The Government of the Federation regulates and controls business operations in the economy through the use of laws and regulations for the purpose of ensuring development, protecting the interest of consumers, promoting the distribution of income, and preventing the economy from non-indigenous dominations. The direction and operation of business activities are vested both in the private and public hands which in turn means that the government, individuals, and group of individuals have the liberty to establish a business in Nigeria, however, the power to regulate and control the operational activities of these businesses is vested in the Federal Government.
Section 16 (1) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) states as follows;
“The State shall within the context of the ideals and objectives for which provisions are made in the constitution-
- Control the national economy in such a manner as to secure the maximum welfare, freedom, and happiness of every citizen on the basis of social justice and equality of status and opportunity;
- Without prejudice to its rights to operate or participate in areas of the economy other than the major sector of the economy;
- Without prejudice to the right of any person to participate in areas of the economy within the major sections of the economy, protect the right of every citizen to engage in any economic activities outside the major sectors of the economy”.
Section 16(3) provides that a body shall be set up by an act f=of the National Assembly which shall have the power-
– to review from time to time the ownership and control of business enterprises operating in Nigeria and make recommendations to the Head of the Federal Government on same and;
– to administer any law for the regulation of the ownership and control of such enterprise.
From the above-stated provision of the Constitution, it is evident that the purpose and aim of the government in the regulation of business is to protect and represent the best interest of society.
The mode by which government can regulate business establishments, strictures, operations in Nigeria is by implementing enactments and through the enforcement of laws by various legislative bodies or administrative agencies.
There are various legislations by which the Nigerian government utilizes as an instrument to regulate the operations of a business in Nigeria, some of which are as follows;
Standard Organization of Nigeria Act 2015- this Act was established by the government as an integral part of the Federal Ministry of Industries to curb the flow of fake and substandard products that dominate the market space. The 2015 Act was enacted to repeal the Standard Organisation of Nigeria Act Cap 59 LFN 2004, as it provides additional functions for the Organisation, increased penalty for violations, and for related matters.
It was enacted for the purpose as provided by Section 4(1) of the Act which states that;
- To advise the Federal Government generally on the national policy on standards, standards specifications, quality control, and meteorology.
- To designate, establish and approve standards in respect of metrology materials, commodities, structures, and processes for certification of products in commerce and industry throughout Nigeria.
- To provide the necessary measures for quality control of raw material and products in conformity with the standard specification.
- To determine the overall policy of the organization in particular with regard to the financial, operation, and administrative programmes of the organization and to ensure the implementation of the said policy and
- To carry out other functions imposed under the Act or any other written law.
By virtue of the Act, there is a need to ensure quality control of manufactured and imported products into Nigeria.
The Price Control Act 1977– This Act was enacted by the government to control and regulate the prices of essential commodities in Nigeria and also reduce the rate of inflation. The Act was provided for the purpose of;
- the establishment of a price control board by virtue of Section 1 of the Act and price control committees for each state of the federation by virtue of Section 2 of the Act to advise and assist the Board in the implementation of the Act.
- Section 4 of the Act provides for the imposition of price control over commodities such as flour, matches, milk, motorcycles and spare parts, petroleum products, salt, and sugar and authorizes the price control Board to add to or delete from the list.
- Section 5 of the Act empowers the board to fix basic prices for commodities and to fix the permitted price increase for such commodities. Selling above the controlled price became illegal and punishable by a fine not exceeding N2000 or imprisonment for a period not exceeding one year or both fine and imprisonment.
Section 6(1) of the Act provides that “it shall be unlawful for any person to sell, agree to sell or offer to sell any or employ any other person, whether or not that other person is full of age, to sell any controlled commodity at a price which exceeds the controlled price”.
Section 8 of the Act empowers the federal commissioner for trade, on the recommendation of the price control board to approve and Resale Price Maintenance (RPM) agreement between a manufacturer, importer, or distributor and the seller of a commodity. Where such an agreement exists, it would be unlawful for a person to sell a commodity at a price above that specified in the agreement.
As old as this Act used to regulate business is, it is still in existence to date, regulating some aspects of the economy, and is yet to be repealed. However, Nigeria has moved with the current realities of the market-based economy where people determine the prices of goods and services freely
Currently, the Bill for an Act to amend the Price Control Act, Cap P28 Laws of the Federation (LFN) has been passed for a second reading by the House of Representatives. The Bill seeks to strengthen the Price Control Board to ensure there is no unfair trade on essential commodities in Nigeria and also to ensure that the Act contains provisions that are in line with the current realities of the economy.
