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The importance of successful small and medium-scale enterprises to developing nations such as Nigeria cannot be overemphasized. Nigeria currently lags behind in most reports in terms of entrepreneurialism and entrepreneurial success. The first step in starting a proper business is usually registration with the recognized government authorities. No serious lender or venture capitalist will get involved with a company that is not properly registered. Nigeria continues to be an entrepreneurial laggard because of the hurdles that have been erected by the bureaucrats at the Corporate Affarirs Commission.
The present structure of the Corporate Affairs Commission (CAC) is not only fraudulent but represents a major obstacle to well-meaning average-income Nigerian entrepreneurs that want to register businesses and organizations. Contrary to its sustained public relations campaign that attempts to package the agency as a modern technology-aided government agency bereft of bureaucracy and sharp practices, the current CAC system promotes fraud and a lot of undocumented kickbacks. Starry-eyed entrepreneurs and social mobilizers find out first hand when they actually contact the CAC in respect of registrations. Whether one wants to register a limited liability company, sole proprietorship or incorporate trustees, it becomes apparent on inquiry that the quoted costs on the website are markedly different from the actual costs.
Since some people feel that the CAC is a modern agency, they naturally visit their websites and check the fees for incorporating trustees. One budding social entrepreneur wanted to establish a non-profit so that he could apply for grants. He visited the CAC website, clicked on DETAILS OF SERVICES AND FEES and did the required mathematics. The official total was 28,000 Naira less the obligatory newspaper advert. Now this official amount covered everything including the registration form, the certified true copies and other documents. Since he perceived the CAC as an accessible organization that aims to stimulate growth and development in Nigeria’s corporate and non-governmental sector, he naturally thought that his job was half done. However, once he actually called the CAC, he began to understand the system. After talking to several lawyers, he fully understood the true nature of things. He had simply asked a lawyer to prepare the necessary documents for him so that he could personally deliver them to the CAC. The first lawyer he spoke to said that he would charge a flat rate of 100,000 Naira to register an organization under PART C of the CAC decree. The young man was incredulous. The second lawyer went a little lower and said that he would do it for 90,000 Naira. Two other lawyers suggested 80,000 Naira for the exercise while another one said it would cost 150,000 naira.
He asked all the lawyers the same question, “Can’t you just prepare the necessary documents for a fee so that I can pay you for your services, go to the CAC office and drop off the documents? “It does not work that way,” one of the lawyers assured him, “there are lots of things involved. An individual like you cannot just work into the CAC office and incorporate anything. You have to go through a lawyer, accountant or secretary that is registered with the Commission.”
The young man called the CAC office and corroborated the lawyers’ stories. The official told him that he needed a member of one of the aforementioned professions because a layman like him would not know the required documents to present. When he protested that the required documents were accessible on the website, the official smoothly replied that those were just initial filing fees and that there were other “hidden” fees that registered lawyers, accountants and secretaries were acquainted with. At this moment, it dawned on him that the entire CAC online system was just a farce and that the CAC has turned what should be a simple process into a complex bureaucratic one so that they can make easy money.
When he investigated further, he found out that there was sort of an informal agreement between the CAC staff and the registered “professionals”. The accredited professionals give them bribe money so that they do not slow down the process and also ensure that these professionals maintain their monopolies. One of the lawyers I consulted told me that, “If you don’t settle them, they can delay the registration for up to three years.” They complicate everything and since most of these professionals do not query them, a lot of easy money is made. The CAC has turned official registration into a secretive process that now costs about thrice the official cost. Is there is a government rule that says that only certain accountants, lawyers and secretaries can register a nonprofit organization or a business? If there is such a law it needs to be repudiated immediately. A law that promotes fraud and stifles enterprise is a bad law, especially in a free market economic system.
If the CAC were truly a transparent agency that was keen to do its work efficiently, then every Nigerian citizen should be able to walk into any CAC office and carry out his business. This would make the body more accessible to the common man and encourage those businesses outside the formal sector to get registered. This will give them easy access to funds and give the country’s economy a boost. In an age when governments are battling bureaucracy and breaking down barriers, it is puzzling that the Nigerian government is still spinning red tape. The CAC should change its policies with effect from today or forced to do so. If they are really serious about transparency and the CAC Online program, they should simply state all the required documents on their website so that ordinary people do not have to suffer through the labyrinthine process. After all, there is nothing so difficult in preparing these documents since most lawyers employ a standard format. Such a transparent system would surely eliminate all these exorbitant hidden fees and simplify the process. The current system also explains why most of the donor funds that enter this country go to dishonest part-time socialites that simply embezzle the money. It also explains why lawyers have begun to defraud prospective registrants. The CAC should stop offering its services to the highest bidder. Rather, it should focus on its core job of investigating prospective business owners and NGO staff.
It is time for the EFCC to begin an investigation into this matter. An agency like the CAC has a huge role to play in the economic and business and social climate of this country and if this behaviour is allowed to continue, then more and more people will be joining the informal sector rather than go through with CAC registration. Let us not forget that the art of government can only be successful if non-governmental organizations play a pivotal role in assisting elected officials. The EFCC should please investigate this matter and prosecute the people involved in this fraud. Young people need to be encouraged by the government so that they can face honest endeavours. An investigation will surely boost the business sector and teach a handy lesson to all corrupt civil servants across Nigeria.
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