Nigerian employers who deal daily with inadequate infrastructure which raise business costs in Africa’s largest economy, now have the added burden of regulators whom they claim hurt companies already battered by decades of unfriendly business practices.
Coca Cola Nigeria Limited and NBC are currently facing prosecution for allegedly violating the orders of the Consumer Protection Council (CPC), which were given to ensure compliance with laid-down safety standards and regulations and enhanced consumers’ welfare.
This was after an administrative panel set up to investigate a consumer complaint found them culpable, regarding two half-empty cans of Sprite manufactured by NBC Limited, under the licence and authority of Coca Cola Nigeria Limited.
“The Consumer Protection Council, in its bid to survive in a dispensation of tight fiscal policy and diminishing budgetary funding, has resorted to sleazy and untoward methods that are inimical to the sustenance of the real sector of the economy,” said the Nigerian Employers Consultative Association (NECA), the umbrella organisation of employers in the Organised Private Sector of Nigeria, in a statement released on Thursday.
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The Consumer Protection Council, imposed a civil penalty of N100 million (including a whopping N60 million cost of investigations) on Coca-Cola bottling company, as the outcome of its investigation.
BusinessDay’s review of the CPC act shows a N50, 000 fine as the highest penalty such an infraction should attract.
While the regulatory environment for Nigerian entrepreneurs is improving, considerable challenges remain.
According to the World Bank, Nigerian businesses spend valuable time and resources trying to comply with myriad local regulations.
“Removing burdensome regulations is an essential step toward a stronger private sector,” said Rita Ramalho, 2015 Doing Business report lead author, World Bank Group.
“Although Nigerian enterprises face regulatory obstacles, implementing business-friendly reforms will allow local entrepreneurs to use their time and resources more efficiently and thus become more competitive,” Ramalho said.
Entrepreneurs and executives say businesses are being squeezed by multiple taxes and increasing red tape as many state governments in Nigeria struggle to shore up internally generated revenues (IGR).
Oil revenues account for up to 75 percent of the federal budget. However in some states, it goes as high as 97 percent.
This comes as the government faces an economy that would need all the investments it can attract as the 35 percent slump in crude in 2014 leads to investor exodus from the Nigerian financial markets and plans for an austerity budget next year.
Analysts say Nigeria’s economic managers must recognise that as oil prices fall, the need to do the right things with regard reforming the economy and easing burdens on businesses become more imperative.
“Things are different now. The government has to respond and know that fiscal buffers are gone. It is not a temporary thing as the Minister of State for Finance alluded,” said Bismarck Rewane, CEO of Financial Derivatives Company, at the Business Day Energy Summit held last week.
“This mental adjustment is more difficult for Nigeria, than fiscal or monetary adjustments,” Rewane said.
Businesses are also contending with inefficiencies at the ports and Corporate affairs Commission (CAC), whose website BusinessDay learnt, has been offline for months, with requests for business names piling up.
The Lagos Chamber of Commerce and Industry (LCCI) reckons that the activities of regulatory agencies have the capacity to overburden companies growth,which are critical to job creation in the economy.
“Regulatory agencies and government bureaucracy now operate as toll roads and view businesses as cash cows to be milked,” said the CEO of a company whose application for a license has been stuck with one of the regulators in Abuja.
“The problem is that these regulators go to conferences and mouth-off about trying to create jobs and grow businesses, without having a clue of how to do so.”
