MANY Nigerians may see building a hotel as an easy way to launder money. For legitimate entrepreneurs, however, running a hotel is far from cheap or simple. In Abuja, the capital, it is rather like erecting a sign that says: “Tax me”. In fact, erecting such a sign would result in city and local taxes of about 80,000 naira ($221) a year.

One Abuja hotelier recorded no fewer than 20 bills for various annual fees, taxes and licences. They range from a 5m-naira charge from the city council for having a car park, to demands from two different agencies for putting a logo on a company car. The hotelier has also been issued with bills for four different types of property tax and a bicycle/cart licence, despite having neither a bicycle nor a cart. Although he is challenging some of the notices in court, it is often safer to pay up and avoid facing the policemen that bureaucrats send to enforce payment on the spot. “It’s a racket …like in the mafia movies,” he says.

Trying to play by the rules can be a laborious, opaque process. Companies that want to renew product licences with Nigeria’s food and drug agency, NAFDAC, have to run the same laboratory tests as they did when they first registered their products, says Affiong Williams, the founder of ReelFruit, a snack company. She was forced to employ an external consultant after a staff member spent one day a week over the course of two months trying to renew the licences (which has to be done every two years). The company was also fined $150 by NAFDAC for not collecting product-registration certificates, but only after it spent almost a year trying to do so and being told they were not ready.

It is possible for the well-connected to pay bribes rather than taxes, says the Abuja hotelier. But those who do risk being presented with a backlog of bills if an election puts a new set of officials in charge. Even those who try to pay the taxman have to beware. Until the introduction of a single bank account for the federal government in 2012, taxpayers could not be sure that they were not simply fattening the personal accounts of mandarins.

There are a number of reasons for Nigeria’s impenetrable thicket of red tape. The first is the low price of oil, which once accounted for as much as 90% of government revenues. When less money is being doled out to state and local administrations, bureaucrats invent new charges.

The main reason, however, is Nigeria’s political system. The “patronage economy” encourages legislators to create ever more government agencies which they can use to provide jobs to pals, says Cheta Nwanze of SBM Intelligence, a research firm. Many simply duplicate work that other agencies are already doing. One local newspaper found that the national parliament was in the process of creating 25 new federal agencies. Among them was a National Council for Research and Development, a National Research and Innovation Foundation, a National Research and Innovation Council and Federal Entrepreneurship Centres across the country. As if that were not enough, it is also creating a Chartered Institute for Entrepreneurs. Many will no doubt start issuing licences and permits to any firm in sight.

Ms Williams knows only too well what happens when firms grow large enough to be noticed. As hers expanded, it was told to register its products with the Standards Organisation of Nigeria, using a near-identical process to NAFDAC’s. Knowing what to comply with (and how) is almost impossible, she says.

The result of all this regulation is that businesses stay small and, where possible, in the shadows. In 2013 the National Bureau of Statistics found that Nigeria has nearly 37m firms employing fewer than ten people (most of them unregistered sole traders). Just 4,670 employed 50-199 staff. No wonder: senior managers at big companies have to spend around 18% of their time dealing with government demands, while bosses at the smallest firms devote just 7%, according to a survey in 2014 by the International Finance Corporation, the World Bank’s private-sector investment arm.

Reformers are trying to snip away at the tangle. Yemi Osinbajo, the vice-president, issued a series of executive orders in May in an effort to move Nigeria up a few notches on the World Bank’s ease of doing business index. It currently ranks 169th out of 190, putting it behind countries such as Iraq and Sudan.

Among his many edicts, Mr Osinbajo has ordered immigration officials to process visas for investors more quickly. He has also forced agencies to publish their regulations online and insisted that officials at ports and airports should be fired if caught asking for bribes.

Yet there is a gulf between promises in the corridors of power and what happens in the depths of the bureaucracy. It is, for instance, possible in theory to renew passports online. But in reality officials still drag their heels, taking months to issue them. In 2011 a report commissioned by the then-president, Goodluck Jonathan, recommended cutting the number of federal agencies from 263 to 161. Since then, however, the number has kept growing.

Source: https://www.economist.com/news/middle-east-and-africa/21727119-regulatory-racket-means-businesses-stay-small-and-shadows-high-cost

Front Page: Lalasticlala

Same old same old. The government keeps expanding to employ a bunch of useless workers who add no value to society. Senseless regulations and multiple taxation kills entrepreneurs.

Good job putting this up! I actually created a reminder to myself to post this article when I saw it in the morning, but I never got around to it.

It will be interesting to see how much interest a post like this, which deals with a huge problem whose solution would make a real difference in people's lives, will get. Will it be ignored outright by the tribal warriors, or will it simply be hijacked by them and their usual accompanying cast of perpetual victims crying about "marginalization" and whatnot? Or will we see a miracle on Nairaland, with only intelligent commenters making valuable and interesting contributions for a change?

