By Chukwuma Umeorah
There has been growing concern among experts, civil society, organized businesses and well-meaning Nigerians who have ramped up support to the government in proffering solution to the seemingly unending problems of the country.
This is not far-fetched from the numerous economic and social issues which over the years have continued to weaken the economy and hinder the pace of national development, the path to sustainable growth for Nigeria has been at the fore of every successive government and indigenous entity.
For some, there is an urgent need to rethink the impact of the private sector in national development while others believe that fostering legislative and business collaboration is the key to healthy economic growth. However, it is evident that the intertwining nature of both opinions is very relevant to the discuss.
Statistics have equally shown that the number of people employed in the private sector as of 2022 is estimated at 60 million while only about 2.12 million are engaged in the public sector, juxtapose that to Nigeria’s total population of about 200 million. It therefore suffices to say that a sector which holds the larger percentage of the nation’s workforce cannot be overlooked as it contributes greatly to economic and national development.
While the focus is always on the ‘government’ to create an enabling environment for businesses to thrive, often times we have this notion that government only abides in the Executive arm. Meanwhile the fulcrum of every government or democracy in any country at all lies in its legislature. The legislature is mandated to create laws for both public and private institutions’ effectiveness. Of course, the welfare of the workers, households and businesses is not left out.
Perhaps, this assertion resonates with the National Institute for Legislative and Democratic Studies (NILDS) which supports the sustenance of dynamic and effective Legislature in Nigeria (at Federal, State and Local level), and the ECOWAS sub-region.
The Director General, NILDS, Prof. Abubakar Sulaiman while delivering a keynote speech at the 66th Annual General Meeting of the Nigeria Employers’ Consultative Association (NECA) emphasized the intricate role of the legislature to the nation’s economy.
He noted that “In democratic systems across the world, the role of the legislature in national development is a constitutional responsibility. Section 4(1) of the 1999 constitution of the Federal Republic of Nigeria as altered vets the legislative powers of the Federal Republic of Nigeria on the National Assembly which consists of the Senate and the House of Representatives through lawmaking.
As already established, the role of the legislature as the true representative of the people is constitutionally charged with the responsibility of working oversight and representation. This critical responsibility has a direct bearing on the economic and political situation of our country and therefore their activities and programs should be of benefit to the business world. They are charged with removing barriers to the business environment and enhancing the impact of the growth and development of enterprises in every sector. It is high time, therefore, that our policy direction be charging a way forward in addressing the national economic issues for us to engage the legislature.”
One such example is the passage of the Annual Appropriation Act, which has implications for all sectors of the economy. Through the Finance Act that was first introduced in 2019 for the 2020 fiscal year, many laws with consequences for business operations can be amended.
The Finance Act 2023 introduces some sweeping changes, such as the withdrawal of incentives, the introduction of a loss relief regime for the disposal of assets, and the inclusion of digital assets as chargeable assets for capital gains tax purposes, which had been anticipated by taxpayers, based on the provisions of the Finance Bill 2022. Unlike in previous years, the FA 2023 was not signed into law and did not become effective in the first quarter of 2023.
KEY LAWS AMENDED BY THE FA 2023
The Finance Act 2023 amends the Capital Gains Act 2004 (as amended) (“CGTA”), Companies Income Tax Act 2004 (as amended) (“CITA”), Customs, Excise Tariff, Etc. (Consolidation) Act 2004 (as amended) (“CETA”), Personal Income Tax Act 2004 (as amended) (“PITA”), Petroleum Profit Tax Act 2004 (as amended) (“PPTA”), Stamp Duties Act 2004 (as amended) (“SDA”), Value Added Tax Act 2004 (as amended) (“VAT”), Corrupt Practices and Other Related Offences Act (as amended) (“CPORO Act”), Public Procurement Act (“PRA”), Tertiary Education Trust Fund (Establishment Etc.) Act 2010 (as amended) (“TET Fund Act”) and the Ministry of Finance (Incorporated) Act 2004 (as amended) (“MOF Act”).
