State of the Nation with Olu Fasan

September 10, 2020

Nigeria needs a vibrant Third Sector, but CAMA 2020 will stifle it

Bola Tinubu

By Olu Fasan

THE new Companies and Allied Matters Act, CAMA 2020, signed into law by President Muhammadu Buhari on August 7 provoked mixed reactions. Most companies hailed it as a great charter for the ease of doing business.

But to most voluntary and religious groups, it is an oppressive tool to constrain religious and civil rights. How could the act have such a polarising effect: meat to one group, poison to another!

The first problem is that CAMA 2020aims, as it were, to kill two birds with one stone. It regulates in one fell swoop profit-oriented companies and not-for-profit organisations.

Yet,both types of regulation require different thought processes and mindsets, which is why companies acts and charity laws are treated separately in most countries, including the UK, on whose laws CAMA 2020 is largely based!

Surely, the drafters of CAMA 2020 gave no thought to the unique nature of charities, social enterprises and voluntary organisations. This is evident from the composition of the board of the Corporate Affairs Commission, CAC, which consists only of representatives of the private sector, professional bodies and government; there is no one representing NGOs, civil society organisations or religious groups on the board.

In the UK, companies are regulated by Companies House, and charities by the Charity Commission. But the CAC purports to regulate both. Yet its board excludes representative of any of the voluntary, not-for-profit sectors. No credible organisation would have a board that lacks expertise in one of its core activities. The CAC fails a basic corporate governance test!

To be sure, the provisions of CAMA 2020 and the make-up of the CAC show deliberate bias towards businesses and prejudice against civil society organisations and religious groups.

For instance, while the act removes some of the legal, regulatory and administrative burdens on businesses, it puts significant barriers on voluntary, charitable and religious organisations in terms of their formation, operation and discipline.

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Of course, I applaud the changes made in CAMA 2020 to enhance the ease of doing business for small and private companies. For 30 years, since the first CAMA was introduced in 1990, Nigeria’s company law was out of kilter with international best practices.

But CAMA 2020 has brought Nigeria in line with some universal company law principles, such as single member/shareholder companies and the validity of electronic signature and virtual meetings. These provisions are good for business and, therefore, commendable!

But the same cannot be said about the provisions relating to the voluntary sector. Indeed, reading CAMA 2020, one gets the impression that businesses are seen as positive things that should be supported with less-burdensome regulation, while charities, NGOs and religious groups lack transparency, accountability and proper governance, and, therefore,should be subject to overwhelming interference and bureaucracy.

For instance, in contrast with the over 15 business-friendly provisions in the new act, CAMA 2020 creates a hostile regulatory environment for charities, NGOs and religious groups.

To be clear, I am not making a case for an unregulated, free-for-all voluntary sector. But I detest the general approach in CAMA 2020 that seems to suggest that businesses are good things and, therefore, should be supported, but charities, NGOs and religious groups are potentially bad things and, therefore, should be treated with suspicion and subjected to overbearing regulation. This is utterly wrong and misguided.

Every civilised society stands on three critical pillars. First, is the public sector; second is the private sector; and the third, well, is known as the Third Sector. As a former president of the US Council on Foundations, Jim Joseph, put it, the Third Sector, is “an intermediary space between business and government where private energy can be deployed for public good”.The Third Sector is ‘value-driven’, motivated by the desire to achieve social goals.

The success and health of any nation depends on the vibrancies of its public, private and voluntary sectors. But the third sector is unique because it occupies the space left by the public and private sectors, engages at the levels they won’t or can’t engage at, to address the social, environmental, cultural, spiritual and general welfare needs of society.

Which is why every sensible government supports the third sector and makes it easier to run a charity, social enterprise or voluntary organisation. For instance, the UK Government set up the Office of the Third Sector, later called Office for Civil Society, at the Cabinet Office to ensure a good policy and regulatory environment for the sector.

Surely, if any country needs a robust third or voluntary sector, it is Nigeria, where the public sector has failed woefully to meet the basic needs of the people, and where the private sector is struggling to survive with a multitude of supply-side constraints. A vibrant third sector is needed to give material and spiritual succour to poor and vulnerable Nigerians.

Yet, with the bizarre requirement for the Attorney-General of the Federation’s consent and even the alternative regime of inviting objections through newspapers, it is extremely cumbersome and unattractive to set up charities and NGOs in Nigeria.

Then, there is the controversial section 839 of CAMA 2020, which allows for the suspension of an association’s trustees and the appointment of interim managers to run its affairs for as nebulous a reason as “public interest.”!

Several years ago, the Charity Commission appointed interim managers to run the affairs of one of the largest churches in the UK. I was appointed as chairman of its reconstituted board. It was a deeply painful experience.

But throughout,the Charity Commission acted in good faith, independently, with no external influence. They worked with me to end the interim management to avoid damaging the church irreparably.

But in Nigeria, where regulatory agencies, including even the courts, are politicised, and can be used for a vendetta, section 839 of CAMA 2020 is extremely dangerous, prone to abuse. Sadly, the act itself will prevent the emergence of a much-needed vibrant third sector in Nigeria!