73995
Economy Profile:
Nigeria
Doing Business 2013 Nigeria 2
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Smarter Regulations for Small and Medium-Size Enterprises. Washington, DC: World
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Doing Business 2013 Nigeria 3
CONTENTS
Introduction .................................................................................................................................. 4
The business environment .......................................................................................................... 5
Starting a business ..................................................................................................................... 14
Dealing with construction permits ........................................................................................... 25
Getting electricity ....................................................................................................................... 35
Registering property .................................................................................................................. 42
Getting credit .............................................................................................................................. 53
Protecting investors ................................................................................................................... 60
Paying taxes ................................................................................................................................ 69
Trading across borders .............................................................................................................. 77
Enforcing contracts .................................................................................................................... 86
Resolving insolvency .................................................................................................................. 97
Employing workers .................................................................................................................. 103
Data notes ................................................................................................................................. 110
Resources on the Doing Business website ............................................................................ 115
Doing Business 2013 Nigeria 4
INTRODUCTION
Doing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the period
for a local entrepreneur to open and run a small to January–December 2011).
medium-size business when complying with relevant
The Doing Business methodology has limitations. Other
regulations. It measures and tracks changes in
areas important to business—such as an economy‘s
regulations affecting 11 areas in the life cycle of a
proximity to large markets, the quality of its
business: starting a business, dealing with construction
infrastructure services (other than those related to
permits, getting electricity, registering property,
trading across borders and getting electricity), the
getting credit, protecting investors, paying taxes,
security of property from theft and looting, the
trading across borders, enforcing contracts, resolving
transparency of government procurement,
insolvency and employing workers.
macroeconomic conditions or the underlying strength
In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing
quantitative indicators on business regulations and the Business. The indicators refer to a specific type of
protection of property rights that can be compared business, generally a local limited liability company
across 185 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because
over time. The data set covers 46 economies in Sub- standard assumptions are used in the data collection,
Saharan Africa, 33 in Latin America and the Caribbean, comparisons and benchmarks are valid across
24 in East Asia and the Pacific, 24 in Eastern Europe economies. The data not only highlight the extent of
and Central Asia, 19 in the Middle East and North obstacles to doing business; they also help identify the
Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in
income economies. The indicators are used to analyze designing regulatory reform.
economic outcomes and identify what reforms have
More information is available in the full report. Doing
worked, where and why.
Business 2013 presents the indicators, analyzes their
This economy profile presents the Doing Business relationship with economic outcomes and presents
indicators for Nigeria. To allow useful comparison, it business regulatory reforms. The data, along with
also provides data for other selected economies information on ordering Doing Business 2013, are
(comparator economies) for each indicator. The data in available on the Doing Business website at
this report are current as of June 1, 2012 (except for http://www.doingbusiness.org.
Doing Business 2013 Nigeria 5
THE BUSINESS ENVIRONMENT
For policy makers trying to improve their economy‘s
regulatory environment for business, a good place to ECONOMY OVERVIEW
start is to find out how it compares with the regulatory
environment in other economies. Doing Business
provides an aggregate ranking on the ease of doing
Region: Sub-Saharan Africa
business based on indicator sets that measure and
benchmark regulations applying to domestic small to Income category: Lower middle income
medium-size businesses through their life cycle.
Economies are ranked from 1 to 185 by the ease of Population: 162,470,737
doing business index. For each economy the index is
calculated as the ranking on the simple average of its GNI per capita (US$): 1,200
percentile rankings on each of the 10 topics included in
the index in Doing Business 2013: starting a business, DB2013 rank: 131
dealing with construction permits, getting electricity,
registering property, getting credit, protecting DB2012 rank: 131*
investors, paying taxes, trading across borders,
Change in rank: 0
enforcing contracts and resolving insolvency. The
ranking on each topic is the simple average of the
percentile rankings on its component indicators (see * DB2012 ranking shown is not last year‘s published
the data notes for more details). The employing workers ranking but a comparable ranking for DB2012 that
indicators are not included in this year‘s aggregate ease captures the effects of such factors as data
of doing business ranking, but the data are presented corrections and the addition of 2 economies
in this year‘s economy profile. (Barbados and Malta) to the sample this year. See
the data notes for sources and definitions.
The aggregate ranking on the ease of doing business
benchmarks each economy‘s performance on the
indicators against that of all other economies in the
Doing Business sample (figure 1.1). While this ranking
tells much about the business environment in an
economy, it does not tell the whole story. The ranking on
the ease of doing business, and the underlying
indicators, do not measure all aspects of the business
environment that matter to firms and investors or that
affect the competitiveness of the economy. Still, a high
ranking does mean that the government has created a
regulatory environment conducive to operating a
business.
Doing Business 2013 Nigeria 6
THE BUSINESS ENVIRONMENT
Figure 1.1 Where economies stand in the global ranking on the ease of doing business
Source: Doing Business database.
Doing Business 2013 Nigeria 7
THE BUSINESS ENVIRONMENT
For policy makers, knowing where their economy relative to the regional average (figure 1.2). The
stands in the aggregate ranking on the ease of economy‘s rankings on the topics included in the
doing business is useful. Also useful is to know how ease of doing business index provide another
it ranks relative to comparator economies and perspective (figure 1.3).
Figure 1.2 How Nigeria and comparator economies rank on the ease of doing business
Source: Doing Business database.
Doing Business 2013 Nigeria 8
THE BUSINESS ENVIRONMENT
Figure 1.3 How Nigeria ranks on Doing Business topics
Source: Doing Business database.
Doing Business 2013 Nigeria 9
THE BUSINESS ENVIRONMENT
Just as the overall ranking on the ease of doing business year Doing Business introduced the distance to frontier
tells only part of the story, so do changes in that ranking. measure. This measure shows how far each economy is
Yearly movements in rankings can provide some indication from the best performance achieved by any economy since
of changes in an economy‘s regulatory environment for 2005 on each indicator in 9 Doing Business indicator sets.
firms, but they are always relative. An economy‘s ranking
Comparing the measure for an economy at 2 points in
might change because of developments in other
time allows users to assess how much the economy‘s
economies. An economy that implemented business
regulatory environment as measured by Doing Business
regulation reforms may fail to rise in the rankings (or may
has changed over time—how far it has moved toward (or
even drop) if it is passed by others whose business
away from) the most efficient practices and strongest
regulation reforms had a more significant impact as
regulations in areas covered by Doing Business (figure 1.4).
measured by Doing Business.
The results may show that the pace of change varies widely
Moreover, year-to-year changes in the overall rankings do across the areas measured. They also may show that an
not reflect how the business regulatory environment in an economy is relatively close to the frontier in some areas
economy has changed over time—or how it has changed and relatively far from it in others.
in different areas. To aid in assessing such changes, last
Figure 1.4 How far has Nigeria come in the areas measured by Doing Business?
Note: The distance to frontier measure shows how far on average an economy is from the best performance achieved by any
economy on each Doing Business indicator since 2005. The measure is normalized to range between 0 and 100, with 100 representing
the best performance (the frontier). The overall distance to frontier is the average of the distance to frontier in the 9 indicator sets
shown in the figure. See the data notes for more details on the distance to frontier measure.
Source: Doing Business database.
Doing Business 2013 Nigeria 10
THE BUSINESS ENVIRONMENT
The absolute values of the indicators tell another part business regulation—such as a regulatory process that
of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures
in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the
economy or those of comparator economies in the economy‘s indicators today with those in the previous
region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist—
numbers of procedures, long delays or high costs. Or and where they are diminishing.
they may reveal unexpected strengths in an area of
Table 1.1 Summary of Doing Business indicators for Nigeria
United Kingdom DB2013
Best performer globally
South Africa DB2013
Botswana DB2013
Nigeria DB2013
Nigeria DB2012
Indicator
Ghana DB2013
Kenya DB2013
India DB2013
DB2013
Starting a Business
119 119 99 112 173 126 53 19 New Zealand (1)
(rank)
Procedures (number) 8 8 10 7 12 10 5 6 New Zealand (1)*
Time (days) 34 34 61 12 27 32 19 13 New Zealand (1)
Cost (% of income per
60.4 70.6 1.6 18.5 49.8 40.4 0.3 0.7 Slovenia (0.0)
capita)
Paid-in Min. Capital (%
0.0 0.0 0.0 4.3 140.1 0.0 0.0 0.0 91 Economies (0.0)*
of income per capita)
Dealing with
Hong Kong SAR,
Construction Permits 88 86 132 162 182 45 39 20
China (1)
(rank)
Hong Kong SAR,
Procedures (number) 15 15 22 16 34 9 13 9
China (6)*
Time (days) 85 85 145 218 196 125 127 99 Singapore (26)
Cost (% of income per
417.7 504.8 172.7 481.2 1,528.0 211.9 33.4 62.4 Qatar (1.1)
capita)
Doing Business 2013 Nigeria 11
United Kingdom DB2013
Best performer globally
South Africa DB2013
Botswana DB2013
Nigeria DB2013
Nigeria DB2012
Indicator
Ghana DB2013
Kenya DB2013
India DB2013
DB2013
Getting Electricity
178 177 90 63 105 162 150 62 Iceland (1)
(rank)
Procedures (number) 8 8 5 4 7 6 5 5 Germany (3)*
Time (days) 260 260 121 78 67 146 226 105 Germany (17)
Cost (% of income per
873.9 1,056.0 353.8 957.3 247.3 1,208.2 1,505.8 108.9 Japan (0.0)
capita)
Registering Property
182 182 51 45 94 161 79 73 Georgia (1)
(rank)
Procedures (number) 13 13 5 5 5 9 6 6 Georgia (1)*
Time (days) 86 82 16 34 44 73 23 29 Portugal (1)
Cost (% of property
20.8 20.8 5.1 1.2 7.3 4.3 5.9 4.7 Belarus (0.0)*
value)
Getting Credit (rank) 23 38 53 23 23 12 1 1 United Kingdom (1)*
Strength of legal rights
9 9 7 8 8 10 10 10 Malaysia (10)*
index (0-10)
Depth of credit
4 3 4 5 5 4 6 6 United Kingdom (6)*
information index (0-6)
Public registry coverage
0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Portugal (90.7)
(% of adults)
Private bureau United Kingdom
4.1 n.a. 58.9 5.7 14.9 4.9 54.0 100.0
coverage (% of adults) (100.0)*
Protecting Investors
70 66 49 49 49 100 10 10 New Zealand (1)
(rank)
Extent of disclosure 5 5 7 7 7 3 8 10 Hong Kong SAR,
Doing Business 2013 Nigeria 12
United Kingdom DB2013
Best performer globally
South Africa DB2013
Botswana DB2013
Nigeria DB2013
Nigeria DB2012
Indicator
Ghana DB2013
Kenya DB2013
India DB2013
DB2013
index (0-10) China (10)*
Extent of director
7 7 8 5 4 2 8 7 Singapore (9)*
liability index (0-10)
Ease of shareholder
5 5 3 6 7 10 8 7 New Zealand (10)*
suits index (0-10)
Strength of investor
5.7 5.7 6.0 6.0 6.0 5.0 8.0 8.0 New Zealand (9.7)
protection index (0-10)
United Arab Emirates
Paying Taxes (rank) 155 139 39 89 152 164 32 16
(1)
Payments (number per Hong Kong SAR,
41 35 32 32 33 41 9 8
year) China (3)*
United Arab Emirates
Time (hours per year) 956 938 152 224 243 340 200 110
(12)
Trading Across Borders
154 153 147 99 127 148 115 14 Singapore (1)
(rank)
Documents to export
10 10 6 7 9 8 6 4 France (2)
(number)
Time to export (days) 24 24 27 19 16 26 16 7 Singapore (5)*
Cost to export (US$ per
1,380 1,263 2,945 815 1,120 2,255 1,620 950 Malaysia (435)
container)
Documents to import
10 10 7 7 11 7 7 4 France (2)
(number)
Time to import (days) 39 39 37 34 20 26 23 6 Singapore (4)
Cost to import (US$ per
1,540 1,440 3,445 1,315 1,200 2,350 1,940 1,045 Malaysia (420)
container)
Doing Business 2013 Nigeria 13
United Kingdom DB2013
Best performer globally
South Africa DB2013
Botswana DB2013
Nigeria DB2013
Nigeria DB2012
Indicator
Ghana DB2013
Kenya DB2013
India DB2013
DB2013
Enforcing Contracts
98 97 68 48 184 149 82 21 Luxembourg (1)
(rank)
Time (days) 457 457 625 487 1,420 465 600 399 Singapore (150)
Cost (% of claim) 32.0 32.0 28.1 23.0 39.6 47.2 33.2 25.9 Bhutan (0.1)
Procedures (number) 40 40 28 36 46 44 29 28 Ireland (21)*
Resolving Insolvency
105 104 29 114 116 100 84 8 Japan (1)
(rank)
Time (years) 2.0 2.0 1.7 1.9 4.3 4.5 2.0 1.0 Ireland (0.4)
Cost (% of estate) 22 22 15 22 9 22 18 6 Singapore (1)*
Outcome (0 as
piecemeal sale and 1 as 0 1 0 0 1 0 1
going concern)
Recovery rate (cents on
28.2 28.2 64.8 26.9 26.0 29.5 35.4 88.6 Japan (92.8)
the dollar)
Note: DB2012 rankings shown are not last year‘s published rankings but comparable rankings for DB2012 that capture the effects of
such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. The ranking
methodology for the paying taxes indicators changed in Doing Business 2013; see the data notes for details. For more information
on “no practice�? marks, see the data notes. Data for the outcome of the resolving insolvency indicator are not available for
DB2012.
* Two or more economies share the top ranking on this indicator. A number shown in place of an economy‘s name indicates the
number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
Source: Doing Business database.
Doing Business 2013 Nigeria 14
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as
Preregistration (for example, name
well as to new markets. And their employees can
verification or reservation, notarization)
benefit from protections provided by the law. An
additional benefit comes with limited liability Registration in the economy‘s largest
companies. These limit the financial liability of business city
company owners to their investments, so personal
Postregistration (for example, social security
assets of the owners are not put at risk. Where
registration, company seal)
governments make registration easy, more
entrepreneurs start businesses in the formal sector, Time required to complete each procedure
creating more good jobs and generating more (calendar days)
revenue for the government.
Does not include time spent gathering
What do the indicators cover? information
Doing Business measures the ease of starting a Each procedure starts on a separate day
business in an economy by recording all Procedure completed once final document is
procedures officially required or commonly done in received
practice by an entrepreneur to start up and
formally operate an industrial or commercial No prior contact with officials
business—as well as the time and cost required to Cost required to complete each procedure
complete these procedures. It also records the (% of income per capita)
paid-in minimum capital that companies must
deposit before registration (or within 3 months). Official costs only, no bribes
The ranking on the ease of starting a business is No professional fees unless services required
the simple average of the percentile rankings on by law
the 4 component indicators: procedures, time, cost
and paid-in minimum capital requirement. Paid-in minimum capital (% of income
per capita)
To make the data comparable across economies,
Doing Business uses several assumptions about the Deposited in a bank or with a notary before
business and the procedures. It assumes that all registration (or within 3 months)
information is readily available to the entrepreneur Has a start-up capital of 10 times income per
and that there has been no prior contact with capita.
officials. It also assumes that the entrepreneur will
Has a turnover of at least 100 times income per
pay no bribes. And it assumes that the business:
capita.
Is a limited liability company, located in the
Does not qualify for any special benefits.
largest business city.
Does not own real estate.
Has between 10 and 50 employees.
Is 100% domestically owned.
Conducts general commercial or industrial
activities.
Doing Business 2013 Nigeria 15
STARTING A BUSINESS
Where does the economy stand today?
What does it take to start a business in Nigeria? costs 60.4% of income per capita and requires paid-in
According to data collected by Doing Business, starting minimum capital of 0.0% of income per capita (figure
a business there requires 8 procedures, takes 34 days, 2.1).
Figure 2.1 What it takes to start a business in Nigeria
Paid-in minimum capital (% of income per capita): 0.0
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the
procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Nigeria 16
STARTING A BUSINESS
Globally, Nigeria stands at 119 in the ranking of 185 regional average ranking provide other useful
economies on the ease of starting a business (figure information for assessing how easy it is for an
2.2). The rankings for comparator economies and the entrepreneur in Nigeria to start a business.
