Don't Miss

Survey: Regulatory inefficiency threat to business success in Nigeria

By BusinessNews Staff on July 31, 2014

A survey by KPMG Professional Services has highlighted regulatory inefficiencies as a threat to the growth of businesses in Nigeria.

Specifically, the 2014 Chief Financial Officers’ (CFOs) survey showed that 70 per cent of CFOs viewed incompetence on the part of some regulatory institutions in the country as a factor that could hinder the growth of their organisations.

According to the survey, there are considerable potential to improve the process of rulemaking and the use of regulation to support the growth of businesses in the country.

It noted that regulations are indispensable to the proper functioning of economies and societies. They underpin markets and protect the rights of citizens. Also, regulations are rarely costly and they can have unintended consequences and they can become less effective, adversarial or even redundant over time.

“Regulators are viewed by the majority as an impediment to businesses rather than an enabler,” the report which was recently launched in Lagos stated.

However, the CFOs were optimistic over the outlook of the Nigerian economy in 2014 as they remained confident that their businesses would continue to thrive. The respondents saw strong outlook and they anticipated quality growth in the Nigerian economy.

Specifically, over 80 per cent of CFOs surveyed believed their organisations would experience revenue growth this year, 61 per cent believed the growth would be accomplished by improvement in operating cashflows while 82 per cent believed that their organisations’ gross margin would either improve or be sustained in 2014.

“So, what would be the drivers of success? Cost management, expansion into new markets, technology and product innovation were identified as the key internally influenced initiatives which will contribute the most to their organisation’s success in the year ahead.

“Furthermore, CFOs identified improving cashflows, introducing new products and services and reducing cost as the strongest priorities for their organisations,” the report added.

Nevertheless, the CFOs raised concern over the prevalence of external factors capable of impacting the degree of success attained by their organisations, other dominant factors of concern to them were security and exchange rate volatility.

“Our respondents allude to the prevalence of an adversarial atmosphere which forces the hand of taxpayers based on the fear of causing disruptions to their businesses.

“60 per cent of the respondents say that tax administration system is inefficient and over 40 per cent says it encourages them to pay their taxes.
“This implies that tax systems are reliant on enforcement mechanisms which leave businesses with only the option of complying with government’s assessment,” it added.

Speaking during the launch, the Executive Chairman, Lagos State Internal Revenue Service, Dr. Babatunde Fowler urged all tax payers in the state to always report suspicious activities of tax consultants on officials of the state revenue service.

Also, a Partner and Head, Audit Division at KPMG Nigeria, Mr. Tola Adeyemi, noted that the survey also demonstrated that the separation of finance function from internal audit is widely expected, adding that the CFOs expressed satisfaction with the performance of their internal audit functions.

[This Day]

headline