The Economic Emergencies In Nigeria and Need for a Clinical and Holistic Approach: Perspective on Business Environment and Competitiveness in Nigeria

Business environment conceptuality is that of the economic, legal and social atmosphere where the determinant of the birth and survival of any business is measured with various yard sticks, ranging from corporate conception, birth, growth, survival and or death of any business.

Nevertheless, the atmosphere may either be that of a desert or otherwise. The survival of a business environment is pertinent on the resources for its survival (natural and artificial), because a company or firm that carries on business does not and cannot act in vacuum, which one can safely conclude as a matter of existence the natural and artificial sources forms the hands and minds of the company.

CONCEPTUAL NATURE OF BUSINESS COMPETITIVENESS IN NIGERIA

A competitive market is not that which is only of many buyers and many sellers or various sellers which are largely same, it also signifies the atmospheric nature and environment of the input and output of a corporate being.

Business environment constitutes the legal or regulatory framework, values, norms and overall policy that set the rules for conduct of business and influences positively or negatively the performance of markets, flow of investments, what is known as economic atmosphere and competitiveness constitute what is generally regarded as functioning.

This is what facilitates production and service delivery, with potentials as numerous in the country. Negatively the business atmosphere considerably is costly with a high risk of both vertical and horizontal setbacks (i.e. human and artificial), which ranges from legal frame work, policy making, proper fiscal planning, financial commitment, private-public relationship and consistency in holistic fight against corruption.

A competitive market is sometimes called a perfectly competitive market. A firm in a competitive market, like most other firms in the economy tries to maximize profits, bearing in mind the cost of establishment and of survival.

I am inclined to agree with Uwem Essia that, Nigeria is highly deficient in financial and managerial capital, and foreign investment is domestic to grow the economy and strengthen its absorptive capacity. Poverty is widespread and comings from oil exports go to Government, 16 percent covers operational costs, and only 4 percent goes to investors. Out of that 80 percent that is received and shared to the 3 tiers of Government only 20 percent is used for the business of governance, the remaining 80 percent is either lost to corruption or misused through poor planning.

Further in his (Uwem Essia) statistics, he stated as I reiterate that in 2006, government took significant steps toward market reforms such as privatization of NITEL and oil service companies, privatization continued in 2007, and a bank consolidation plan was implemented. But the publicly owned transport infrastructures remain a major impediment to growth Electricity supply remained enatic, and non-functioning refineries deprive the country of reliable petroleum products supply to Nigeria, implementation of non-tariff barriers has been arbitrary and uneven. Indeed inadequate institutional support, security concerns and poor infrastructure have deterred foreign investors. Nigeria imported 128.6 million in telecommunication equipment (up by 71.4%) an increasing number now use internet service. This offers enormous opportunities equally; energy power demands in the country far exceed the production capacity of the national supplier and provide opportunities for viable investments in the energy sector.

During the period 2003-2007, Nigeria attempted to implement an economic reform programme called NEEDS sought to raise living standards through a variety of reforms for achieving microeconomic stabilization, deregulation, liberalization, privatization, transparency and accountability. The counterpart initiatives at the State and LGCs levels were SEEDS and LEEDS. A longer-term economic development program is the UN sponsored Millennium Development Goals (MDGS) which covers 2000-2015. The efforts of Government at anti-corruption are yielding some good results as Nigeria’s ranking by Transparency international.

China shows a classic example of how government institutions can facilitate national-level and enterprise level competitiveness simultaneously. About 70 percent of manufactures from China are produced by its Armed Forces. So in addition to being an effective security institution the defense sector in China is equally the prime manufacturing growth driver. This contrasts the situation in Nigeria and several other poor countries where the defense sector drains away substantial resources. The situation is more worrisome when it is understood that the armed forces usually recruits and maintains the best trained and disciplined workforce.

Further, Nigeria’s business environment is generally considered to be costly, uncertain and unhospitable, nevertheless there is a broad acceptance that the vast potentials in Nigeria can offer high returns, but again, doing business in Nigeria is difficult and risky.

The major challenges are a weak Naira, which compounds the difficulty associated with high import dependence, high cost of funds, unstable power supply, unfair competition from some foreign goods, advanced fee fraud, high duties and multiple taxes, cable and facility vandalism, and relatively low purchasing power.

A microscopic concentration is placed on legal frame work, regulations as well as taxation.

The laws that regulate business organizations from guidelines for suitable choices, regulatory agencies, pre-incorporation, incorporation and post incorporation, foreign participation and investment incentives, conversion, alteration of MEMOART, corporate governance, resolutions, restructuring, securities, company proceedings and winding up.

At the commencement of a company’s life the, the difficulty of survival and competitiveness begins. Part of the legal frame work for owning and running a business in Nigeria has been fundamentally cumbersome which ranges from age limit, compliances and other restrictions.

The reality we often fail to acknowledge is the fact that our laws or guidelines largely no longer represent or accommodate our present state of socio-economic life and no longer cater for both economic and technological advancement. All that a company as an artificial entity goes through as highlighted above engineers a lot of delay in moving from one stage to another. A very good example is the resolutions and company proceedings which requires the issuing of notice of meetings, calling of meetings, calling for resolution, court proceedings (especially in cases of reduction of share capital). The judicial system required thus, is that of an archaic judicial system which the present and future of our judicial system is still built on and buried in. The resultant effect of this is a continuous delay in the survival of a company in the business environment, as this invariably slows down the pace of a company with fast rolling targets.

Compliances at the point of registration of a business or incorporation of a company that was recently removed by the corporate affairs commission is a way to quickly flood the business environment with quacks, impersonations and low business quality, because the compliances served as checks to businesses that has professionalism and requires expertise for efficient delivery. E.g. engineering businesses, oil and gas, law or legal services, education etc.

