Corporate restructuring and reforms for ease of doing business in Nigeria

• Jurisdiction: South Africa
• Pages: 51-73
• Author: Kaka, G.E.
• Citation: (2018) 4(2) JCCL&P 51
• Published date: 16 August 2019
• Date: 16 August 2019

51

CORPORATE RESTRUCTURING AND

REFORMS FOR EASE OF DOING

BUSINESS IN NIGERIA

GRACE EMMANUEL KAKA*

Lecturer, Bauchi State University, Gadau, Bauchi State

FOLMI YOHANNA†

Nigerian-based Legal Practitioner

ABSTRACT

In the latest World Bank annual ratings for 2018, Nigeria is ranked

145th among 190 economies in the Ease of Doing Business Index.

This is an improvement from the 169th position it occupied in

the 2017 ranking. This is due to reforms initiated by the Nigerian

government aimed at creating an enabling environment for doing

business in Nigeria. However, more needs to be done to sustain the

momentum of creating the desired environment for entrepreneurs.

Lack of political will to aggressively pursue reforms in the areas

of electricity procurement, tackling corruption, taxes, enforcing

contracts, permits for foreigners and dispute resolutions have been

cited as affecting ease of doing business in Nigeria. This article seeks

to propose reforms that could improve the ease of doing business in

Nigeria.

I INTRODUCTION

When investors are looking to enter a new market, they examine

a wide range of market variables and the ease of doing business.

Any market with a strong presence of politics and bureaucracy,

joined with high operating costs, is often avoided by investors.1 The

World Bank Annual Report on the ease of doing business is often

used by investors to determine which country’s market is attractive

for investment.2 In the 2018 World Bank annual ratings for ease of

* PhD (Cand) LLM, BL LLB.

† BL LLB.

1 Proshare Business ‘How important is the ease of doing business to Nigeria?’ Proshare

Nigeria Limited 9 November 2017 at 1, available at https://www�proshareng�com/

news/Doing-Business-in-Nigeria/How-important-is-the-Ease-of-Doing-Busin/37217,

accessed on 2 February 2018.

2 Ibid.

(2018) 4(2) JCCL&P 51

© Juta and Company (Pty) Ltd

52

(2018) 4 (2) JOURNAL OF CORPORATE AND COMMERCIAL LAW & PRACTICE

doing business, titled ‘Doing Business 2018: Reforming to Create

Jobs’, Nigeria ranked 145th in the list of 190 economies in the Ease of

Doing Business Index.3 It is an improvement from the 169th position

it occupied on the 2017 ranking. The Nigerian government wasted

no time in attributing Nigeria’s improvement in the 2018 ranking to

the effort of the Presidential Enabling Business Environment Council

(hereinafter ‘the PEBEC’) in implementing reforms aimed at creating

an enabling environment for doing business in Nigeria.

The need to attain best global practices in creating an

enabling environment for entrepreneurship to thrive cannot be

overemphasised. Without it, it would be difficult for any country

to attract investors. This explains why the Nigerian government

initiated reforms in areas such as (i) starting a business; (ii) getting

construction permits; (iii) getting credit; and (iv) payment of taxes,4

aimed at creating an enabling environment for doing business in

Nigeria.5 However, more needs to be done in terms of reforms and

corporate restructuring to sustain the momentum for creating the

desired environment for entrepreneurs.

The challenges to ease of doing business, such as lack of political

will to aggressively carry out the needed reforms in the areas of

(i) electricity procurement; (ii) tackling corruption; (iii) taxes; (iv)

enforcing contracts; (v) permits for foreigners; and (vi) dispute

resolutions affect the ease of doing business in Nigeria. The Corporate

Affairs Commission (hereinafter ‘the CAC’), the agency in charge

of registration and regulation of businesses in Nigeria, is another

obstacle to the ease of doing business in Nigeria. The Companies and

Allied Matters Act 1990 (hereinafter ‘the CAMA’) is mundane, and as

such is not in line with best global practices, thereby affecting ease

of doing business in Nigeria, which will be discussed in this work.

This paper will discuss doing business in Nigeria — the challenges

and reforms initiated by the Nigerian government which played a

pivotal role in helping the country to improve its ranking in the Ease

of Doing Business Index, to rank 145th out of 190 economies.

Finally, this paper will look at reforms needed for this momentum

to be sustained, such as continuous implementation of reforms

aimed at improving the ease of doing business in the country,

restructuring the CAC and an overhaul of the CAMA, modelling it

3 The World Bank ‘Doing business 2018: Reforming to create jobs’ 31 October 2017

at 4, available at http://www�doingbusiness�org/content/dam/doingBusiness/media/

Annual-Reports/English/DB2018-Full-Report�pdf, accessed on 2 February 2018.

4 These are regulatory areas often measured by the World Bank to come up with a

report on the ease of doing business.

5 Presidential Enabling Business Environment Council (PEBEC) ‘NAP 60’

21 February 2017, available at https://easeofdoingbusinessnigeria�com/national-

action-plans/nap-60.

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