Experts have called on the federal government to do more toward promoting new investments, especially local start-up companies, by offering them tax incentives in order to enable them thrive in the nation’s current business climate. They are unanimous in their opinion that the federal government has not done enough to encourage local investors in the country. They said that though the federal government has taken some steps in promoting foreign investment, it has continued to pay lip service to providing a level playing field for start-ups which are still struggling to establish their businesses.
An economist and former director-general of the Abuja Chamber of Commerce and Industry (ACCI), Chijioke Ekechukwu, said the intention of government was actually to grow the economy, adding that it had taken steps to identify hurdles associated with bringing the economy out of recession and growing it through the three-year Economic Recovery Growth Plan. He said: “Policies of government have done a lot towards encouraging investors using the one-stop investors’ platform. Registering business in Nigeria now takes the shortest possible time of one week or less, and government has also repelled indigenisation so that foreigners can now own 100 per cent shares in their companies.”
Ekechukwu, however, said the government is not doing enough in the area of encouraging locally manufactured goods, noting that the sector is still being bedevilled by multiple taxation, high level of corruption, power, and the issue of land use and acquisition. According to him, “Local businesses are being strangled by the issue of multiple taxation. Every business has to pay the Federal Inland Revenue Service (FIRS) corporate tax, National Social Insurance Trust Fund (NSITF), Industrial Training Fund (ITF), PENCOM (levies) and even municipal tax where you have to pay unnecessary levies like environmental levy, tenement rates, business premises, mobile advert for cars and the rest. “Government should harmonise these levies and remove those that are unnecessary.
Then the issue of corruption should not be ruled out, where investors are made to pay money to facilitate their business dealings. “The issue of power is the worst. It is beginning to look like a constant, because it is the main challenge of entrepreneurs. This issue has driven investors to go to the neighbouring countries, resulting in massive capital flight because the nation loses out on the opportunity to provide employment and also grow its economy. Until all the stories we’re hearing on power translates into stable power supply, the government is still failing in that area. “Lastly, there should be tax holiday for new businesses. Nigeria should borrow a leaf from other African nations by encouraging new businesses by making the nation a tax haven for small businesses.
We should not kill the entrepreneurs we want to grow by bedevilling them with unnecessary taxes because once government gets it right with the local investors, then the foreign investors will also find the nation’s business environment friendly.” Similarly, the chief executive officer of TSP Capital, Mr Peter Elofusim, said the answer to whether government is doing enough to encourage investors in Nigeria is no, adding that it does not mean government is not doing anything, just that it is not doing enough.
“For instance, when you come to the issue of start-up companies, which in other climes are encouraged to stay in business by giving them tax holidays, they get tax holidays for two to three years to help them stabilise and start making profits, but that is not the case in Nigeria. “Oftentimes they’ll tell you they’re doing that but that’s not true because at the day, you’ll find out they’re not being exempted from paying tax but competing in an uneven playing field. “Start-ups only get this kind of facility by talking to someone who knows someone before they can access tax holidays – which shouldn’t be the case.
I think if the federal government should wade in and, you know, stop this corrupt trend where small businesses can only be encouraged to stay in business by getting a tax holiday by making it available to every small business irrespective of who you know, and then we’ll make better progress,” he said. He further noted that the issue of favourable credit facility is also another major factor that hinders the growth of new businesses. “There is also the issue of double digit interest in credit facilities. This is a situation that is crumbling a lot of small businesses in Nigeria. They take out loans to finance their business and they’re forced to pay double digit for that facility. You find that it is difficult for start-up businesses to break even or even grow because of the stiff conditions of credit facility.
“Now all these can be addressed if the federal government would look into these issues with a view to encouraging investors to invest in new businesses by lowering the standards for start-ups simply by giving tax holidays and making credit assessment less tedious for small businesses,” he added. However, technical advisor, Technology Systems Ltd, Ken Spann, believes that the federal government is doing much to encourage investment. “For example, the Corporate Affairs Commission (CAC) has reduced the time it takes to file paperwork to start business in Nigeria from 45 days to less than 19 days, and looking at technology to reduce even more. SEC is deploying technology to enable a global market so that participants can participate in the Nigerian Stock Exchange and facilitate foreign investments in Nigeria. FGN is looking to make digital transformation and adoption of block-chain technology a reality so that one day Nigeria will be as attractive as Dubai for making investments. The vice president Prof Yemi Osinbajo has gathered a committee to explore harmonisation of the data silos that will also facilitate investment in Nigeria,” he added.