One of the reforms that will have the most impact on the economic climate of Nigeria when it eventually comes into operation are the proposed changes to the corporate landscape through the long overdue amendment of the Companies and Allied Matters Act (CAMA) with the new CAMA Bill, 2018. The act is the principal law governing corporate law in Nigeria. The last time any major substantive re-touch was made on the legislation was in 1990, when the Companies and Allied Matters Decree No. 1 was promulgated to replace the 1968 Companies Act. Thereafter, not for lack of suggestive inputs, minor changes mostly focused on form rather than substance have been made. In 2004 the act was codified as the CAMA, Cap. C20, Laws of the Federation of Nigeria.
The bill and hopefully the act will as soon as possible manifest the genuine intentions of the government to create an uncomplicated, friendly, modern and efficient platform for undertaking business within the country. This is a highly commendable move by the executive and legislative arms of the federal government, who have from the inception of the act, involved stakeholders.
There is also the issue of the government’s increasing interest in technology. To really drive real foreign direct investment in the sector, Nigeria must first develop its infrastructure. Once the right infrastructure is put in place, it is expected that private investors, both foreign and domestic, will be attracted to the Nigerian market because of the large population of nearly 194m, which is the largest in Africa.
Vice-president Oluyemi Oluleke Osinbajo, while commissioning Lagos’ Vibranium Valley in June 2018, Nigeria’s largest tech and innovation cluster, hinted that the federal government is including tech start-ups in the list of businesses eligible for a reduction or elimination of tax in the form of a tax holiday. However, there still remains the question of when this will happen. Many seed investors in tech start-ups, such as Y Combinator and other venture capitalists, still insist that Nigerian companies accepted into their accelerator programmes must be incorporated in the US. This may be influenced by a fluctuating economy, numerous permit requirements and increasing challenges that Nigerian businesses and companies face.
SME & Start-Up Regulations
There is yet to be a primary regulation for start-ups and small and medium-sized enterprises (SMEs), which make up 70% of the businesses in Nigeria. Start-ups are still treated on a level playing field with other companies. The high cost of getting an operating licence, and the presence of little or no incentives, multiple taxations and security issues are some of the challenges start-ups and SMEs are faced with as a result of the country’s lack of infrastructure. Key reforms have been introduced to reinforce the importance placed on creating an enabling environment within the framework of the SMEs, as laid out in the Presidential Enabling Business Environment Council (PEBEC) blueprint, the-then acting president signed into law two bills that would ease access to credit.
While the Credit Reporting Act, 2017 recognises that there is a need for the sharing of information between various institutions providing services on credit, such as credit bureaux, banks and financial institutions, and other retailers. Meanwhile, the Collateral Registry Act, legislatively expressed as the Secured Transactions in Movable Assets Act, 2017, ensures that micro-enterprises and SMEs can register their movable assets and use such as means of collateral for accessing its various loans. Movable assets are widely defined under Section 2 and Section 65 in the Collateral Registry Act to mean tangible or intangible property other than real property.
OBG would like to thank Stillwaters Law Firm for its contribution to THE REPORT Nigeria 2019
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