Figure 2.2 How Nigeria and comparator economies rank on the ease of starting a business
Source: Doing Business database.
Doing Business 2013 Nigeria 17
STARTING A BUSINESS
What are the changes over time?
While the most recent Doing Business data reflect how process have changed—and which have not (table 2.1).
easy (or difficult) it is to start a business in Nigeria That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 2.1 The ease of starting a business in Nigeria over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 119 119
Procedures
10 10 9 9 9 8 8 8 8 8
(number)
Time (days) 44 44 43 43 34 31 31 31 34 34
Cost (% of
income per 89.6 95.6 73.8 54.4 56.6 90.1 76.7 78.9 70.6 60.4
capita)
Paid-in Min.
Capital (% of
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
income per
capita)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data correc tions and the
addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Nigeria 18
STARTING A BUSINESS
Equally helpful may be the benchmarks provided by a business (figure 2.3). These benchmarks help show
the economies that over time have had the best what is possible in making it easier to start a business.
performance regionally or globally on the procedures, And changes in regional averages can show where
time, cost or paid-in minimum capital required to start Nigeria is keeping up—and where it is falling behind.
Figure 2.3 Has starting a business become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Nigeria 19
STARTING A BUSINESS
Cost (% of income per capita)
Paid-in minimum capital (% of income per capita)
Note: Ninety-one economies globally have no paid-in minimum capital requirement.
Source: Doing Business database.
Doing Business 2013 Nigeria 20
STARTING A BUSINESS
Economies around the world have taken steps making greater firm satisfaction and savings and more
it easier to start a business—streamlining procedures registered businesses, financial resources and job
by setting up a one-stop shop, making procedures opportunities.
simpler or faster by introducing technology and
What business registration reforms has Doing Business
reducing or eliminating minimum capital requirements.
recorded in Nigeria (table 2.2)?
Many have undertaken business registration reforms in
stages—and they often are part of a larger regulatory
reform program. Among the benefits have been
Table 2.2 How has Nigeria made starting a business easier—or not?
By Doing Business report year
DB year Reform
An electronic company name search was introduced, which
DB2008
made the company registry more efficient.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 21
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Nigeria is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new City: Lagos
firm. These are identified by Doing Business
through collaboration with relevant local Legal Form: Private Limited Liability Company
professionals and the study of laws, regulations and Paid in Minimum Capital Requirement: None
publicly available information on business entry in
that economy. Following is a detailed summary of Start-up Capital: 10 times GNI per capita
those procedures, along with the associated time
and cost. These procedures are those that apply to
a company matching the standard assumptions
(the ―standardized company‖) used by Doing
Business in collecting the data (see the section in
this chapter on what the indicators measure).
Summary of procedures for starting a business in Nigeria—and the time and cost
Time to
No. Procedure Cost to complete
complete
Check the availability of company name with the Corporate Affairs
Commission
The Corporate Affairs Commission (CAC) Online System was
commissioned in June 2005. The system envisaged an online search of
unique company names immediately upon the purchase of an e- NGN 200 application
1 5 days
payment card from an accredited bank. Although this services is widely form
adevertised by CAC, until now the system is not fully operational either
because of power fluctuation or because of lack of availability of the
pre-paid cards- necessary to conduct the on-line transaction. In most
cases, the applicants have to go to the CAC office to complete this
procedure.
Prepare the requisite incorporation documents and pay the stamp
duty
0.75% stamp duty
2 To prepare the requisite incorporation documents, the incorporators 7 days
paid on capital
must complete the requisite statutory forms, prepare and print the
memorandum and articles of association, and have them stamped by
the Federal Inland Revenue Service (FIRS)
Notarize the declaration of compliance (CAC 4)
3 The declaration by the barrister or solicitor engaged in the formation of 1 day NGN 500
the company may be sworn to at either the State High Court for a fee
of NGN 250 or at the Federal High court for a fee of NGN 100.
Register the company with the Corporate Affairs Commission & NGN 59,592 legal fees
4 pay fees at the bank desk at CAC 11 days + NGN 500
incorporation forms +
Doing Business 2013 Nigeria 22
Time to
No. Procedure Cost to complete
complete
To register the company with the Corporate Affairs Commission (CAC), NGN 20,000
the following incorporation documents are submitted: incorporation fees +
NGN 500 for each
• Name reservation and availability form
additional copy of
• Memorandum and articles of association, stamped by the
Memorandum and
commissioner for stamp duties (two copies)
NGN 500 for
• Form CAC 3, Notice of registered address
• Form CAC 4, Declaration of compliance additional copy of the
• Form CAC 7, Particulars of directors Articles of Association
• Form CAC 2, Statement of share capital and return of allotment of stamped + NGN
shares 3,000 for certified true
copy of
Incorporation fees are memorandum and
• NGN 10,000 for company whose nominal share capital does not articles of association
exceed NGN 1,000,000, and NGN 10,000 for every NGN 1,000,000 + NGN 2,000 for
thereafter. Incorporation fees for a company whose share capital certified true copy of
exceeds N1,000,000.00 is N10,000.00 for the first NGN 1,000,000.00 and
particulars of
N10,000.00 for every additional NGN 1,000,000.00 or any part thereof
directors +NGN 2,000
• NGN 500 incorporation forms
for certified true copy
• Stamp duties is payable on the share capital of a company at the rate
of 0.75% of particulars of
• N500 for each additional copy of Memorandum and Articles of shareholders.
Association stamped
• N3,000 for certified true copy of memorandum and articles of
association
• N2,000 for certified true copy of particulars of directors
• N2,000 for certified true copy of particulars of shareholders. Moreover,
NGN 60,000 is the approximate cost of company incorporation
conducted by professionals ( lawyers, charted accountants of charted
secretaries) accredited by CAC
The payment can be done at the bank desk at CAC.
The Corporate Affairs Commission introduced a same-day
incorporation option at an increased statutory fee (five times that of
standard incorporation). In June 2005, the Corporate Affairs
Commission commissioned a system for online company registration, in
which registration documents and payments may be processed
electronically by Commission-accredited lawyers. However, the system
is not yet fully implemented.
Register with the Federal Board of Inland Revenue Department of
the Ministry of Finance for income tax and VAT
The Federal Inland Revenue Service (FIRS) requires the applicant to
complete tax registration forms for corporate income tax registration as
5 well as VAT. 4 days no charge
The company submits an application letter to the tax authority for a tax
clearance certificate and, for income tax purposes, registers at the
integrated tax office.
The registration process requires submitting a completed tax office–
issued application (taxpayer registration input form, TRIF/2006/001
Doing Business 2013 Nigeria 23
Time to
No. Procedure Cost to complete
complete
COYS) and the following documents:
• Completed FIRS questionnaire
• Memorandum and articles of association (copy)
• Certificate of incorporation (copy)
• Directors‘ names and addresses
• Tax advisor‘s name and address
• Letter of appointment of a tax adviser and corresponding letter of
acceptance
• The date the company commenced business
• Names, addresses and mobile numbers of major promoters and the
chairman of the company, including their email addresses
• Other sources of income of the chairman and the promoters of the
company
• Name and addresses of the principal officers of the company
including the chairman, managing director, legal adviser and
accountant
To register, the company must submit the taxpayer registration input
form in triplicate, and the original certificate of incorporation must be
presented for review by the controller. Upon the completed taxpayer
registration input form and all other documents being received, a tax
reference number is allocated. An application must be filed for the tax
clearance certificate; its issuance is not automatic.
Fee schedule for tax clearance certificate:
• Registration within 6 months of incorporation: no cost.
• Registration after 6 months of incorporation (if the company has yet
to start business operations):
• A pre-operation levy of NGN 20,000 for first-year requests and NGN
25,000 for each subsequent year request, until the company files a
notice of commencement of business as per amendment to section 29
of the Companies‘ Income Tax Act No. 11 of 2007.
• Companies that register after the start of operations must file a set of
audited accounts. TCC is issued based on tax paid for 3 years. If the
position is at a loss, the TCC will be issued to reflect the position.
Companies required to register for VAT complete the VAT registration
form (VAT Form 001, obtainable free of charge from all FIRS offices) and
return it to the integrated tax office, which will issue a taxpayer
identification number (TIN). Companies required to register for VAT
must do so within 6 months from the date of starting business
operations.
Since the registration for corporate income tax and VAT are done in the
same place; 1 Tax Identification Number (TIN) is issued to companies
for all federal taxes.
* Register for personal income tax PAYE at the State Tax Office 2 days, no charge
6
(simultaneous with
Doing Business 2013 Nigeria 24
Time to
No. Procedure Cost to complete
complete
All employers shall register with the relevant state tax authority for previous procedure)
income tax withholding. Once the application is filed, with a copy of the
certificate of incorporation attached, a reference file is opened for the
company.
* Receive inspection from local government
The Lagos State Government has developed a new State Law which
entitles it to impose signage fees. Lagos State Signage and Advertising
Agency (LASAA) regulates outdoor display in business premises in
Lagos State. Any company that is doing business in Lagos State that has
an outdoor display in form of advertisement in the premises or any
vehicle of the company must register the display with the agency.
LASAA issue the questionnaire regarding the application to erect a
signboard outside business premises, etc. That questionnaire is 7 days,
included in procedure
7 completed by newly established businesses within the State and (simultaneous with
8
submitted to LASAA, who will scrutinise the completed questionnaire previous procedure)
and arrange for an inspection of the signboard at its location.
After the above, the application will be forwarded to the Billing and
Assessment department of the agency to determine the fee payable for
the issuance of the permit. The amount of fee is determined by the
dimension and location of the outdoor display.
However, in most states in Nigeria, signage and related compliance
issues are handled by the local government council.
Pay fees at a designated bank
The fee payable is about NGN 9,000 comprising the formal application
8 fee (NGN 2,500) and the fee for a Geographical Information Survey 1 day NGN 18,500
(NGN 6,500). Additional optional fees totalling NGN 6,000 may also be
paid at the application stage for the LASAA Guidelines (NGN 5,000) and
the LASAA Gazzette (NGN 1,000).
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Nigeria 25
DEALING WITH CONSTRUCTION PERMITS
Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION
public. But it needs to be efficient, to avoid
PERMITS INDICATORS MEASURE
excessive constraints on a sector that plays an
important part in every economy. Where complying
with building regulations is excessively costly in Procedures to legally build a warehouse
time and money, many builders opt out. They may (number)
pay bribes to pass inspections or simply build Submitting all relevant documents and
illegally, leading to hazardous construction that obtaining all necessary clearances, licenses,
puts public safety at risk. Where compliance is permits and certificates
simple, straightforward and inexpensive, everyone Completing all required notifications and
is better off. receiving all necessary inspections
What do the indicators cover? Obtaining utility connections for water,
Doing Business records the procedures, time and sewerage and a fixed telephone line
cost for a business to obtain all the necessary Registering the warehouse after its
approvals to build a simple commercial warehouse completion (if required for use as collateral or
in the economy‘s largest business city, connect it to for transfer of the warehouse)
basic utilities and register the property so that it Time required to complete each procedure
can be used as collateral or transferred to another (calendar days)
entity.
Does not include time spent gathering
The ranking on the ease of dealing with information
construction permits is the simple average of the
Each procedure starts on a separate day
percentile rankings on its component indicators:
procedures, time and cost. Procedure completed once final document is
received
To make the data comparable across economies,
Doing Business uses several assumptions about the No prior contact with officials
business and the warehouse, including the utility Cost required to complete each procedure (%
connections. of income per capita)
The business: Official costs only, no bribes
Is a limited liability company operating in
Will be connected to water, sewerage
the construction business and located in
(sewage system, septic tank or their
the largest business city.
equivalent) and a fixed telephone line. The
Is domestically owned and operated. connection to each utility network will be 10
meters (32 feet, 10 inches) long.
Has 60 builders and other employees.
Will be used for general storage, such as of
The warehouse:
books or stationery (not for goods requiring
Is a new construction (there was no special conditions).
previous construction on the land).
Will take 30 weeks to construct (excluding all
Has complete architectural and technical delays due to administrative and regulatory
plans prepared by a licensed architect. requirements).
Doing Business 2013 Nigeria 26
DEALING WITH CONSTRUCTION PERMITS
Where does the economy stand today?
What does it take to comply with the formalities to permits there requires 15 procedures, takes 85 days
build a warehouse in Nigeria? According to data and costs 417.7% of income per capita (figure 3.1).
collected by Doing Business, dealing with construction
Figure 3.1 What it takes to comply with formalities to build a warehouse in Nigeria
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on
the procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Nigeria 27
DEALING WITH CONSTRUCTION PERMITS
Globally, Nigeria stands at 88 in the ranking of 185 other useful information for assessing how easy it is for
economies on the ease of dealing with construction an entrepreneur in Nigeria to legally build a
permits (figure 3.2). The rankings for comparator warehouse.
economies and the regional average ranking provide
Figure 3.2 How Nigeria and comparator economies rank on the ease of dealing with construction permits
Source: Doing Business database.
Doing Business 2013 Nigeria 28
DEALING WITH CONSTRUCTION PERMITS
What are the changes over time?
While the most recent Doing Business data reflect how the process have changed—and which have not (table
easy (or difficult) it is to deal with construction permits 3.1). That can help identify where the potential for
in Nigeria today, data over time show which aspects of improvement is greatest.
Table 3.1 The ease of dealing with construction permits in Nigeria over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 86 88
Procedures (number) 19 19 15 15 15 15 15 15
Time (days) 303 303 251 251 251 85 85 85
Cost (% of income
1,450.2 970.8 1,025.8 661.7 541.0 564.2 504.8 417.7
per capita)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on ―no practice‖ marks, see the
data notes.
Source: Doing Business database.
Doing Business 2013 Nigeria 29
DEALING WITH CONSTRUCTION PERMITS
Equally helpful may be the benchmarks provided by possible in making it easier to deal with construction
the economies that over time have had the best permits. And changes in regional averages can show
performance regionally or globally on the procedures, where Nigeria is keeping up—and where it is falling
time or cost required to deal with construction permits behind.
(figure 3.3). These benchmarks help show what is
Figure 3.3 Has dealing with construction permits become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Nigeria 30
DEALING WITH CONSTRUCTION PERMITS
Cost (% of income per capita)
Source: Doing Business database.
Doing Business 2013 Nigeria 31
DEALING WITH CONSTRUCTION PERMITS
Smart regulation ensures that standards are met while building safety while keeping compliance costs
making compliance easy and accessible to all. reasonable, governments around the world have
Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements.
adequate allocation of resources are especially What construction permitting reforms has Doing
important in sectors where safety is at stake. Business recorded in Nigeria (table 3.2)?
Construction is one of them. In an effort to ensure
Table 3.2 How has Nigeria made dealing with construction permits easier—or not?
By Doing Business report year
DB year Reform
Nigeria made obtaining construction permits easier by setting
up an official time frame of permit issuance, and introducing
DB2008
risk-based inspections. Meanwhile, a new building code is
going to be implemented.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 32
DEALING WITH CONSTRUCTION PERMITS
What are the details?
The indicators reported here for Nigeria are based
BUILDING A WAREHOUSE
on a set of specific procedures—the steps that a
company must complete to legally build a
warehouse—identified by Doing Business through City : Lagos
information collected from experts in construction
licensing, including architects, construction
Estimated
lawyers, construction firms, utility service providers NGN 74,890,495
Warehouse Value :
and public officials who deal with building
regulations. These procedures are those that apply The procedures, along with the associated time and
to a company and structure matching the standard cost, are summarized below.
assumptions used by Doing Business in collecting
the data (see the section in this chapter on what
the indicators cover).
Summary of procedures for dealing with construction permits in Nigeria —and the time and cost
Time to
No. Procedure Cost to complete
complete
Obtain Environmental Impact Assessment Report
1 It usually takes 4 days for the Town Planner to issue the Environmental 7 days NGN 35,000
Impact Assessment Report. The fee varies between NGN 20,000.00 and
NGN 50,000.00.
Obtain Development Permit from the Building Control Agency
The Development Permit authorizes construction and is valid for 2
years. To obtain this permit a Building Development Plan portraying the
intended uses and the proposed development on the site and the
effect on adjacent developments and neighborhood must be prepared
by a professional.