Age restriction is hard a rock to crack and a reality that has to be checked sternly with the fast rate of human (vertical) and artificial (horizontal) developments as a result of evolutions and fast rate of vertical developments through evolution.

Regrettably owning land in this part of the world is forbidden before the age of 21 years, where in a 21st century world individuals are economically empowered to acquire and own landed properties. women cannot take up military or para-military jobs with ease, construction works, late night works (except medical practitioners) because of what our archaic laws presents as standing guidelines for societal norms. These makes our economy and market drag like a snail in the mud behind other world markets and weak in output.

The idea of our present day government is largely for revenue generation with little concentration on public-private partnership commitment and enhancement, while the idea of the business environment is efficiency in delivery and adequate profit making with due consideration to input and output, and it is evident that it has created more workload, slow process, extortion, corruption, inter alia for businesses.

There is no effective evidence that decentralization of legal frame work is positive. For instance once a company is incorporated, it is required to register business premises with the state and cost differs from state to state. Patent rights i.e. trade markings is also essential to further identify and protect a company in the business environment. These are clear examples of decentralization of registration and certification processes but perhaps one can safely conclude that, such decentralization is not sincere as it is only a ploy not to concentrate the huge financial demand of starting and running a business in one body, and among many things avoid being challenged.

As Nigeria implements its economic recovery growth plan, it is imperative to take a look at the place of taxation in government’s long term plan.

Taxation as a major challenge is the imposition of pecuniary charges by governments upon persons (natural or artificial) or property for the purpose of raising revenue or policy for socio-economic responsibilities of citizens, is however a policy and a course of study and concern, and as well a vital aspect of the growth and advancement of the economy through which the government is able to channel the resources towards priority beneficial projects for the society.

Taxation however grows vis-à-vis the economic environmental change, by reason of its dynamism as a subject of law and of the economy.

Multiple taxation is the levying of tax by two or more tax on the same declared income (in the case of income taxes), asset (in the case of capital taxes) or financial transaction (in the case of sales taxes).

In classical terms, double taxation is a situation that affects corporation when incomes on businesses are taxed at both corporate and personal levels.

It is no gain saying that the economy thrives the society and prevents the government from liquidating, by accumulation of its revenue acquired from various means as may be stipulated by the government; in a modern world, taxation is a major contributor to socio-economic growth. Hence as a means of survival the federal, states and local governments in most case delve from their constitutional powers of taxation, by usurping that of another, therefore laying claims on struggle for thriving the economy and survival of the governmental institutions. To a large extent and with all intent and purposes, it amounts to incidence of multiple taxation.

Consequently critics of multiple taxation would prefer to integrate the corporate and personal taxes as the natural humans that acts as the body and mind of these companies does so as agents of the company, in the capacity of the company as an artificial principal, which is to the effect that the company only should be subjected to liabilities from benefits made, quid facie per alium facie percie (what is done through an agent is considered done by the principal himself).

Research have shown that the major factors responsible for multiple taxation inter alia are; (i) unfair revenue formula,

(ii) dwindling of state income,

(iii) unhealthy state rivalries,

(iv) political patronage,

(v) greed of tax officials,

(vi) corruption and

(vii) unhealthy regulations.
(i) unfair revenue formula,

(ii) dwindling of state income,

(iii) unhealthy state rivalries,

(iv) political patronage,

(v) greed of tax officials,

(vi) corruption and

(vii) unhealthy regulations.

Further, the incidence of multiple taxation is nothing to write home about. The laws provide for taxes to be levied and who to collect same, but however as a matter of practice (legal or illegal) taxes are part of the major challenges companies face in the business environment. This is because the incidence of multiple taxation are onerous as levies of various kinds are targeted at one single tax base which is against the principle of convenience of the conceptual nature of tax system in Adams Smith’s Wealth of Nations.

In the economic atmospheric desert, where there is little or no commitment from the public sector to ease the atmosphere in a business environment, unavailability of resources, no priority incentives (practically), no sincere economic incentive or bailout fund to assist businesses and their survival, the public sector through various economic commitment from the private sector milks the business environment dry, and forgetting that business is doom to fail once expenditure is same or more than income.

POSSIBLE SOLUTIONS AND CONCLUSION

Business potentials are great but considerably not effective unless business environment is recreated with a well-planned and holistic consideration of the business atmosphere.

The business institutional data analysis should be done by the government in collaboration with the private sector to properly discover and provide solutions for the negativities in the business environment.

Institutional decentralization is key as part of the possible solutions but financial decentralization is not a healthy idea for business developments as this has overtime been attribute with extortion and high rate of corruption.

Initiatives like the gas master plan, renewable energy master plan, transmission master plan and power sector recovery programme are geared towards renewing, rebuilding and expanding the power value. Although the Government has stepped further to set up a team that will monitor implementations that will enable the improvements needed in the TAX administration in Nigeria, especially with introduction of the tax identification number TIN, and also in the power sector and market, it is hoped that there will be a sincere and holistic pursuit of the policy implementations.

The federal government should have a holistic overhaul of the legal frame work and regulatory bodies that creates determinants from the sustainability of and firm in the business environment. Nevertheless, suffice to mention that there is the need to deepen the financial sector for its peculiarities and opportunities with a keen identification of the stakeholders in areas of expertise and sufficient analysis of same.

In addition, there should be a holistic education for politicians on economic governance and the government should be more sincere in its fight against corruption.

Article compiled by Adedeji Austine Falujo Esq.; A legal practitioner and Administrative manager of Evertop Realties Limited.