Acting President Yemi Osinbajo SAN on 18th May, 2017 issued 3 (Three) Executive Orders (EOs) to support existing legislations on promoting investment and economic growth in Nigeria. This GEPLaw Focus report reviews in detail each of the EOs and their expected impact on our clients, prospective investors and other stakeholders within the Nigerian business environment.
Executive Order on Ease of Doing Business
Nigeria currently ranks as the 169th nation in the World Bank’s 2017 ‘Doing Business’ ranking which assesses such areas as the regulatory framework for starting a business, obtaining permits, paying taxes and registering property among 6 (Six) other factors. It is against this backdrop that an Executive Order on the Ease of Doing Business (“EOEDB”) in the Country was signed by Acting President Muhammadu Buhari on Monday 19th May, 2017 seeking to amongst other things promote transparency and efficiency in the business environment and to also attract investment into the Country. The goal of the EOEDB is to remove bureaucratic bottlenecks that impede the ease of doing of business in Nigeria, one of such challenges being the opacity attached to a number of government processes and agencies.
Section 1 of the EOEDB mandates every Ministry, Department and Agency (MDA) of the Federal Government of Nigeria (FGN) to “publish a complete list of all requirements or conditions for obtaining products and services” on conspicuous places on their premises as well as on their websites. Open access to information on fees and timelines attached to applications for licenses, permits, filings and approvals will better guide prospective investors and players in industries supervised by the MDAs, providing certainty that will ultimately help to positively sway the mind of investors. In addition, the requirement that the information be published on the websites of the MDAs will not only compel the agencies to be more technology-compliant but also improve Nigeria’s ranking on the global transparency index which may further help attract more investment.
Section 2 of the EOEDB places a duty on heads of agencies to maintain a verified and updated list of its requirements for permits, licences, approvals and related matters as published by the agency which shall also prevail in any situation of conflict between the list and any other requirement not published. We are of the view that if diligently enforced, this provision holds the potential to substantially eliminate delays in regulatory approvals and opportunities for corruption.
Section 3 of the EOEDB provides that applications made to MDAs are to be either approved or rejected within a published timeframe and where no communication on the approval or rejection of same is made to the applicant, such applications are to be deemed granted. This should address the complaints of pervasive nonchalance in regulatory agencies as it pertains to submitted applications to such agencies. By reason of Section 8 of the EOEDB, applicants who seek to benefit from deemed approvals are to request for a certificate supporting their claim from the Minister supervising such agency. A possible challenge with the concept of deemed approval may however be instances where agencies are genuinely overwhelmed by multiple applications and thereby become unable to communicate their decisions within stated timelines. Granting deemed approval of applications for Trademarks, Patents or Company Names may unwittingly open a vista for litigation over conflicting claims in the future. It is advised that such agencies be allowed to publish lists of applications still being reviewed pending when a decision is made within stipulated timeframes in situations where they are unable to give a decision within stated timelines.
The EOEDB is silent on the mode of enforcement of the provisions set out above; however it is assumed that the Presidential Enabling Business Environment Council (“PEBEC”) stated in the EOEDB’s preamble as the body empowered to coordinate the implementation of the EOEDB may be able to initiate proceedings to sanction non- compliant heads of agencies in line with Section 9 of the EOEDB.
Section 10 of the EOEDB aims at addressing a challenge caused by multiple agencies carrying out nearly similar tasks. Going forward, it will now be sufficient for investors to provide a photocopy or other prima facie proof of any permit, license or approval required to have been obtained from other agencies when demanded by a particular MDA. It is now the duty of the MDA to take steps to confirm the validity of such documents. This reduces the stress faced by individuals and businesses but more needs to be done and an example of this is seen in Section 20-22 where several agencies operating at Nigerian ports have now been mandated to present a single interface to the public.
With regard to Service Level Agreements (“SLAs”), Section 11 provides that all SLAs shall be binding on the MDAs and shall be relied upon by MDAs in the issuance of published stipulated timelines for processing of applications for the products and services.
Provisions of the EOEDB dealing with Immigration issues are capable of enhancing the experience of potential investors travelling to Nigeria. Section 14 stipulates that “Ordinary tourist and business entry visas to Nigeria shall henceforth be issued or rejected with reason by the Consular Office of Nigerian Embassies and High Commissions within 48 hours of receipt of valid application” while Section 16 further provides support for government’s new policy of visas on arrival. In all, applications are required to be processed in a transparent manner.
Section 17 to 24 of the EOEDB seeks to promote transparency and efficiency at Nigerian ports by banning touting, bribery and illegal use of designated sections of the ports by unapproved dignitaries. Individual agencies are obligated to harmonise their arrival and departure points into a single customer interface while all agencies present at the ports are similarly required to unify their surface operations at the ports thereby eliminating the unduly bothersome and repetitive checks which investors and other travelers are often subjected to. Improved port experiences may influence the desire of foreign investors hitherto frustrated by delays and corruption experienced at airports and other ports to return to the country as well as invite other potential investors. This should therefore be a big win for the country.
Furthermore, the country and all investors stand to be better guided when making projections for business activities as Section 22 of the EOEDB places a duty on agencies operating at the Ports to submit data collected on export and import activities to the National Bureau of Statistics (“NBS”). The NBS has been actively publishing useful data on its website and social media channels and is positioned to be a very useful ally in ensuring the successful implementation of the EOEDB.
In addition, the EOEDB is bound to play a major role in boosting foreign exchange revenue through exports. Section 23 underscores government’s attempt to diversify the economy from oil to agriculture and other sectors. Investors in this field may now be able to quickly export their crops and void both product loss and demurrage as a terminal in each port will now be dedicated to the exportation of agriculture produce. Generally however, the nation’s busiest port in Apapa is also to commence 24-hour operation to reduce time spent by manufacturers in getting their goods shipped out of the Country.
