‘Legal uncertainties hinder Nigerian business growth’

Nigeria’s businesses are grappling with persistent legal inconsistencies, regulatory overlaps, and policy uncertainties despite recent economic reforms, a new report has revealed.

The report read, “Unclear legal and regulatory frameworks undermine policy consistency… characterised by conflicts between the provisions of different laws, overlapping regulations, conflicting regulatory jurisdiction, and lack of harmonisation between federal and subnational laws.”

The policy brief titled Priority Legislative Actions to Foster an Enabling Business Environment in Nigeria was launched in Abuja on Wednesday.

The event was organised by the Ernest Shonekan Centre of the Nigerian Economic Summit Group, with the research conducted in partnership with the Policy and Legal Advocacy Centre and funded by the Foreign, Commonwealth and Development Office.

According to the report, while the Federal Government has introduced reforms, including foreign exchange liberalisation, subsidy removal, and tax changes, the business environment remains constrained by structural and legal weaknesses.

It noted that inconsistent policies, unreliable public services, and inefficient legal systems continue to deter investment and limit the ease of doing business in the country.

The report further explained that frequent policy changes and overlapping regulations have increased compliance costs for businesses, weakened long-term planning, and discouraged both domestic and foreign investment.

“A review of key legal frameworks… shows that the provisions… are conflicting and there is sometimes a lack of clear delineation of regulatory jurisdiction, resulting in low investors’ confidence and high compliance costs,” it added.

It highlighted several instances of regulatory overlap, including conflicts between agencies in the oil and gas sector, where multiple regulators exercise similar functions, leading to duplication of licensing requirements and rising operational costs for firms.

The report also pointed to weaknesses in the legislative process, including poor coordination among agencies, limited transparency, and inadequate stakeholder engagement, which have contributed to gaps and inconsistencies in laws governing the business environment.

It warned that without clear, harmonised, and predictable legal frameworks, Nigeria’s efforts to achieve inclusive growth and economic transformation would remain limited.

Beyond legal inconsistencies, the report identified longstanding structural challenges such as poor power supply, weak infrastructure, limited access to finance, multiple taxation, and insecurity as key constraints facing businesses.

It noted that despite over 180 reforms implemented by the Presidential Enabling Business Environment Council between 2016 and 2023, many of the same bottlenecks persist, indicating only marginal progress in improving the business climate.

To address these issues, the report recommended urgent legislative action to harmonise existing laws, strengthen regulatory coordination, and improve transparency in lawmaking processes.

It also called for a comprehensive review of key legal frameworks to eliminate ambiguities and align them with current economic realities, noting that such reforms would boost investor confidence and reduce compliance burdens.

The report further urged lawmakers to prioritise executive bills that promote inter-agency coordination, ensure public access to legislative processes, and build the capacity of legislative drafters to produce more coherent and effective laws.

Presenting the report findings at the launch, Lead Consultant, Dr Shola Omoju, emphasised the urgency of legislative fixes, noting that several existing laws require immediate review to align with current economic realities.

He pointed to gaps in key statutes affecting sectors such as oil and gas, finance, and environmental regulation, stressing that unresolved inconsistencies continue to complicate business operations and raise compliance costs.

He also highlighted specific tax-related concerns, stating, “The definition of small businesses in the Act should be aligned with the definitions in the CAMA Act. This is important, given that small businesses contribute to gross domestic product, GDP, employment, and exports.”

On foreign exchange-related tax provisions, he added, “Section 20(4) of the Nigeria Tax Act should be amended to allow businesses to deduct expenses incurred in foreign currency, converted at the official exchange rate published by the Central Bank of Nigeria (CBN) or any other approved channels.”

He warned that without such adjustments, firms sourcing forex at higher official rates may struggle to recover costs fully.

Also speaking at the event, a board member of the Ernest Shonekan Centre, Mr Nnanna Ude, placed the report within the broader macroeconomic context. He observed that Nigeria’s economy has recorded modest growth in recent years, largely driven by the non-oil sector, but warned that structural weaknesses remain entrenched.

He said, “Public debt remains elevated, and structural constraints such as infrastructure gaps, regulatory inefficiencies, policy inconsistencies, and institutional and regulatory challenges continue to limit private sector growth and investment.”

Ude argued that macroeconomic reforms alone cannot deliver sustained growth without strong legal backing, adding that gaps in laws and overlapping mandates across agencies are at the heart of many business challenges.

He further explained that the report was designed to identify these bottlenecks and propose targeted legislative solutions, noting that “many of the challenges confronting businesses today are rooted in gaps within the legal and regulatory framework.”

According to him, unless issues such as weak enforcement, poor coordination, and lack of transparency in the legislative process are addressed, reforms will continue to yield limited results.

Also speaking, Chairman of the Ernest Shonekan Centre, Kyari Bukar, outlined the scope of the study, noting that it reviewed laws across critical sectors, including governance, digital economy, trade and investment, infrastructure, energy, climate, and fiscal policy.

He said the exercise identified weaknesses in both existing and emerging legal frameworks and proposed a mix of broad and sector-specific legislative actions aimed at improving the business environment and accelerating economic growth.