Legally, a pre-approval inspection is required. Other inspections include
2 one by the Environmental Protection Agency, and another structural 42 days NGN 494,240
inspection carried out by the Local Planning Authority during
construction. In practice however, none of these inspections usually
takes place.
For construction involving a structure of more than two floors the
developer or owner, shall at the time of submitting his application to
commence building works to the Building Control Agency submit a
general contractors all risk insurance policy certificate.
Pay Development Levy to the Lagos State Physical Planning
Authority
3 The Lagos State Physical Planning Authority charges a contribution levy 1 day NGN 49,424
(10% of the building permit cost) for the preparation and production of
development plans, such as local, district, subject, and action plans;
development guides; office maintenance; procurement and
Doing Business 2013 Nigeria 33
Time to
No. Procedure Cost to complete
complete
maintenance of vehicles; office equipment; and similar issues.
Pay Spatial Enhancement Contribution to the Lagos State Urban &
Regional Planning Board in bank draft 1 day NGN 98,848
4
Obtain Certificate of Structural Stability of foundation from an
accredited construction testing company 2 days NGN 4,031
5
Obtain Certificate of Structural Stability (first pouring of concrete)
6 2 days NGN 4,031
Obtain Certificate of Structural Stability (second pouring of
concrete) 2 days NGN 4,031
7
Obtain Certificate of Structural Stability (third pouring of concrete)
8 2 days NGN 4,031
Receive inspection during construction from State Government
Task Force reporting to the Commissioners for Land and Urban
9 Development 1 day no charge
Receive inspections during construction for material evaluation
and testing, fire and public health control from the Building
Control Agency
10 1 day no charge
The Lagos State Urban and Regional Planning and Development Law
from July 2010, gives the Building Control Agency the power to carry
out inspection(s) of building construction, when necessary.
Receive inspection during construction from Zonal Monitoring
Team 1 day no charge
11
Request and receive inspection by Fire Department
This certificate is to be obtained at the local planning authority before
12 the building can be used. It is within the discretion of the authority to 1 day no charge
conduct an on-site inspection before issuing the certificate. However,
such an inspection, normally about 45 minutes, is very rarely
performed.
Obtain Certificate of Completion and Fitness for Habitation
13 14 days no charge
* Obtain fixed phone line
14 21 days NGN 15,750
The estimated completion time is 21 days and the cost is NGN
15,750.00.
* Dig borehole to obtain water 7 days NGN 138,000
15
Doing Business 2013 Nigeria 34
Time to
No. Procedure Cost to complete
complete
The cost breakdown to dig the bore hole is the following:
• Equipment rental: NGN 15,000.00
• Steel casing: NGN 20,000.00
• Transportation: NGN 10,000.00
• Riser pipe: NGN 5,000.00
• Safety pipe: NGN 3,000.00
• Renting pumping machine: NGN 7,000.00 (NGN 1,000.00 per day)
• Chemicals: NGN 3,000.00
• Labor: NGN 60,000.00
• Geophysics test: NGN 15,000.00.
The total is NGN 138,000.00.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Nigeria 35
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY
for businesses. To counter weak electricity supply,
many firms in developing economies have to rely INDICATORS MEASURE
on self-supply, often at a prohibitively high cost.
Whether electricity is reliably available or not, the Procedures to obtain an electricity
first step for a customer is always to gain access by connection (number)
obtaining a connection.
Submitting all relevant documents and
What do the indicators cover? obtaining all necessary clearances and permits
Doing Business records all procedures required for Completing all required notifications and
a local business to obtain a permanent electricity receiving all necessary inspections
connection and supply for a standardized
warehouse, as well as the time and cost to Obtaining external installation works and
complete them. These procedures include possibly purchasing material for these works
applications and contracts with electricity utilities, Concluding any necessary supply contract and
clearances from other agencies and the external obtaining final supply
and final connection works. The ranking on the
ease of getting electricity is the simple average of Time required to complete each procedure
the percentile rankings on its component (calendar days)
indicators: procedures, time and cost. To make the Is at least 1 calendar day
data comparable across economies, several
assumptions are used. Each procedure starts on a separate day
The warehouse: Does not include time spent gathering
information
Is located in the economy‘s largest
business city, in an area where other Reflects the time spent in practice, with little
warehouses are located. follow-up and no prior contact with officials
Is not in a special economic zone where Cost required to complete each procedure
the connection would be eligible for (% of income per capita)
subsidization or faster service. Official costs only, no bribes
Has road access. The connection works Excludes value added tax
involve the crossing of a road or roads but
are carried out on public land.
Is 150 meters long.
Is a new construction being connected to
Is to either the low-voltage or the medium-
electricity for the first time.
voltage distribution network and either overhead
Has 2 stories, both above ground, with a or underground, whichever is more common in
total surface of about 1,300.6 square the economy and in the area where the
meters (14,000 square feet), and is built on warehouse is located. The length of any
a plot of 929 square meters (10,000 square connection in the customer‘s private domain is
feet). negligible.
The electricity connection: Involves installing one electricity meter. The
monthly electricity consumption will be 0.07
Is a 3-phase, 4-wire Y, 140-kilovolt-ampere
gigawatt-hour (GWh). The internal electrical
(kVA) (subscribed capacity) connection.
wiring has been completed.
Doing Business 2013 Nigeria 36
GETTING ELECTRICITY
Where does the economy stand today?
What does it take to obtain a new electricity procedures, takes 260 days and costs 873.9% of
connection in Nigeria? According to data collected by income per capita (figure 4.1).
Doing Business, getting electricity there requires 8
Figure 4.1 What it takes to obtain an electricity connection in Nigeria
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures
reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Nigeria 37
GETTING ELECTRICITY
Globally, Nigeria stands at 178 in the ranking of 185 regional average ranking provide another perspective
economies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in
4.2). The rankings for comparator economies and the Nigeria to connect a warehouse to electricity.
Figure 4.2 How Nigeria and comparator economies rank on the ease of getting electricity
Source: Doing Business database.
Doing Business 2013 Nigeria 38
GETTING ELECTRICITY
Even more helpful than rankings on the ease of getting performers on these indicators may provide useful
electricity may be the indicators underlying those benchmarks.
rankings (table 4.1). And regional and global best
Table 4.1 The ease of getting electricity in Nigeria
Best performer in
Best performer
Indicator Nigeria DB2013 Nigeria DB2012 Sub-Saharan Africa
globally DB2013
DB2013
Rank 178 177 Mauritius (44) Iceland (1)
Procedures
(number) 8 8 Comoros (3) Germany (3)*
Time (days) 260 260 Rwanda (30) Germany (17)
Cost (% of income
per capita) 873.9 1,056.0 Mauritius (295.1) Japan (0.0)
Note: DB2012 rankings shown are not last year‘s published rankings but comparable rankings for DB2012 that capture the
effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year.
* Two or more economies share the top ranking on this indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
Source: Doing Business database.
Doing Business 2013 Nigeria 39
GETTING ELECTRICITY
Obtaining an electricity connection is essential to safety in the connection process while keeping
enable a business to conduct its most basic operations. connection costs reasonable, governments around the
In many economies the connection process is world have worked to consolidate requirements for
complicated by the multiple laws and regulations obtaining an electricity connection. What reforms in
involved—covering service quality, general safety, getting electricity has Doing Business recorded in
technical standards, procurement practices and Nigeria (table 4.2)?
internal wiring installations. In an effort to ensure
Table 4.2 How has Nigeria made getting electricity easier—or not?
By Doing Business report year
DB year Reform
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Source: Doing Business database.
Doing Business 2013 Nigeria 40
GETTING ELECTRICITY
What are the details?
The indicators reported here for Nigeria are based on
OBTAINING AN ELECTRICITY CONNECTION
a set of specific procedures—the steps that an
entrepreneur must complete to get a warehouse
connected to electricity by the local distribution City: Lagos
utility—identified by Doing Business. Data are collected
from the distribution utility, then completed and
Name of Utility: Eko Distribution Company
verified by electricity regulatory agencies and
independent professionals such as electrical engineers, The procedures are those that apply to a warehouse
electrical contractors and construction companies. The and electricity connection matching the standard
electricity distribution utility surveyed is the one assumptions used by Doing Business in collecting the
serving the area (or areas) in which warehouses are data (see the section in this chapter on what the
located. If there is a choice of distribution utilities, the indicators cover). The procedures, along with the
one serving the largest number of customers is associated time and cost, are summarized below.
selected.
Summary of procedures for getting electricity in Nigeria—and the time and cost
Time to
No. Procedure Cost to complete
complete
Submit application to Eko Distribution Company and await
clearance letter
The licensed electrical contractor acts on customer‘s behalf. All electrical
contractors have to be licensed with the Federal Ministry for Power and
Steel. Correspondence takes place between contractor and utility.
1 Payments are made to utility by contractor who then bills the customer. 120 calendar days no charge
Upon receipt of application, the utility sends a tentative letter of
clearance for purchase of distribution transformer and other external
connection materials. It mentions in the letter the description of the
materials (must be new, purchased from accredited distributor and
receipt produced, test certificate of transformer from manufacturer
produced).
Receive tentative approval letter from Eko Distribution Company,
submit payment and request and receive site visit from utility
engineer
Upon receipt of application, the utility sends a tentative letter of
clearance for purchase of distribution transformer and other external
connection materials. It mentions in the letter the description of the
2 materials (must be new, purchased from accredited distributor and 31 calendar days NGN 10,000.0
receipt produced, test certificate of transformer from manufacturer
produced). The survey fee is for the site visit which the utility engineer
will do. The payment is for scheme and sanction preparation. The
request for site visit is made over the phone to the utility. The engineer
verifies that the materials purchased are of good quality. The delay is
because no facilitation fees have been paid, and the entire connection
process is delayed by the utility.
Doing Business 2013 Nigeria 41
Time to
No. Procedure Cost to complete
complete
Purchase and install external connection equipment
3 18 calendar days NGN 1,559,250.0
Customer needs to purchase cables, distribution transformer, and
installation accessories from market
* Request and receive inspection from Inspecting Engineer, Federal
Ministry of Power and Steel
The Inspecting Engineer inspects and tests the installation, and prepares
4 inspection certificate. A letter has to be delivered to the Ministry 14 calendar days no charge
requesting inspection. Upon receipt of the letter, the ministry official sets
a date of inspection. The contractor has to be present on the site during
the inspection. The inspection certificate is filled up on the spot, but not
given to the contractor.
Submit payment to Federal Ministry of Power and Steel and pick up
the Inspection Certificate
5 1 calendar day NGN 10,000.0
This is the standard fee for inspection. This fee varies for each district.
The fee is paid by check at the Ministry.
Submit inspection certificate to Eko Distribution Company, request
and receive estimate letter from utility and make payment
The customer can go to the utility to pick up the estimate letter. The
6 estimate letter is usually prepared on the spot when the contractor 30 calendar days NGN 193,500.0
requests it. If no facilitation fee is paid, then this procedure is greatly
delayed. The contractor then makes the payment mentioned in the letter,
and also submits the inspection certificate from the Ministry to the
utility.
Eko Distribution Company conducts internal wiring inspection and
tests complete installation
7 30 calendar days no charge
The utility engineer conducts the internal wiring inspection within a week
after the estimate is paid. The delay is because no facilitation fees have
been paid, and the entire connection process is delayed.
Eko Distribution Company conducts meter installation and
electricity starts flowing
8 Once the internal wiring inspection is complete, the utility sends over the 30 calendar days no charge
connection team to do the meter installation and then turns on
electricity flow. The delay is because no facilitation fees have been paid,
and the entire connection process is delayed.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Nigeria 42
REGISTERING PROPERTY
Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY
Effective administration of land is part of that. If
INDICATORS MEASURE
formal property transfer is too costly or
complicated, formal titles might go informal
again. And where property is informal or poorly Procedures to legally transfer title on
administered, it has little chance of being immovable property (number)
accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens,
finance. notarizing sales agreement, paying property
transfer taxes)
What do the indicators cover?
Registration in the economy‘s largest business
Doing Business records the full sequence of city
procedures necessary for a business to purchase
property from another business and transfer the Postregistration (for example, filing title with
the municipality)
property title to the buyer‘s name. The transaction
is considered complete when it is opposable to Time required to complete each procedure
third parties and when the buyer can use the (calendar days)
property, use it as collateral for a bank loan or
Does not include time spent gathering
resell it. The ranking on the ease of registering information
property is the simple average of the percentile
rankings on its component indicators: procedures, Each procedure starts on a separate day
time and cost. Procedure completed once final document is
received
To make the data comparable across economies,
several assumptions about the parties to the No prior contact with officials
transaction, the property and the procedures are
Cost required to complete each procedure
used.
(% of property value)
The parties (buyer and seller):
Official costs only, no bribes
Are limited liability companies, 100% No value added or capital gains taxes included
domestically and privately owned.
Are located in the periurban area of the
economy‘s largest business city. Has no mortgages attached and has been
under the same ownership for the past 10
Have 50 employees each, all of whom are
years.
nationals.
Consists of 557.4 square meters (6,000 square
Perform general commercial activities.
feet) of land and a 10-year-old, 2-story
The property (fully owned by the seller): warehouse of 929 square meters (10,000
Has a value of 50 times income per capita. square feet). The warehouse is in good
The sale price equals the value. condition and complies with all safety
standards, building codes and legal
Is registered in the land registry or requirements. The property will be transferred
cadastre, or both, and is free of title in its entirety.
disputes.
Is located in a periurban commercial zone,
and no rezoning is required.
Doing Business 2013 Nigeria 43
REGISTERING PROPERTY
Where does the economy stand today?
What does it take to complete a property transfer in procedures, takes 86 days and costs 20.8% of the
Nigeria? According to data collected by Doing property value (figure 5.1).
Business, registering property there requires 13
Figure 5.1 What it takes to register property in Nigeria
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the
procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Nigeria 44
REGISTERING PROPERTY
Globally, Nigeria stands at 182 in the ranking of 185 regional average ranking provide other useful
economies on the ease of registering property (figure information for assessing how easy it is for an
5.2). The rankings for comparator economies and the entrepreneur in Nigeria to transfer property.
Figure 5.2 How Nigeria and comparator economies rank on the ease of registering property
Source: Doing Business database.
Doing Business 2013 Nigeria 45
REGISTERING PROPERTY
What are the changes over time?
While the most recent Doing Business data reflect how process have changed—and which have not (table 5.1).
easy (or difficult) it is to register property in Nigeria That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 5.1 The ease of registering property in Nigeria over time
By Doing Business report year
Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. 182 182
Procedures
(number) 14 14 13 13 13 13 13 13 13
Time (days) 112 112 82 82 82 82 82 82 86
Cost (% of property
value) 27.1 27.1 21.2 21.2 20.9 20.9 20.9 20.8 20.8
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on ―no practice‖ marks, see
the data notes.
Source: Doing Business database.
Doing Business 2013 Nigeria 46
REGISTERING PROPERTY
Equally helpful may be the benchmarks provided by (figure 5.3). These benchmarks help show what is
the economies that over time have had the best possible in making it easier to register property. And
performance regionally or globally on the procedures, changes in regional averages can show where Nigeria
time or cost required to complete a property transfer is keeping up—and where it is falling behind.
Figure 5.3 Has registering property become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Nigeria 47
REGISTERING PROPERTY
Cost (% of property value)
Source: Doing Business database.
Doing Business 2013 Nigeria 48
REGISTERING PROPERTY
Economies worldwide have been making it easier for have cut the time required substantially—enabling
entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What
as by computerizing land registries, introducing time property registration reforms has Doing Business
limits for procedures and setting low fixed fees. Many recorded in Nigeria (table 5.2)?
Table 5.2 How has Nigeria made registering property easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business
reports for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 49
REGISTERING PROPERTY
What are the details?
The indicators reported here are based on a set of
STANDARD PROPERTY TRANSFER
specific procedures—the steps that a buyer and
seller must complete to transfer the property to the
buyer‘s name—identified by Doing Business City: Lagos
through information collected from local property Property Value: NGN 10,143,182
lawyers, notaries and property registries. These
procedures are those that apply to a transaction The procedures, along with the associated time and
matching the standard assumptions used by Doing cost, are summarized below.
Business in collecting the data (see the section in
this chapter on what the indicators cover).
