STUDY SESSION 9: THE ROLES OF GOVERNMENT AND BUSINESS AGENCIES IN

NIGERIA

9.1 Introduction

The diversity of the support structures available in a given business environment has implications

for the success or failures of business enterprises. Theoretically, the forces of demand and supply

direct economic activities and ensure continuous stability in the market place. However, when the

market fails to guarantee stability, the government will have to intervene either by way of lending

supports or formulation of rules and regulations. In this study session, you will learn why

government remains a significant stakeholder in any given business environment. First, formality

of businesses is a necessary condition but we have more of informal businesses in this part of the

world. There are businesses that are operating in the economy and do not have any documentary

evidence of registration. You will, therefore, learn about the significance of business registration.

You will also learn the steps involved when registering a new business. Business registration is

the primary responsibility of the Corporate Affairs Corporation (CAC). Its functions are well spelt

out and distinct from the activities of other government agencies that have significant roles to play

in the business environment. In this case, you will be introduced to other government agencies in

Nigeria’s business environment and their respective functions. The concluding part of this study

session discusses the role of government in a given entrepreneurial ecosystem.

9.2 Learning Outcomes for Study Session 9

At the end of this study session, you should be able to:

1. Discuss the economic significance of business registration

2. List the steps involved in business registration

3. Differentiate the functions of the CAC from the functions of other government agencies

4. Explain the role of government in a given entrepreneurial ecosystem

9.3 Economic Significance of Business Registration

Laws, rules and regulations in a business perspective can be termed as legal structures that guide

the formation, operations and activities of enterprises (Scarborough, 2011). Hence, business as a

legal entity that can sue and be sued is expected to operate within the recognized and legal

provisions. Notably, every human being tends to enjoy certain rights with obligations. Therefore,

each company is lawfully bound with certain rights and obligations for its existence. Every

business organisation, particularly, a new venture benefits from the stated laws, rules, and

regulations in the environment where it operates as mentioned below;

Protect new businesses:

The rights of new businesses are protected when there is a legal framework in the industry/sector

that guides their formation and operations by copyrighting their ventures (Wickham, 2011).

Therefore, they are protected from any intimidation either from the bigger firms or government

since there are stated and recognized laws, rules, and regulations that guide them.

Provide guidelines and directions:

Legal structure tends to provide guidelines and directions with which enterprises operate in the

business environment (Barringer & Ireland, 2010). This helps a lot in how to recruit manpower,

how to care for the employees, and the way and manner they are expected to be disengaged from
the services. It also aids firms on how to carry out legitimate businesses being in the system that

will not tarnish their images.

Make ventures legal entities to engage in legal contracts:

This clarifies the reason why a company is a legal entity because they are qualified to engage in

legal activities. When a firm is legally established, there are rules and regulations within which it

operates (Urlancher, 1999). All these come together to make such company have legal power to

engage in certain legal contracts such as leasing, because there are rules and regulations that guide

such agreement. Therefore, when there are laws, rules, and regulations, and companies obey them,

they are legally qualified to enter into any legal agreement with any party (Heriot, 2006).

9.3.1 In-Text Question (ITQ)

Succinctly explain the reason why business organization is a legal entity

9.3.2 In-Text Answers (ITAs)

Business organisation is a legal entity because it can sue and be sued, and since every human being

tends to enjoy certain rights with obligations, therefore, each company is also lawfully bound by

certain rights and obligations for its existence.

Benefits a new venture can enjoy from business regulations:

a. Protection

b. Guidelines and directions

c. Engaging in legal contracts

 9.4 The Corporate Affairs Commission

The Corporate Affairs Commission (CAC) of Nigeria was established in 1990 vide Companies
and Allied Matters Act no 1 (CAMA) 1990 as amended on Act cap C20 Laws of federation of
Nigeria, 2004. Principally, the Commission is one of the innovations of CAMA that accords the
Commission the responsibility of incorporation of companies, registration of Business Names,
Incorporation of Trustee of certain committees, bodies, associations and other regulations. It is an
independent body charged with the responsibility to regulate the formation and management of
companies in Nigeria.

Before the advent of CAC, the Companies Act of 1968 was the Act that regulated the activities of
companies in Nigeria. The present CAMA was an offshoot of draft documents prepared by the
Nigerian Law Reform Commission in an attempt to restructure and improve on the Companies
Act of 1968, which could no longer address the different challenges linked to the regulation and
supervision of Companies in Nigeria. As mentioned in Ibekwe (2018), below are the functions of
CAC:

Functions of the Corporate Affairs Commission (CAC)

Functions of the CAC

Incorporation of companies
business name
Registration of incorporated Trustees
Insurance of certified true copies of extracts of field documents.
Registration of increase in share capital, mortgages, debentures and charges, etc
Processing the statutory filing of (a) Annual returns (b) alterations of the memorandum and articles of
association (c) addresses etc.

