Business Essentials Vol. 4 No 3

Dear Esteemed Member,

In this edition, we reviewed the Fiscal Policy Measures for 2016 which was made up of the Supplementary Protection Measures (SPM) for implementation. Also of interest is the ECOWAS CET 2015 – 2019 and the impact of the tariff reduction on Businesses.

As you are probably aware, your Association was represented at the Quarterly Presidential Economic Forum, hosted by the Office of the Vice President for the Economy, we shared with you through this platform the submissions of the Organised Businesses at the forum.

And for those who could not make it to the quarterly Committee of Human Resource Experts’ Meeting of NECA, the summary of presentation made by the Lagos State Zonal Comptroller, Federal Ministry of Labour & Employment at the meeting. Our regular Labour and Employment Law Review and Upcoming Training Programmes were not left out.

Have a pleasant reading.

Timothy Olawale

Editor

In this Issue:

• Review Of 2016 Fiscal Policy Measures: Impact Of Tariff Reduction

• Issues Tabled During the Quarterly Presidential Economic Forum

• Dispute Resolution Process: The Mediatory Role Of The Federal Ministry Of Labour And Employment

• LABOUR & EMPLOYMENT LAW: Jurisdiction of the National Industrial Court (Mr. Slawomir Panta vs. Dal Trade Nigeria Limited) (2014) 50 N.L.L.R. Pt 166, P. 417 NIC

• Upcoming Training Programmes

 

The Best Way to Solve Recurring Work Problems Problems at work tend to be repetitive. No one complains because their boss was angry one time or a colleague failed to pitch in once. The next time you’re in a familiar noxious work setting where someone is doing the same thing as usual, try something different: improvise. Break the routine. For example, if you have an employee who’s chronically late to meetings and reprimanding her in the past hasn’t solved the problem, the next time she’s late, stop the meeting and praise her for all that she’s doing right. Everyone will be caught off guard, and it may actually resolve the problem once and for all. By introducing an unfamiliar dynamic, you encourage your counterpart to respond differently in turn. Adapted from “To Fix a Chronic Problem, Try Winging It,” by Michael Lipson

REVIEW OF 2016 FISCAL POLICY MEASURES: IMPACT OF TARIFF REDUCTION

The Federal Government recently approved the 2016 Fiscal Policy Measures which allows the implementation of the Supplementary Protection Measures (SPM) and the ECOWAS Common External Tariff (CET) 2015-2019.  A key feature of this implementation plan is a reduction of import duty rates on specific items on the national list, aimed at promoting the development of sectors deemed critical to the economy.

Notable amongst these are:

1. 0% for machineries and equipment for priority sectors (Agriculture, Cement, Power, Hospitality, Iron and Steel, Solid minerals, Textile and Aviation);
2. 5% (previous: 10%) for Milk and Cream, and other semi-processed animal by-products; and

• 5% (previous: 10%) for Tomato concentrate.

In total, 89 items were affected, with tariff reductions ranging from 5%-15%.

Overall, we expect this development to be supportive of growth in the medium term, assuming Government takes genuine measures towards economic diversification. That said, we believe the impact could suffer setback due to more fundamental challenges like: constraints to doing business, low labour productivity, corruption, and foreign exchange unavailability.

Implications on Businesses:

Stimulation of Aggregate Demand

• The reduction in tariff is expected to stimulate aggregate demand through imports, as our analysis suggests that the listed items could account for 29%-35% of annual imports. Although imports-to-GDP is only marginal at 8.6%, the policy will aim to leverage strong linkages to consumption and investments to stimulate growth.
• Whilst this is plausible, we suspect challenges around foreign exchange could subdue the intended impact even as sources of dollar inflows remain stretched. Nonetheless, we see the room for import growth as tilted to the upside, consistent with the trend observed since Q1 2016 as demand stabilises following a weak 2015.
• Thus, we expect Nigeria’s trade deficit to widen further in 2017 from around NGN1 trillion recorded in 2016, if fiscal measures are not taken to bolster exports significantly

Stimulation of Further Growth

• A zero tariff on machinery and equipment should stimulate growth in the sectors with strong linkages to the economy as fixed capital formation increases over time. Nonetheless, it is important to note that this development may cause distortions in a few industries. The tariff reduction on milk products may hamper utilisation of domestic raw material along the value chain and thus disincentivize increased domestic production. Also, the Chemical and Allied products, and Electrical and Electronic industries may be prone to over-dependency on importation of intermediate goods in the medium term, and this may stifle backward integration in the industry.