Summary of procedures for registering property in Nigeria—and the time and cost
Time to
No. Procedure Cost to complete
complete
Conduct a Property title search at the Land Registry
The application letter to conduct the search is accompanied by a sworn
declaration of the status of the party and purpose of search. A lawyer is
generally used to perform the registration of property. Legal fees are
NGN 3,750 (search
charged based on the Scale of Fees for Conveyancing Matters [Legal
at Registry) + Legal
Practitioners (Remuneration for Legal Documentation and Other Land
Matters) Order 1991]. This is a sliding scale , and averages out at about fees as follows: NGN
7.5% of the consideration. The fees include all the steps required until 7,500–10,000 + 7.5%
the new title is registered under the buyer‘s name. of values above NGN
1 1 day
20,000 if acting for
The primary objective at this stage is to ascertain that the Vendor has a the buyer (5% of
good root of title. A good root of title in this context means the values above NGN
following: 20,000 if acting for
that the Vendor is the rightful owner of the land. the seller)
that the land is free from any encumbrance or pending litigation.
that the land is not the subject of any Government acquisition.
that the land is not subject to any of the overriding interests in land (e.g.
short leases, easements, licenses, road or right of way).
Obtain Application Land Form 1C
One can obtain the application from the consent section of Lands
Services Department. Form 1C is the application form to request later 1 day No cost
2
the Governor‘s Consent to the transaction required by Nigerian law. The
Form 1C must be dated and signed by the parties to the transaction and
sworn to before a magistrate or notary public.
Obtain Certified True Copy (CTC) of title document
3 2 days NGN 5625
The assignor/assignee issues a Letter of Authority to the Registrar of
Titles, authorizing the lawyer to apply for and obtain CTC of title
Doing Business 2013 Nigeria 50
Time to
No. Procedure Cost to complete
complete
document, required for Governor‘s Consent. It takes a minimum of 2
days to obtain certified copies of title documents as the lawyer should
also present an affidavit to that effect.
Obtain a Survey plan
4 Parties obtain a copy of the survey Plan, as approved by the Town 1 day no cost
Planning Authority, which is required for the Governor‘s Consent.
Execution of Deed of Assignment/Conveyance and Land Form 1C
5 The assignor and assignee complete and sign Land Form 1C and four (4) 1 day No extra cost
copies of the Deed of Assignment.
Charting Fees (NGN
Payment of the Charting Fee, Administrative Fees, Endorsement fee 7500) +
at a designated bank Administrative fees
(NGN 3000) and
A Charting Fee of NGN 7,500 and the Endorsement fee of NGN 1,500 are Endorsement Fees
6 paid to the designated banks. A receipt is issued, together with the 1 day
(NGN 1500)
paying-in slip to the designated bank. A bank draft made payable to
Capital gains tax of
Lagos State Government. This Procedure is required for Governor‘s
2% is also paid, but
Consent.
are not included in
the calculation
Process Governor’s consent to the Assignment
By virtue of the Land Use Act, promulgated in 1978, all land in each State
in the Federation became vested in the Governor of that State, who‘s
prior Consent is mandatory for the legal validity of any transfers or
alienation of interest in landed property. In August 2005, the Governor‘s
Consent Procedure underwent major reform, with the aim that Consent
should be granted within 30 days following submission of a duly
completed application. Incomplete applications are not accepted. New
Procedures and documentation requirements have been widely
published.
7 Obtaining the Governor‘s consent require the following documentation: 61 days no cost
• Covering letter with Address and Telephone Nos.
• Completed Form 1C
• Certified True Copy (CTC) of Title Document of Assignor
• Current Tax Clearance Certificates of the Assignor and Assignee
• For Limited Liability Companies, the Internal Revenue Certificate of
PAYE for its Staff and Current Tax Clearance Certificate for the Directors
• Four (4) copies of the Deed of which Consent is sought should be
attached.
• Copy of the Survey Plan, as approved by the Town Planning Authority
and a picture of the Building
• Evidence of payment for Charting fee, Endorsement fee, Form 1C
(admin fees), Consent fee, Stamp Duty, Capital Gains Tax and
Doing Business 2013 Nigeria 51
Time to
No. Procedure Cost to complete
complete
Registration fee
• Evidence of payment of Land Use Charge
• Where the Property is covered by a State Leasehold or Certificate of
Occupancy, evidence of payment of Ground Rent, up to date.
• Where the Property is covered by a State Leasehold or Certificate of
Occupancy, evidence of payment of Ground Rent, up to date.
• A photograph of the property
• A copy of the applicant and/or his agent/legal representative‘s
identification
Obtain notice of Stamp duty , Registration fees, Consent fees,
Neighborhood improvement charge at the Land Registry
After investigation and assessment of the true value of the property, the
conveyancer will be informed of the amount for the Registration fee, the
8 consent fee, Stamp duty, Capital gains tax, that should be paid at the 7 days no cost
Designated Bank.
The parties will also pay an administrative fee of NGN 3,000 once the
documents have been verified for completeness.
Payment of Stamp duty , Registration fees, Consent fees,
Neighborhood improvement charge at a commercial bank 8% Consent Fee +
3% of property value
The Conveyancer pays the remaining fees at the designated Bank by for the registration
means of Certified Checks: 8% Consent Fee + 3% of property value for fee + 2% of property
the registration fee + 2% of property value for the Stamp duty + value for the Stamp
9 (Capital gains tax of 2% is also paid). Receipts are provided to the 1 day
duty (Capital gains
Conveyancer, who will make copies of those receipts before submitting
tax of 2% is also
to the Land Registry.
paid, but are not
If Land directly allocated to the seller by the government is resold within
10 years of its initial allocation, then a penalty consent fee of 16% of the included in the
value is charged (to deter land speculation). calculation).
Submit the Receipts of the Registration fees, Consent fees,
Neighborhood improvement charge, Stamp duty
The receipts obtained from the Bank are submitted as proof of payment
to the Land Registry. These receipts are internally forwarded to the
Account department for reconciliation. The lawyer retains copies of the 1 day no cost
10
Deposit/Payment slip is retained for his records. The Land registry
manually confirms these payments to the relevant departments. Once
payment is confirmed by the Accounts department, the Land Services
department sends the file directly to the office of the Honorable
Attorney General of the State.
Obtain file from the Land Services Department
11 1 day No extra cost
The Conveyancer will make follow-up calls or visit personally the Land
Registry to follow-up on the progress of the file. The Honorable
Doing Business 2013 Nigeria 52
Time to
No. Procedure Cost to complete
complete
Attorney General and Commissioners of the State grant consent on
behalf of the Governor by signing on the deed of transfer. The lawyer
will then transmit this file to the Stamp duty offices for stamping.
Stamping of the deed of assignment
Deeds are presented by assignee‘s lawyer for stamping at the Stamp
Duties Registry (agency of Inland Revenue Services). Stamping takes
12 place only after Registry receives confirmation of receipt of payment. 1 day No extra cost
The documentation shall include: receipts confirming payment of stamp
duty.
Registration of Certificate of Occupancy or Deed and Title conferred
The lawyer will then follow up on the deed to be filed to the Lands
Registry. The receipt and paying-in slips evidencing payment are given 3 - 10 days No extra cost
13
to the cashier at the Lands Registry.
With proof of payment, a lands officer is assigned to enter the Deed into
the Registry records.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Nigeria 53
GETTING CREDIT
Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS
credit and improve its allocation: credit information
MEASURE
systems and the legal rights of borrowers and
lenders in collateral and bankruptcy laws. Credit
information systems enable lenders to view a Strength of legal rights index (0–10)
potential borrower‘s financial history (positive or Protection of rights of borrowers and lenders
negative)—valuable information to consider when through collateral laws
assessing risk. And they permit borrowers to Protection of secured creditors‘ rights through
establish a good credit history that will allow easier bankruptcy laws
access to credit. Sound collateral laws enable
businesses to use their assets, especially movable Depth of credit information index (0–6)
property, as security to generate capital—while Scope and accessibility of credit information
strong creditors‘ rights have been associated with distributed by public credit registries and
higher ratios of private sector credit to GDP. private credit bureaus
What do the indicators cover? Public credit registry coverage (% of adults)
Doing Business assesses the sharing of credit Number of individuals and firms listed in
information and the legal rights of borrowers and public credit registry as percentage of adult
lenders with respect to secured transactions population
through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults)
information index measures rules and practices
Number of individuals and firms listed in
affecting the coverage, scope and accessibility of
largest private credit bureau as percentage of
credit information available through a public credit
adult population
registry or a private credit bureau. The strength of
legal rights index measures whether certain features
that facilitate lending exist within the applicable
collateral and bankruptcy laws. Doing Business uses
case scenarios to determine the scope of the Has 100 employees.
secured transactions system, involving a secured Is 100% domestically owned, as is the lender.
borrower and a secured lender and examining legal
The ranking on the ease of getting credit is based on
restrictions on the use of movable collateral. These
the percentile rankings on the sum of its component
scenarios assume that the borrower:
indicators: the depth of credit information index and
Is a private, limited liability company. the strength of legal rights index.
Has its headquarters and only base of
operations in the largest business city.
Doing Business 2013 Nigeria 54
GETTING CREDIT
Where does the economy stand today?
How well do the credit information system and Globally, Nigeria stands at 23 in the ranking of 185
collateral and bankruptcy laws in Nigeria facilitate economies on the ease of getting credit (figure 6.1).
access to credit? The economy has a score of 4 on the The rankings for comparator economies and the
depth of credit information index and a score of 9 on regional average ranking provide other useful
the strength of legal rights index (see the summary of information for assessing how well regulations and
scoring at the end of this chapter for details). Higher institutions in Nigeria support lending and borrowing.
scores indicate more credit information and stronger
legal rights for borrowers and lenders.
Figure 6.1 How Nigeria and comparator economies rank on the ease of getting credit
Source: Doing Business database.
Doing Business 2013 Nigeria 55
GETTING CREDIT
What are the changes over time?
While the most recent Doing Business data reflect how institutions and regulations have been strengthened—
well the credit information system and collateral and and where they have not (table 6.1). That can help
bankruptcy laws in Nigeria support lending and identify where the potential for improvement is
borrowing today, data over time can help show where greatest.
Table 6.1 The ease of getting credit in Nigeria over time
By Doing Business report year
Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. 38 23
Strength of legal rights
9 9 9 9 9 9 9 9 9
index (0-10)
Depth of credit
0 0 0 0 0 0 3 3 4
information index (0-6)
Public registry
0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.1 0.1
coverage (% of adults)
Private bureau
0.0 0.0 0.0 0.0 0.0 0.0 n.a. n.a. 4.1
coverage (% of adults)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Nigeria 56
GETTING CREDIT
One way to put an economy‘s score on the getting shows the number of economies with this score in
credit indicators into context is to see where the 2012 as well as the regional average score. Figure 6.3
economy stands in the distribution of scores across shows the same thing for the depth of credit
economies. Figure 6.2 highlights the score on the information index.
strength of legal rights index for Nigeria in 2012 and
Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared—
and lenders? and how widely?
Number of economies with each score on strength of legal Number of economies with each score on depth of credit
rights index (0–10), 2012 information index (0–6), 2012
Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit
laws are better designed to facilitate access to credit. information, from either a public credit registry or a private
Source: Doing Business database. credit bureau, to facilitate lending decisions. Regional
averages for the depth of credit information index exclude
economies with no public registry or private bureau.
Source: Doing Business database.
Doing Business 2013 Nigeria 57
GETTING CREDIT
When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs‘
and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing
and increase the scope, coverage and accessibility of Business recorded in Nigeria (table 6.2)?
Table 6.2 How has Nigeria made getting credit easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
The Central Bank of Nigeria (CBN) issued a guideline in October
DB2010 2008 that defines the licensing, operational and regulatory
requirements for a privately owned credit bureau.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 58
GETTING CREDIT
What are the details?
The getting credit indicators reported here for Nigeria The data on the legal rights of borrowers and lenders
are based on detailed information collected in that are gathered through a survey of financial lawyers and
economy. The data on credit information sharing are verified through analysis of laws and regulations as
collected through a survey of a public credit registry or well as public sources of information on collateral and
private credit bureau (if one exists). To construct the bankruptcy laws. For the strength of legal rights index,
depth of credit information index, a score of 1 is a score of 1 is assigned for each of 8 aspects related to
assigned for each of 6 features of the public credit legal rights in collateral law and 2 aspects in
registry or private credit bureau (see summary of bankruptcy law.
scoring below).
Summary of scoring for the getting credit indicators in Nigeria
Sub-Saharan OECD high income
Indicator Nigeria
Africa average average
Strength of legal rights index (0-10) 9 6 7
Depth of credit information index (0-6) 4 3 5
Public registry coverage (% of adults) 0.1 7.7 31.5
Private bureau coverage (% of adults) 4.1 25.6 74.6
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once. Regional averages for the depth of credit information index exclude economies with no public registry or private bureau.
Regional averages for the public registry coverage exclude economies with no public registry. Regional averages for the private
bureau coverage exclude economies with no private bureau.
Strength of legal rights index (0–10) Index score: 9
Can any business use movable assets as collateral while keeping possession of the assets;
Yes
and any financial institution accept such assets as collateral ?
Does the law allow businesses to grant a non possessory security right in a single category
Yes
of movable assets, without requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of
Yes
its assets, without requiring a specific description of collateral?
May a security right extend to future or after-acquired assets, and may it extend
Yes
automatically to the products, proceeds or replacements of the original assets ?
Is a general description of debts and obligations permitted in collateral agreements; can all
types of debts and obligations be secured between parties; and can the collateral agreement Yes
include a maximum amount for which the assets are encumbered?
Is a collateral registry in operation, that is unified geographically and by asset type, with an
Yes
electronic database indexed by debtor's names?
Doing Business 2013 Nigeria 59
Strength of legal rights index (0–10) Index score: 9
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
Yes
debtor defaults outside an insolvency procedure?
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
No
business is liquidated?
Are secured creditors either not subject to an automatic stay or moratorium on enforcement
procedures when a debtor enters a court-supervised reorganization procedure, or the law Yes
provides secured creditors with grounds for relief from an automatic stay or
Does the law allow parties to agree in a collateral agreement that the lender may enforce its
Yes
security right out of court, at the time a security interest is created?
Private credit Public credit
Depth of credit information index (0–6) Index score: 4
bureau registry
Are data on both firms and individuals distributed? Yes No 1
Are both positive and negative data distributed? Yes No 1
Does the registry distribute credit information from
retailers, trade creditors or utility companies as well No No 0
as financial institutions?
Are more than 2 years of historical credit information
Yes No 1
distributed?
Is data on all loans below 1% of income per capita
Yes No 1
distributed?
Is it guaranteed by law that borrowers can inspect
No No 0
their data in the largest credit registry?
Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry.
Coverage Private credit bureau Public credit registry
Number of firms 443,350 ..
Number of individuals 3,155,238 ..
Source: Doing Business database.
Doing Business 2013 Nigeria 60
PROTECTING INVESTORS
Investor protections matter for the ability of WHAT THE PROTECTING INVESTORS
companies to raise the capital they need to grow,
INDICATORS MEASURE
innovate, diversify and compete. If the laws do not
provide such protections, investors may be reluctant
to invest unless they become the controlling Extent of disclosure index (0–10)
shareholders. Strong regulations clearly define Who can approve related-party transactions
related-party transactions, promote clear and efficient
Disclosure requirements in case of related-
disclosure requirements, require shareholder party transactions
participation in major decisions of the company and
set clear standards of accountability for company Extent of director liability index (0–10)
insiders. Ability of shareholders to hold interested
What do the indicators cover? parties and members of the approving body
liable in case of related-party transactions
Doing Business measures the strength of minority
Available legal remedies (damages, repayment
shareholder protections against directors‘ use of
of profits, fines, imprisonment and rescission
corporate assets for personal gain—or self-dealing. of the transaction)
The indicators distinguish 3 dimensions of investor
protections: transparency of related-party Ability of shareholders to sue directly or
transactions (extent of disclosure index), liability for derivatively
self-dealing (extent of director liability index) and Ease of shareholder suits index (0–10)
shareholders‘ ability to sue officers and directors for
Access to internal corporate documents
misconduct (ease of shareholder suits index). The
(directly or through a government inspector)
ranking on the strength of investor protection index is
the simple average of the percentile rankings on Documents and information available during
these 3 indices. To make the data comparable across trial
economies, a case study uses several assumptions Strength of investor protection index (0–10)
about the business and the transaction.
