Explainer: Registering a business: Time is money
Starting a business in Nigeria begins with registering one. By law, it is illegal to do business with an unregistered company. All companies, whether a private company limited by shares, private unlimited or a company limited by guarantee must be registered in accordance with the Companies and Allied Matters Act (CAMA), which is the principal law that regulates companies in Nigeria.
The World Bank in its 2020 Ease of Doing Business report ranked Nigeria 131 out of 190 countries surveyed. According to the Bank, an entrepreneur in a low-income economy like Nigeria typically spends around 50 percent of the country’s per-capita income to launch a company, compared with just 4.2 percent for an entrepreneur in a high-income economy.
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.
Research shows there is a relationship between economic freedom, measured by the ease of registering a business, and growth in the goods and services produced in a country. The processes for business incorporation are among the metrics for determining how burdensome or flexible it is to do business in an economy.
Economies that score highest on the ease of doing business share several common features, including the widespread use of technology. All the top 20 economies have online platforms for business registration, for filing tax documents , and allow online procedures related to property transfers.
Some who interface with the CAC’s online platform aren’t impressed. They say while the intention behind the CAC platform is good it has not worked as efficiently as the commission’s mandarins have boasted.
There are allegations of slow staff response, server breakdowns, an unnecessarily tedious registration process and the commission’s indifference to these inefficiencies, especially the problems they pose to the ability of Nigerians to do business with ease.
When the staff, processes and systems of CAC are not as efficient as they should be, more local companies are not registered, international investment location decisions will not favour the country, resulting in lower levels of entrepreneurial activity, lower employment opportunities, lower government tax revenues and impaired personal incomes.