Hmm, looks like my cynicism about the limited intellect of the Nairaland hordes has been proven correct once again: one of the most respected international periodicals devotes an entire story to an issue which has seriously choked growth and thereby kept millions of Nigerians in poverty, and yet not a single Nairalander has anything worthwhile to say on the issue? Worse yet, the mods don't make any attempt to move it to the front page either!

This is the sort of thing I'm getting at when I say ordinary Nigerians should stop blaming "politicians", "elites" and so forth, and need to acknowledge that they are their own worst enemies - ignorant, mentally lazy, highly credulous, extremely superstitious, and tribalistic beyond belief.

omohayek:
Good job putting this up! I actually created a reminder to myself to post this article when I saw it in the morning, but I never got around to it.

It will be interesting to see how much interest a post like this, which deals with a huge problem whose solution would make a real difference in people's lives, will get. Will it be ignored outright by the tribal warriors, or will it simply be hijacked by them and their usual accompanying cast of perpetual victims crying about "marginalization" and whatnot? Or will we see a miracle on Nairaland, with only intelligent commenters making valuable and interesting contributions for a change?

Lol the partisan prostitute have nothing to argue about. The tribalist are too dumb to contribute. Jonathan failed in this regard Buhari hasn't done anything to much. The APC expands governments in same manner. Why they don't just expand existing or just combine them who knows.

The executive orders were a start but the need to be implemented better. Half of these agencies don't have updated websites or phone lines. Then the drag their feet unless you bribe them to do jobs.

Some of these regulations are dumb like conducting yearly experiment. My biggest issue with these regulatory agencies overlap then you end up paying money to do similar process over and over.

omohayek:
Hmm, looks like my cynicism about the limited intellect of the Nairaland hordes has been proven correct once again: one of the most respected international periodicals devotes an entire story to an issue which has seriously choked growth and thereby kept millions of Nigerians in poverty, and yet not a single Nairalander has anything worthwhile to say on the issue? Worse yet, the mods don't make any attempt to move it to the front page either!

This is the sort of thing I'm getting at when I say ordinary Nigerians should stop blaming "politicians", "elites" and so forth, and need to acknowledge that they are their own worst enemies - ignorant, mentally lazy, highly credulous, extremely superstitious, and tribalistic beyond belief.

a Lot of Nigerians want to talk about it like me, but the thing is that like me, many are tired of debating about these issues to no avail; everybody wants to "BLOW" in nigeria, "owo ni koko, "baba god pick my call", everybody wants a federal civil service job where they can do nothing, and everybody including even those even in the private sector is trying to be smarter than the next fellow. point is Nigeria is Banana republic headed for doom, and frankly there's no point debating any issue at all, let the country implode on itself; after all, the only way to go after hitting rock bottom is up.

EZEIGBO1OFIMO:

a Lot of Nigerians want to talk about it like me, but the thing is that like me, many are tired of debating about these issues to no avail; everybody wants to "BLOW" in nigeria, "owo ni koko, "baba god pick my call", everybody wants a federal civil service job where they can do nothing, and everybody including even those even in the private sector is trying to be smarter than the next fellow. point is Nigeria is Banana republic headed for doom, and frankly there's no point debating any issue at all, let the country implode on itself; after all, the only way to go after hitting rock bottom is up.

The problem with just waiting for things to keep getting worse until they hit rock bottom is that a lot of people will have to suffer and even die unnecessarily along the way; that is something I would find it difficult to turn my back on even if those affected were strangers halfway across the world, let alone people amongst whom I count many as either my own blood relatives or as close personal acquaintances.

I wish I could simply turn my back on Nigeria but that simply isn't a possibility, which is why I find the crushing stupidity of how so many things are done in the country so incredibly frustrating. While I recognize that there are a few people who understand what is wrong with the place and what needs to be done to fix it, I think it's also very clear from following this forum, or the Nigerian online newspapers, that most Nigerians really have no clue why their lives never improve year after year - otherwise they wouldn't be so quick to blame conspiracies by foreigners or people from other tribes for problems they themselves have had a hand in creating. My hope is that by discussing these things vigorously on forums like this one, at least a few Nigerians who aren't beyond redemption will wake up and start to think more critically about economic and political issues, and begin to demand more from politicians than that they share the same religion and place of origin with those who support they seek. Maybe then we could actually look beyond shallow identity politics to elect a leader who is neither an egomaniac, an invalid, a thief, or a sickly old ignoramus for once, someone with ideas for real reform and the energy to carry them out.

omohayek:

The problem with just waiting for things to keep getting worse until they hit rock bottom is that a lot of people will have to suffer and even die unnecessarily along the way; that is something I would find it difficult to turn my back on even if those affected were strangers halfway across the world, let alone people amongst whom I count many as either my own blood relatives or as close personal personal acquaintances.