Simple average of the extent of disclosure,
The business (Buyer): extent of director liability and ease of
shareholder suits indices
Is a publicly traded corporation listed on the
economy‘s most important stock exchange (or
at least a large private company with multiple
the company purchase used trucks from another
shareholders).
company he owns.
Has a board of directors and a chief executive
The price is higher than the going price for used
officer (CEO) who may legally act on behalf of
trucks, but the transaction goes forward.
Buyer where permitted, even if this is not
specifically required by law. All required approvals are obtained, and all
required disclosures made, though the transaction
The transaction involves the following details:
is prejudicial to Buyer.
Mr. James, a director and the majority
Shareholders sue the interested parties and the
shareholder of the company, proposes that
members of the board of directors.
Doing Business 2013 Nigeria 61
PROTECTING INVESTORS
Where does the economy stand today?
How strong are investor protections in Nigeria? The index (figure 7.1). While the indicator does not
economy has a score of 5.7 on the strength of investor measure all aspects related to the protection of
protection index, with a higher score indicating minority investors, a higher ranking does indicate that
stronger protections (see the summary of scoring at an economy‘s regulations offer stronger investor
the end of this chapter for details). protections against self-dealing in the areas measured.
Globally, Nigeria stands at 70 in the ranking of 185
economies on the strength of investor protection
Figure 7.1 How Nigeria and comparator economies rank on the strength of investor protection index
Source: Doing Business database.
Doing Business 2013 Nigeria 62
PROTECTING INVESTORS
What are the changes over time?
While the most recent Doing Business data reflect how ranking on the strength of investor protection index
well regulations in Nigeria protect minority investors over time shows whether the economy is slipping
today, data over time show whether the protections behind other economies in investor protections—or
have been strengthened (table 7.1). And the global surpassing them.
Table 7.1 The strength of investor protections in Nigeria over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 66 70
Extent of disclosure
5 5 5 5 5 5 5 5
index (0-10)
Extent of director
liability index (0- 7 7 7 7 7 7 7 7
10)
Ease of shareholder
5 5 5 5 5 5 5 5
suits index (0-10)
Strength of
investor protection 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7
index (0-10)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Nigeria 63
PROTECTING INVESTORS
One way to put an economy‘s scores on the protecting shows the number of economies with this score in
investors indicators into context is to see where the 2012 as well as the regional average score. Figure 7.3
economy stands in the distribution of scores across shows the same thing for the extent of director liability
economies. Figure 7.2 highlights the score on the index, and figure 7.4 for the ease of shareholder suits
extent of disclosure index for Nigeria in 2012 and index.
Figure 7.2 How strong are disclosure requirements? Figure 7.3 How strong is the liability regime for directors?
Number of economies with each score on extent of
Number of economies with each score on extent of
director liability index (0–10), 2012
disclosure index (0–10), 2012
Note: Higher scores indicate greater liability of directors.
Note: Higher scores indicate greater disclosure.
No economy receives a score of 10 on the extent of
Source: Doing Business database.
director liability index.
Source: Doing Business database.
Doing Business 2013 Nigeria 64
PROTECTING INVESTORS
Figure 7.4 How easy is access to internal corporate documents?
Number of economies with each score on ease of
shareholder suits index (0–10), 2012
Note: Higher scores indicate greater powers of shareholders
to challenge the transaction.
Source: Doing Business database.
Doing Business 2013 Nigeria 65
PROTECTING INVESTORS
The scores recorded over time for Nigeria on the changes over time in the regional average score on
strength of investor protection index may also be this index.
revealing (figure 7.5). Equally interesting may be the
Figure 7.5 Have investor protections become stronger over time?
Strength of investor protection index (0–10)
Note: The higher the score, the stronger the investor protections.
Source: Doing Business database.
Doing Business 2013 Nigeria 66
PROTECTING INVESTORS
Economies with the strongest protections of minority time. So reforms to strengthen investor protections
investors from self-dealing require more disclosure may move ahead on different fronts—such as through
and define clear duties for directors. They also have new or amended company laws or civil procedure
well-functioning courts and up-to-date procedural rules. What investor protection reforms has Doing
rules that give minority investors the means to prove Business recorded in Nigeria (table 7.2)?
their case and obtain a judgment within a reasonable
Table 7.2 How has Nigeria strengthened investor protections—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for
these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 67
PROTECTING INVESTORS
What are the details?
The protecting investors indicators reported here for shareholder suits indices, a score is assigned for each
Nigeria are based on detailed information collected of a range of conditions relating to disclosure, director
through a survey of corporate and securities lawyers as liability and shareholder suits in a standard case study
well as on securities regulations, company laws and transaction (see the notes at the end of this chapter).
court rules of evidence. To construct the extent of The summary below shows the details underlying the
disclosure, extent of director liability and ease of scores for Nigeria.
Summary of scoring for the protecting investors indicators in Nigeria
Sub-Saharan OECD high income
Indicator Nigeria
Africa average average
Extent of disclosure index (0-10) 5 5 6
Extent of director liability index (0-10) 7 4 5
Ease of shareholder suits index (0-10) 5 5 7
Strength of investor protection index (0-10) 5.7 4.5 6.1
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Score Score description
Extent of disclosure index (0-10) 5
What corporate body provides legally sufficient Board of directors and Mr. James is
2
approval for the transaction? not allowed to vote
Whether disclosure of the conflict of interest by Mr. Existence of a conflict without any
1
James to the board of directors is required? specifics
Whether immediate disclosure of the transaction to
0 No disclosure obligation
the public and/or shareholders is required?
Whether disclosure of the transaction in published Disclosure on the transaction and Mr.
2
periodic filings (annual reports) is required? James' conflict of interest
Whether an external body must review the terms of
0 No
the transaction before it takes place?
Extent of director liability index (0-10) 7
Whether shareholders can sue directly or derivatively
for the damage that the Buyer-Seller transaction 1 Yes
causes to the company?
Doing Business 2013 Nigeria 68
Score Score description
Whether shareholders can hold Mr. James liable for Liable for unfair/oppressive
the damage that the Buyer-Seller transaction causes 2 transaction or prejudicial to minority
to the company? shareholders
Whether shareholders can hold members of the
approving body liable for the damage that the Buyer- 1 Liable for negligence
Seller transaction causes to the company?
Possible when the transaction is
Whether a court can void the transaction upon a
1 oppressive or prejudicial to minority
successful claim by a shareholder plaintiff?
shareholders
Whether Mr. James pays damages for the harm
caused to the company upon a successful claim by 1 Yes
the shareholder plaintiff?
Whether Mr. James repays profits made from the
transaction upon a successful claim by the 1 Yes
shareholder plaintiff?
Whether fines and imprisonment can be applied
0 No
against Mr. James?
Ease of shareholder suits index (0-10) 5
Whether shareholders owning 10% or less of Buyer's
shares can inspect transaction documents before 0 No
filing suit?
Whether shareholders owning 10% or less of Buyer's
shares can request an inspector to investigate the 1 Yes
transaction?
Information that the defendant has
Whether the plaintiff can obtain any documents from
1 indicated he intends to rely on for his
the defendant and witnesses during trial?
defense
Whether the plaintiff can request categories of
documents from the defendant without identifying 0 No
specific ones?
Whether the plaintiff can directly question the
2 Yes, without approval from the judge
defendant and witnesses during trial?
Whether the level of proof required for civil suits is
1 Yes
lower than that of criminal cases?
Strength of investor protection index (0-10) 5.7
Source: Doing Business database.
Doing Business 2013 Nigeria 69
PAYING TAXES
Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS
infrastructure and services that are crucial for a MEASURE
properly functioning economy. But the level of tax
rates needs to be carefully chosen—and needless Tax payments for a manufacturing company
complexity in tax rules avoided. According to in 2011 (number per year adjusted for
Doing Business data, in economies where it is more electronic or joint filing and payment)
difficult and costly to pay taxes, larger shares of
economic activity end up in the informal sector — Total number of taxes and contributions paid,
where businesses pay no taxes at all. including consumption taxes (value added tax,
sales tax or goods and service tax)
What do the indicators cover?
Method and frequency of filing and payment
Using a case scenario, Doing Business measures
Time required to comply with 3 major taxes
the taxes and mandatory contributions that a
(hours per year)
medium-size company must pay in a given year as
well as the administrative burden of paying taxes Collecting information and computing the tax
and contributions. This case scenario uses a set of payable
financial statements and assumptions about Completing tax return forms, filing with
transactions made over the year. Information is proper agencies
also compiled on the frequency of filing and
Arranging payment or withholding
payments as well as time taken to comply with tax
laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if
the simple average of the percentile rankings on required
its component indicators: number of annual Total tax rate (% of profit before all taxes)
payments, time and total tax rate, with a threshold
1 Profit or corporate income tax
being applied to the total tax rate. To make the
data comparable across economies, several Social contributions and labor taxes paid by
assumptions about the business and the taxes and the employer
contributions are used. Property and property transfer taxes
TaxpayerCo is a medium-size business that Dividend, capital gains and financial
started operations on January 1, 2010. transactions taxes
The business starts from the same financial Waste collection, vehicle, road and other taxes
position in each economy. All the taxes
Taxes and mandatory contributions include
and mandatory contributions paid during
corporate income tax, turnover tax and all
the second year of operation are recorded.
labor taxes and contributions paid by the
Taxes and mandatory contributions are company.
measured at all levels of government.
A range of standard deductions and
exemptions are also recorded.
1
The threshold is defined as the highest total tax rate among the top 15% of economies in the ranking on the total tax rate. It is calculated and
adjusted on a yearly basis. The threshold is not based on any economic theory of an ―optimal tax rate‖ that minimizes distortions or maximizes
efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates
levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the
indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company
because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than
manufacturing or from natural resources (all of which are outside the scope of the methodology). This year‘s threshold is 25.7%.
Doing Business 2013 Nigeria 70
PAYING TAXES
Where does the economy stand today?
What is the administrative burden of complying with Globally, Nigeria stands at 155 in the ranking of 185
taxes in Nigeria—and how much do firms pay in taxes? economies on the ease of paying taxes (figure 8.1). The
On average, firms make 41 tax payments a year, spend rankings for comparator economies and the regional
956 hours a year filing, preparing and paying taxes and average ranking provide other useful information for
pay total taxes amounting to 33.8% of profit (see the assessing the tax compliance burden for businesses in
summary at the end of this chapter for details). Nigeria.
Figure 8.1 How Nigeria and comparator economies rank on the ease of paying taxes
Note: DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of
25.7% applied in DB2013, the total tax rate is set at 25.7% for the purpose of calculating the ranking on the ease of paying
taxes.
Source: Doing Business database.
Doing Business 2013 Nigeria 71
PAYING TAXES
What are the changes over time?
While the most recent Doing Business data reflect how the process have changed — and which have not
easy (or difficult) it is to comply with tax rules in (table 8.1). That can help identify where the potential
Nigeria today, data over time show which aspects of for easing tax compliance is greatest.
Table 8.1 The ease of paying taxes in Nigeria over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 139 155
Payments (number per
35 35 35 35 35 35 35 41
year)
Time (hours per year) 1,120 1,120 1,120 938 938 938 938 956
Total tax rate (% profit) 31.5 32.2 32.2 32.2 32.2 32.2 32.7 33.8
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as d ata corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. DB2013 rankings reflect changes to the
methodology. For all economies with a total tax rate below the threshold of 25.7% applied in DB2013, the total tax rate is set at
25.7% for the purpose of calculating the ranking on the ease of paying taxes.
Source: Doing Business database.
Doing Business 2013 Nigeria 72
PAYING TAXES
Equally helpful may be the benchmarks provided by possible in easing the administrative burden of tax
the economies that over time have had the best compliance. And changes in regional averages can
performance regionally or globally on the number of show where Nigeria is keeping up—and where it is
payments or the time required to prepare and file falling behind.
taxes (figure 8.2). These benchmarks help show what is
Figure 8.2 Has paying taxes become easier over time?
Payments (number per year)
Time (hours per year)
Doing Business 2013 Nigeria 73
PAYING TAXES
Total tax rate (% of profit)
Source: Doing Business database.
Doing Business 2013 Nigeria 74
PAYING TAXES
Economies around the world have made paying taxes concrete results. Some economies simplifying tax
faster and easier for businesses—such as by payment and reducing rates have seen tax revenue
consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in
payments or offering electronic filing and payment. Nigeria (table 8.2)?
Many have lowered tax rates. Changes have brought
Table 8.2 How has Nigeria made paying taxes easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
Nigeria introduced a new compulsory labor contribution paid
DB2013
by the employer.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 75
PAYING TAXES
What are the details?
The indicators reported here for Nigeria are based
LOCATION OF STANDARDIZED COMPANY
on a standard set of taxes and contributions that
would be paid by the case study company used by
Doing Business in collecting the data (see the City: Lagos
section in this chapter on what the indicators
cover). Tax practitioners are asked to review
standard financial statements as well as a standard
list of transactions that the company completed
The taxes and contributions paid are listed in the
during the year. Respondents are asked how much
summary below, along with the associated number of
in taxes and mandatory contributions the business
payments, time and tax rate.
must pay and what the process is for doing so.
Summary of tax rates and administrative burden in Nigeria
Sub-Saharan OECD high income
Indicator Nigeria
Africa average average
Payments (number per year) 41 39 12
Time (hours per year) 956 319 176
Profit tax (%) 22.3 19.0 15.2
Labor tax and contributions (%) 10.8 13.3 23.8
Other taxes (%) 0.7 25.5 3.7
Total tax rate (% profit) 33.8 57.8 42.7
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Total tax
Tax or mandatory Payments Notes on Time Statutory Notes on
Tax base rate (% of
contribution (number) payments (hours) tax rate total tax rate
profit)
taxable
Corporate income tax 1 398 30% 20.5
profit
gross
Social Security Contributions 12 396 8% 8.5
salaries
taxable
Education Tax 1 0 2% 1.4
profit
Doing Business 2013 Nigeria 76
Total tax
Tax or mandatory Payments Notes on Time Statutory Notes on
Tax base rate (% of
contribution (number) payments (hours) tax rate total tax rate
profit)
Employee Compensation
gross
Contribution paid by the 6 0 1% 1.1
salaries
employer
gross
Training Tax 1 0 1% 1.1
salaries
capital
Capital gains tax 1 0 10% 0.5
gains
interest
Tax on interest 0 0 10% 0.3 not included
income
property
Tenement Tax 1 0 0% 0.2
value
5/1000 of
Tax on check transactions
0 0 5% value of 0.2
(irrecoverable VAT)
check
fixed fee
depending
Road license 1 0 NGN 5,000 0.2
on type of
vehicle
State business tax 1 0 NGN 5,000 fixed fee 0.1
Infrastructure Development NGN 100 per
1 0 fixed fee 0.1
Tax employee
included in
Fuel tax 1 0 0
fuel price
Advertising tax 1 0 various rates 0 small amount
Stamp duty on contracts 1 0 0
Value added tax (VAT) 12 162 5% value added 0 not included
Totals 41 956 33.8
Source: Doing Business database.
Doing Business 2013 Nigeria 77
TRADING ACROSS BORDERS
In today‘s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS
economies easier is increasingly important for
INDICATORS MEASURE
business. Excessive document requirements,
burdensome customs procedures, inefficient port
operations and inadequate infrastructure all lead to Documents required to export and import
extra costs and delays for exporters and importers, (number)
stifling trade potential. Research shows that Bank documents
exporters in developing countries gain more from
Customs clearance documents
a 10% drop in their trading costs than from a
similar reduction in the tariffs applied to their Port and terminal handling documents
products in global markets. Transport documents
What do the indicators cover? Time required to export and import (days)
Doing Business measures the time and cost Obtaining, filling out and submitting all the
(excluding tariffs and the time and cost for sea documents
transport) associated with exporting and importing
Inland transport and handling
a standard shipment of goods by sea transport,
and the number of documents necessary to Customs clearance and inspections
complete the transaction. The indicators cover Port and terminal handling
procedural requirements such as documentation
Does not include sea transport time
requirements and procedures at customs and other
regulatory agencies as well as at the port. They also Cost required to export and import (US$ per
cover trade logistics, including the time and cost of container)
inland transport to the largest business city. The
All documentation
ranking on the ease of trading across borders is
the simple average of the percentile rankings on its Inland transport and handling
component indicators: documents, time and cost Customs clearance and inspections
to export and import.
