The Role of Subnational Legislative Reforms in Unlocking Economic Development

1 year ago

Nsikan Essien

Nigeria is rich in natural resources, which can be found in all federation states. These resources have the potential to boost productivity and the economy if properly utilised. However, states rely heavily on the Federal Government’s allocation and generally seem deficient in revenue generation. This dearth of sub-national competitiveness has become a growing concern at the federal level as it has a major impact on Nigeria’s GDP and overall global competitiveness. States are yet to harness their full economic potential due to several setbacks. For instance, some states lack clear regulations on land acquisition, taxation, and licensing, which makes it difficult for businesses to operate. Furthermore, the judiciary in some states is slow and inefficient, leading to prolonged disputes that undermine investment and economic growth. 

There are a lot of ongoing efforts by the government and relevant stakeholders to drive productivity at the state level. These efforts have led to critical legal, policy, institutional and regulatory reforms designed and implemented to ease the bottlenecks in Nigeria’s business environment. Legislative reform has remained a crucial tool in driving economic growth and development at the subnational level. 

Several states in Nigeria have implemented legal reforms to improve their business environments and attract investments. For instance, through legislative reform, Lagos State simplified the land use charge system. In Ekiti, the State Government set up the State Investment Promotion Agency Law to promote investment and economic growth in the state. The law established the Ekiti State Investment Promotion Agency (EKIPA) to facilitate investment in the state. Enugu also has the Enugu State Investment Promotion and Protection Agency (ENSIPA). Also, several states have utilised legislative reforms for key initiatives that will provide financial and technical support to SMEs. 

As such, law reforms have been a crucial tool for improving the business environment in various states in Nigeria. An efficient legal framework that addresses regulations, taxation, investment promotion, infrastructure and business registration will go a long way in creating a sustainable business environment for the private sector to thrive. Recently, efforts have been made to review the Constitution of the Federal Republic of Nigeria, 1999, to devolve more economic powers to the states in key sectors of the economy. Most states have adopted these proposed amendments as they will benefit states through job creation, revenue generation and the attraction of foreign direct investment when signed into law. 

 

Benefits of Subnational Legislative Reforms to Economic Development

Legislative reform can have a multitude of benefits for states. Some of these benefits include: 

  1. Improved Business Environment: Legislative reforms can provide a stable and predictable regulatory environment encouraging investment. Clear and transparent regulations on land acquisition, taxation, and licensing can reduce the cost of doing business and attract more investors to the state. 
  2. Increased Revenue Generation: Legislative reforms can help subnational governments generate more revenue. For example, improving tax collection processes and expanding the tax base can increase revenue generation. 
  3. Promoting Local Entrepreneurship: Subnational legislative reforms can promote Nano, micro, small and medium enterprises. More entrepreneurs can start businesses, create jobs, and generate wealth for themselves and the community by providing a conducive business environment. 
  4. Improved Service Delivery: Legislative reforms can also lead to better service delivery. For instance, reforms that provide greater accountability and transparency in public service delivery can lead to more efficient use of public resources. This can lead to improved infrastructure and social services, essential for economic growth.

Conclusion 

Subnational legislative reforms are critical to enhancing economic development in Nigeria. Legislative reforms can spur economic growth and reduce poverty by providing a conducive business environment, promoting local entrepreneurship, increasing revenue generation, and improving service delivery.

Ensuring a better quality of laws that drive economic growth and development requires a holistic approach that involves stakeholder engagement, research, and monitoring and evaluation. Subnational governments must therefore prioritize legislative reform measures that offer a stable regulatory framework and promote global competitiveness.

 Nsikan is the Team Lead, NASSBER Operations. She can be reached on nsikan.essien@nesgroup.org