In the long run, we reiterate that factors such as improving the ease of doing business, raising human capital productivity, and addressing other structural issues are fundamental to achieving a sustainable and inclusive growth in Nigeria. In our view, a deficiency in one or more of these levers would keep growth trajectory below potential and limit economic development.

You can obtain copy of the Fiscal Policy Measures for 2016, which contained the list for Import Adjustment Tax (IAT) List, National List for Implementation with ECOWAS CET (2015-2019) in 2016 and the Import Prohibition List (Trade) through:tim@neca.org.ng, thompson@neca.org.ng, olusola@neca.org.ng

Issues Tabled During the Quarterly Presidential Economic Forum

Following the invitation received from the Office of the Vice President, Professor Yemi Oshinbajo on its plan to involve the Director-General of NECA, Mr. O.A Oshinowo in the 2017 Quarterly Meetings of the Presidential Committee on the economy. We present the Executive Summary of issues tabled on behalf of the Organized Private Sector (OPS) at the meeting:

Challenge of Access to Foreign Exchange by the Real Sector:

• Government through the CBN should ensure that the 60% concessionary forex allocation for the manufacturing/industrial sector’s for raw materials and machinery importation are judicially implemented.

• There is the need to review the list of 41-items banned by CBN for accessing FX in the interbank forex market with the aim of removing raw materials component that cannot be source locally.

Diversification of the Economy and Support for Backward Integration

• Government should consider diversifying the utilization of the Negotiable Duty Credit Certificate (NDCC) to include payment of other government taxes and levies to reduce the pressure on Nigeria Customs Service which is currently the only collecting agency.

• Government should create special long term funding windows for the industrial/manufacturing sector at single digit interest rate as well as make such easily accessible for the industrial sector.

• Need to borrow externally for immediate support to the industrial/manufacturing sector, especially those that are looking inward in input sourcing.

• Fast-tracking of the operationalization of the Development Bank of Nigeria (DBN) to cater for the credit need of the real sector.

• EU/ECOWAS Economic Partnership Agreement (EPA):

• Government should not sign the EPA document until the ultimate concerns raised by Nigeria are addressed.

Scheduled and Regular Dialogue with the OPS

• Government should be cautious in side-tracking engagement known to be orchestrated by self-fish groups and individual enterprises that do not really represent mainstream OPS.

• There should be regular dialogue between Ministries and Agencies of Government with relevant stakeholders in the OPS.

Patronage of Made-in-Nigeria Products and Enforcement of the Procurement Act

• Government should help define the basis for distinguishing local and foreign firms through the Corporate Affairs Commission (CAC) so as not to give undue advantage for foreign companies to exploit the national procurement.

• Government should also help to adjust the BPP thresholds for local companies / suppliers, which currently stands at N1 billion for works and N100 million for goods, to N30 billion for works to appropriate size that would reflect the realities of the economy (“First Order Policy”).

• Need to help set up realistic margin of preference? Our research suggests 60% in favour of “Made-in Nigeria” goods. This should be effectively implemented for all procurements of the Federal Government. State and Local Governments should be encouraged to follow suit.

• It is important to also increase the Micro, Small and Medium Enterprises’ participation rate in all public procurement; we are suggesting a minimum of 40%.

Collapse of Basic Infrastructural Facilities: e.g., Roads, Bridges, Airports, Railways and Information Technology

• Need for a Public Private Partnership (PPP) arrangement that will focus on Built-Operate-Transfer (BOT) rather than expending scarce resources on infrastructure development.

• Low Investment in Agriculture & Agro-Allied Businesses

In the CBN Anchor Borrowers Scheme, we urge the Government to expand the scheme to include medium-scale integrated processors (as well as large-scale integrated processors) to act as Anchor companies, so as to increase private sector involvement in the scheme an boost production of key commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food.

Decadent State of our Industrial Relations System:

• There is urgent need to reform the Industrial Relations System to reflect the following:
  • Promotion of an enabling environment suitable for wealth and job creation.
  • Promotion of the rule of law, respect for the sanctity of Procedural and Substantive Agreements and responsible use of strikes and lock-outs as tools of Collective Bargaining.

• The Ministry of Labour and Employment should articulate and share with the Social Partners government’s reform agenda for the Industrial Relations System.

• The Ministry can set up a Tripartite-plus Committee, which should include respected scholars of Industrial Relations to help achieve the reform.

