A Critical Analysis Of The Nigerian Business Facilitation Act and All The Provisions That Relate To Promotion Of Corporate Investment In Nigeria
Nigeria’s economy as one of Africa’s largest economies has been grossly affected by business and entrepreneurial activities through the influence of government and its policies, foreign investments, global markets, civilization, among other variables. As recorded by the World Bank’s rating, Nigeria currently ranks 131st out of 190 economies in the world on ease of doing business.This rating is based on how the regulatory environment is conducive enough for businesses to operate through a simpler and friendly regulations, as well as stronger protections of business rights by governments and other regulatory bodies. In an attempt to tally with this level of economic growth, the country has faced persistent challenges in creating a conducive environment and systems of business operations. These regulations are not static, but ever-changing to reflect economic realities as well as changes in the international standards and practices. Perhaps; this necessitates some legislative reforms to enhance the business environment and to attract more corporate investments. Two important enactments in this regard are the The Business Facilitation (Miscellaneous Provision) Act, 2023 (the “Act” or the “BFA 2023”) and the Nigerian Startup Act (NSA). Generally, the changes introduced by this Acts are without a doubt, an advancement to our laws.
The BFA received presidential assent by President Muhammadu Buhari on the 8th day of February 2023, having been passed into law by the National Assembly, which became known as the Business Facilitation (Miscellaneous Provisions) Act, 2023. As the objective of the Act states by the virtue of its section 1;
1.—(1) The objectives of this Act are to —
(a) promote the ease of doing business in Nigeria and eliminate
bottlenecks ; and
(b) amend relevant legislation to promote the ease of doing business in
Nigeria and institutionalise all the reforms to ease implementation.
In this connection, the Act notably amended about 21 business-related laws, namely: the Companies Allied Matters Act (“CAMA”), Nigerian Export Promotion Council Act, Customs and Excise Management Act, Export Prohibition Act, Financial Reporting Council Act, Foreign Exchange (Monitoring and Miscellaneous Act), Immigration Act, Industrial Inspectorate Act, Industrial Training Fund Act, Investment and Securities Act, National Housing Fund Act, National Technological Acquisition and Promotion Act, National Planning Commission Act, Nigerian Customs Service Board Act, Nigerian Investment Promotion Commission Act, Nigerian Oil and Gas Industry Content Development Act, Nigerian Ports Authority Act, Patents and Designs Act, Pension Reform Act, Standards Organisation of Nigeria Act, and Trademarks Act.
While the Nigerian Startup Act was also signed by President Muhammad Buhari in October 2022, as a forward-thinking legislative reform designed to harness the potentialities of Nigeria’s burgeoning tech ecosystem. The Act seeks to provide a conducive environment for the establishment, development, and scaling of businesses startups by addressing regulatory, funding, and infrastructural challenges. Section 1 provides for the objective of the Act;
1. The objectives of this Act are to —
(a) provide a legal and institutional framework for the development of
startups in Nigeria ;
(b) provide an enabling environment for the establishment, development
and operation of startups in Nigeria ;
(c) provide for the development and growth of technology-related
talents ; and
(d) position Nigeria’s startup ecosystem, as the leading digital technology
centre in Africa, having excellent innovators with cutting edge skills and
exportable capacity.
In essence; both the BFA 2023 and the NSA 2022 represent the recommendable efforts of Federal government in creating a more conducive environment for business operations, innovations and investments as the FGN continues to engender more efforts at ensuring the ease of doing business in Nigeria.
Corporate Investment
Corporate investment can simply be defined as the quantity of capital, which is invested or spent with the expectation that it will be able to generate income or will be appreciated in the future. It refers to the amount of capital spent on increasing the total assets of a firm (Ahmed & Danish, 2019). As it’s mostly in the form of new investment; these investments could be financed either by internal sources, such as accumulated profits in the form of various reserves, depreciation provision, etc., or by external sources of funds, such as borrowed capital, fresh capital raised among others. Perhaps; corporate investment is one of the main concerns of every nation as a higher degree of expectation is placed on business ventures and investments to proffer returns that will facilitate economic growth, job creation, and technological advancement. Thus; Nigeria recognizes the importance of creating an enabling environment to attract both domestic and foreign corporate investors.
