Are Small Businesses In Tax & Regulatory Wilderness?

The economy of any nation reflects the activities of a mix of economic agents or players interacting at different levels to generate goods and services either as input to another production process or for consumption by the end user. These players are differentiated by size, access to capital or other factors of production, economy of scale, efficiency etc.

The recent re-basing of Nigeria's Gross Domestic Product (GDP), which established her as the largest economy in Africa, not only exposed Nigeria's potential, but revealed her fragilities. No doubt, potential for greater growth is huge yet "small businesses" are barely surviving in the Nigeria. The expression "small businesses" as used in this article cover businesses whether organised as limited liability companies or enterprises. This expression also connotes reference to the small entrepreneurs who are engaged in manufacturing and production on a micro scale.

The verdict of the Central Bank of Nigeria (CBN) is simply that the Small and Medium Enterprises (SMEs) have grossly under performed largely because of "unfriendly business environment, poor funding, low managerial skills and lack of access to modern technology (CBN)".

In addition to the infrastructural challenges, "small businesses" pose a problem of classification. In the Company legislation, the following criteria are prescribed for a "small company":

2 million turnover 1 million net assets (total asset - liability) No foreign participation No participation from government, government corporation, government agency or parastatals or its nominee Private company having a share capital Directors between them hold not less than 51% of the equity share capital The Central bank of Nigeria has been at the vanguard of ensuring...