• The resuscitation and strengthening of the National Labour Advisory Council (NLAC) by the Federal Ministry of Labour and Employment to enable it perform its role of stabilizing the Industrial Relations System in Nigeria

Categorization of the industrial sector gas usage to Commercial Status

• Government should facilitate re-categorising industrials sector gas usage to Strategic development usage which will reduce the price to US$2.86/cubic meter which is the international gas price for the industrial sector.

Limit Media Sensationalism By Government Agencies Of Simple Issue Against Business That Can Be Addressed Through Dialogue

• Government should advise all its agencies to limit the discussion of the infraction and sanction to be imposed with the affected member and the relevant Organized Private Sector (OPS) in order not to destroy such company. Government agencies should never disclose such sanction to the media, except it is of a criminal.

Criminalization by Government Agencies of Perceived Breach of Regulations By Our Members

• Government agencies should adopt the attitude of discussing issues with the affected companies and the relevant OPS with a view to amicably resolving any dispute or breach of regulations rather resorting to publicity and litigation.

Multiple Levies By Government Agencies On The Same Sales Promotion

• Government advises its regulatory agencies to ensure that only one fee is charged for a particular transaction. There is no reason while NAFDAC, CPC and NLRC (which are all federal government agencies) should charge separate fees for the same sales promotion, thereby increasing the cost of doing business in Nigeria.

Invasion Of Premises Of Members For The Purpose Of Collecting Taxes Which Is Not Final

• FIRS should follow the laid down procedure by tax laws for recovering taxes owed by companies instead of the gestapo approach currently adopted, which has the tendency of discouraging investors.

Double Taxation On Retained Earnings

• FIRS should issue a Circular or Financial Order exempting retained earnings of all companies as long as corporate tax had earlier been paid in order to facilitate reinstatement of profits so as to generate more employment in Nigeria.

• Government should ‘walk the talk’ by ensuring that all its agencies must ensure that any policy they will introduce henceforth, must facilitate the ease of doing business and commerce, and not create bottlenecks.

Outstanding Payment/Debt to Contractors

• There is need for Government to pay priority attention to defraying these vintage debts to enable the companies/creditors involved to return to business and boost the economy.

DISPUTE RESOLUTION PROCESS: THE MEDIATORY ROLE OF THE FEDERAL MINISTRY OF LABOUR AND EMPLOYMENT

At the first meeting of the Committee of Human Resource Experts in 2017, the Lagos State Comptroller of the Federal Ministry of Labour & Employment presented a paper on the above subject. Below is the highlight of his presentation.

Highlights of the Presentation:

• Disputes on issues relating to labour are a recurring decimal on daily basis; they do arise in both informal and formal sectors of economy. Unresolved conflicts in divergent interests of employer and employee yield disputes.
• The Federal Ministry of Labour and Employment, the National Industrial Court were saddled with settlement of these disputes whenever and whenever they occur.
• Mechanism for resolving conflict in labour matters includes: resolution by any internal settlement mechanism – that is, settlement by means of a pre-determined or agreed procedure between the parties; resort to mediation, conciliation, and arbitration before the Industrial Arbitration Panel (IAP); and adjudication by the National Industrial Court (NIC).

1. Internal Settlement Mechanism: According to section 4 (1) Trade Disputes Act, parties to a trade dispute are enjoined to seek resolution of the dispute by means of any existent pre-agreed procedure, apart from the provisions of the Act, arising from a collective agreement or any other agreement between the parties. This provision endorses one of the roles of collective bargaining referred to as rule-making; that is, the inclusion in the resultant collective agreement of provisions governing the various employment relationships which obtain in the bargaining unit, including the settlement of disputes, the regulation of relations between the parties and the promotion of workers’ participation.
2. Mediation: Where there is no existing agreed means of settling disputes, or where the application of that means has failed to resolved the conflict, the parties shall within seven days of the failure ( or, if no such means exists, within seven days of the date on which the dispute arises or it first apprehended) meet under a mediator, mutually agreed upon between the parties, with a view to an amicable settlement of the dispute. Section 4 (1) If the dispute is not settled within 7 days of the date on which a mediator is appointed, the dispute shall be reported to the Minister in writing, within 3 days of the end of the 7 days. Section 6 (1).

 The report shall be in writing, disclosing the points of disagreement, and the steps already taken by the parties to reach a settlement. Section 6 (2). Aside, the Minister, suo motu, can apprehend   a trade dispute. In such case, he would in writing inform the parties of this fact (of apprehension) and steps he proposes to take In resolving the dispute. Such steps may include the appointment of a conciliator, or a reference to the Industrial Arbitration panel, or a reference of the dispute to a board of inquiry under section 33 of the Act.

