Over the years, the debate over the overbearing attitude of regulators as it concerns the ease of doing business in Nigeria has never been as contentious or rancorous as it is today.
What majority of the stifling policies or policy witch-hunt have effectively succeeded in doing is restrict or hinder innovation, investment opportunities, growth of economy and most importantly bring about a static economy where bureaucrats dictate the pace of growth of an economy or out-rightly retard the process.
A country that prioritises the ease of doing business is almost on a sacred quest for the solution that will create growth, and open new eras of prosperity and well-being.
Unfortunately, like many things called holy, the concept of innovation is invoked ritually and ceremonially more than it is embraced in practice.
Having said that, amid all the rhetoric, of allowing organisations the enabling environment to thrive and in return grow the economy, a lot of regulatory authorities knowingly and unknowingly stifle it. They say they want more growth and innovation but at the same time, they seem to operate by a set of hidden principles designed to prevent innovations from surfacing or succeeding.
Emeka Ohanyere, an economist, learnt his voice on the the need for government and other relevant authorities to support and encourage companies with huge investment appetite rather than stifle them with overbearing policies that will hinder industrial growth.
Ohanyere continued: “Often than not, regulatory rascality, a situation where regulation takes the law in its hands rather than follow due process, is the key factor that negatively affects inflow of FDIs. Many a time, it unknowingly hinders investment inflows, for fear of losing domestic management control.
“The current Coca-Cola/CPC issue which has raged on for a while occupying the centre stage in media discourse is one that is giving investors some concern.
“However, Nigeria needs to do more to make its economy attractive to foreign investors and catch up with other developing countries, despite the improvement recorded.”
In ease of obtaining credit, Nigeria jumped 73 places up to No.52, while in ease of starting a business it improved nine places to No. 125.
The World Bank report went further to say that Nigeria has implemented 10 regulatory reforms, starting from 2005, making it easier to do business.
Having observed this situation for a while and the attendant effects, it is likely to have on the economy, one will expect that some level of caution be taken so as not to send the wrong signals to consumers it intends to protect.
One other worrisome policy is in the insurance sector, where FDI”s in insurance companies is permitted up to certain levels with restrictions on voting rights to ensuring that management control of an insurance firm doesn’t shift to a foreign entity.
Concerns about loss of management control is of much less importance compared to sacrifice of economic growth. Considering the potential of FDI to spur growth, for an industry regulator to be unnecessarily harsh on businesses is misplaced priority.
Another case in point that easily comes to mind is that of India, Mexico and China losing huge Foreign Direct Investment (FDIs) due to their stifling policies that can best be described as regulatory rascality.
To put India’s track record in attracting FDI in an international context, it’s been at best a trickle compared to FDI into countries like Mexico and China. In the last 10 years, Mexico has attracted $247bn of FDI net inflows and China $2trn, compared to India’s $229bn.
According to Kayode Omosebi, an analyst with UBA Capital, Nigeria needs to do more to make its economy attractive to foreign investors and catch up with other developing countries. It needs to shed itself from stifling policies that might bring about the needed enabling environment that would attract investors, likewise deepen their level of presence.
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