Port and terminal handling
To make the data comparable across economies,
Official costs only, no bribes
Doing Business uses several assumptions about the
business and the traded goods.
The business:
Is of medium size and employs 60 people. Do not require refrigeration or any other
special environment.
Is located in the periurban area of the
economy‘s largest business city. Do not require any special phytosanitary or
environmental safety standards other than
Is a private, limited liability company,
accepted international standards.
domestically owned, formally registered
and operating under commercial laws and Are one of the economy‘s leading export or
regulations of the economy. import products.
The traded goods: Are transported in a dry-cargo, 20-foot full
container load.
Are not hazardous nor do they include
military items.
Doing Business 2013 Nigeria 78
TRADING ACROSS BORDERS
Where does the economy stand today?
What does it take to export or import in Nigeria? Globally, Nigeria stands at 154 in the ranking of 185
According to data collected by Doing Business, economies on the ease of trading across borders
exporting a standard container of goods requires 10 (figure 9.1). The rankings for comparator economies
documents, takes 24 days and costs $1380. Importing and the regional average ranking provide other useful
the same container of goods requires 10 documents, information for assessing how easy it is for a business
takes 39 days and costs $1540 (see the summary of in Nigeria to export and import goods.
procedures and documents at the end of this chapter
for details).
Figure 9.1 How Nigeria and comparator economies rank on the ease of trading across borders
Source: Doing Business database.
Doing Business 2013 Nigeria 79
TRADING ACROSS BORDERS
What are the changes over time?
While the most recent Doing Business data reflect how process have changed—and which have not (table 9.1).
easy (or difficult) it is to export or import in Nigeria That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 9.1 The ease of trading across borders in Nigeria over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 153 154
Documents to export
11 10 10 10 10 10 10 10
(number)
Time to export (days) 41 26 26 25 25 24 24 24
Cost to export (US$ per
798 1,026 1,026 1,179 1,263 1,263 1,263 1,380
container)
Documents to import
14 10 10 10 10 10 10 10
(number)
Time to import (days) 53 46 46 42 41 39 39 39
Cost to import (US$ per
1,460 1,047 1,047 1,306 1,440 1,440 1,440 1,540
container)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Nigeria 80
TRADING ACROSS BORDERS
Equally helpful may be the benchmarks provided by These benchmarks help show what is possible in
the economies that over time have had the best making it easier to trade across borders. And changes
performance regionally or globally on the documents, in regional averages can show where Nigeria is
time or cost required to export or import (figure 9.2). keeping up—and where it is falling behind.
Figure 9.2 Has trading across borders become easier over time?
Documents to export (number)
Time to export (days)
Doing Business 2013 Nigeria 81
TRADING ACROSS BORDERS
Cost to export (US$ per container)
Documents to import (number)
Doing Business 2013 Nigeria 82
TRADING ACROSS BORDERS
Time to import (days)
Cost to import (US$ per container)
Source: Doing Business database.
Doing Business 2013 Nigeria 83
TRADING ACROSS BORDERS
In economies around the world, trading across borders systems. These changes help improve the trading
as measured by Doing Business has become faster and environment and boost firms‘ international
easier over the years. Governments have introduced competitiveness. What trade reforms has Doing
tools to facilitate trade—including single windows, Business recorded in Nigeria (table 9.2)?
risk-based inspections and electronic data interchange
Table 9.2 How has Nigeria made trading across borders easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
Port facilities at Apapa port in Lagos were upgraded thereby
DB2009
speeding up the import and export process.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 84
TRADING ACROSS BORDERS
What are the details?
The indicators reported here for Nigeria are based
LOCATION OF STANDARDIZED COMPANY
on a set of specific procedural requirements for
trading a standard shipment of goods by ocean
transport (see the section in this chapter on what City: Lagos
the indicators cover). Information on the
procedures as well as the required documents and
the time and cost to complete each procedure is The procedural requirements, and the associated time
collected from local freight forwarders, shipping and cost, for exporting and importing a standard
lines, customs brokers, port officials and banks. shipment of goods are listed in the summary below,
along with the required documents.
Summary of procedures and documents for trading across borders in Nigeria
Sub-Saharan OECD high income
Indicator Nigeria
Africa average average
Documents to export (number) 10 8 4
Time to export (days) 24 31 10
Cost to export (US$ per container) 1,380 1,990 1,028
Documents to import (number) 10 9 5
Time to import (days) 39 37 10
Cost to import (US$ per container) 1,540 2,567 1,080
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Procedures to export Time (days) Cost (US$)
Documents preparation 14 280
Customs clearance and technical control 3 350
Ports and terminal handling 4 450
Inland transportation and handling 3 300
Totals 24 1,380
Procedures to import Time (days) Cost (US$)
Documents preparation 19 330
Customs clearance and technical control 12 360
Doing Business 2013 Nigeria 85
Procedures to import Time (days) Cost (US$)
Ports and terminal handling 5 450
Inland transportation and handling 3 400
Totals 39 1,540
Documents to export Documents to import
Bill of lading Bill of lading
Cargo release order Cargo release order
Certificate of origin Certificate of origin
Commercial Invoice Collection order
Customs export declaration Commercial invoice
Form NXP Customs import declaration (Form I)
Inspection report Form M
Packing List Packing list
Technical standard/health certificate Technical standard/health certificate
Terminal handling receipts Terminal handling receipts
Source: Doing Business database.
Doing Business 2013 Nigeria 86
ENFORCING CONTRACTS
Well-functioning courts help businesses expand WHAT THE ENFORCING CONTRACTS
their network and markets. Without effective
INDICATORS MEASURE
contract enforcement, people might well do
business only with family, friends and others with
whom they have established relationships. Where Procedures to enforce a contract through
contract enforcement is efficient, firms are more the courts (number)
likely to engage with new borrowers or customers, Any interaction between the parties in a
and they have greater access to credit. commercial dispute, or between them and
the judge or court officer
What do the indicators cover?
Steps to file and serve the case
Doing Business measures the efficiency of the
judicial system in resolving a commercial dispute Steps for trial and judgment
before local courts. Following the step-by-step Steps to enforce the judgment
evolution of a standardized case study, it collects
Time required to complete procedures
data relating to the time, cost and procedural
(calendar days)
complexity of resolving a commercial lawsuit. The
ranking on the ease of enforcing contracts is the Time to file and serve the case
simple average of the percentile rankings on its Time for trial and obtaining judgment
component indicators: procedures, time and cost.
Time to enforce the judgment
The dispute in the case study involves the breach
of a sales contract between 2 domestic businesses. Cost required to complete procedures (% of
The case study assumes that the court hears an claim)
expert on the quality of the goods in dispute. This No bribes
distinguishes the case from simple debt
Average attorney fees
enforcement. To make the data comparable across
economies, Doing Business uses several Court costs
assumptions about the case: Enforcement costs
The seller and buyer are located in the
economy‘s largest business city.
The buyer orders custom-made goods,
The dispute on the quality of the goods
then fails to pay.
requires an expert opinion.
The seller sues the buyer before a
The judge decides in favor of the seller; there
competent court.
is no appeal.
The value of the claim is 200% of income
The seller enforces the judgment through a
per capita.
public sale of the buyer‘s movable assets.
The seller requests a pretrial attachment to
secure the claim.
Doing Business 2013 Nigeria 87
ENFORCING CONTRACTS
Where does the economy stand today?
How efficient is the process of resolving a commercial Globally, Nigeria stands at 98 in the ranking of 185
dispute through the courts in Nigeria? According to economies on the ease of enforcing contracts (figure
data collected by Doing Business, enforcing a contract 10.1). The rankings for comparator economies and the
takes 457 days, costs 32.0% of the value of the claim regional average ranking provide other useful
and requires 40 procedures (see the summary at the benchmarks for assessing the efficiency of contract
end of this chapter for details). enforcement in Nigeria.
Figure 10.1 How Nigeria and comparator economies rank on the ease of enforcing contracts
Source: Doing Business database.
Doing Business 2013 Nigeria 88
ENFORCING CONTRACTS
What are the changes over time?
While the most recent Doing Business data reflect how identify which areas have changed and where the
easy (or difficult) it is to enforce a contract in Nigeria potential for improvement is greatest (table 10.1).
today, data on the underlying indicators over time help
Table 10.1 The ease of enforcing contracts in Nigeria over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 97 98
Time (days) 730 730 730 457 457 457 457 457 457 457
Cost (% of claim) 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0
Procedures (number) 41 41 41 40 40 40 40 40 40 40
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last year‘s
published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of
2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Nigeria 89
ENFORCING CONTRACTS
Equally helpful may be the benchmarks provided by help show what is possible in improving the efficiency
the economies that over time have had the best of contract enforcement. And changes in regional
performance regionally or globally on the number of averages can show where Nigeria is keeping up—and
steps, time or cost required to enforce a contract where it is falling behind.
through the courts (figure 10.2). These benchmarks
Figure 10.2 Has enforcing contracts become easier over time?
Time (days)
Cost (% of claim)
Doing Business 2013 Nigeria 90
ENFORCING CONTRACTS
Procedures (number)
Source: Doing Business database.
Doing Business 2013 Nigeria 91
ENFORCING CONTRACTS
Economies in all regions have improved contract often work on reducing backlogs by introducing
enforcement in recent years. A judiciary can be periodic reviews to clear inactive cases from the docket
improved in different ways. Higher-income economies and by making procedures faster. What reforms
tend to look for ways to enhance efficiency by making it easier (or more difficult) to enforce contracts
introducing new technology. Lower-income economies has Doing Business recorded in Nigeria (table 10.2)?
Table 10.2 How has Nigeria made enforcing contracts easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 92
ENFORCING CONTRACTS
What are the details?
The indicators reported here for Nigeria are based
COMPETENT COURT
on a set of specific procedural steps required to
resolve a standardized commercial dispute
through the courts (see the section in this chapter City: Lagos
on what the indicators cover). These procedures,
and the time and cost of completing them, are The procedures for resolving a commercial lawsuit, and
identified through study of the codes of civil the associated time and cost, are listed in the summary
procedure and other court regulations, as well as below.
through surveys completed by local litigation
lawyers (and, in a quarter of the economies
covered by Doing Business, by judges as well).
Summary of procedures for enforcing a contract in Nigeria—and the time and cost
Sub-Saharan OECD high income
Indicator Nigeria
Africa average average
Time (days) 457 649 510
Filing and service 42
Trial and judgment 273
Enforcement of judgment 142
Cost (% of claim) 32.0 50.1 20.1
Attorney cost (% of claim) 15.0
Court cost (% of claim) 12.0
Enforcement Cost (% of claim) 5.0
Procedures (number) 40 39 31
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Doing Business 2013 Nigeria 93
ENFORCING CONTRACTS
No. Procedure
Filing and service:
1 Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the contract.
2 Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to represent him before the court.
Plaintiff’s filing of summons and complaint: Plaintiff files his summons and complaint with the court, orally or in
*
writing.
* Plaintiff’s payment of court fees: Plaintiff pays court duties, stamp duties, or any other type of court fee.
Registration of court case: The court administration registers the lawsuit or court case. This includes assigning a
3
reference number to the lawsuit or court case.
Assignment of court case to a judge: The court case is assigned to a specific judge through a random procedure,
*
automated system, ruling of an administrative judge, court officer, etc.
Court scrutiny of summons and complaint: A judge examines Plaintiff's summons and complaint for formal
4
requirements.
Judge admits summons and complaint: After verifying the formal requirements, the judge decides to admit
*
Plaintiff‘s summons and complaint.
Delivery of summons and complaint to person authorized to perform service of process on Defendant: The
5 judge or a court officer delivers the summons to a summoning office, officer, or authorized person (including
Plaintiff), for service of process on Defendant.
First attempt at physical delivery: A first attempt to physically deliver summons and complaint to Defendant is
6
successful in the majority of cases.
Second attempt at physical delivery: If a first attempt was not successful, a second attempt to physically deliver
7
the summons and complaint to Defendant is required by law or standard practice.
Application for pre-judgment attachment: Plaintiff submits an application in writing for the attachment of
*
Defendant's property prior to judgment. (see assumption 5)
Decision on pre-judgment attachment: The judge decides whether to grant Plaintiff‘s request for pre-judgment
* attachment of Defendant‘s property and notifies Plaintiff and Defendant of the decision. This step may include
requesting that Plaintiff submit guarantees or bonds to secure Defendant
Guarantees securing attached property: Plaintiff typically submits guarantees or bonds to secure Defendant
8
against possible damages to attached property. (see assumption 5)
Pre-judgment attachment.: Defendant's property is attached prior to judgment. Attachment is either physical or
9
achieved by registering, marking, debiting or separating assets. (see assumption 5)
Custody of assets attached prior to judgment: Defendant's attached assets are put under enforcement officer's or
10
(private) bailiff's care. (see assumption 5)
Report on pre-judgment attachment: Court enforcement officer or (private) bailiff issues and delivers a report on
11
the attachment of Defendant‘s property to the judge. (see assumption 5)
Doing Business 2013 Nigeria 94
No. Procedure
Trial and judgment:
Defendant’s filing of defense or answer to Plaintiff’s claim: Defendant files a written pleading which includes his
12 defense or answer on the merits of the case. Defendant's written answer may or may not include witness statements,
expert statements, the documents Defendant relies on as evidence and the legal authori
Deadline for Plaintiff to answer Defendant's defense or answer: Judge sets the deadline by which Plaintiff will be
13
allowed to answer Defendant's defense or answer.
Plaintiff’s written response to Defendant's defense or answer: Plaintiff responds to Defendant‘s defense or
14 answer with a written pleading. Plaintiff's answer may or may not include a witness statements or expert (witness)
statements.
Filing of pleadings: Plaintiff and Defendant file written pleadings and submissions with the court and transmit
15 copies of the written pleadings or submissions to one another. The pleadings may or may not include witness
statements or expert (witness) statements.
Adjournments: Court procedure is delayed because one or both parties request and obtain an adjournment to
16
submit written pleadings.
17 Framing of issues: Plaintiff and Defendant assist the court in framing issues on which evidence is to be presented.
Delivery of expert report by court-appointed expert: The independent expert appointed by the court delivers his
*
or her expert report to the court. (see assumption 6-b of this case)
Mediation hearing: The judge during this informal meeting with the parties encourages them to settle the case. The
18 judge acts as mediator. If the case cannot be settled, the judge may draft a pre-trial conference report, after which
the case may be allocated to another judg
* Request for interlocutory order: Defendant raises preliminary issues, such as jurisdiction, statute of limitation, etc.
Court’s issuance of interlocutory order: Court decides the preliminary issues the Defendant raised by issuing an
*
interlocutory order.
Plaintiff’s appeal of court's interlocutory order: Plaintiff appeals the court's interlocutory order, which suspends
19
the court proceedings.
* Setting of date(s) for oral hearing or trial: The judge sets the date(s) for the oral hearing or trial.
Pre-trial conference aimed at preparing for trial: The judge meets with parties to make practical arrangements
20 for the trial (for example, the number of witnesses parties intend to call on during trial, how much time each party is
given to present oral arguments etc.).
* List of (expert) witnesses: The parties file a list of (expert) witnesses with the court. (see assumption 6-a)
Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment to
21
prepare for the oral hearing or trial.
Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment
22
during the oral hearing or trial, resulting in an additional or later trial or hearing date.
23 Closing of the evidence period: The court makes the formal decision to close the evidence period.
Final arguments: The parties present their final factual and legal arguments to the court either by oral presentation
*
or by a written submission.
Doing Business 2013 Nigeria 95
No. Procedure
24 Writing of judgment: The judge produces a written copy of the judgment.
25 Registration of judgment: The court office registers the judgment after receiving a written copy of the judgment.
26 Plaintiff's receipt of a copy of written judgment: Plaintiff receives a copy of the written judgment.
Notification of Defendant of judgment: Plaintiff or court formally notifies the Defendant of the judgment. The
27
appeal period starts to run the day the Defendant is formally notified of the judgment.
