• Saturday, February 24, 2024
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BusinessDay

Nigeria lags African peers in registering business

CAC reverses N100m minimum capital policy for foreign interests

Blessing Adebanjo (not her real name) was wedged behind her computer with stacks of documents required to register a client’s business in a two-room apartment in Lagos, Nigeria’s commercial capital.

Over a five-day period, Adebanjo, a lawyer, tried to register a company on the portal of the agency charged with regulating the formation and management of companies in the country.

From the public search to the reservation of name and the registration itself, the process left Adebanjo frustrated and groaning as the server of the agency kept crashing.

The constant breakdown of its servers is one of the major barriers to registering a company in Africa’s largest economy.

Those who dare to overcome the barriers hire Adebanjo who runs a law firm from her home in Surulere, a middle-class suburb in the city.

She makes a living helping clients navigate the maze of bureaucracy required for registering a new company.

Business registration by CAC

The Corporate Affairs Commission (CAC) is the statutory agency responsible for registering all businesses and non-profit organisations in Nigeria.

The agency says it has now made the incorporation of a company easier through its online platform. An individual can now register a company online with CAC, as long as such an individual understands the requirements for the incorporation process.

According to CAC’s website, activities like name reservation and registration of new businesses are expected to take 48 hours.

CAC said name reservation and availability will now take 48 hours, correction of availability, 24 hours, while consent for restricted names, limited by guarantee and incorporated trustees will be processed within five working days.

For post-registrations for companies, a change of name and deed of release requires seven working days to process.

Businesses groan

Findings by BusinessDay showed owners of small businesses face a hurdle transiting into the formal sector. Registering their company, which should be the most basic, is a challenge.

“The attitude there is very lackadaisical”, says Daniel Oriyomi, an Ibadan-based lawyer and accredited agent of CAC.

Oriyomi paid the 15-year annual returns of a client a couple of weeks ago. And two weeks after, CAC has only acknowledged returns for six years.

Another lawyer told BusinessDay that registering non-governmental organisations (NGOs) can be tedious. The office of the registrar-general handles the registration of NGOs, including religious organisations.

“It took me eight months to get first availability from the RG’s office for an NGO a client wants to register,” she said. The delays and excuses make his clients suspicious. It leaves them “thinking that you have eaten their money and do not want to do their work,” he added.

Adesunkanmi Balogun, managing director of Fewchore Finance Company Limited, said one major threat facing fintechs and other businesses in Nigeria is the challenge of registering business.

According to him, this is one critical issue the incoming administration of Bola Tinubu must address.

Read also: CAC seen as barrier to ease of doing business

Business registration in other African countries

Rwanda

According to the World Bank, Rwanda has “carried out the most reforms since the inception of Doing Business”.

With an annual growth of 6 percent for the last two decades, Rwanda became one of the fastest-growing economies on the continent. In 2018, it had the most entrepreneurial reforms implemented throughout the region.

In 2018, Rwanda introduced free software allowing the issuance of value-added taxation invoices through any kind of printer. Furthermore, the country is only second to New Zealand in terms of easy property registration.

Kenya

The World Bank has described Kenya as one of the top performers around the world in starting a business and getting credit. During 2017-2019, the country improved its Doing Business rank by 31 places.

According to research, a major reason for this huge improvement was the introduction of a law that significantly simplified the obtaining of credit.

Also, Kenya’s collaboration with the International Business Machine for the development of a technological solution for the country’s agencies has led to the introduction of an online system that can receive fees and provide digital certificates for property registration.

Mauritius

Mauritius’ small market size means that investors often pay little to no attention to the state. However, at the moment, Mauritius sits pretty ranked 20th in the World Bank’s Index of Doing Business. This makes it the highest-ranked African country.

Thanks to an open-minded financial sector, low taxes, ease of registering businesses and a steady political environment, Mauritius is a desirable spot for investors looking for a business environment with low risk, according to findings by BusinessDay.

Morocco

In less than 10 years, the North African country has gone from 114th to 53rd on the Ease of Doing Business ranking.

The country expects to grow 3.1 percent on average in the next few years as its tourism and manufacturing sectors have been selected to drive economic growth.