Stop closing businesses
In the last four years plus, the federal government and by extension, some few states have been toiling to ensure provision of employment and empowerment to the people via numerous schemes. Apart from direct employment of people into the various establishments, social investment programs such as Npower, Trader money, Market money, Sustainable development programs, Petroleum Training Development Fund, skill development programs and many more exist. Whilst all these initiatives and many more are going ceaselessly at all levels, the shocking thing is that some other acts are simultaneously being carried out at different levels, albeit consciously or unconsciously, which run contrary to the objectives of these noble schemes geared towards the employment and empowerment of our people. In recent times, I have observed frequent closure of businesses in the country for one alleged infraction or the other, at times, baseless and frivolous.
This act permeates the different levels of government in Nigeria be it Federal, State or Local government. They all relish the sealing or closing down of businesses as if there was always a trophy for such act. Ordinarily, as a legal practitioner, this should not be my concern, as there exist in the country various chambers of commerce and industry and other interest groups purportedly established for the protection of the interest of their members or stakeholders. This view, however, will be myopic on my part. If considered on a wider scale, I must certainly know that the multiplier effect of such closures, which in most cases lead to the demise of such establishments, will surely and steadily have impact on me and defeat the essence of governance to which most genuine leaders are committed.
Let me state without mincing words and without any aid of data, call it empirical studies, that most businesses in Nigeria today are groaning under one form of depression or the other. In fact, for the fact that there is attendant liability to the voluntary closure of those businesses, their directors or promoters would have done such willingly. Little surprise, therefore, that when government agents eventually pounce on these companies, they quickly seize this opportunity to wind up without any liabilities to their employees. The net effect of this is that such employees that have spent useful part of their lives in such establishments end up going home without any compensation for the years they have spent in the entities. Apart from this closure, there exist other ancillary issues of policies which continue to negatively impact the businesses such as multiple taxation, levies, increase in charges, extra imposition of regulation and restrictions, (name it and you will never exhaust it).
Few years ago, according to the Punch Newspaper Online publication of August 24, 2014, titled 272 firms shut down in one year – MAN, the Manufacturers Association of Nigeria (MAN) gave this staggering statistics: in 2016 alone, 272 firms, which were hitherto doing business in Nigeria and employing thousands of Nigerians, were forced out of business. Out of this number, 50 of these firms were manufacturing companies (http://punchng.com/272-firms-shut-one-year-man- visited on 23/12/17).
This excludes businesses that have had to downsize and declare redundancies over the years. The story is not so much different today. But for the Federal government interventions in the areas of agriculture, palm oil and local content development, hardly will any sector worth its name exist again in the country. There is no sector that is left out of this gloomy picture of survival as all of them are interrelated. For instance, advertising sector is experiencing the severe distress due to the fact that many companies are cutting down on their advertising budget or that many companies do not even exist any more. Today, a trip around major cities in Nigeria reveals that many billboards, including the electrically propelled ones, are empty.
Nothing is being displayed on them, a sure sign of changing times for the industry. A close observer on the streets of Lagos will notice that even the LED billboards which manage to secure some advert placement are limited to just a few adverts as against what used to happen in the past when several adverts would be running on the billboards. In most cases, static boards are empty, while some of the LED billboards are now operating as static billboards. Flowing from the above, I am of the very strong opinion that rather than sealing or closing some of these businesses for the alleged infractions, particularly where more than 80 per cent of companies are as a result of failure to fulfill one financial obligation or the other to the government, government should in the first instance, probe the circumstances or rationale behind such failure or neglect to pay such sum due and payable. Where it is discovered that such refusal, neglect or failure to honour such financial obligation is deliberate or is as a result of diversion of funds, then government can then wield the big stick. How do governments wield the big stick in other civilised jurisdictions?
The practice is for the government to go after the directors of such companies to be prosecuted for such criminal defaults. Hardly, would such a government seal any company for failure to fulfill any financial obligation; rather governments in those climes strive to aid the continuous floating of the entities to sustain their economic contribution and the maintenance of the existing employment statistics. In this regard, our Government, at the various levels must, at all times, continue to aid by keeping companies afloat, as this ought to primarily be the business of government. The point being made is that where the refusal/neglect to fulfill the financial obligation is deliberate, government should, rather than sealing the premises or shutting down the business, descend on the Directors of the company that are responsible for the default and prosecute them. Where the exit of the directors will impact the management or operation of the company, a new management can be put in place via the instrumentality of the law and courts. This will ensure continuous existence of the business and guarantee the employment of the workers. Forceful closure without an order of court particularly is a manifestation of our military mentality of might is right as governments in civilised climes would rather go to court, obtain relevant orders and prosecute the defaulting directing minds of such companies.