I wish I could simply turn my back on Nigeria but that simply isn't a possibility, which is why I find the crushing stupidity of how so many things are done in the country so incredibly frustrating. While I recognize that there are a few people who understand what is wrong with the place and what needs to be done to fix it, I think it's also very clear from following this forum, or the Nigerian online newspapers, that most Nigerians really have no clue why their lives never improve year after year - otherwise they wouldn't be so quick to blame conspiracies by foreigners or people from other tribes for problems they themselves have had a hand in creating. My hope is that by discussing these things vigorously on forums like this one, at least a few Nigerians who aren't beyond redemption will wake up and start to think more critically about economic and political issues, and begin to demand more from politicians than that they share the same religion and place of origin with those who support they seek. Maybe then we could actually look beyond shallow identity politics to elect a leader who is neither an egomaniac, an invalid, a thief, or a sickly old ignoramus for once, someone with ideas for real reform and the energy to carry them out.

funny, i had this same argument with a friend of mine a week back, and i asked him a question "How do you explain quantum mechanics to a 50 year old village man, who has little to no education?", thing is no matter how good a teacher you are, it is an exercise in futility as the old man clearly has no foundation in physics, or any field at all, as is well past beyond the age where learning is a comfortable quick process. The old man in this scenario describes most Nigerians, no matter how much you debate these issues, explain them with utmost passion , or speak forth with great eloquence and conviction, you would be wasting useful energy; Our educational sector is all the more useless, with private (k-12) schools charging millions just to give kids fake accents ,and our public schools broken beyond repair. what i think we need is what some political scientists are referring to as "epistocracy".here's a link to the article http://www.newyorker.com/magazine/2016/11/07/the-case-against-democracy

How many federal agencies now?

One local newspaper found that the national parliament was in the process of creating 25 new federal agencies. Among them was a National Council for Research and Development, a National Research and Innovation Foundation, a National Research and Innovation Council and Federal Entrepreneurship Centres across the country.

Damn! This made me boil!!

This shows directly that our Constitution is sh!t; that it has no proper checks and balances in place for the three arms of government. The center has too much power and they can do whatever they like.

It's why corruption and "godfatherism" is rampant. No wonder the guy called it a patronage system of government.

But the important question is how the hell do we ensure the right people get into positions of power to make the necessary changes to our system of government in a peaceful manner??

We can never be a developed nation with this form of highly inefficient system whereby agencies are duplicated to "settle guys" which just creates a large workforce with zero productivity.

EZEIGBO1OFIMO:

funny, i had this same argument with a friend of mine a week back, and i asked him a question "How do you explain quantum mechanics to a 50 year old village man, who has little to no education?", thing is no matter how good a teacher you are, it is an exercise in futility as the old man clearly has no foundation in physics, or any field at all, as is well past beyond the age where learning is a comfortable quick process. The old man in this scenario describes most Nigerians, no matter how much you debate these issues, explain them with utmost passion , or speak forth with great eloquence and conviction, you would be wasting useful energy; Our educational sector is all the more useless, with private (k-12) schools charging millions just to give kids fake accents ,and our public schools broken beyond repair. what i think we need is what some political scientists are referring to as "epistocracy".here's a link to the article http://www.newyorker.com/magazine/2016/11/07/the-case-against-democracy

I love the New Yorker essay you provided a link to: it really speaks to many of the concerns I've had about how democracy works in developed countries like the UK and the USA, not to speak of a place like Nigeria with its abysmal educational system and high levels of either bare literacy or outright illiteracy. What hope is there of erecting a better system when those who get to choose the leaders are themselves ignorant and either incapable of learning or simply outright unwilling to learn?

One thing that is rarely emphasized by advocates of ever greater democracy in developing countries is that none of the western nations who are doing the democracy-promotion were born as full-blown democracies themselves. Originally only aristocrats and the upper middle classes could even dream of voting in most of Europe, with the electoral franchise only being gradually extended down the social scale over the decades, and universal voting rights (for men only) waiting until just before World War 1; the requirement that voters had to pay a certain minimum in tax and own a certain minimum amount of property ensured that property rights were taken seriously, while frustrating the desires of demagogues willing to make empty promises of government-funded heaven on earth. The downside to all this - especially in the USA - was that it also enabled oppressed minorities to be disenfranchised, leaving them powerless to fight even more political oppression. Still, the bottom line is that in Europe, the outcomes of elections were never determined by masses of hungry and illiterate voters who could be swayed by the empty appeals to tribe and "free" goodies that work so well in the Nigerian setting.