The Nigerian Enterprises Promotion Act 1989- this Act was established by the Federal Government to promote indigenous ownership and participation in certain types of business in Nigeria. The Act re-enacts the Nigerian Enterprises Promotion Act 1977 by dissolving the board established and to reschedule all enterprises under one schedule.
Section 1 of the Act provides that all enterprises specified in the Schedule to this Act are hereby exclusively reserved for Nigeria citizens or associations and accordingly no such enterprise shall be established in Nigeria by an alien on or after the commencement of this Act.
However, Section 1 (2) goes further to state that an alien may be the owner of any enterprise specified in the schedule to this Act if the capitalization involved is not less than N20,000,000 (Twenty Million Naira). It is important to note that aliens in this context mean foreigners or non-Nigerians.
Some of the enterprises listed in Schedule 1 of the Act include; advertising and public relations business, all aspects of pool betting business and lotteries, assembly of radios, radiograms, record changers, television sets, tape recorders, and other electric domestic appliances not combined with manufacture of components; blending and bottling of alcoholic drinks; candle manufacture; casinos and gaming centres; bread and cake making; commission agents; office cleaning, poultry farming; protective agencies and travel agencies, etc. there are currently 40 classes of enterprises listed in Schedule 1 of the Act.
The aim of the government in the establishment of this Act to regulate business is to control the excesses of foreign investors and not to eliminate them completely, so that Nigerians can participate fully in the ownership and management of business enterprises in the Nigerian economy. In line with that, Section 2 of the Act provides that an enterprise will be deemed to be an alien enterprise if the entire capital or proprietary interest, whether financial or otherwise, is owned and controlled by aliens.
Companies and Allied Matters Act 2020– by the establishment of this Act, the federal government in the view to regulate business requires that all foreign enterprises wishing to do business in Nigeria must be registered with the Corporate Affairs Commission. Also, business enterprises can be registered by Nigerian citizens as sole proprietorship, partnership, and incorporate companies.
Nigerian Investment Promotion Commission Act (NIPC Act) 1995 Cap N117 LFN 2004– the Federal government has formulated and implemented taxation policies and incentives such as tax holidays, capital allowances, investment allowances, tax exemptions, export permission grants, double taxation reliefs, etc, to encourage and discourage some particular activities of a business and also to promote competitiveness and attract investments.
The NIPC Act established the Commission in Section 1 of the Act as an agency of the Federal government which is charged with the responsibility of encouraging and promoting investment in the Nigerian economy as provided by Section 4 of the Act.
By virtue of Section 21 of the act, foreign enterprises can invest in all or portions of the shares of any Nigerian enterprise other than the prohibited business activities in the negative list as provided in Section 31 such as the production of arms and ammunition; production of and dealing in narcotic drugs and psychotropic substances; production of military and paramilitary wears and accouterment including those of the police and the customs, immigration and prison services and any other items as the Federal Executive Council may from time to time determine, in any convertible foreign currency. This provision seeks to open up the Nigerian economy to foreign investment capital.
Also, the Commission by virtue of the Act is empowered to make regulations for the implementation of the objectives of which the Commission was set up and one of the regulations created by the Commission is the Industrial Development (Income Tax Relief) Act Cap 17 LFN 2004, which empowers the President to publish in the national gazette of the Federal Republic of Nigeria, a list of industries and products that are eligible to be conferred Pioneer Status. The Pioneer Status is an incentive that serves as a tax holiday for a specified period of up to five (5) years.
Fiscal policies– this refers to the tax structures that are created and the determination of the amount of tax revenues to be paid. It is an instrument of regulating business by the government through direct taxes and government spending by payment of salaries, pension, and unemployment benefits; it can be used to control the production and consumption of particular goods and services.
Monetary policies– these policies regulate money and the terms of availability of credit. It is carried out by the Central Bank of Nigeria (CBN) and other monetary authorities to set up base interest rates and also influence the supply of money aimed at meeting the macroeconomic objectives such as controlling inflations, consumption, and liquidity. These policies can be implemented by buying or selling government bonds, changing the amount of money banks are required to maintain as reserves, or by modifying the interest rate.
In summary, there are a lot of ways by which the government can regulate business in Nigeria for the benefit of society and the Nigerian economy. The above listed are just a few of the various legislations established and implemented by the government as instruments of regulating business in Nigeria to prevent the abuse of consumers and promote the distribution of income.
The Federal Government can regulate business activities in different sectors of the Nigerian economy through the use of legislations and designated government agencies to protect and represent the interest of the society. The sector activities concerned with are production, distribution, and exchange of wealth or goods and services. Therefore, business owners are required to comply with the regulations established by the government.
By Corporate & Commercial Law Team at Resolution Law Firm