Decadence and the Nigerian Factor.

Several articles, issues and facts abound on the difficulty in doing business in Nigeria. The World Bank Group http://www.doingbusiness.org/data/exploreeconomies/nigeria even has an entire section dedicated to measuring business regulations in Nigeria, like it does for other countries. WB does it's measurements across several indices like - Getting Credit, Enforcing Contracts, Registering Properties, Taxes, Protecting Minority Investors, Electricity, etc. A cursory look at the statistics tells you this is not a conducive climate for any investment not to mention a foreign one. Little wonder why industries are shutting down and entrepreneur just pickup and run out of the country. Nigeria ranks at 169 out of 190 in the world. scoring a dismal 44.63% While it take an average of 4 - 5 days to start a business in the world, it takes a whopping 34 days (if you are lucky) in Nigeria.

Now there are people who would say that there are mitigating factors to all these, but common logic forces some of us to wonder why there should be special conditions for businesses to thrive in our society. The WB has a growing body of empirical research that shows the links between business entry regulation and social and economic outcomes in any society. The studies show that where formal entrepreneurship are higher, job creation and economic growth tends to be higher. These evidence suggests that regulatory reforms that make it easier to start a formal business are associated with increases in the number of newly registered firms and with higher levels of employment and productivity. On the other hand, excessively cumbersome regulation like the ones that exist here in Nigeria are associated with higher levels of corruption and informality. These alone provides the solutions to Nigeria's pressing problem - Employment, Job Creation. in other words, make it easier for businesses to thrive and more and more jobs will be created in turn.

Using data collected from company registries in 100 economies over 8 years, World Bank analysis found that a simple business start-up process is critical for fostering formal entrepreneurship. Cumbersome regulations and administrative procedures for starting a business are found to be associated with a smaller number of legally registered firms, greater informality (a finding particularly relevant for many developing economies), a smaller tax base and more opportunities for corruption.

Since I started looking at creating the EL' Uno project, I learned first-hand how difficult it is to do almost anything in Nigeria, as a local, I wondered how frustrated other Nigerians or even a foreigner would be if they were in my shoes. At some point, I wondered why I was doing this in the first place - i considered trying it elsewhere in West Africa, Ghana, the Cameroons, any where else, but here.

Credit: - The banks wont provide credit, they request for collateral that far exceed the value of the needed credit. Even where credit is available, the interest rate is over the roof. Investment friendly incentives like the Central Bank of Nigeria's CBN Small and Medium Enterprises Equity Investment Scheme are inaccessible from the deposit money bank who would rather proffer their more exorbitant interest rate at between 20 - 25%.

I have approached GTBank and Diamond bank and both declined to loan me money or assist in any way. But you can bet your last buck they will be running rings around me when the business is up and running.

Property Registration:- Landed assets have long been partitioned off to cronies and stooges of people in government. These people often have no use for the lands, or have no ideas of what to do with the land. Their only hope is that someone with deep pockets would come along to buy the land, giving them to opportunity to earn where they never sowed or for government, opportunity to charge for fees and other levies. That is why Abuja, a city that is over 4 decades old is largely underdeveloped and Dubai which started barely a decade ago is far more advanced.

After I eventually got an appropriate recreational space, the authorities would not validate the paper work to facilitate the transaction. Even a formal notice from my lawyer didn't help.

Protecting Minority Investors:- There are little measures put in place to protect investment. Nigeria scores 6.5 on the scale of 10 for this metrics. Perhaps for measure put in place for high powered money and huge government interventions, but from my small corner, I couldn't see where and how I was been protected.

For example I was bluntly told by a Park & Recreation staff that "We don't do formal searches here, you just have to try to take possession and if you are challenged (by the authorities I presume), then you know for sure that the land is not legally held by the person who wants to sell it to you". Wow! that is recipe for disaster. Rather than protect the investor, this opens up opportunities for criminals to scam innocent investors and fraudulent bureaucrats to exploit investors? So how do they do on protection?

I could go on and on about the challenges of starting a business in Nigeria.Regulatory reforms can have an positive impact if they tackle the right problems. a study in Mexico found that the number of registered businesses increased by 5% and employment by 2.8% after bottlenecks were plugged. How will plug our own problems, and where should they start?