Also, the Nigerian economy diversification bill and the Nigerian local content development bill are other legislations that have been introduced in the ninth national assembly and may be reintroduced in the tenth national assembly. These legislative actions undoubtedly have its impact, directly or indirectly on organized businesses and the economy and with effective implementation can be the key to sustainable national development.
OPS and National Development
Making up the larger percentage of the workforce, The Organized Private Sector (OPS) also plays a vital role in national development. However, depending on the directions of policy, the OPS dictates what to produce, when and how to produce it and for whom to produce it. While the political class may promise to get it done, solve the problem of unemployment and address poverty, the real actions that would foster development to achieve these goals lie with the activities of the organized private sector while positioning Nigeria for the attainment of the Sustainable Development Goals (SDGs).
This reinforces the need for increased advocacy between all relevant stakeholders to improve the efficiency of the legislature with regards to economic reforms that would strengthen the private sector. NECA being the umbrella body for employers of labour in Nigeria’s Organized Private Sector could take a proactive step in this direction by identifying gaps in the existing legislature that may have implications for the business environment and bringing the same to the attention of lawmakers through stakeholders’ interactive session. It can also initiate bills that would be sponsored by members of consolidation by the house of representative.
The OPS is also the biggest player in Nigerian corporate responsibility space. Across Nigeria. The Corporate Social Responsibility (CSR) of the organized private sector is helping to culminate cleaner environments, supporting community development, enhancing the quality of life and giving back to society through gifts and donations.
In 2020, through the Private Sector Coalition Against Covid-19 (CACOVID) the OPS assisted the government in combating the Impact of COVID-19 more than any other sector in Nigeria. It also supported human capital development in the country through its contributions to the Stationary Education Trust Fund. While this contribution used to be two percent of the accessible profits of a company registered in Nigeria, the rate was increased to 2.5 percent in the year 2021 finance Act. And three percent in the 2023 Finance Act.
Titivating the effect of these increases on the operation of the organized private sector and coming up with constructive suggestions of what the optimal ratio should be, among others are some of the ways NECA can foster legislative and business collaboration for national development.
Furthermore, as Nigeria struggle with huge debts, growing tax revenue which has been identified as crucial for addressing Nigeria’s revenue challenges. Achieving the target lies with the success of the OPS as taxes are paid by companies that are thriving and not those that have been evaporated through non inclusive business policies of government.
A review of government revenue in the past few years shows that the share of company income tax as a percentage of non-oil revenue to the government has been increasing, yet the potential is even greater if business friendly policies from the monetary and fiscal sides are pursued.
Although partnership between the organized private sector and the government had helped to advance governments economic aspirations in a number of ways, there are still a number of challenges that need to be addressed. Government policies continue to conflict and opportunities that are meant to benefit business in Nigeria, such as the African Continental Free Trade Area Agreement (AfCTA) is lost to foreign businesses including neighboring countries.
In essence, the legislature is arguably the most crucial element to national development as studies have shown that countries with more powerful legislatures not only possess higher levels of economic growth, but they also enjoy higher levels of human development and low levels of income inequality.
It is time for both legislation at the national and state level to be more proactive in carrying out its responsibilities in enhancing the economic development of Nigeria by creating a stable macro-economic environment, ensure business have easy access to credit, good infrastructure, nurturing enterprises that generate the most jobs opportunities among others. All these can be achievable by the legislature through rolling out effective policies and ensuring strict implementation. Policies including fiscal and monetary policies, trade and exchange rate policies, labour and employment policies, tax policies among others.
Sulaiman noted that, “While the efforts of NECA have been effective to advance the Interest of Nigerian Businesses and employers. The rapidly changing domestic and global environment calls for continued engagement of stakeholders to improve the environment for doing business in our country. There is a need for an integrated and holistic approach to provide a solution in these most controversial times.
“One of the critical areas NECA can be of importance in the legislative process is through participation in public hearing and lawmaking process through sponsoring of bills. It can also identify draconian laws that stiffen business growth and come up with suggestions on the way forward.”