Appeal period: By law, Defendant has the opportunity to appeal the judgment during a period specified in the law.
28
Defendant decides not to appeal. Judgment becomes final the day the appeal period ends.
Reimbursement by Defendant of Plaintiff's court fees: The judgment obliges Defendant to reimburse Plaintiff for
29
the court fees Plaintiff has advanced, because Defendant has lost the case.
Enforcement of judgment:
Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented by a
*
lawyer during the enforcement of judgment phase.
Plaintiff's approaching of court enforcement officer or (private) bailiff to enforce the judgment: To enforce
30
the judgment, Plaintiff approaches a court enforcement officer such as a court bailiff or sheriff, or a private bailiff.
Plaintiff’s request for enforcement order: Plaintiff applies to the court to obtain the enforcement order ('seal' on
*
judgment).
Attachment of enforcement order to judgment: The judge attaches the enforcement order (‗seal‘) to the
31
judgment.
Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer or a
*
(private) bailiff.
Request to Defendant to comply voluntarily with judgment: Plaintiff, a court enforcement officer or a (private)
32 bailiff requests Defendant to voluntarily comply with the judgment, giving Defendant a last chance to comply
voluntarily with the judgment.
Identification of Defendant's assets for attachment by court official or Defendant: Judge, a court enforcement
33
officer, a (private) bailiff or the Defendant himself identifies Defendant's movable assets for attachment.
Contestation of selection of assets identified for attachment: The party, Plaintiff or Defendant, who was not
34
involved in the designation of the assets to be attached, contests the selection of assets for attachment.
Plaintiff’s identification of Defendant's assets for attachment: Plaintiff identifies Defendant's assets for
35
attachment.
Notification of intent to attach: A court enforcement officer or (private) bailiff notifies other creditors of the intent
36
to attach Defendant's goods.
37 Attachment: Defendant‘s movable goods are attached (physically or by registering, marking or separating assets).
38 Sale through public auction: The Defendant‘s movable property is sold at public auction.
* Direct sale: Defendant's property is sold but not through a public auction. (assumption 9 is disregarded here)
Distribution of proceeds: The proceeds of the public auction are distributed to various creditors (including
39
Plaintiff), according to the rules of priority.
Doing Business 2013 Nigeria 96
No. Procedure
Reimbursement of Plaintiff’s enforcement fees: Defendant reimburses Plaintiff's enforcement fees which Plaintiff
40
had advanced previously.
41 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Nigeria 97
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY
ensuring the survival of economically efficient
companies and reallocating the resources of INDICATORS MEASURE
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of Time required to recover debt (years)
businesses to normal operation and increase
Measured in calendar years
returns to creditors. By improving the expectations
of creditors and debtors about the outcome of Appeals and requests for extension are
insolvency proceedings, well-functioning included
insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s
save more viable businesses and thereby improve estate)
growth and sustainability in the economy overall.
Measured as percentage of estate value
What do the indicators cover?
Court fees
Doing Business studies the time, cost and outcome Fees of insolvency administrators
of insolvency proceedings involving domestic
entities. It does not measure insolvency Lawyers‘ fees
proceedings of individuals and financial Assessors‘ and auctioneers‘ fees
institutions. The data are derived from survey
Other related fees
responses by local insolvency practitioners and
verified through a study of laws and regulations as Recovery rate for creditors (cents on the
well as public information on bankruptcy systems. dollar)
The ranking on the ease of resolving insolvency is Measures the cents on the dollar recovered
based on the recovery rate, which is recorded as by creditors
cents on the dollar recouped by creditors through Present value of debt recovered
reorganization, liquidation or debt enforcement
Official costs of the insolvency proceedings
(foreclosure) proceedings. The recovery rate is a
are deducted
function of time, cost and other factors, such as
lending rate and the likelihood of the company Depreciation of furniture is taken into
continuing to operate. account
To make the data comparable across economies, Outcome for the business (survival or not)
Doing Business uses several assumptions about the affects the maximum value that can be
recovered
business and the case. It assumes that the
company:
Is a domestically owned, limited liability
company operating a hotel.
Has 201 employees, 1 main secured creditor
Operates in the economy‘s largest business and 50 unsecured creditors.
city.
Has a higher value as a going concern—and
the efficient outcome is either reorganization
or sale as a going concern, not piecemeal
liquidation.
Doing Business 2013 Nigeria 98
RESOLVING INSOLVENCY
Where does the economy stand today?
Speed, low costs and continuation of viable businesses piecemeal sale. The average recovery rate is 28.2 cents
characterize the top-performing economies. How on the dollar.
efficient are insolvency proceedings in Nigeria?
Globally, Nigeria stands at 105 in the ranking of 185
According to data collected by Doing Business,
economies on the ease of resolving insolvency (figure
resolving insolvency takes 2.0 years on average and
11.1). The rankings for comparator economies and the
costs 22% of the debtor‘s estate, with the most likely
regional average ranking provide other useful
outcome being that the company will be sold as
benchmarks for assessing the efficiency of insolvency
proceedings in Nigeria.
Figure 11.1 How Nigeria and comparator economies rank on the ease of resolving insolvency
Source: Doing Business database.
Doing Business 2013 Nigeria 99
RESOLVING INSOLVENCY
What are the changes over time?
While the most recent Doing Business data reflect the changed—and where it has not (table 11.1). That can
efficiency of insolvency proceedings in Nigeria today, help identify where the potential for improvement is
data over time show where the efficiency has greatest.
Table 11.1 The ease of resolving insolvency in Nigeria over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 104 105
Time (years) 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Cost (% of estate) 22 22 22 22 22 22 22 22 22 22
Recovery rate
(cents on the 25.6 26.1 26.8 27.9 27.5 28.0 28.0 26.8 28.2 28.2
dollar)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the
addition of 2 economies (Barbados and Malta) to the sample this year. ―No practice‖ indicates that in each of the previous 5 years
the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This
means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for
―no practice‖ economies is 0.
Source: Doing Business database.
Doing Business 2013 Nigeria 100
RESOLVING INSOLVENCY
Equally helpful may be the benchmarks provided by possible in improving the efficiency of insolvency
the economies that over time have had the best proceedings. And changes in regional averages can
performance regionally or globally on the time or cost show where Nigeria is keeping up—and where it is
of insolvency proceedings or on the recovery rate falling behind.
(figure 11.2). These benchmarks help show what is
Figure 11.2 Has resolving insolvency become easier over time?
Time (years)
Cost (% of estate)
Doing Business 2013 Nigeria 101
RESOLVING INSOLVENCY
Recovery rate (cents on the dollar)
Note: Regional averages on time and cost exclude economies with a “no practice�? mark.
Source: Doing Business database.
Doing Business 2013 Nigeria 102
RESOLVING INSOLVENCY
A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have
companies that are financially distressed but been aimed at helping more of the viable businesses
economically viable from inefficient companies that survive. What insolvency reforms has Doing Business
should be liquidated. But in some insolvency systems recorded in Nigeria (table 11.2)?
even viable businesses are liquidated. This is starting to
Table 11.2 How has Nigeria made resolving insolvency easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Nigeria 103
EMPLOYING WORKERS
Doing Business measures flexibility in the regulation of Particular data for Nigeria are presented here without
employment, specifically as it affects the hiring and scoring.
redundancy of workers and the rigidity of working
hours. From 2007 to 2011 improvements were made to To make the data on employing workers comparable
align the methodology for the employing workers across economies, several assumptions about the
indicators with the letter and spirit of the International worker and the business are used.
Labour Organization (ILO) conventions. Only 4 of the
188 ILO conventions cover areas measured by Doing The worker:
Business: employee termination, weekend work,
holiday with pay and night work. The Doing Business Earns a salary plus benefits equal to the
methodology is fully consistent with these 4 economy‘s average wage during the entire
conventions. The ILO conventions covering areas period of his employment.
related to the employing workers indicators do not Has a pay period that is the most common for
include the ILO core labor standards—8 conventions workers in the economy.
covering the right to collective bargaining, the Is a lawful citizen who belongs to the same
elimination of forced labor, the abolition of child labor race and religion as the majority of the
and equitable treatment in employment practices. economy‘s population.
Resides in the economy‘s largest business city.
Between 2009 and 2011 the World Bank Group worked
Is not a member of a labor union, unless
with a consultative group—including labor lawyers,
membership is mandatory.
employer and employee representatives, and experts
from the ILO, the Organisation for Economic Co-
The business:
operation and Development, civil society and the
private sector—to review the employing workers
Is a limited liability company.
methodology and explore future areas of research.
Operates in the economy‘s largest business
city.
A full report with the conclusions of the consultative
Is 100% domestically owned.
group is available at http://www.doingbusiness.org/
Operates in the manufacturing sector.
methodology/employing-workers.
Has 60 employees.
Is subject to collective bargaining agreements
Doing Business 2013 does not present rankings of
in economies where such agreements cover
economies on the employing workers indicators or
more than half the manufacturing sector and
include the topic in the aggregate ranking on the ease
apply even to firms not party to them.
of doing business. The report does present the data on
Abides by every law and regulation but does
the employing workers indicators in an annex. Detailed
not grant workers more benefits than
data collected on labor regulations are available on the
mandated by law, regulation or (if applicable)
Doing Business website (http://www.doing business.org).
collective bargaining agreement.
Doing Business 2013 Nigeria 104
EMPLOYING WORKERS
What do some of the data show?
One of the employing workers indicators is the worker in his or her first job. Doing Business data show
difficulty of hiring index. This measure assesses, among the trend in the minimum wage applied by Nigeria
other things, the minimum wage for a 19-year-old (figure 12.1).
Figure 12.1 Has the minimum wage for a 19-year-old worker or an apprentice increased over time?
Minimum wage (US$ per month)
Note: A horizontal line along the x-axis of the figure indicates that the economy has no minimum wage.
Source: Doing Business database.
Doing Business 2013 Nigeria 105
EMPLOYING WORKERS
Employment laws are needed to protect workers from past 4 years did so in ways that increased labor market
arbitrary or unfair treatment and to ensure efficient flexibility. What changes did Nigeria adopt that
contracting between employers and workers. Many affected the Doing Business indicators on employing
economies that changed their labor regulations in the workers (table 12.1)?
Table 12.1 What changes did Nigeria make in employing workers in 2012?
Reform
No reform as measured by Doing Business.
Source: Doing Business database.
Doing Business 2013 Nigeria 106
EMPLOYING WORKERS
What are the details?
The data on employing workers reported here for public officials. Employment laws and regulations as
Nigeria are based on a detailed survey of employment well as secondary sources are reviewed to ensure
regulations that is completed by local lawyers and accuracy.
Rigidity of employment index
The rigidity of employment index measures 3 areas of labor regulation: difficulty of hiring, rigidity of hours and
difficulty of redundancy.
Difficulty of hiring index
The difficulty of hiring index measures whether fixed- worker. (The average value added per worker is the
term contracts are prohibited for permanent tasks; the ratio of an economy‘s gross national income per capita
maximum cumulative duration of fixed-term contracts; to the working-age population as a percentage of the
and the ratio of the minimum wage for a trainee or total population.)
first-time employee to the average value added per
Difficulty of hiring index Data
Fixed-term contracts prohibited for permanent tasks? No
Maximum length of a single fixed-term contract (months) No limit
Maximum length of fixed-term contracts, including renewals (months) No limit
Minimum wage for a 19-year old worker or an apprentice (US$/month) 106.5
Ratio of minimum wage to value added per worker 0.57
Source: Doing Business database.
Doing Business 2013 Nigeria 107
EMPLOYING WORKERS
Rigidity of hours index
The rigidity of hours index has 5 components: whether respond to a seasonal increase in production; and
there are restrictions on night work; whether there are whether the average paid annual leave for a worker
restrictions on weekly holiday work; whether the with 1 year of tenure, a worker with 5 years and a
workweek can consist of 5.5 days or is more than 6 worker with 10 years is more than 26 working days or
days; whether the workweek can extend to 50 hours or fewer than 15 working days.
more (including overtime) for 2 months a year to
Rigidity of hours index Data
Standard workday in manufacturing (hours) 8 hours
50-hour workweek allowed for 2 months a year in case of a seasonal Yes
increase in production?
Maximum working days per week 6.0
Premium for night work (% of hourly pay) in case of continuous 0%
operations
Premium for work on weekly rest day (% of hourly pay) in case of 0%
continuous operations
Major restrictions on night work in case of continuous operations? No
Major restrictions on weekly holiday in case of continuous operations? No
Paid annual leave for a worker with 1 year of tenure (in working days) 20.0
Paid annual leave for a worker with 5 years of tenure (in working days) 20.0
Paid annual leave for a worker with 10 years of tenure (in working days) 20.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 20.0
working days)
Source: Doing Business database.
Doing Business 2013 Nigeria 108
EMPLOYING WORKERS
Difficulty of redundancy index
The difficulty of redundancy index has 8 components: worker; whether the employer needs approval from a
whether redundancy is disallowed as a basis for third party to terminate a group of 9 redundant
terminating workers; whether the employer needs to workers; whether the law requires the employer to
notify a third party (such as a government agency) to reassign or retrain a worker before making the worker
terminate 1 redundant worker; whether the employer redundant; whether priority rules apply for
needs to notify a third party to terminate a group of 9 redundancies; and whether priority rules apply for
redundant workers; whether the employer needs reemployment.
approval from a third party to terminate 1 redundant
Difficulty of redundancy index Data
Dismissal due to redundancy allowed by law? Yes
Third-party notification if 1 worker is dismissed? No
Third-party approval if 1 worker is dismissed? No
Third-party notification if 9 workers are dismissed? Yes
Third-party approval if 9 workers are dismissed? No
Retraining or reassignment obligation before redundancy? No
Priority rules for redundancies? Yes
Priority rules for reemployment? No
Source: Doing Business database.
Doing Business 2013 Nigeria 109
EMPLOYING WORKERS
Redundancy cost
The redundancy cost indicator measures the cost of notice requirements and severance payments
advance notice requirements, severance payments and applicable to a worker with 1 year of tenure, a worker
penalties due when terminating a redundant worker, with 5 years and a worker with 10 years is used to
expressed in weeks of salary. The average value of assign the score.
Redundancy cost indicator Data
Notice period for redundancy dismissal (for a worker with 1 year of tenure, in salary 4.0
weeks)
Notice period for redundancy dismissal (for a worker with 5 years of tenure, in 4.0
salary weeks)
Notice period for redundancy dismissal (for a worker with 10 years of tenure, in 4.0
salary weeks)
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 4.0
of tenure, in salary weeks)
Severance pay for redundancy dismissal (for a worker with 1 year of tenure, in 2.3
salary weeks)
Severance pay for redundancy dismissal (for a worker with 5 years of tenure, in 11.4
salary weeks)
Severance pay for redundancy dismissal (for a worker with 10 years of tenure, in 22.9
salary weeks)
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 12.2
of tenure, in salary weeks)
Source: Doing Business database.
Doing Business 2013 Nigeria 110
DATA NOTES
The indicators presented and analyzed in Doing
Business measure business regulation and the ECONOMY CHARACTERISTICS
protection of property rights—and their effect on
businesses, especially small and medium-size domestic
firms. First, the indicators document the complexity of
Gross national income per capita
regulation, such as the number of procedures to start a
business or to register and transfer commercial Doing Business 2013 reports 2011 income per capita
property. Second, they gauge the time and cost of as published in the World Bank‘s World Development
achieving a regulatory goal or complying with Indicators 2012. Income is calculated using the Atlas
method (current US$). For cost indicators expressed
regulation, such as the time and cost to enforce a
as a percentage of income per capita, 2011 gross
contract, go through bankruptcy or trade across
national income (GNI) in U.S. dollars is used as the
borders. Third, they measure the extent of legal denominator. GNI data were not available from the
protections of property, for example, the protections World Bank for Afghanistan; Australia; The Bahamas;
of investors against looting by company directors or Bahrain; Barbados; Brunei Darussalam; Cyprus;
the range of assets that can be used as collateral Djibouti; Guyana; the Islamic Republic of Iran;
according to secured transactions laws. Fourth, a set of Kuwait; Malta; New Zealand; Oman; Puerto Rico
indicators documents the tax burden on businesses. (territory of the United States); Sudan; Suriname; the
Finally, a set of data covers different aspects of Syrian Arab Republic; Timor-Leste; West Bank and
employment regulation. Gaza; and the Republic of Yemen. In these cases
GDP or GNP per capita data and growth rates from
The data for all sets of indicators in Doing Business the International Monetary Fund‘s World Economic
2
2013 are for June 2012. Outlook database and the Economist Intelligence
Unit were used.
