Will Buhari’s “Eight Economic Laws” end the economic recession?

On Friday, 18 November, Nigeria’s President Muhammadu Buhari assented to eight bills which the Nigerian Senate had, in October, after passing them, said would help in “ending (Nigeria’s) economic recession.”  Mr Yusuph Olaniyonu, Special Adviser, Media and Publicity to the Senate President, had then said that passing the bills was a demonstration of the Senate’s “commitment to employing all legislative mechanisms at its disposal to end the current economic recession in the country.”

As soon as it resumed from its two-month recess, in September, the Senate had issued a 21-point resolution wherein it said it would “fast-track all economic-related bills.” According to Olaniyonu, passing the eight bills was evidence of the Senate “match(ing) its words with actions.”

Now that the president has assented, the question is: will they do what the Senate claimed: end the recession?

The first point to note is that these are not new legislations. Rather, they are amendments/alterations to existing laws on the various subject matters. What the Senate did is to align them with Nigeria’s present economic realities.

The eight are: Prevention of Crime Amendment Act,‎ 2016; The National Crop Varieties and Livestock Breeds (Registration) Amendment Act‎, 2016; Telecommunications and Postal Offences Amendment Act,‎ 2016; The National Agricultural Land Development Authority Amendment Act‎ 2016; The Produce Enforcement of Export Standards Amendment Act‎ 2016; The Agricultural and Rural Management ‎Training Institute Amendment Act‎ 2016; Bee Import Control and Management Amendment Act‎ 2016, and Water Resources Amendment Act‎ 2016.

The second point is that there is a discernible pattern in all the amendments: increment in the penalties – fines and convictions.

The Telecommunications and Postal Offences Act, for instance, is “an Act to create offences and punishments for acts against telecommunications and postal services and to provide for other related matters connected therewith.”

One of the provisions of the Act which has been amended is Section 2(3). By the amendment, individuals are now liable on conviction to a fine of not less than N500,000 or, and imprisonment of 12 months, as against “a fine of not less than N100,000 or imprisonment for a term not exceeding 12 months or to both such fine and imprisonment.”  The fine for corporate bodies is now N5 million as against a fine of “not less than N500, 000.”

The seemingly huge penalties attached to this law can be understood when you realise that the sector(s) it seeks to protect are critical to the economy and security of the nation.

According to the Pyramid Research report, the sector accounted for over 30 per cent of the Nigerian Foreign Direct Investment (FDI) since deregulation in 2001 and well up to half of the country’s FDI in recent years. It also added that the sector has created over 20,000 direct jobs since liberalisation and 1.5 million indirect jobs since deregulation.

You can now understand why Olaniyonu, in his statement, said this amendment would “help boost investment and participation in the telecommunications sector.”

The Produce (Enforcement of Export Standards) Act is an “Act to make provision for the inspection of commodities for export from Nigeria at ports of shipment, for the purpose of enforcement of grades and standards of quality in respect of such commodities, and for matters incidental to the execution of the powers conferred by the Act.” What the amendment has done is to increase some of the prescribed penalties for non-compliance with the Act.

The National Crop Varieties, Livestock Breeds (Registration) Act is an “Act to introduce a register for the certification, registration and release of national crop varieties and livestock breeds and other matters related thereto.” There are also increases in penalties imposed under the Act.

Prevention of Crimes Act is an “Act for the more effectual prevention of crime.” The Amendment Act changes the interpretation of “crime” from “any felony as defined in the Criminal Code” to any offence “punishable with a jail term of not less than three years.” It also modified some of the wordings in the provisions.

Water Resources Act is an “Act to promote the optimum planning, development and use of Nigeria’s water resources and other matters connected therewith.” Just as the other amendements, there is an upward review of the fines and penalties of the Act to ensure more compliance with the law.

Bee (Import Control and Management) Act is “an Act to make provisions for the importation and management of bees and apicultural material.” The amendment also increased penalties.

National Agricultural Land Development Authority Act is “an Act to establish a National Agricultural Land Development Authority to provide, among other things, strategic public support for land development.” The amendment introduced new provisions and modified existing ones in line with present realities.

Agricultural and Rural Management Training Act is an Act to establish a training organisation known as the Agricultural and Rural Management Training Institute to provide among other things, detailed identification of management training needs in agricultural and rural development organisations throughout Nigeria, and to develop and implement training programmes to meet the needs of managers in the agricultural and rural development sector of the economy.” The Amendment Act makes it possible for all the Federal Universities in Nigeria to be represented on the Board of the Agricultural and Rural Management Training Institute.

Olaniyonu had said: “The National Crop Varieties, Livestock Breeds (Registration) Act (Amendment) Bill, Produce (Enforcement of Export Standards) Act (Amendment) Bill, National Agricultural Land Development Authority Act (Amendment) Bill, Bee (Import Control and Management) Act (Amendment) Bill, and the Agricultural and Rural Management Training Act (Amendment) Bill are all aimed at bolstering the standards in Nigeria’s Agricultural sector to help the country achieve more economic diversification.” Adding that, they “are aimed at strengthening the enforcement mechanisms in sectors of the economy that can help boost Internally Generated Revenue.”

Having established that many of the amendments only increased the prescribed penalties, fines and compensations, the question then arises: how would they stimulate economic growth?

Perhaps, not by themselves; not until there are convictions.

Before their amendments, some of these legislations – and there are still many more in our books – bore ridiculous fines and penalties. In the Water Resources Act, for example, non-compliance with some of the provisions therein attracted a fine of N100. The Bee (Import Control and Management) Act contained fines as low as N40 and N50. As important as the Produce (Enforcement of Export Standards) Act is in ensuring that global standards are maintained in commodities for export, non-compliance with the some of the laws or standards to be met attracted sums of N200, N400 and the likes. Perhaps, these were reflective of the economic situation as well as status of the Naira when these laws became effective. With modern realities, it is undeniable that these punishments can no longer hold.

From the perspective of the law, punishments are meant to serve as deterrents and a form of restoration. Effectively, it works in two ways: brings sanity to the system in form of ensuring compliance with the laws as well as makes more money available to government. A case in point is the recent fine by telecommunications regulator, Nigerian Communications Commission (NCC) against leading telco, MTN. Initially, MTN was fined $5.2 billion (N1.04 trillion according to the exchange rate of that time) for failure to disconnect about 5.1 million unregistered subscribers from its network. Although the fine was later reduced, the money will accrue to government coffers. Similarly, it helps the government maintain control over the activities of the operators.

This establishes how it benefits the government.

Does this make more money available for manufacturers, investors? Not necessarily. However, the environment is made more encouraging for them. For investors, the amendments grant them more protection under the law against the activities of vandals and criminals in the affected sectors. Thus, there is more confidence in investing in the sectors and making them more viable.

The Produce (Enforcement of Export Standards) Act (Amendment) Bill and other bills which enhance the standards in the agricultural sector should go a long way in boosting the Federal Government’s policies on economic diversification for the country. Manufacturers will have no choice but to ensure that standards are adequately complied with and in line with global best practices. With this, there will be no fear of export commodities from the country being substandard. This in turn would give the country a more positive image and in the long run, boost the economy.

Notwithstanding that these laws have been in place for some time, they have remained largely dormant and out of touch with present realities. Numerous cases of violations and non-compliance abound but due to the “slap-on-the-wrist” kind of punishment which the penalties have become, the laws have not effectively served their objectives. With the amendments, these have been corrected.

Since the laws seek to make more money available to government coffers by strengthening enforcement mechanisms, these agencies as well as the judiciary will be pivotal to the smoothness or otherwise of the process.

 

Ayobami OLOPADE