Government, friend or foe to small businesses?
A Nigerian friend who lives abroad wants to come back and set up a foundation that aims to reduce the maternal mortality rate in rural areas. This reduction would be achieved through access to information and free ante-natal care for pregnant women, starting with south-west Nigeria.
This is a really noble idea from him considering he could get a well-paying job with his experience in a number of good organisations. He called me to find out how much it costs to register a not-for-profit and a call to a contact I have at the Corporate Affairs Commission reveals the amount about N130,000. The official price on the CAC website is N30, 000. This left me wondering why it should cost so much to register an entity for something this noble.
Government has been mouthing job creation. For the record, the present government, while campaigning, said they will create three million jobs each year. The easiest approach for government to create jobs is through empowering entrepreneurs and reducing the cost of doing business.
Take a random business owner; let’s call him Johnny. Johnny has finished university for 2 years and can’t find a job. He has been spending time at a local print shop and has learned a thing or two about printing, then decides to pursue a printing business career. He gets his first job and the company wants him to print a few marketing materials for them. They don’t deal with individuals and Johnny must submit his invoice, etc. on his letterhead.
Johnny runs to CAC to register a business name. Officially it will cost him N10,000 and anything between four and six weeks to get his business name or he pays N25,000 and gets it in a week. Needless to say he misses out on his first printing job.
Or should we talk about John who provides security – bouncers and armed officers, sometimes – for events. He has a brilliant idea to use drones for aerial surveillance to monitor activities around the centres where he provides security. This makes sense, only that he has to get a permit from NCAA (they regulate the Nigerian Airspace), with a non-refundable fee of N500,000.
His company also has to have a share capital of 20 million shares and he has to apply for this permit six months before his intended date of use. For the same permit issued by the NCAA, the American FAA, charges $5.
Let’s also talk about Joe. Joe just opened his shop in Ikeja, Lagos. The day after he opens, PHCN disconnects him because the previous occupant owes N250,000. While contemplating his options, the local government guys serve him a demand notice for N40,000 for all types of levies including radio and TV permits, even though he has no TV or radio in his shop. He has to pay up or they will lock his shop the next day.
Or talk about Josh who runs a clothing business. He reads in the newspapers that the government is making loans available for small businesses such as his at single digit interest rate. This is naturally through participating financial institutions, so he calls a few of them but realises he can’t meet up with the requirements. The documentation is much and they are asking for guarantors with huge net worth. He concludes the government initiative, though laudable, isn’t realistic or well-grounded.
Someone said once that doing business in Nigeria is like climbing mountain Everest without safety devices. It is bad enough that the average entrepreneur gets to source his own capital, many times at high interest rates, pay for rent one year upfront, power his generator at N145 per litre, pay his staff and deduct PAYE on government’s behalf and the government still manages to get in his way of doing business at every possible turn. He is multi-taxed, government offers him no support and does absolutely nothing for him, forgetting this entrepreneur contributes to the country’s GDP, reduces unemployment and, by extension, poverty and crime.
To borrow a line from Olamide, who government epp? Maybe government doesn’t realise she needs to help entrepreneurs, so we will proffer a few ways government can help.
Ways Government Can Support Entrepreneurs
Most interactions between entrepreneurs and government are financial. Government should do more in aligning information with reality. The fees quoted on any government website for any service is never the price one pays. If you insist on paying the official price, what should normally take two weeks may end up taking ten months. Information, fees and procedures should be clearly stated. The use of cash payment should expressly be discontinued.
Multiple Payment Channels
One should have more than one option of remitting money to government. One should be able to pay at the bank and through online channels. All channels should have instant receipting capacities that capture amount and purpose of payment.
See Also: How to become the president of Nigeria.
In parts of Europe and United States, tax returns to government are filed on specific dates. Everyone knows these dates and there are no excuses. Where applicable, payments and levies should have general deadline dates and where not applicable, people should get some sort of reminder of payment and not get slapped with a fine only when payment date has passed.
Government should have systems through which the engaging public can appraise services received and the personnel delivering such services. This system should be closely monitored and those who have delivered quality and impressive service should be rewarded; those who drop the bar should be penalised. Like the police, all public servants should wear name tags so names can be known without having to ask for it.
I find government creating programs and initiatives for entrepreneurs without engaging the entrepreneurs for whom the programs are designed. Beyond the consultants, beyond the back room staff, government has to engage with entrepreneurs at different strata to get a pulse of their needs and what solutions would work best.
Reduce Cost And Red Tape
The cost and time it takes to do business with government is too long. It should not take two weeks to register a new business; but 20 minutes at the most. It should not take 6 months to get a drone permit; at most, it should take 6 hours at the most. Government, through leveraging technology, should aim for a 24-hour service delivery time in at least 80% of its service delivery.
Dear Government, implement the above and maybe then you truly may be on your way to helping entrepreneurs focus on their core – delivering quality products and services to their customers, which sometimes include you.