Mediation marks the end of voluntary mechanism under the Trade Disputes Act.

• Conciliation: This is the beginning of compulsory mechanisms for the settlement of trade disputes. The Minister may appoint a conciliator who shall inquire into the causes and circumstances of the dispute and by negotiation with the parties endeavour to bring about a settlement of the dispute. Section 8 (1) & (2).

If a settlement of the dispute is reached within 7 days of his appointment the conciliator shall report the fact to the Minister and forward to him a memorandum of the terms of the settlement. If a settlement of the dispute is not reached within 7 days of his appointment, the conciliator shall report same to the Minister. Section 8 (3) & (5).

Quite apart from the foregoing, where the Minister is of the opinion that the provisions of the Act relating to settlement of trade dispute by a previously agreed means or by a mediator have not been complied with substantially, , he shall issue to the parties a notice in writing directing steps they should take and the time within which to take such action.

• Arbitration Before The Industrial Arbitration Panel: By section 9, within 14 days of the receipt by the Minister of the report stating that mediation has failed (including the 7 days provided for conciliation under section 8) he shall refer the matter to the Industrial Arbitration Panel which shall constitute a tribunal of itself. Under section 13, the tribunal shall make its award within 21 days of its being constituted, or such longer period as the Minister may allow in any particular case.
• The award shall be communicated to the Minister and nobody else, and he shall send a copy of the award to the parties. If the Minister received no notice of objection from either party, he shall then publish in the Federal Gazette a notice confirming the award which then becomes binding on the employers and workers to whom it relates as from the date of the award (or such earlier or later date as may be specified in the award).  In the event that the Minister receives a valid notice of objection, section 14 directs that he refer the dispute to the National Industrial Court.

• Direct Recourse Of The Parties To The National Industrial Court: Without prejudice to the foregoing, the disputants have the right to apply to the National Industrial Court directly (here, the reference to the NIC is not by the Minister but by the parties themselves, or by one of them) by way of appeal as of right against the decisions of an arbitral tribunal in trade dispute matters.
• Adjudication By The National Industrial Court: The objective behind establishing the court is to create a specialized court to handle matters which are connected with the economic growth, industrial relations development, peaceful co-existence between and among labour and employers of labour as well as labour policy formulator, that is, the government.

By virtue of the Third Alteration Act, 2010, the National Industrial Court has become one of the superior courts of record in Nigeria. By implication, this equates the status of National Industrial Court with the Federal High Court.

• Application Of International Best Practices: By a composite reading, section 7(6) NICA and section 253C (1) (f) and (h) empowers National Industrial Court to take cognizance of unfair labour practices and apply international best practices and standards in labour, employment and industrial relations matters. What amount to good or international best practice in labour or industrial relations shall be a question of fact.

The implication is that whatever the court determines to be international best practices cannot be made a subject of appeal or evaluation by the appellate court, being a question of a fact determinable by the National Industrial Court as court of first instance.

The starting point for ascertaining what qualifies as international best practices must be:

• ILO standard setting conventions and recommendations
• Opinions of the Committee of Experts on Freedom of Association on and;
• Opinions of the Committee of Experts on the Application of Conventions and Recommendations (CEACR)

To obtain the full presentation, kindly send your request through tim@neca.org.ng

Legislative Observatory: Request for Submissions

A Bill for an Act to Amend the Labour Act to Make Further Provisions for the Compulsory Registration of All Foreign Employers of Labour in Nigeria by the Ministry and for Related Matters

Highlights of the Bill

Registration of Foreign Employers of Labour: The Bill seeks to make regulations for the registration of foreign employers and such regulations made shall:

• • Provide for the compulsory and free registration of all foreign employers of labour and the mode of registration shall be prescribed in the regulations;
  • Prescribe the manner of, and conditions for registration and the person by whom and the manner in which the register is to be maintained;
  • Prescribe the circumstances in which employers may be struck off the register
  • Prohibit the employment of any person whether Nigeria nationals or nationals of any country by unregistered employers
  • Provide for the compulsory and routine inspection of employers to ensure compliance with the provisions of this act and such other laws protecting the welfare of Nigerian workers and have the reports of every inspection delivered to the Minister within 14 days of completion of the inspection
  • Impose penalties for contraventions of the regulations of the regulations not exceeding a fine of N500,000 or imprisonment for a term of two years or both

• The provision in respect of registration (not penalties) shall not apply to a foreign owned factory already registered under the Factories Act provided that such factory shall comply with the provisions under this section.

