Economic Impact Of The Provisions Of The CAMA Bill
Some of the economic benefits to be realized by Nigeria if the proposed amendments are passed into law include:
Ensure more business-friendly regulation for Micro, Small and Medium Enterprises: It has been determined from a collaborative survey by the Nigerian Bureau of Statistics (NBS) and the Small & Medium Enterprises Development Agency of Nigeria (SMEDAN) that the Act is currently designed to regulate mostly larger type companies and that the provisions of the Act impose unnecessary costs on smaller type companies. According to the said survey, there are over 37 million MSMEs in Nigeria which contribute almost 50% of the Gross Domestic Product in nominal terms and account for 84.02% of all Nigerian jobs. By making the provisions of the Act friendlier to MSMEs, the amendments to the Act have the potential to increase activities of MSMEs, thereby growing the Nigerian economy in the process.
Fewer reporting obligations for small companies: Another impact of the Act is to reduce the financial reporting obligations of small companies. Such companies will be exempt from the yearly audit process. This invariably means that cost is reduced and more money can be ploughed back into the business for expansion. For the Nigerian economy, this translates to more jobs and a more stable economy.
Reduction in Time and Cost for Setting up a Company: The proposed amendments to the Act make it more attractive for small businesses operating within the informal sector, which contribute about 64% to the Gross Domestic Product (GDP) to the economy. These companies will be able to formalize their businesses by registering at the Corporate Affairs Commission. This has the potential of widening the tax base of the country thereby increasing revenue earned from taxation of corporate entities, and thereby diversifying the economy.
Promotion of Financial Stability: The introduction of model netting provisions in the Bill as a means of mitigating credit risks associated with over the counter derivatives promotes financial stability and investor confidence in the Nigerian Financial Sector. The proposed provisions also minimize risks associated with the performance of certain large financial institutions, thereby making the financial positions of Nigerian financial institutions more secure.
Increasing Investor Confidence in the Nigerian Financial Sector as well as all sectors of the economy: Investor confidence in the Nigerian financial sector and indeed, all sectors of the economy is expected to significantly improve, due to a competitive and business-friendly environment where companies are regulated in line with global best practice.
We at 5W1H Consults are super excited with the opportunities this will create and look forward to the signing of the bill into law.