I had reason to call a National Agency for Food Drug Administration and Control staff yesterday, the 2nd day of September 2016 making enquiry on product certification requirement for a mentee of mine who extracts coconut oil for sale within the FCT whom I felt needed to formalise her operations and move up and before doing same, she had told me not to bother as the cost of obtaining the certification would eat up her working capital and I honestly thought that with the inauguration of the presidential commission on ease of doing business that things would have changed, but alas, like Tupac said “still I see no changes”.
The world over, special considerations are given to MSMEs and steps deliberately taken to ensure they survive beyond their first five years, in the light of this, ease of doing business for MSMEs are taken very seriously and countries that do this are not found on the 169th spot in 2016 or anywhere near it, neither were they found in the 170th spot in 2015 ease of doing business rankings and more importantly, neither did they inaugurate presidential commissions that do not reach out to MSMEs to understand the challenges they face and agree on way forward, in other words, the countries found between 1st to 30th positions on the ease of doing business ranking do not inaugurate “ghost” ease of doing business presidential commissions.
I was told by the NAFDAC official that my mentee needs obtain a trademark for her product first and then come back to NFADAC for counselling, registration and then formal visits will then be made to her production facility before certification would be considered. I will attempt to narrate the frustration of MSMEs with this procedure and how it affects ease of doing business in Nigeria in the following paragraphs below and hope we get our government and its agencies to think twice.
INCORPORATION AT CORPORATE AFFARIS COMMISSION (CAC)
It costs between Fifteen to Twenty Thousand (15,000-20,000) Naira to register a business name at CAC and for over 50% of MSMEs starting up business enterprises; this often is between 3-7% of their capital base. Incorporation of limited liability companies cost between Sixty to Eighty Thousand (60,000-80,000) Naira, this also represents between 4-8% of the capital base of over 50% MSMEs seeking to go formal. (Survey conducted by MSME-ASI)
TRADEMARK REGISTRATION
My first experience at the department handling trademark and patent at the Federal Ministry of Industry, Trade and Investment left me disappointed for a couple of reason chief among them was the absence of a fixed sum for trademark filling, I was told it will cost between Sixty to Eighty (60,000-80,000) Thousand Naira and no fixed turn -around time for the process to be completed.
My mentee choose to register a business name as against a limited liability as she needed to have sufficient working capital to enable her continue her production and having being in the business for over a year and made substantial production and attained significant market acceptance, she was then faced with the challenge of retail outlets not accepting her brand for display on their shelf as she had not yet obtained NAFDAC number.
A 2012 World Bank Enterprise Survey titled “Why are Minimum Capital Requirements a Concern for Entrepreneurs” clearly illustrated how eliminating minimum capital requirements in 5 EU economies made it easier to start small and medium-size enterprises and placed Nigeria amongst one of the few countries still asking MSMEs to deposit as much they presently do before registration can be done.
Having spent over 3% of total capital base to register a business name and presently battling with production losses going by her manual production process and unable to obtain financing from Bank of Industry until she obtains her NAFDAC number which she won’t get until she obtains a trademark and with cost of obtaining trademark ranging from Sixty-Eighty Thousand (60,000-80,000) Naira my mentee is seriously reconsidering the business enterprise.
I have tried all means possible to reach the Presidential Commission on ease of doing business and can’t find a lead and beg anyone who knows how to reach the commission to provide their contact details please.
OKEKE CELESTINE
LEAD PARTNER; MSME-ASI
@okekecc @advocacy_msme
