Okoroafor: Government must tackle insecurity, multiple taxation to boost business
The chairman, Petroleum Technology Association of Nigeria (PETAN), Bank Anthony Okoroafor, told KELVIN EBIRI in Port Harcourt that although doing business is tough in Nigeria, the challenges are not insurmountable if government addressed insecurity, multiple taxation and poor infrastructure.
Why is Nigeria’s ease of doing business profile poor?
Our rating is poor, and that is the truth. Doing business here is one of the toughest things. Let me give you an example. You do a job and the contract says you will be paid after 45 days. Yet, eight months later, you have still not been paid. And nobody is sanctioned for owing you, for not following the contract. It happens even in the oil and gas sector.
The Nigeria National Petroleum Corporation and international oil companies have a joint venture agreement. The international oil companies bring in their money but the NNPC does not pay its cash call, which you are aware of. If you do business, you don’t know what is statutory and what is not. Your business vehicles are held on the road for rules introduced the same day. So, you cannot plan. There is no stability. We are also living in an environment of fear. People sit down and make things difficult. Why should a contract cycle take two years? From biding to award of contract, why should it take two years? There are many factors that frustrate a lot people.
How is multiple taxation negatively affecting business?
It is a very big problem. If you come here, the local government people will hold you. They come to your business premises. The same thing applies to state government officials. Nothing is harmonised. If everything is harmonised, if you pay X-value and it covers everything, you will have rest of mind. So, when people come to your premises, you will show them that you have paid, instead of having to deal with several elements.
Multiple taxation is a big problem. In Rivers State, you have the state government. If you do business in Port Harcourt and Obio-Akpor local governments, you have to contend with them. If you go to Onne, you are held and asked to pay Federal Ocean Terminal tax. When people from outside the country see all these things they report back. If you go to other parts of the world, businesses pay one tax, and it covers a lot of things.
How about government’s plan to harmonise taxation?
They promised, but has it been implemented? If they come up January next year and say, ‘if you have a business premises here, pay up, and no state or local government will worry you again,’ you will discover that by the end of the following year, the indexes will change.
People have been talking to government to harmonise taxation, to no avail. They need to make it illegal for any tout to be on road under the guise of tax collection. Some of these touts mount the roads pretending they are working for the government. You have local government and state government touts on the roads. Some wear uniforms; some do not. They move in groups to business premises. If government makes a law banning them from collecting revenue on the road, it will help.
They should harmonise local government and state taxes, so that once you pay, you’re covered because it is all encompassing. An example is environmental levy. You pay to the local government and also pay to the state. It does not make sense. Let there be one. In the United Kingdom, you know what are you supposed to pay, and you pay it. It is straightforward.
Do operatives of the immigration service hamper your business?
First of all, getting visa to Nigeria is very tough. They make it very difficult. How can you attract investment when you make procurement of visa so difficult? These are the issues. Most companies encourage people to come in and invest, but immigration makes that tough.
I have had instances when I needed to bring people in and it took ages. The Nigerian embassy abroad keeps asking you to come back and come back. Sometimes, it takes three to six months before a visa is issued. That is not acceptable. Government often has good policy but the problem is implementation. The people who implement the policies are the problem.
Is registration of businesses now a lot easier?
I heard that the Corporate Affairs Commission is implementing a system where you can register a company within 24 hours. But I have not checked to know if it has started working. In the United Kingdom you can register a company 24 to 48 hours.
How does the country’s infrastructural deficit impact business?
We lack supportive infrastructure for business to thrive. Internet connectivity is poor. We don’t have good roads. Power supply is not stable. The telephone system is not very good. The train system also is nothing to write home about. We have dilapidated infrastructure everywhere.
What should be done to improve ease to doing business?
Let’s start by changing the attitude of all our people. Let’s remove multiple taxation. Let’s create enabling environment and create law and order. Let’s ensure security of life and property. Let’s maintain the sanctity of contract. If we do these basic things, investment will come; the economy will thrive. The ease of doing business will improve and we will create more jobs and opportunity for our population. In the end, everybody will be fine. I don’t know why it is difficult to do these things, but we need to have the will to do them. Once we have the will, every other thing will fall in place.
How has insecurity worsened ease of doing business?
Security is number one. Business does not thrive in an atmosphere of fear. Once the government can create an enabling environment where there is security of life and property, investment will thrive everywhere. We are not investing enough in security. How many CCTVs do you have on major streets in Port Harcourt? How many police people do we have? How many vehicles do they have? What equipment and gadgets do they have?
What’s is the major challenge faced by businesses in the oil and gas sector?
The key issue is that they are not being paid for work done. The oil companies are saying NNPC is not paying them. A lot of companies have gone under. A lot of companies borrowed money from banks and they are sacking people. It is tough.
The second thing is that there are no jobs. Nigeria wants to start producing 4 million barrels per day in 2020. But there is no drilling. There is no exploration. So, how do you achieve that? You want to have enough gas to drive the electricity and you are not drilling for gas. Is the gas going to come from the air? Where is it going to come from?
There has to be economic activity to generate jobs. The non-passage of the Petroleum Industry Bill is also worsening the ease of doing business. People are not investing because they are not sure if the law would change. So, the National Assembly, as a matter of urgency, needs to pass the bill.
The way forward is create economic activities. Let’s do a lot of exploration. Put in more money and then drill more wells. Create enough gas to drive our power system. Produce more oil to have more foreign exchange and resuscitate the economy. To boost foreign investment, you need to improve the security framework. Make sure you maintain the sanctity of contract. Make sure there is law and order.