President Muhammad Buhari signed the Company and Allied Matters Act (CAMA) 2020 into law on August 7, 2020. The law replaced the 1990 CAMA with provisions reflecting current realities and opportunities that can improve the business environment. The new company law contributes to improvement in formation, registration and governance of companies including health enterprises. It enables entrepreneurs to start single-member companies, with flexibilities in appointment of auditors and company secretaries. There is also provision for Limited Liability Partnerships and Limited Partnerships.
As the world embraces accelerated digitalization, the law allows use of virtual platforms for knowledge management and corporate governance.
The Act is a significant piece of legislation for the growth of the private sector which is crucial for job creation and poverty reduction. According to Nigeria’s Bureau of Statistics, nearly 22 million Nigerians are currently unemployed while about 83 million people are poor. The private sector is the engine of economic growth particularly through the employment opportunities created by small and growing businesses.
Every legal and policy reform that makes the tough business climate better can open new
doors to lift many people out of poverty with positive externalities for their health indices and wellbeing.
Despite genuine concerns about some sections of the law which must be resolved quickly, strengthening regulatory institutions and systems is in the best interest of all Nigerians.
The law aligns with ongoing reforms to create a continental market through the African Continental Free Trade Area (AfCFTA) agreement. A new World Bank report shows that the agreement can accelerate economic diversification and job creation in Africa, enabling countries that maximize its opportunities to lift millions out of poverty.
Nigeria’s membership of the Africa Trade Insurance Agency and recent tax and business reforms are important building blocks of a viable environment that allows the country to seize opportunities of robust domestic and continental markets.
A better business environment is key for local production of goods consumed on the continent. The ongoing coronavirus pandemic shows that Africa relies heavily on imported food items, medical supplies and drugs for its 1.2 billion people with serious implications for health and food security. While there are several socio-economic and sector-specific factors necessary to boost local production, timely laws that ease tax and regulatory provisions for innovative businesses create vital incentives.
These reforms encourage policy makers, private sector players and development partners to work together on a longterm vision of resilience in the post-COVID world. Nigeria represents a strategic market where a convergence of talents, capital and technologies can enhance local production of medical goods and food for regional and continental consumption.
The law positions the country better to attract new investments. The 2019/2020 Global Investment Competitiveness Report shows that investors prioritize political economy and regulatory systems in target countries.
Although foreign direct investment may fall by 25 – 40% in Africa due to COVID-19, putting together the right building blocks can position the country for speedy recovery and new investments in the post-COVID era. Nigeria is one of the most improved countries with increasingly better business environment globally, according to the World Bank 2020 Doing Business Report. However, the country ranks 131 out of 190 countries globally and 17th in Sub-Saharan Africa on the Doing Business Index far behind Rwanda, Kenya and South Africa. Nonetheless, recent tax and business reforms send the right message to investors that the nation is making progress in removing bottlenecks that can impede business entry and growth. With access to capital, business and social enterprises can grow and thrive.
Biodun Awosusi is Health Economist at Health Systems and Development Enterprise