For the organised private sector, the intervention of the Federal Government is very auspicious at this critical period to clarify the roles of its agencies whose activities have been identified to be stalling the growth of business in the country.
Its recent study has revealed that regulatory challenges and their attendant costs have been the major factors stifling healthy growth of businesses across several sectors of the Nigerian economy.
This revelation was part of the findings of a research conducted by the Centre of International Private Enterprise (CIPE) in collaboration with the Lagos State Chamber of Commerce and Industry (LCCI) on the “Impact of Regulatory Agencies on Businesses.”
The report had revealed that beyond infrastructure shortcomings, infractions by most of the regulatory agencies including Standards Organisation of Nigeria (SON) and National Agency for Food and Drugs Administration Control (NAFDAC), have forced some businesses either to close shop, relocate to other countries or move into the informal sector.
It noted that regulatory agencies in Nigeria continued to be riddled with red tapism and bureaucracy, resulting in a complex web of unclear and frequently-changing regulations, adding that such an environment not only makes it difficult for entrepreneurs to do business but also allows for arbitrary and inconsistent enforcement of laws and regulations by government agencies.
“In a bid to avoid the red tapism, private sector operators often find themselves compromising on standards forcing most companies to suffer higher/unnecessary costs, inefficiency and unfriendly business climate.
“For small and medium-sized enterprises, the effects of arbitrary regulatory policies are more profound because of their inherent vulnerability,” the study stated.
On the modus of the study, LCCI explained that being a leading voice for the private sector in Nigeria, it took it upon itself to investigate and create a platform for engagement with key public regulatory agencies especially SON and NAFDAC.
According to the report, as the two agencies are the most famous regulators in the Nigerian manufacturing, industrial and allied sectors, it becomes more important as their regulatory mandate is broad and largely complimentary especially in the food, drugs, drinks, cosmetics and chemical products subsectors.
Some of the problems identified by the study group include high rate of human interface between the agencies officials and businesses in the process of registration; arbitrary charges, fees and fines, and evidences of repetitive inspection exercise by the agencies on claims of test failure (especially NAFDAC) whereas such claims are mostly unverified.
The report also identified overlapping of functions and fight for supremacy among the agencies and high frequency of factory visit, stating that the study found that number of inspection visits range from four to 10 times a year depending on the company’s production capacity and other factors.
“The disturbing aspect of the repeat/regular visits is that the same quantity of product samples is collected by the agencies during each visit. The companies are compelled to pay inspection fee for each visit and take care of transportation of the agency officials on each factory visit,” among others, it said.
Other faults identified by the study include the collection of excessive product samples; approval delays and absence of national standards, which make genuine importers and those with contraband goods to “cut corners” with the officials.
It added further that, “some companies induce the agency officials because they don’t want to pass through the rigour associated with processing documents. This is mostly fuelled by the need for quick approval of papers/permits to meet certain commercial deadlines or to circumvent inherent/artificial bottlenecks in the system.
“Sometimes, companies’ representatives go out of their way to tip the officials to save their jobs considering that a major regulatory query issued against the company may lead to the manager in charge being blamed or fired by the management for mishandling relationship management with the regulator.
“We also found that some importers may bring in many products but would lobby regulatory officials to pay inspection fee for only few of the products. Those that import contraband goods also do the same thing by “cutting their ways” with the officials.”
While proffering the way out, the study stated that any approach to fighting the ills must first address the institutional factors that allow infractions to occur and reduce/eliminate the incentives for business to participate.
It stated however that: “To start with, frameworks that will enhance the collaboration between SON and NAFDAC’s regulatory and monitoring functions will be very helpful to build trust and respect among the two agencies. More enhanced collaborations between the two agencies will certainly reduce unnecessary pressure on the businesses suffering from the age long silent battle for supremacy between SON and NAFDAC.”
The report also charged the management of the agencies to take the enforcement of rules against human interface by their officials very seriously.
It reasoned that high degree of human interface for registration and obtaining permits remains even after the leadership of SON and NAFDAC have instituted reliable processes that eliminate/reduce human interface in their operations.
“We want to see a clear pronouncement specifying the number of times and for what purposes SON and NAFDAC are expected to visit the companies in a year. For now, the frequency of visit to companies is still high, even after the leadership of the agencies gave assurances at different forums on the measures being put in place to reposition the institutions,” the report maintained.
Source : SunOnline