We kindly request that you forward your inputs on the above Bill to enrich our submission to the House Committee on Labour, Employment & Productivity, forward it to tim@neca.org.ng on or before Friday, 2^nd February, 2017.

LABOUR & EMPLOYMENT LAW: Jurisdiction of the National Industrial Court (Mr. Slawomir Panta vs. Dal Trade Nigeria Limited) (2014) 50 N.L.L.R. Pt 166, P. 417 NIC

Facts:

• The claimant (Mr. Slawomir Panta) filed his complaint against the defendant, claiming the following:
  • The sum of N81,101,367.00 being amount due to the claimant as terminal benefits and gratuities on the contract of employment between the parties
  • An Order that all the monies/dividend already declared on the 3,795 share owned by the claimant by the defendant be paid
  • An Order that subsequent monies/dividend on the claimant’s shares (3,795) for year 2010 and subsequent years be paid to him
  • Interest on the total amount of money claimed at the prevailing bank rate
  • In response, the defendant filed a notice of preliminary objection, praying for the striking out of some paragraphs of the claimant’s Statement of Fact and the Claims for payment of Dividend for not being within the competence and jurisdiction of the National Industrial Court

Issues

• Whether the National Industrial Court has jurisdiction to entertain the suit.

The Judgement

On Relationship between Jurisdiction and Competence of Court:- It is trite law that jurisdiction is inextricable from the competence of a court. This is against the backdrop of the fundamentality of jurisdiction to the adjudicatory powers of a Court. (See also: Madukolu vs. Nkemdilim (1962) 2 SCNLR 341; (1962) 1 All NLR Pt.4, Page 587)

On Meaning, Nature and Limit of the Jurisdiction of a Court:-

Jurisdiction is said to be the authority a Court has to decide on any issue brought before it for its decision. It is the foundation or bedrock of adjudication. The limits of this authority are imposed by the Constitution, Statute, Charter or Commission under which the court is constituted and may be extended or restricted by similar means. (See also: Obasanjo vs. Yusuf (2004) 9 NWLR Pt.877, Page 437).

On relevant determinants of jurisdiction of court where objection is raised thereto:-

When considering the relevant determinants of the jurisdiction of court to hear a matter when objection is raised as to the exercise of such jurisdiction, the jurisdiction of the court will be determined by the subject-matter of the claim and not the claim relating to the injunction which was an ancillary relief and depends on the primary claim. In the instant case, in deciding whether or not the court has jurisdiction to entertain the suit as regards the payment of dividends of the claimant, recourse should be made to the claim of the claimant’s Statement of Fact.

On whether National Industrial Court has jurisdiction over Director’s fees and claims for dividends/debt:-

Issues bordering on non-payment of Directors’ fees are outside the jurisdiction of the National Industrial Court. The Court also has no jurisdiction over claims for dividends/debt.

On whether National Industrial Court has exclusive jurisdiction over all matters arising from the workplace:-

The National Industrial Court does not have exclusive jurisdiction over all matters arising from the workplace. To follow this instance means that even a case of libel which is an independent tort should be handled by the court. When the court is faced with issued of this nature, what should be considered is whether the law/rules needed to resolve the matter at hand are employment law rules. If the answer is Yes, it then means that the court can safely assume jurisdiction, but if it is in the negative, that means that the court would not exercise jurisdiction over the matter.

Final Judgment:-

The Court upheld the preliminary objection of the defendant and struck out some paragraphs of the claimant’s Statement of Fact and the Claims for payment of Dividend for not being within the competence and jurisdiction of the National Industrial Court, as it had to do with payment of dividends and was within the operation of the Company and Allied Matters Act.

OPINION:

Where the exercise of a power of court is statutory, such power can only be exercised within the limits prescribed by the statute.

Learning & Development Experts Forum

Date:                9 February 2017

Duration:          ½ Day

Venue:             NECA Learning Centre

Course Fee:     Members: Free                    Non- Members: N5,500

 Management Skills Development for New Managers

Date:                16 – 17 March 2017

Duration:          2 Days

Venue:             NECA Learning Centre

Course Fee:     Members: N82,500;            Non- Members: N87,500

Annual NECA Retreat Of Technical Committees

Date:                24 – 25 March 2017

Duration:          2 days

Venue:             TBA

Course Fee:     Members: N85,000;            Non- Members: N90,000

For further details please contact Adewale (08069720364) adewale@neca.org.ng

Visit www.neca.org.ng