Overlapping rules and frequent policy changes have deterred investors in Nigeria’s economic environment throughout the years, according to the Nigerian Economic Summit Group (NESG).
The Group disclosed the information on Wednesday during the publication of the “Baseline Report on Priority Legislative Actions to foster a Business Enabling Environment,” which was carried out by the NESG’s Ernest Shonekan Center in collaboration with the Policy and Legal Advocacy Center (PLAC) with assistance from FCDO.
The study determined the legal, structural, and regulatory obstacles to Nigeria’s business climate and economic development.
“Businesses operate under high-risk and high-cost conditions despite Nigeria’s vast market size, youthful population, and plenty of natural resources. Unreliable electrical supply, poor transportation and logistics infrastructure, restricted access to reasonably priced financing, foreign exchange scarcity, unpredictable regulations, insecurity, a lack of skills, and persistent inflationary pressure are examples of persistent restrictions.
Many of these restrictions have essentially not altered in recent years, according to a comparison analysis, indicating that prior reforms have only produced modest improvements rather than a structural change that could greatly boost competitiveness. Institutional and regulatory inefficiencies are significant obstacles, among other limitations of the corporate environment.
The research stated that “complex and overlapping regulations, frequent policy shifts, weak coordination across agencies, and uneven subnational implementation raise compliance costs and create uncertainties for investors.”
It went on to say that while the Presidential Enabling Business Environment Council and the Business Facilitation Act have improved aspects of business registration and administrative efficiency, there are still gaps in regulatory consistency, dispute resolution, contract enforcement, and policy predictability. These weaknesses, it was noted, dilute the effectiveness of broader economic reforms and deter long-term domestic and foreign investment.
Mr. Nnanna Ude, a board member of the Ernest Shonekan Center (NESG), stated in his remarks that Nigeria has seen alternating cycles of growth and constraint, with economic growth being moderate and stabilizing at roughly 3 to 4 percent in recent years, primarily driven by the non-oil sector.
However, he stated that important issues still exist in spite of these advancements.
“Private sector growth and investment are still constrained by structural issues like infrastructure gaps, regulatory inefficiencies, policy inconsistencies, and institutional and regulatory challenges. Public debt is still high.”This emphasizes one of the report’s main points: without robust, cohesive, and efficient legislative and regulatory frameworks, macroeconomic reforms by themselves are insufficient.
“The purpose of this policy brief, therefore, is to identify the key bottlenecks within Nigeria’s business environment and outline priority legislative actions that can address these constraints,” he continued.
The study looks at institutional, legal, regulatory, and structural obstacles that impact the business environment. It finds weaknesses in the current legal systems and suggests specific legislative changes to boost regulatory efficacy, promote economic change, and improve policy coherence.
One of the main conclusions of this research is that many of the problems that businesses face today stem from weaknesses in the legal and regulatory framework. These include contradictory clauses in different laws, overlapping regulatory requirements, inadequate enforcement capabilities, and restrictions on the legislative process itself, especially with regard to inclusivity, coordination, and transparency.
“Reforms will continue to yield limited gains and the full potential of the Nigerian economy will remain constrained if these issues are not addressed.”
He said that the research also suggested legislative and regulatory action to increase the creation, coordination, and execution of laws as well as to enhance their quality.
Speaking as well, Kyari Bukar, the board chairman of the ESC, stated that the report specifically examines both new and existing legal frameworks related to the business environment. It focuses on six major areas: justice, governance, and institutions; digital economy; trade, investment, and competition; infrastructure, housing, and urban development; energy and power; climate and environment; fiscal policy and financial sector; and it identifies gaps in the frameworks and how they undermine the business environment. It also makes general and legislation-specific recommendations to improve the business environment and promote rapid economic growth.
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