In conclusion, Paragraph 25 of the EOEDB specifically directs the Corporate Affairs Commission to fully automate company registration process “from the start of an application process to completion, including ensuring the availability of an online payment platform where necessary.” Beyond reducing challenges faced by legal practitioners in registering businesses for clients, the provision may also influence business owners in the informal sector to register their ventures. The anticipated migration may also help government widen its tax net thereby boosting revenue.
Executive Order on Local Content
The Executive Order on Local Content (“EOLC”) signed by the Acting President seeks to promote patronage of locally made goods and services. Based on the EOLC, all Ministries, Departments and Agencies (MDAs) shall grant preference to local manufacturers of goods and service providers in their procurement of goods and services.
Section 4 of the EOLC prescribes that 40% (Forty Percent) of the procurement expenditure of any MDA must be spent on Made-in-Nigeria products. This is expected to have a direct positive impact on indigenous businesses, promote entrepreneurship among youths and entrench the local content drive in Nigeria.
The EOLC further states that all MDAs of the Federal Government shall grant preference to local manufacturers of goods and service providers in their procurement processes for a number of items including food and beverages, motor vehicles, Information and Communication Technology (ICT) products, pharmaceuticals, construction materials, furniture and fittings, among others.
It is pertinent to note that the EOLC holds the potential of mitigating waste and mismanagement of government funds as well as ensuring that procurement of goods and services are in line with national development goals. Nigeria boasts of a number of world-class companies whose products can compete favourably with those of their foreign counterparts. The challenge has always been the right form of support from the government.
Section 2 of the EOLC however recognises the importance of ensuring quality of the goods and services offered. It states that documents issued for the solicitation of offers shall expressly indicate information required to establish the eligibility of such bids. Bidders or potential manufacturers, suppliers, contractors and consultants are equally required to provide verifiable statements on the local content of the goods or services to be provided.
An important feature of the EOLC is its emphasis on compliance. Section 5 thereof provides that within 90 days of its issuance, “heads of the respective MDAs shall assess the monitoring, enforcement, implementation, and compliance with this Executive Order and local content stipulations in the Public Procurement Act or any other relevant Act within their agencies.”
It further empowers the MDAs to propose policies to ensure that the Federal Government’s procurement of goods and services maximise the use of goods manufactured in Nigeria and services provided by Nigerian citizens doing business as sole proprietors, firms, or companies held wholly by them or in the majority and such findings be submitted to the Honourable Minister of trade Industry, Trade and Investment.
The EOLC also mandates the Minister of Industry, Trade and Investment, in consultation with the Director General of the Bureau of Public Procurement to submit to the President, a report of the Made in Nigeria initiative that includes findings from Section 5 discussed above. The report is to include specific recommendations to strengthen the implementation of Local Content Laws and Local Content procurement preference policies and programmes.
Executive Order on Budgets
The Executive Order on Budgets (“EOB”) can further entrench transparency in government Ministries, Departments and Agencies (MDAs) as well as ensure that private businesses patronized by MDAs are properly paid for work done. Section 1 of the EOB mandates all government agencies including the 31 listed in the Fiscal Responsibility Act to prepare and submit estimates of their revenues and expenditure latest by May of every year. The provision, while seeking to reinforce the obligation placed on the MDAs in the Fiscal Responsibility Act (“FRA”), however appears to impose a more stringent condition as it stipulates a shorter timeframe for the submission of the estimates. Section 21 of the FRA demands that estimates of revenue and expenditure for the next three financial years be submitted to the Minister not later than the end of the second quarter of every year whereas Section 1 of the EOB limits it to the month of May in every year.
Similar to the above, Section 2 of the EOB mandates the MDAs to submit annual budgets derived from the estimates latest by July every year which serves as an improvement of the provision in Section 21(2) of the FRA which gives the MDAs till August of every year to submit such budgets.
In line with the prevailing air of reforms in the Country, it is expected that the EOBs would be complied with, thereby addressing the delays experienced in the preparation and passage of annual budgets which regularly stalls payment of mobilization funds to contractors. Concerning the seeming inconsistency between the EOB and the FRA, it is to be noted that Section 315 of the 1999 Constitution of the Federal Republic of Nigeria (“CFRN”) vests the President with powers to modify an existing law made by the National Assembly where necessary to bring it into conformity with the Constitution. All stakeholders can therefore be assured of the legality of the EOB and are advised to comply with same.
Another important provision contained in the EOB on Budgets is the obligation imposed on agencies to spend strictly within the budget and to seek the approval of the President where there is a need to spend beyond approved figures except such expenditure is for the payment of salaries. This provision simultaneously seeks to ensure continued liquidity in the economy while also creating a check for agencies that may want to spend more than the approved sums without lawful excuse.
As with all laws, the strength of this EOB invariably lies in the force of enforcement that follows. Section 6 of EOB stipulates that “Heads of Agencies and Chief Executive Officers of Government owned companies” shall be personally responsible for infractions of the EOB and be subject to applicable sanctions for non-compliance with the EOB. This is a major step in the right direction and should spur affected officers to enforce compliance within their agencies.
In conclusion, the EOEDB, EOLC and EOB reflect deliberate thinking on the part of government to not only improve Nigeria’s perception and ranking on the global ease of doing business ranking but also improve general performance of the economy. When diligently implemented, simplified licensing and regulatory processes are bound to encourage productivity and generate jobs as well as boost Nigeria’s gross domestic product (“GDP”). It is advised that government continues to take similar steps to reform regulatory processes and merge administrative bodies where possible while business owners and prospective investors are hereby urged to take advantage of the improved conditions to invest in Nigeria. As a firm, we remain willing, able and capable of assisting all stakeholders in achieving these desired results.