Exciton:
One local newspaper found that the national parliament was in the process of creating 25 new federal agencies. Among them was a National Council for Research and Development, a National Research and Innovation Foundation, a National Research and Innovation Council and Federal Entrepreneurship Centres across the country.

Damn! This made me boil!!

This shows directly that our Constitution is sh!t; that it has no proper checks and balances in place for the three arms of government. The center has too much power and they can do whatever they like.

It's why corruption and "godfatherism" is rampant. No wonder the guy called it a patronage system of government.

But the important question is how the hell do we ensure the right people get into positions of power to make the necessary changes to our system of government in a peaceful manner??

We can never be a developed nation with this form of highly inefficient system whereby agencies are duplicated to "settle guys" which just creates a large workforce with zero productivity.

The country is doomed,very doomed.
Even when Cambridge trained, MIT trained, Global technocrats come in, they are overwhelmed by the populace which they seek to improve, everything about our culture, language, and way of life has corruption and rent seeking as a way of life, The extended family, our most prized institution is the bedrock of corruption; whilst trying to placate 7 uncles, 40 under educated nephews and a horde of villagers who are supposedly your brothers, you find that you have to live above your means, and settle them, because apparently, they all "trained" you.
Moving beyond the extended family, We have a culture that is at best survivalist and has no futuristic theme;to illustrate, we used the grinding stone for more than a millennia, our forefathers. never bothered improving the grinding stone, they didn't envisage a future where the earth ran out c stone or where It would b necessary to grind large quantities, or that the time spent swinging with such vigor could be spent doing something else; insofar the grinding stone worked and was some kind of indicator of wealth, the African man was just satisfied with his grinding stone. Beyond the grinding stone in modern Africa, we have everyone here with useless survivalist dreams, Go to school, cram hard for the repeated past question exam, get a freeloader civil service job marry, give birth to more kids than you need, grow old collect pension,
and in between amass more money than your next door neighbor so can oppress him and chop life and flenjor.. Nobody gives a crap about pollution, institution, anthropology, the rule of law, science, technology, even things as trivial as a simple park for relaxation, so far one is driving a range rover through the pot hole ridden rode, and buying overpriced real estate where open drainage exist, they are living the "LIFE". it's not just corruption, or the right people or intellectuals, it is us as a people its our way of thinking, of living, of interacting and ultimately dying. Our people have no drive, no passion, no quest for enlightenment, no soul.

EZEIGBO1OFIMO:

The country is doomed,very doomed.
Even when Cambridge trained, MIT trained, Global technocrats come in, they are overwhelmed by the populace which they seek to improve, everything about our culture, language, and way of life has corruption and rent seeking as a way of life, The extended family, our most prized institution is the bedrock of corruption; whilst trying to placate 7 uncles, 40 under educated nephews and a horde of villagers who are supposedly your brothers, you find that you have to live above your means, and settle them, because apparently, they all "trained" you.
Moving beyond the extended family, We have a culture that is at best survivalist and has no futuristic theme;to illustrate, we used the grinding stone for more than a millennia, our forefathers. never bothered improving the grinding stone, they didn't envisage a future where the earth ran out c stone or where It would b necessary to grind large quantities, or that the time spent swinging with such vigor could be spent doing something else; insofar the grinding stone worked and was some kind of indicator of wealth, the African man was just satisfied with his grinding stone. Beyond the grinding stone in modern Africa, we have everyone here with useless survivalist dreams, Go to school, cram hard for the repeated past question exam, get a freeloader civil service job marry, give birth to more kids than you need, grow old collect pension,
and in between amass more money than your next door neighbor so can oppress him and chop life and flenjor.. Nobody gives a crap about pollution, institution, anthropology, the rule of law, science, technology, even things as trivial as a simple park for relaxation, so far one is driving a range rover through the pot hole ridden rode, and buying overpriced real estate where open drainage exist, they are living the "LIFE". it's not just corruption, or the right people or intellectuals, it is us as a people its our way of thinking, of living, of interacting and ultimately dying. Our people have no drive, no passion, no quest for enlightenment, no soul.

Haha! At the moment we are doomed, but I think you're a bit too harsh.

Sure, probably more than 98% of us have an extremely narrow worldview -- stuck in survival mode and not caring for science, philosophy, art, etc -- only getting to experience a very tiny percentage of what life has to offer. However, I believe a small percentage are rising out of that sordid way of life. The only question is how quickly will we reach the required level of enlightenment to rebuild our society and move forward. We aren't there yet but calls for restructuring is proof that we've started thinking.

By the way, thanks for the link you posted. Just finished reading it. Fvcking great! I just downloaded (illegally of course ) Jason Brennan's book for later reading. But as the article cited, the major problem lies in the fine details of epistocracy, in detailing how exactly the intelligent people will be chosen in a fair and just manner. But as for us, developing countries, anything but the dumb masses making decisions will do!