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A recent study by
the World Bank Group, in conjunction with the United Kingdom Department
for International Development (DFID), has unravelled the issues
conspiring to sustain the prevailing difficult operating business
environment in most states of Nigeria. The 176-page report, titled,
‘Doing Business 2010: Reforming through Difficult Times’ launched on
Thursday in Abuja, as part of the Nigeria Sub-national Investment
Climate Programme, focused on key areas of regulations affecting four
stages of business life cycle in the country, covering starting a
business, dealing with construction permits, registering property, and
enforcing contracts.

The initial study
in 2008 dwelled on quantitative indicators on business regulations in
10 states, including Kano, Anambra, Ogun, Enugu, Kaduna, Sokoto, Abia,
Bauchi, Lagos and the Federal Capital Territory (FCT), Abuja.

The 2010 edition
not only documented the progress in the previous study, but also
expanded the scope to all the 36 states and Abuja, comparing their
performances with 183 economies worldwide. The thrust of the report was
to investigate the conditions that enhance business activity, as well
as the constraining factors to the growth of small and medium scale
liability companies. The overriding objective was to provide the basis
for understanding and improving the regulatory environment for business.

Study findings

Findings from the
study, according to the World Bank Group Vice President, Financial and
Private Sector Development, Janamitra Devan, showed that though there
exist wide variations in business regulations nationwide, eight of the
11 states measured in 2008 recorded improvements in at least one of the
four areas above, as a result of various reforms initiated to change
the business environment.

The variations were
attributed to different performance levels of state branches of federal
agencies involved in the different stages in the business registration
process, such as Corporate Affairs Commission (CAC), stamp duty
offices, federal and state inland revenue services, as well as state
licensing authorities for business premises.

While it takes only
five procedures, 22 days and about 58.5 per cent of per capita income
to complete the cycle of starting a business, it takes almost an extra
month to complete a similar incorporation process in Bayelsa State,
owing to the high number of processes required to be met. Across the 36
states, starting a limited liability company, the study shows, requires
an average of nine different procedures, 36 days and about 77.7 per
cent of Nigeria’s per capita income of $1,161 (about N174,150).

On dealing with
construction permits, the report says it is easier to obtain all
construction-related permits and utility connections in Jigawa, Sokoto,
Kano and Adamawa States than in Abuja, Lagos, and Ogun. In 32 of the
states, requirements for construction permits include: environmental
impact assessment (EIA), land use clearance, site analysis report and
fire safety report, while Jigawa, Kwara, Kano, Benue, and Sokoto States
do not require such permits for the construction of structures with low
environmental impact.

Completion of the
all procedures for the permits could be as fast as within 47 days in
Jigawa, 52 in Kwara or as long as 148 days in Rivers State or 350 in
Lagos, as a result of the bottlenecks of obtaining building permit and
getting permanent electricity connection, the report shows.

Registering
property, according to the study, has continued to be a slow, expensive
and burdensome process, with entrepreneurs having to go through an
average of 12 procedures over 82 days and having to pay over 16 per
cent of the value of the property to have it registered in the Land
Registry. The involvement of lawyers to register property is a big
impediment to the property transfer process, though not as much as the
requirement to secure the state governor’s consent.

Rating by states

On enforcing
contracts, the study shows that it takes an average of 511 days and
about 36.3 per cent of the claim value in all the states to enforce a
contract, as a result of clumsy court processes. Overall, Jigawa, Gombe
and Borno were adjudged the easiest states in the country to do
business, while Imo and Ogun states were considered the most difficult.