Business Facilitation (Miscellaneous Provision) Act, 2023
This part of our research will critically highlight and examine some of the changes replicated by the Business Facilitation (Miscellaneous Provisions) Act, 2023 that directly affects corporate investment. In furtherance; we will also analyze some specific legislative reforms effected by the Act, while juxtaposing them with the pre-existing provisions of the respective statutes in respect to corporate investments. Below will be the provisions of the Business Facilitation (Miscellaneous Provisions) Act, 2023 that directly impact corporate investment in Nigeria whether as provision or amendment, which touch on the core regulatory, procedural, or administrative aspects that evidently remove barriers in doing businesses, enhance investors’ confidence, and promote sustainable corporate growth. Each of the referenced sections or provisions reflect the federal government’s strategic effort to create a more investment-friendly environment by simplifying compliance obligations and regulations, modernizing institutional and administrative practices, and harmonizing procedures across various agencies that would compete a world-standard approach.
It’s very important to ensure transparency in business engagements and activities especially, engagements and activities of the key-attractors of foreign and corporate investment of Ministries, Departments and Agencies (MDAs) of the Government that serve as the signal to foreign investors for their regulations and services such as; waivers, tax related processes, filings, approvals, registration, certification, permits, licenses, among others. In this regard, the Act mandates MDAs to publish a complete list of requirements to obtain such regulations, products and services in accordance with the functions of the MDA within 21 days from the commencement of the Act. By the implementation of this provision, persons dealing with MDAs for the procurement of products and services relevant to their functions, would have first-hand information of all requirements to be fulfilled in doing so. This not only eliminates the risk of acting on assumptions or relying on the discretion of the MDA for such information, but would also curb the prevalence of arbitrary requests and demands from MDA officials for providing such products and services.
Additionally, MDAs are now required to notify applicants of the acceptance or denial of their applications within the timeframe specified in their published list. The Act specifies that an application for a product will be deemed approved and granted if the approval or denial is not completed within the specified time frame. Consequently, should an application be denied within the deadline, the MDA is required to notify the applicant of the rejection and the reasons for same within the stipulated timeline, otherwise, the application is deemed approved. Whilst this appears to be a tall order given the antecedents of MDAs in relation to applications for approvals and grants, we opine that such transparency measures if successfully implemented, would in no small measure stem corruption and all forms of exploitation in that regard within the public sector.
Companies and Allied Matters Act 2022
The Act amended the CAMA 2020 to allow for the full automation of the application/registration process of businesses: The Registrar-General of CAC is mandated to ensure that all application processes at CAC are automated from start completion as provided in Section 8 of The BFA 2023.
The section provides for the expansion of the class of foreign companies exempted from the incorporation requirement to include foreign companies granted an exemption under extant National Assembly Acts: and this includes a new subparagraph (c) introduced immediately after section 78 (3)(a-b) of CAMA 2020. Such foreign Companies granted an exemption under any extant Act of the National Assembly are now recognized under the law. Section 2 of Part 1 of the Schedule to the BFA 2023.
Section 3 of the BFA 2023 introduced the additional mode of increasing a company’s issued share capital by allotment in section 127(1) CAMA 2020. The Amendment introduces an additional mode – a board resolution. Companies can now increase its issued share capital by allotting new shares l in a general meeting or by a board resolution subject to the provision of its articles or the direction of the members in general meeting.
The Act further restricts the principle of preemptive rights of shareholders to private companies as Section 4 of the BFA introduced a new word “private” to be added immediately before “company” in section 142 (1) of CAMA 2020. Consequently, a public company in an allotment of new shares, need not first offer all the existing shareholders the newly issued shares before issuing the shares to non-shareholders. Furthermore, section 4 BFA substituted section 142 (2)(c) of CAMA 2020 for a new 142 (2)(c), providing clarity to the phrase ‘reasonable time period’ as used in the old section 142 (2)(c). Existing shareholders of a private company receiving an offer of shares from the company based on their preemptive rights, now have a definite time with which to accept the offer – 21 days, otherwise, the offer will be deemed declined.
The BFA also amends Section 149(1) of CAMA substituting it with a new paragraph that states that the powers to allot shares of a company are not exercised by the board except there is an express authority to do so in a general meeting or pursuant to the articles of the company. All registrations of allotments at the Commission shall now be done within 15 days as opposed to one month as stated in Section 154(1) of CAMA.