Let me state without any fear of contradiction that most of the companies that are guilty in this instance for failure to meet one obligation or the other are just outrightly incapable of doing so as a result of the economic situation of the country. Where this occurs in other countries, what government does is to review the payment plan of these companies by spreading the payment plan over a long period and, where necessary, give these companies necessary support in terms of advice or other mechanism towards continuous survival. In some instances, governments even grant discounts or rebates to such companies.
Closure is always not an option in virtually all other nations, but in Nigeria, as I have earlier indicated, it still enjoys the pride of place. Unfortunately, this is a very myopic way of addressing the challenges of the situation. Assuming without conceding that such approach of closure exists in any other nation, Nigeria in her present precarious situation cannot afford to be receptive to such draconian practice. In fact, I hasten to say that this is a situation of being penny wise, pounds foolish because most times, the amount you want to go after, which will eventually lead to the demise of the company, is negligible compared to the ultimate losses incurable in the eventual collapse of the companies. Such losses do not merely result in income not made by the company under closure.
It reflects in other contracts not awarded or executed as a result of closure, salaries and benefits payable but not paid as a result of the closure, taxes derivable from such salaries but not collectible.
A dislocating manifestation is the immediate loss of jobs and hence, resorts to social vices such as kidnapping, robbery, terrorism etc., thereby creating insecurity of lives and properties within the society. The cost implication of taming these challenges far outweighs the receivable we are enforcing to collect. An apt analogy of the situation is that of a person who fails to spend on environmental health but intends to gain from clinical health. If you fail to spend on environmental health, you certainly will end up spending about ten times the amount on clinical health. If the environment is tidy, people hardly fall sick, much less dying. The productive energy of the workforce is thereby enhanced, coupled with the amount incurable on the treatment of the patients. Needless to add that mortality rate will rise.
This is the picture of the acts of sealing and closing businesses in Nigeria, which is our focus herein. The amount recoverable by government in most cases of the closure is usually a peanut compared to the consequences arising from the eventual winding up of those ailing companies and the release of employees to the labour market. It is high time our Government at all levels started taking a broad view of the situation rather than a narrow view. We must be holistic in our approach to all issues of enforcement, particularly when it comes to survival of companies in our country. We cannot afford the kind of trend that we are going through otherwise the vices of kidnapping, boko haram, Niger Delta militants’ agitation etc. will continue to soar. A hungry man is permanently an angry man. Anger of this nature can be the motivation for engaging in criminal acts.
The cost of taming the monstrous acts of criminality is too grave to be subsumed under revenue drive. It is, therefore, my view that governments at all levels must call themselves together, particularly, at the State and Local Government levels where this is most rampant, and agree that there should be no more closure of businesses. They must look for alternatives to closure, which I know, exist. There are several options that are available administratively and legally. All we need is to perceive Government as a continuum and the conversation or the narratives change immediately. It is also important to counsel that our Courts must also be sensitive to these acts in the same manner that we try to give primacy to commercial disputes. It is an adjunct to it. Courts in the administration of justice must be conscious of the need to promote the survival of these entities through reluctance in granting sealing Orders.
The further implication of sealing or closing these businesses is the disincentive it will constitute towards inflow of investments into the country. Another ugly trend in this regard is the creation of many Tribunals in the nature of courts by the State Governments and Local Governments where all manners of funny and outrageous Orders are granted. Let the legislatures wake up to forbid and or abolish the contraptions. It does nobody any good.
The best interest of our economy must be a primary consideration at all times. Because of the impact which government polices have on business and bearing in mind the crucial role which businesses play in stirring the wheel of society, it is imperative that government evaluates the cost of failed businesses and unemployment to the nation, especially, due to closures. The Federal Government has stated that it has spent several billions of naira to tackle the insecurity that bedevils the nation. However, unless a well thought-out plan is developed to help business from failing and laying-off their staff nor Government itself accelerating their deaths, any victory recorded in the fight against insecurity would be empty because idle hands and minds are the greatest threats to Nigeria’s security. This being the case, government has a number of tools at its disposal by which it could encourage business activities throughout the economy.
This suggestion on the avoidance of closure of businesses, the fulcrum of this write up, however, is a low hanging fruit, which must be taken up immediately and urgently. When businesses fail, Nigerians lose their jobs. Unemployed Nigerians then become cannon fodders for crime and insecurity, which the Buhari government has been contending with since its inception. This has in turn depleted the extremely limited resources available for government to grow the economy.
While it is difficult to fault the determination of the Buhari administration to stabilise the economy after years of systemic haemorrhaging by past administrations, it must be noted that the growth of businesses is not solely dependent on the action of the Federal Government, but development at State and Local Governments level is also important to drive growth. Due to the nation’s history of military rule, the focus has always been on the centre. However, State and Local Governments have mostly failed to live up to their responsibilities. Businesses thrive on consistency and certainty and conducive environment mostly provided by the regulators. Except we abate this practice of distraint urgently, the country shall be on a keg of gunpowder. A stitch in time saves nine.