with 1 million share capital would not cost the owners more than N37,000, adding that in other countries, professionals such as lawyers were not needed for registration of businesses and there was no reason to insist on this in Nigeria, so as to reduce the cost of registering a business. But he said the lawyer could be contracted as a legal adviser in the running of the business. This was in response to complaints by some entrepreneurs that they have had to pay about N1 million to register a business of 1 million share capital when they could have paid less than N100,000.
Abubakar however said “every company must have a secretary, but it is not compulsory that this must be a chartered accountant or lawyer which is compulsory for only public limited companies. For a limited liability company, you can appoint anybody who can handle the work. Once the secretary’s name is in our records, he or she can have access to our premises. The only area that requires legal services is advice on company matters which is different from company formation.”
Sola Oworu, Lagos State commissioner for commerce and industry, represented by Jafar Sanuth, director of industry, team head, economics, said Lagos had started informal reforms programme, which is just an act of moving informal businesses that constitute about 86 percent of all businesses in Lagos to the formal sector.
Sanuth said some of the advantages of formalising a business include expanded market operations in which the business owner(s) can trade with people outside the country, saying “you have an identity and people can know you. Financial institutions will be able to trace your operations.” He said the state government was doing a lot in terms of harmonisation of taxes, saying “without leaving your office, you can know how much you need to pay.”
For the approval needed to operate within the state, he said: “The process of getting approvals for business premises is undergoing reforms. We have reduced the rate of advertisement for Lagos State Advertising Agency (LASAA) and some other agencies, all to create an enabling environment.”
John Osadebe, director-general, Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), said the first step for the entrepreneur in registering a business was business formation, starting with factors of production – land, which should have a Certificate of Occupancy, manpower for day-to-day running and capital. He said people have no excuses for not registering their businesses, saying that in transacting business with many organisations, if one writes on a sheet of paper, there would be no response. He then stated that the letterhead paper to be used should also have the names of the directors, stressing that there were lots of business agreements that businesses could enjoy if they were registered.
GEMS 3, the organiser of the event, is a programme sponsored by the United Kingdom Department for International Development (DFID), which works with public and private sectors to support improved business environment by stimulating local investment, one of which is encouraging the start-up of businesses.
According to Yemisi Joel-Isibor, Lagos State manager for GEMS3, one of the approaches of the programme is ensuring that taxes are fair, therefore it has been encouraging the use of Point of Sale (PoS) for the payment of taxes, thereby the tax payer gets a receipt immediately and is sure the money goes straight to the government account.
After the meeting, practical demonstrations on registering of businesses was carried out at the Tejuosho Market later in the day for business owners by some of the stakeholders at the forum.