On voting, the BFA amends Section 248(1) of CAMA which now reads that a resolution put to vote can now be decided on a show of hands or through electronic voting. Pursuant to the amendment of Section 275 of CAMA, public companies are mandated to have at least one-third of the total number of its directors as independent directors.
The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (the “FEMMA”)
The BFA 2023 expands the provision of section 6(1) of the FEMMA, by stipulating the various instances wherein the Central Bank of Nigeria (the “CBN”) may revoke the appointment of an authorized dealer or buyer. Section 6(1) to show grounds upon which the CBN may revoke appointment of an authorized dealer which includes but is not limited to instances where the dealer; fails to utilize the license within 30days, fails to commence; provides information that is false; or is placed under liquidation among others.
Immigration Act
Section 20 of the Immigration Act is amended by the BFA through the insertion of new subsections (8) and (9) which states that entry visas to Nigeria shall be issued or rejected with reason within 48 hours of receipt of valid applications” and comprehensive and up to date list of requirements, conditions and procedures for obtaining visa on arrival as well as all other entry visas, including the estimated timeframe, shall be published on all immigration-related websites, Embassies and High Commissions, and all Nigerian ports of entry respectively.
Moreso, the Immigration Service may accredit an established system that is capable of facilitating any activity contemplated under subsection (5) and satisfies any requirements prescribed or adopted by the Service. While subsection 7 now empowers the Immigration Service to make regulations relating to standards of operation, service quality and fees etc.
Industrial Inspectorate Act
BFA 2023 amends the Industrial Inspectorate Act in Section 3(1)(a) and (b) by increasing the threshold of capital expenditure for new and existing undertakings which will require notice to the Director under the said act. The threshold was increased from “not less than twenty thousand naira” to ” five million naira or as the Minister may by regulation prescribe”.
Investments and Securities Act (ISA)
The BFA 2023 amended the ISA by substituting with the new provisions of section 67(1) which stipulates that no allotment shall be made of any securities of a company offered to a public for subscription unless in the case of – (a) for a public company, the amount stated in the prospectus as the minimum amount, which, in the opinion of the directors, is required to be raised by the issue of share capital in order to provide for the matters specified in paragraph 2 of the Third Schedule to this Act, has been subscribed and the sum payable on application for the amount so stated has been paid to and received by the company; or – (b) private company, through any lawful means, as the Commission may by regulation prescribe.
Nigeria Investments Promotions Act (NIPA)
The NIPA governs the modalities of investment and promotion of same in Nigeria. The BFA 2023 now amends same in section 20 by inserting section 20(3) that allows for an enterprise registered in Nigeria, which subsequently acquires foreign participation after the commencement of business, to, within three months of such acquisition, register with the Commission. Prior to this, section 20(1) and (2) clearly stated that an enterprise involved in foreign participation under s.17 shall apply to the commission for registration before the commencement of business, while s.20(2) stated that Commission shall register such enterprise within 14 days from receipt of application. It is interesting to note that the NIPA now gives enterprises the flexibility of time to complete registration within 3 months after commencement of business.
Section 22 of the NIPA was also amended to extend the scope of purpose by which the commission shall promote identified strategic or major investments. Some of which include the publication of “criteria for determining strategic investment and designate an investment that satisfies the criteria, as strategic investment” and “details of special incentives awarded through negotiation under this section 22” in the Federal Government Gazette and on its website.
Trademark Act
The Trademark Act is amended by expanding the definition section through the inclusion of the definition of “goods” to include services. This means that the Act now expressly recognizes the use of trademark to protect goods which are not limited to physical products but also extends to services being offered. It also provides for a new definition of “trade mark” which means a mark used or proposed to be used in relation to goods or services for the purpose of indicating a connection between the goods or services and a person having the right, either as a proprietor or as a registered user, to use the mark, whether with or without any indication of the identity of that person, and may include shape of goods, their packaging and combination of colors; and in relation to a certification trade mark, a mark registered or deemed to have been registered under section 43 of this Act.”
Standard Organization of Nigeria Act (SON Act)
The BAF 2023 amended section 5 (1)(b) of the SON Act to ensure that the function of the Organization is to undertake investigations on the products not just in Nigeria, but to include those imported into Nigeria. Amendment of section 5(1)(e) and (l) empowers the Organisation to compile and publish an inventory of products requiring standardization and also undertake the registration of all regulated products specified under paragraph (e).