Region and income group
Methodology
Doing Business uses the World Bank regional and
The Doing Business data are collected in a
income group classifications, available at
standardized way. To start, the Doing Business team, http://data.worldbank.org/about/country-
with academic advisers, designs a questionnaire. The classifications. The World Bank does not assign
questionnaire uses a simple business case to ensure regional classifications to high-income economies.
comparability across economies and over time —with For the purpose of the Doing Business report, high-
assumptions about the legal form of the business, its income OECD economies are assigned the ―regional‖
size, its location and the nature of its operations. classification OECD high income. Figures and tables
Questionnaires are administered through more than presenting regional averages include economies
9,600 local experts, including lawyers, business from all income groups (low, lower middle, upper
consultants, accountants, freight forwarders, middle and high income).
government officials and other professionals routinely Population
administering or advising on legal and regulatory
Doing Business 2013 reports midyear 2011
requirements. These experts have several rounds of
population statistics as published in World
interaction with the Doing Business team, involving
Development Indicators 2012.
conference calls, written correspondence and visits by
the team. For Doing Business 2013 team members
visited 24 economies to verify data and recruit The Doing Business methodology offers several
respondents. The data from questionnaires are advantages. It is transparent, using factual information
subjected to numerous rounds of verification, leading about what laws and regulations say and allowing
to revisions or expansions of the information collected. multiple interactions with local respondents to clarify
potential misinterpretations of questions. Having
2
The data for paying taxes refer to January – December 2011.
Doing Business 2013 Nigeria 111
representative samples of respondents is not an issue; 2013 would differ from the recollection of
Doing Business is not a statistical survey, and the texts entrepreneurs reported in the World Bank Enterprise
of the relevant laws and regulations are collected and Surveys or other perception surveys.
answers checked for accuracy. The methodology is
inexpensive and easily replicable, so data can be
collected in a large sample of economies. Because Subnational Doing Business indicators
standard assumptions are used in the data collection,
This year Doing Business completed subnational
comparisons and benchmarks are valid across
studies for Indonesia, Kenya, Mexico, the Russian
economies. Finally, the data not only highlight the Federation and the United Arab Emirates. Each of
extent of specific regulatory obstacles to business but
these countries had already asked to have subnational
also identify their source and point to what might be
data in the past, and this year Doing Business updated
reformed. the indicators, measured improvements over time and
Information on the methodology for each Doing expanded geographic coverage to additional cities or
Business topic can be found on the Doing Business added additional indicators. Doing Business also
website at http://www.doingbusiness.org/methodology/. published regional studies for the Arab world, the East
African Community and member states of the
Organization for the Harmonization of Business Law in
Limits to what is measured Africa (OHADA).
The Doing Business methodology has 5 limitations that The subnational studies point to differences in
should be considered when interpreting the data. First, business regulation and its implementation—as well as
the collected data refer to businesses in the economy‘s in the pace of regulatory reform—across cities in the
largest business city (which in some economies differs same economy. For several economies subnational
from the capital) and may not be representative of studies are now periodically updated to measure
regulation in other parts of the economy. To address change over time or to expand geographic coverage
this limitation, subnational Doing Business indicators to additional cities. This year that is the case for all the
were created (see the section on subnational Doing subnational studies published.
Business indicators). Second, the data often focus on a
specific business form—generally a limited liability
company (or its legal equivalent) of a specified size— Changes in what is measured
and may not be representative of the regulation on
The ranking methodology for paying taxes was
other businesses, for example, sole proprietorships. updated this year. The threshold for the total tax rate
Third, transactions described in a standardized case
introduced last year for the purpose of calculating the
scenario refer to a specific set of issues and may not
ranking on the ease of paying taxes was updated. All
represent the full set of issues a business encounters. economies with a total tax rate below the threshold
Fourth, the measures of time involve an element of
(which is calculated and adjusted on a yearly basis)
judgment by the expert respondents. When sources
receive the same ranking on the total tax rate
indicate different estimates, the time indicators indicator. The threshold is not based on any economic
reported in Doing Business represent the median
theory of an ―optimal tax rate‖ that minimizes
values of several responses given under the
distortions or maximizes efficiency in the tax system of
assumptions of the standardized case. an economy overall. Instead, it is mainly empirical in
Finally, the methodology assumes that a business has nature, set at the lower end of the distribution of tax
full information on what is required and does not rates levied on medium-size enterprises in the
waste time when completing procedures. In practice, manufacturing sector as observed through the paying
completing a procedure may take longer if the taxes indicators. This reduces the bias in the indicators
business lacks information or is unable to follow up toward economies that do not need to levy significant
promptly. Alternatively, the business may choose to taxes on companies like the Doing Business
disregard some burdensome procedures. For both standardized case study company because they raise
reasons the time delays reported in Doing Business public revenue in other ways—for example, through
Doing Business 2013 Nigeria 112
taxes on foreign companies, through taxes on sectors investors, paying taxes, trading across borders,
other than manufacturing or from natural resources enforcing contracts, and resolving insolvency. The
(all of which are outside the scope of the employing workers indicators are not included in this
methodology). Giving the same ranking to all year‘s aggregate ease of doing business ranking. In
economies whose total tax rate is below the threshold addition to this year‘s ranking, Doing Business presents
avoids awarding economies in the scoring for having a comparable ranking for the previous year, adjusted
an unusually low total tax rate, often for reasons for any changes in methodology as well as additions of
3
unrelated to government policies toward enterprises. economies or topics.
For example, economies that are very small or that are
Construction of the ease of doing business index
rich in natural resources do not need to levy broad-
based taxes. Here is one example of how the ease of doing business
index is constructed. In Finland it takes 3 procedures,
14 days and 4% of annual income per capita in fees to
Data challenges and revisions register a property. On these 3 indicators Finland ranks
in the 6th, 16th and 39th percentiles. So on average
Most laws and regulations underlying the Doing
Finland ranks in the 20th percentile on the ease of
Business data are available on the Doing Business
registering property. It ranks in the 30th percentile on
website at http://www.doingbusiness.org. All the th
starting a business, 28 percentile on getting credit,
sample questionnaires and the details underlying the
24th percentile on paying taxes, 13th percentile on
indicators are also published on the website. Questions
enforcing contracts, 5th percentile on trading across
on the methodology and challenges to data can be
borders and so on. Higher rankings indicate simpler
submitted through the website‘s ―Ask a Question‖
regulation and stronger protection of property rights.
function at http://www.doingbusiness.org.
The simple average of Finland‘s percentile rankings on
all topics is 21st. When all economies are ordered by
Ease of doing business and distance to their average percentile rankings, Finland stands at 11
frontier in the aggregate ranking on the ease of doing
business.
Doing Business 2013 presents results for 2 aggregate
measures: the aggregate ranking on the ease of doing More complex aggregation methods—such as
business and the distance to frontier measure. The principal components and unobserved components—
ease of doing business ranking compares economies yield a ranking nearly identical to the simple average
4
with one another, while the distance to frontier used by Doing Business. Thus, Doing Business uses
measure benchmarks economies to the frontier in the simplest method: weighting all topics equally and,
regulatory practice, measuring the absolute distance to
the best performance on each indicator. Both
measures can be used for comparisons over time.
3
In case of revisions to the methodology or corrections to the
underlying data, the data are back-calculated to provide a
When compared across years, the distance to frontier
comparable time series since the year the relevant economy or topic
measure shows how much the regulatory environment was first included in the data set. The time series is available on the
for local entrepreneurs in each economy has changed Doing Business website (http://www.doingbusiness.org). Six topics
over time in absolute terms, while the ease of doing and more than 50 economies have been added since the inception
business ranking can show only relative change. of the project. Earlier rankings on the ease of doing business are
therefore not comparable.
Ease of doing business 4
See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita
Ramalho, ―Doing Business Indicators: Why Aggregate, and How to
The ease of doing business index ranks economies Do It‖ (World Bank, Washington, DC, 2005). Principal components
from 1 to 185. For each economy the ranking is and unobserved components methods yield a ranking nearly
calculated as the simple average of the percentile identical to that from the simple average method because both
rankings on each of the 10 topics included in the index these methods assign roughly equal weights to the topics, since the
pairwise correlations among indicators do not differ much. An
in Doing Business 2013: starting a business, dealing
alternative to the simple average method is to give different weights
with construction permits, getting electricity, to the topics, depending on which are considered of more or less
registering property, getting credit, protecting importance in the context of a specific economy.
Doing Business 2013 Nigeria 113
within each topic, giving equal weight to each of the ability of different government agencies to deliver
5
topic components. tangible results in their area of responsibility.
If an economy has no laws or regulations covering a Economies that improved the most across 3 or more
specific area—for example, insolvency—it receives a Doing Business topics in 2011/12
―no practice‖ mark. Similarly, an economy receives a
Doing Business 2013 uses a simple method to calculate
―no practice‖ or ―not possible‖ mark if regulation exists
which economies improved the most in the ease of
but is never used in practice or if a competing
doing business. First, it selects the economies that in
regulation prohibits such practice. Either way, a ―no
2011/12 implemented regulatory reforms making it
practice‖ mark puts the economy at the bottom of the
easier to do business in 3 or more of the 10 topics
ranking on the relevant indicator. 6
included in this year‘s ease of doing business ranking.
The ease of doing business index is limited in scope. It Twenty-three economies meet this criterion: Benin,
does not account for an economy‘s proximity to large Burundi, Costa Rica, the Czech Republic, Georgia,
markets, the quality of its infrastructure services (other Greece, Guinea, Kazakhstan, Korea, the Lao People‘s
than services related to trading across borders and Democratic Republic, Liberia, Mongolia, the
getting electricity), the strength of its financial system, Netherlands, Panama, Poland, Portugal, Serbia, the
the security of property from theft and looting, Slovak Republic, Slovenia, Sri Lanka, Ukraine, the
macroeconomic conditions or the strength of United Arab Emirates and Uzbekistan. Second, Doing
underlying institutions. Business ranks these economies on the increase in
their ranking on the ease of doing business from the
Variability of economies‘ rankings across topics
previous year using comparable rankings.
Each indicator set measures a different aspect of the
Selecting the economies that implemented regulatory
business regulatory environment. The rankings of an
reforms in at least 3 topics and improved the most in
economy can vary, sometimes significantly, across
the aggregate ranking is intended to highlight
indicator sets. The average correlation coefficient
economies with ongoing, broad-based reform
between the 10 indicator sets included in the
programs.
aggregate ranking is 0.37, and the coefficients
between any 2 sets of indicators range from 0.19 Distance to frontier measure
(between dealing with construction permits and
A drawback of the ease of doing business ranking is
getting credit) to 0.60 (between starting a business
that it can measure the regulatory performance of
and protecting investors). These correlations suggest
economies only relative to the performance of others.
that economies rarely score universally well or
It does not provide information on how the absolute
universally badly on the indicators.
quality of the regulatory environment is improving
Consider the example of Canada. It stands at 17 in the over time. Nor does it provide information on how
aggregate ranking on the ease of doing business. Its large the gaps are between economies at a single
ranking is 3 on starting a business, and 4 on both point in time.
resolving insolvency and protecting investors. But its
The distance to frontier measure is designed to
ranking is only 62 on enforcing contracts, 69 on
address both shortcomings, complementing the ease
dealing with construction permits and 152 on getting
of doing business ranking. This measure illustrates the
electricity.
distance of an economy to the ―frontier,‖ and the
Variation in performance across the indicator sets is change in the measure over time shows the extent to
not at all unusual. It reflects differences in the degree which the economy has closed this gap. The frontier is
of priority that government authorities give to a score derived from the most efficient practice or
particular areas of business regulation reform and the highest score achieved on each of the component
indicators in 9 Doing Business indicator sets (excluding
5 6
A technical note on the different aggregation and weighting Doing Business reforms making it more difficult to do business are
methods is available on the Doing Business website subtracted from the total number of those making it easier to do
(http://www.doingbusiness.org). business.
Doing Business 2013 Nigeria 114
the employing workers and getting electricity The maximum (max) and minimum (min) observed
indicators) by any economy since 2005. In starting a values are computed for the 174 economies included
business, for example, New Zealand has achieved the in the Doing Business sample since 2005 and for all
highest performance on the time (1 day), Canada and years (from 2005 to 2012). The year 2005 was chosen
New Zealand on the number of procedures required as the baseline for the economy sample because it was
(1), Slovenia on the cost (0% of income per capita) and the first year in which data were available for the
Australia and 90 other economies on the paid-in majority of economies (a total of 174) and for all 9
minimum capital requirement (0% of income per indicator sets included in the measure. To mitigate the
capita). Calculating the distance to frontier for each effects of extreme outliers in the distributions of the
economy involves 2 main steps. First, individual rescaled data (very few economies need 694 days to
indicator scores are normalized to a common unit: complete the procedures to start a business, but many
th
except for the total tax rate. To do so, each of the 28 need 9 days), the maximum (max) is defined as the 95
component indicators y is rescaled to (max − y)/(max percentile of the pooled data for all economies and all
− min), with the minimum value (min) representing the years for each indicator. The exceptions are the getting
frontier—the highest performance on that indicator credit, protecting investors and resolving insolvency
across all economies since 2005. For the total tax rate, indicators, whose construction precludes outliers.
consistent with the calculation of the rankings, the
Take Ghana, which has a score of 67 on the distance to
frontier is defined as the total tax rate corresponding
th frontier measure for 2012. This score indicates that the
to the 15 percentile based on the overall distribution
economy is 33 percentage points away from the
of total tax rates for all years. Second, for each
frontier constructed from the best performances
economy the scores obtained for individual indicators
across all economies and all years. Ghana was further
are aggregated through simple averaging into one
from the frontier in 2005, with a score of 54. The
distance to frontier score. An economy‘s distance to
difference between the scores shows an improvement
frontier is indicated on a scale from 0 to 100, where 0
over time.
represents the lowest performance and 100 the
frontier. The distance to frontier measure can also be used for
comparisons across economies in the same year,
The difference between an economy‘s distance to
complementing the ease of doing business ranking.
frontier score in 2005 and its score in 2012 illustrates
For example, Ghana stands at 64 this year in the ease
the extent to which the economy has closed the gap to
of doing business ranking, while Peru, which is 29
the frontier over time. And in any given year the score
percentage points from the frontier, stands at 43.
measures how far an economy is from the highest
performance at that time.
Doing Business 2013 Nigeria 115
RESOURCES ON THE DOING BUSINESS WEBSITE
Current features Doing Business reforms
News on the Doing Business project Short summaries of DB2013 business regulation
http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a
ranking simulation tool
Rankings http://www.doingbusiness.org/reforms/
How economies rank—from 1 to 185
http://www.doingbusiness.org/rankings/ Historical data
Customized data sets since DB2004
Data http://www.doingbusiness.org/custom-query/
All the data for 185 economies—topic rankings,
indicator values, lists of regulatory procedures and Law library
details underlying indicators Online collection of business laws and regulations
http://www.doingbusiness.org/data/ relating to business and gender issues
http://www.doingbusiness.org/law-library/
Reports http://wbl.worldbank.org/
Access to Doing Business reports as well as
subnational and regional reports, reform case Contributors
studies and customized economy and regional More than 9,600 specialists in 185 economies who
profiles participate in Doing Business
http://www.doingbusiness.org/reports/ http://www.doingbusiness.org/contributors/doing-
business/
Methodology
The methodologies and research papers NEW! Entrepreneurship data
underlying Doing Business Data on business density for 130 economies
http://www.doingbusiness.org/methodology/ http://www.doingbusiness.org/data/exploretopics/e
ntrepreneurship
Research
Abstracts of papers on Doing Business topics and More to come
related policy issues Coming soon—information on good practices and
http://www.doingbusiness.org/research/ data on transparency and on the distance to
frontier
Doing Business 2013 Nigeria 116