A new registration system raises hopes of making business easier in Nigeria, but further reforms are requ…
A new registration system raises hopes of making business easier in Nigeria, but further reforms are required to capitalise on new opportunities.
A new online portal for registering companies was launched in Nigeria earlier this year, in line with the government’s aim of improving the ease of doing business.
The Company Registration Portal (CRP) was established by the Corporate Affairs Commission (CAC) on 4 January, replacing a paper-based system, and incorporates features including electronic search, and pre- and post-incorporation filings.
It follows the implementation of the Companies and Allied Matters Act 2020, designed to improve regulation of corporations, and small and medium-sized enterprises. Established in 1990, the CAC regulates the formation and management of companies.
Tinuade Awe, chief executive of NGX Regulation, which regulates the Nigerian Stock Exchange, describes the new portal as “timely”, making access to CAC services quicker, easier and more secure at a time of “rapid transition to digitisation across every industry”, adding that it should “allow for easier engagement between the commission and users” and it is “refreshing to see the CAC adapt with the times”.
An additional benefit, believes Awe, will be new information about Nigeria’s business sector: “The CRP guarantees improved quality of data and data management given that information that is uploaded can be automatically sorted. Moreover, the data stored on the CRP can easily be reviewed to provide critical insights into industry trends, policy needs and more.”
Kunle Ajagbe, a partner with Aidan Partners in Lagos, agrees that the portal “demonstrates a notable operational leap by the CAC as it embraces potential game-changing use of technology”, albeit with some teething problems: “The portal has not been entirely seamless in its use by the public nor has it been free of complaints.”
“The portal is not a silver bullet that will immediately set the economy back on the path of recovery,” accepts Awe. “But it is one of the major steps in the right direction that will greatly improve ease of entry into the Nigerian business landscape.”
The overhaul of business registration has come at an important time for Nigerian businesses. The African Continental Free Trade Area (AfCFTA) took effect on 1 January this year. Although some protectionist and sovereignty concerns led Nigeria to initially delay its signature, companies operating in Africa’s largest economy should benefit from significant regional and continental opportunities.
The Nigerian economy finds itself caught between the impact of the coronavirus pandemic and previously existing economic problems, which Ajagbe summarises as “high unemployment, insecurity, declining central government revenues [and] diminished consumer purchasing among others”, although he notes that Covid-19 has also created new opportunities for some businesses.
Economic progress and reform has been cautious under the presidency of Muhammadu Buhari, but following his re-election in early 2019, observers in the financial and legal sectors were hopeful that progress could be made.
The 2020 edition of the World Bank’s Doing Business report, which ranks 190 countries for ease of conducting business, rated Nigeria 131st,, an improvement on 146th in 2019 and lower in the years before. However, it is a long way behind leading African economic rivals like Mauritius and Rwanda, both inside the top 50, and Morocco, Kenya, Tunisia and South Africa, inside the top 100.
Awe nonetheless welcomes the progress, saying: “Nigeria was one of the top 10 countries with the most notable improvements during the review period,” due to improvements in the categories of establishing businesses, construction permits, electricity access, property registration, cross-border trading and enforcement of contracts.
She notes that the shared characteristics of countries which fare well in Doing Business include “the widespread use of electronic systems and [a] favourable regulatory environment” and expresses confidence that the CAC’s work “will make an impact on the attractiveness of Nigeria as a destination to do business”.
“The automation of the registration process signals to the market that the commission is indeed willing to support the establishment of viable businesses in Nigeria and will continue to evolve to meet stakeholders’ needs,” she adds, saying it will bring more operations into the formal economy and make it easier for people outside of Nigeria to register businesses – a timely cross-border development as AfCFTA comes into force.
Ajagbe, a corporate lawyer, describes Nigeria’s current ease of doing business as “work in progress”, but “in the last few years, noticeable strides have been recorded”, with regards to company and tax law. “Key issues, however, remain outstanding and continue to be confronted by businesses – bureaucratic bottlenecks, inexplicable official delays among others,” he adds.
Also vice chairman of the law practice management committee of the Nigerian Bar Association Section on Business Law (NBA-SBL), Ajagbe calls for further official support to increase the use of technology. Regulators must buy in to improving ease of doing business, co-operate with each other and engage with stakeholders, he warns, but he is “cautiously optimistic that these might happen”.
Awe similarly wants further steps: “It is important that we take a proactive approach to anticipate future trends and make the necessary and bold steps that will ensure we can take care of the present and projected needs of our business environment,” she says, calling for more streamlined processes “to ensure that the requirements are promoting and not stifling productivity”.