Nigerian Oil & Gas Industry Content Development Act (‘Local Content Act’) 2010
The meaning of “Nigerian Independent Operators,” which refers to a Nigerian Company, has been inserted into section 106 of the Local Content Act by the BFA. This addition reinforces the provisions of the Local Content Act 21 which provides that first consideration in the award of oil blocks, oil field licences, oil lifting licences and in all projects for which contract is to be awarded in the Nigerian oil and gas industry shall be given to Nigerian independent operators subject to the fulfilment of such conditions as may be specified by the Minister. Considering that the term ‘Nigerian Independent Operators’ was not defined under the extant law, this definition would undoubtedly provide some much needed clarity in the sector and eliminate the lacuna in the current law.
National Office for Technology Acquisition and Promotion Act (NOTAP Act) 2004
Prior to the BFA, it was the case that contracts and agreements entered into by any person in Nigeria with a person outside Nigeria relating to the use of trademarks, patented inventions, supply of technical expertise, etc., are to be registered with NOTAP not later than 60 days of its execution. But the BFA has now amended the NOTAP Act to the effect that companies in their first two years of business operation shall not be liable to late registration penalties where such contracts are registered before the end of the second year of their business operation. With this amendment, young businesses and start-ups involved in transactions relating to the use of trademarks and the likes now have some flexibility to commence and carry on with their business operations within the first two years of commencement without the concern of accruing penalties for late registration.
Customs and Excise Management Act (CEMA Act)
The BFA 2023 provides for the amendment of the Customs and Excise Management Act (“CEMA Act”) to include the insertion of the definition of “single window” to mean a platform or facility that allows parties involves in trade and transport to lodge trade-import, export or transit-data required by governments and MDAs. It also inserted new sections 18A and 18B which provided for the modus operandi of the Single Window, such that pursuant to section 18A (1) of the CEMA Act, the Board shall establish and maintain a single window to enable traders submit or other data requirements for importation, exportation, or transit to single-point entry.
The insertion of section 18B, provides for the examination and inspection of goods; such that the examination of goods at the custom stations shall be scheduled to ensure that it is done by any officer or other
relevant authorities at the same time.
Another important amendment to note is in section 31 of CEMA Act wherein the BFA reduced the time frame for delivery of uncleared or missing goods after the
discharge of the importing vehicle has been discharged from 15 days to 5 days by the proper officer in charge. In addition, Section 31 (4) of CEMA Act has also been amended to reduce the timeframe where the proper officer can move the said uncleared or missing goods to the Government warehouse or such other place as may be approved from 14 days to 4 days. An interesting point to note is that the amendment of Section 31(4) of the CEMA Act did not increase the fine of fifty naira imposed on any person that fails to comply with the direction in Section 31 (4) CEMA Act as a deterrent. Lastly, the schedules of the CEMA Act were amended with respect to timelines.
Export Prohibition Act
There is a new section 1 of the Export Prohibition Act, which provides that notwithstanding anything contained in the Customs Excise Tariff, etc. (Consolidation) Act, Cap. C49, Laws of the Federation of Nigeria, 2004 or any other enactment, the goods specified in the Schedule to this Act are prohibited from being exported outside Nigeria.
Financial Reporting Council Act (FRCA)
The BFA 2023 amends section 59 of the FRCA which speaks to preparation of financial reports in accordance with standard regulations, rules and pronouncements issued and adopted by the Financial Reporting Council of Nigeria.
Nigeria Customs Service Board Act
The BFA 2023 amended section 3 of the Nigeria Customs Service Board Act, by inserting a subparagraph section 3(b)(iii) whereby the Board shall adopt modern means of operationalization and develop regulations for the carrying out of activities of the Service. This has also expanded the function of the Board with respect to administering the Customs and Excise Management Act.
References
- Business Facilitation (Miscellaneous Provision) Act, 2023
- Insights on the Business Facilitation Act 2023; A publication of DUALE, OVIA & ALEX-ADEDIPE
- TEMPLARS ThoughtLab’s Publication ; The Business Facilitation (Miscellaneous Provisions) Act 2023 – A Boost for Economic Development.
About Author
Salisu Abdulazeez Lawal is a third-year Law student at the prestigious Ahmadu Bello University, Zaria. He is a legal writer and researcher, a poet, essayist, columnist, and co-founder of Hausa Law (a public discourse of laws in hausa). For any correspondence or comments; he can be reached via email; abdulazeezsalisulawal
