By Bolaji Owasanoye
A number of factors were identified as stifling investments, economic growth and robust business practices in Nigeria.
These factors hinder local and foreign investment in core areas such as infrastructure provision, agriculture, real estate to mention a few. One notable feature is the inadequacies or absence of modern laws in virtually all the sectors.
This is reflected in the areas considered under this theme. First, it is noted that corporate activities are stifled because most core business activities are put on the exclusive list ofthe 1999 Nigeria Constitution thereby centralising legislation, regulation and administration of such activities in the federal government.
Thus though the constitution and system of government is federal, corporate activities in core areas are unitary, the result is that there is no competition amongst the states and the pace of economic growth is slowed down.
To ameliorate this defect, the proposed review of the 1999 constitution must address the centralisation of regulation and administration of key businesses in the federal government. In the interim, limited partnerships with well defined legal framework to be driven by state legislatures are advocated.
Also proposed are closed corporations which will be different from private companies. These would be mainly family business with well defined fiduciary obligations between shareholders, but with minimal compliance requirements under the law.
Given the deregulation and liberalisation policy of government in current times there is need for a comprehensive legal framework to drive public private partnerships.
The legal regime does not respond to developments on time. For example, franchising which is gaining grounds in Nigeria is a viable business mechanism especially for people who want to operate businesses but do not have the technical know-how to conceive and operate them.
Franchisors provide the use of the companyâ€™s name, methods of businessoperation, accounting and bookkeeping systems, symbols and trademarks and marketing plans to franchise operators.
Given its nature franchising can be exploited with dire consequences for the economy if not properly regulated.
It is therefore necessary and expedient that a legal framework be put in place to assist investors and to maintain fair dealings between the parties.
Allied to this are poor consumer protection laws and agencies which has led to undermining of consumer rights and the proliferation of poor quality products and services. With the growth in the service industry Nigerians have become more dependent on service Prof. Bolaji Owasanoye, Findings from Review of Laws for Social and Economic Development by providers and at the same time more vulnerable to poor service delivery than before with little or no opportunity to redress misrepresentation and poor service except by the traditional justice system, which is expensive and out of reach of most consumers.
A consumer legislation that is clear in its objective of protecting consumers will not only induce providers of goods and services pay more attention to their operations but also be more consumer sensitive and friendly.
Such a law must be supported by a well trained and equipped consumer protection agency. The present regime of consumer protection does not serve this purpose.
Leasing of Movable Property
Similarly, the absence of a law for leasing of movable properties creates a gap in economic development. Given the increasing resort to leasing by the business community, there is need for a detailed provision to regulate leasing of movable properties and the relationship of the contracting parties. Doing so will not only recognise the primacy of contract but will also address the possibility of abuse of bargaining powers, registration and other incidental matters.
Secured Credit for Movable Assets
Secured credit transactions of movable properties is not regulated. Save for the Bill of Sales Act 1893 a statute of general application in Nigeria, there is no legislation on the subject of secured credits for movable properties. Aside this there is no registry for movable properties The law is obscure and hardly in use.
Modern commerce however is driven by credit while credit fosters a planned economy and is a tool for regulating market behaviour and economic predictability.
The absence of a legal framework in this area has slowed down commerce. More important is that this gap is affecting the poor more in that they are less likely to have fixed assets like land that is preferred as security. A regime of secured credit for movable properties will thus improve their opportunities to get credit more.
Nigeria has no Competition law. Yet business combinations are a feature of our economy. Though the Securities and Exchange Commission is empowered under the Investment and Securities Act 1999 to make merger or business combination decisions the absence of a Competition law clouds the horizon and makes the consumer open to monopolies that will hurt rather than help economy.
Outsourcing by public and privates institutions is a growing phenomenon. Since the federal government started the policy of deregulation and liberalisation of the economy and of its functions and duties in particular, the government has outsourced a lot of duties and functions.
However these were done without reference to any specific law on the matter. In order to ensure a uniform approach and to guide ministers and other public officers there is need for a law in order to achieve best value and guide the investing public.
Multiple Approving Agencies
Despite the establishment of Nigerian Investment Promotion Commission, a major setback for the growth of commerce is the phenomenon of multiple approving agencies at federal state and sometimes local levels.
This is not unrelated with the overconcentration of corporate laws and regulatory bodies at the federal level.
In order to boost economic development multiple approving bodies must be eliminated or powers harmonised as an incentive to establishment.
Public Private Partnerships (P3)
At present, collaborations between the public and private sectors are packaged as separate contracts or concessions granted to enable private companies undertake and deliver public services.
In the absence of a comprehensive legal framework the arrangement is often abused, subjected to favouritism and uncertainty and mired in controversy . Given the importance of PPP to the quest to overcome Nigeriaâ€™s infrastructural deficiency there should be a proper institutional framework for PPP or P3s to operate in Nigeria.
P3s refers to the notion of transferring the components of capital assets, procurement and management to the private sector. As a mechanism, it is being globally embraced to meet infrastructural needs of both the developed and developing countries.
As is widely recognised, economic development in any country is tied to infrastructural capacity, and its upgrade to meet current development needs.
Under the traditional procurement mechanism it is the government, whether at the federal or the state or local level that is fully responsible for the provision of infrastructure that is needed to sustain economic and social development.
The United Nations Economic Commission for Africa identified significant infrastructure expenditure needs in sub-Saharan Africa, with the estimates of annual needs ranging from 9 to 13 percent of GDP for at least the next ten years.
The growing need for infrastructure and apparent lack of public resource to fund it makes it imperative for developing countries to embrace alternative procurement mechanisms to remain responsible and responsive.
Essentially, P3 re-emphasises to government the involvement of the private sector through partnership with government to procure infrastructure, in recognition of the capacity of the private sector to absorb project costs, design, timeliness in project implementation, and managerial and maintenance acumen and quality service delivery.
Choice of model will depend on the infrastructure to be provided. Usually, it is expected that the parties will give extensive consideration to risk to be transferred length of contract term, how and the length of time the private participant will recoup its investment etc.
Key Sector Considerations 1. Power, a. The sector should be further deregulated with an easy entry portal for private investors. The monopoly status of the National Power Holding Company and itssubsidiaries should be broken.
b. The government should consider the use of Public-Private Partnership to solve the problem of power infrastructure in Nigeria, as other countries have done, so that it could free itself of costs of funding the sector, transfer the risk to those who can best bear it, and expect quality and sustained generation and transmission of power against the backdrop of good service delivery and maintenance culture which private investors can guarantee c.
Recognize the nexus between sincere enforcement of the town planning laws and effective and efficient power supply.
City areas should be properly designated, with a view to ensuring that supply of power to specific designated areas can meet the need for power by residents in those areas.
Doing so will solve the problem of supply power that is not needed, and that of supply of power that is not sufficient forthe users in those areas.
2. Intellectual Property, a. Nigeria should reform its IP laws to take cognizance of the need to protect local trade names and marks rather than the present attitude of protecting mainly international intellectual property rights.
Trade marks and patentable designs are essentials instruments of industrialization and technological development. b. Nigerian IP laws should be consolidated into a single body of laws.
Furthermore, IP administration should be simplified and a single statutory body made responsible for the administration of all intellectual property rights.