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Published On: Wed, Sep 23rd, 2020

New company act proves how the government is committed to giving too little by taking too much

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By Abdullah Tijani

The Nigerian President has just assented to the Company and Allied Matters Act which has been popularised as an act to ease the way of doing business in the country. So much as this polarisation would have been true, sections like 863 and 839 intend to do just the opposite.
The new act is introducing direct government interference into the non-governmental organisation by having the power to remove its trustee for “public interest”; an interference which is termed to be against the freedom of the NGO and Civil Society Organisations (CSOs), including media organisations to make the government accountable. It also criminalises all businesses in the informal sector so that anybody with an unregistered business name would be liable to a fine as prescribed by the Corporate Affairs Commission (CAC).
Government interference in the NGO affairs would make it anything but effective. Evidence is in the public sectors like health, education, electricity, and so on where little or no progress can be recorded. The criminalisation of the informal sector would rather make life more difficult for the citizens and would give a big blow to the country’s economy.
Why Informal Sector Matters
Section 863 of the CAMA made it an offence for any person or association to operate under an unregistered business name; the CAC can thereby prescribe a fine to be levied upon that person or association. Two hilarious things are involved in this section which makes the whole section undeserving. First, criminalisation of the informal sector and second, giving too much power to the commission by prescribing a punishment and enforcing it.
The informal sector is very important to economic development, and instead of just criminalising it, the government better encourage it. In 2017, IMF said it contributes up to 65% to the country’s GDP and has more employment than the formal sector. Chasing people out of business by way of criminalisation is not a good way to help them.
An attempt to regulate the informal sector through legislation and compulsory registration cannot improve the citizens’ standard of living. Analysis of the challenges faced by the informal sector revealed that government bureaucracy does anything but ease the way of doing business. For instance, food or drug companies pay more in bribe to the government in order to get a product approved even after meeting all the requirements needed to be approved.
The fear of multiple taxes the SMEs are subjected to is enough to trigger their unwillingness to register their business with CAC. It is natural for the SMEs owners to think that if they are paying this much in taxes when their business is yet to be registered, they will be paying much more if it is registered, which is in all sense correct. No wonder, a Nigerian entrepreneur and Chairman of Heirs Holdings, Tony Elumelu said in 2017 that 95% of SMEs collapse in a year due to multiple taxation.
Instead of making more than 50% of the populace criminals, incentives like reduction of taxes and simplification of registration to CAC will spontaneously boost business registration into the formal sector.
Government Interference in the Non-Governmental sector
Records show that Nigerian legislators have been adamant in regulating the NGOs. Within the period of 2014 to 2020, the National Assembly had three instances where their action directly portrayed their intention to regulate the NGOs. The first of these instances was in 2014 when a “Bill to Regulate the Acceptance and Utilization of Financial/Material Contributions of Donor Agencies to Voluntary Organisations” was initiated. The second instance was in 2016 when a “Bill to Provide for the Establishment of Non-Government Organisation (NGO) Regulatory Commission” – another NGO Bill — was introduced in the National Assembly. The first and the second Bill could not scale through because of the ardent criticism from the populace.
The current incorporated section 839 of the CAMA Act is the third instance and aimed to fulfill the ardency of the Nigerian Legislators. With the new law, the Company Affairs Commission (CAC) can now remove and replace the trustees of an NGO for some reasons which include “public interest”.
NGOs are considered to be outside the interference of government because of its scope. Most of these NGOs include but are not limited to the human rights activists group, religious body, and media organisations whose responsibility is to serve as a watchdog to the government and make it accountable. It will be easy for the government to influence the purpose of these organisations if it can now replace their trustees.
The government that governs best is the one that governs the least. If the Nigerian government wants to check corruption in the NGOs, many government parastatals sink in corruption and demand rescue. Corruption is fighting back in Nigeria, and not because there are no enough laws, but because the anti-graft agencies are ineffective — imagine an anti-corruption agency’s boss in corruption scandal. Let the government face the inadequacies in many of its sectors instead of adding another burden to the one it is unable to manage.
Taking business away from people by way of making criminals out of the business owners and interference in the sector which are historically known as non-interference from the government is too much for the government to take while disguising under the pretence of easing the way of doing business. It is obvious that the government is unable to conceive, sometimes, the criticism it receives from them, therefore, intends to repress them by way of legislation. CAMA Act should not be portrayed as an act that aims to ease the way of doing business in Nigeria, because with the presence of section 863 and 839, it is in fact the opposite.
Abdullah Tijani is a National Coordinator at Students For Liberty and Alumnus of African Liberty Writing Fellowship. He writes and advocates for freedom, human rights, and limited government.

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