Change of particulars of allotment

Change of registered office address
Registration of receivership
Registration of appointment liquidation
Statement of Affairs pursuant of section 636 of any company.
Conducting investigation into the affairs of any company, business names or incorporated Trustees.
Supervising the management and winding up of companies
Enforcing compliance with the provision of CAMA by corporate bodies.
The commission offers same day incorporation service under which companies are registered within
Accreditation of lawyers, chartered accountants and chartered secretaries who are direct users of the
services of the commission. (CAC Notes on customers guidance 2010:24). The commission also
registers business names, and incorporates trustees as well as provides a wide range of ancillary

9.4.1 In-Text Question (ITQ)

What is the major responsibility of the Corporate Affairs Commission (CAC)?

9.4.2 In-Text Answers (ITAs)

It is an independent body charged with the responsibility to regulate the formation and
management of companies in Nigeria. Selected responsibilities of the CAC include:

i. Incorporation of companies
ii. Registration of business name
iii. Registration of incorporated Trustees
iv. Change of registered office address

9.5 National Agency for Food and Drug Administration and Control (NAFDAC)

The National Agency for Food and Drug Administration and Control (NAFDAC) is an agency

formed under the Federal Ministry of Health, and is responsible for regulating and controlling the

manufacture, importation, exportation, advertisement, distribution, sale and use of food, drugs,

cosmetics, medical devices, chemicals and packaged water in Nigeria.

The organization was established in Nigeria in 1993 under the country's health and safety law to

guide against unlawful and fake products. The formation of NAFDAC was motivated by a 1988

World Health Assembly resolution requesting countries' assistance and support in fighting against
the global health threat posed by phony pharmaceuticals. The first governing council of NAFDAC

was formed in December 1992. The council was chaired by Tanimu Saulawa. In January 1993,

supporting legislation was officially approved as legislative Decree No. 15 of 1993. On January 1,

1994 NAFDAC was legitimately established as a “parastatal of the Federal Ministry of Health”.

NAFDAC replaced the former Federal Ministry of Health body, the Directorate of Food and Drug

Administration and Control, which had been considered ineffective, partly because of lack of laws

regarding counterfeit drugs.

FUNCTIONS OF NAFDAC

Functions of NAFDAC
Regulating and controlling (importation, exportation, manufacturing, advertising,
distribution, sale and use of food, drugs, cosmetics, medical devices, bottled water and

Conducting appropriate tests and ensure compliance with standard specifications

designated and approved by the Council
Undertaking appropriate investigations into the production premises and raw materials

Undertaking inspection of imported products, certification of production sites, and the

Compiling standard specifications and guidelines for the production, importation,

exportation, sale and distribution of food, drug, cosmetics, medical devices, bottled water

Undertaking the registration of food, drugs, cosmetics, medical devices, bottled water and

Controlling the exportation and issue quality certification of food, drugs, cosmetics,
medical devices, bottled water and chemicals intended for export
Establishing and maintain relevant laboratories or other institutions in strategic areas
Pronouncing on the quality and safety of food, drugs, cosmetics, medical devices, bottled

Carrying out measures to ensure that the use of narcotic drugs and psychotropic
substances are limited to medical and scientific purposes
Giving authorisation to import and export of narcotic drugs and psycho- tropic substances
as well as other controlled substances
Cooperating with the National Drug Law Enforcement Agency in some measures to
Nigeria
 Advising Federal, State and Local Governments, the private sector and other interested
bodies concerning the quality, safety, and regulatory provisions on food, drugs, cosmetics,
medical devices, bottled water and chemicals.
Embarking on and co-ordinate research programmes on the storage, adulteration,
distribution and rational use of food, drugs, cosmetics, medical devices, bottled water and

Issuing guidelines on, approve and monitor the advertisement of food, drugs, cosmetics,
medical devices, bottled water and chemicals;
Gathering and publish relevant data resulting from the performance of the functions of

ponsoring such national and international conferences as it may consider appropriate

Liaising with appropriate and related establishments within and outside Nigeria
Determining the suitability or otherwise of medicines, drugs, food products, cosmetics,
medical devices or chemicals for human and animal use; and
Carrying out activities that are necessary for the performance of its functions under this

9.5.1 In-Text Question (ITQ)

What is your understanding about National Agency for Food and Drug Administration and

Control (NAFDAC)? State any five responsibilities of this agency.

9.5.2 In-Text Answers (ITAs)

The National Agency for Food and Drug Administration and Control (NAFDAC) is an agency

formed under the Federal Ministry of Health, and is responsible for regulating and controlling the

manufacture, importation, exportation, advertisement, distribution, sale and use of food, drugs,

cosmetics, medical devices, chemicals and packaged water in Nigeria.

Any 5 functions of NAFDAC

I. Regulating and controlling

II. Conducting appropriate tests and ensure compliance with standard specifications
III. Undertaking appropriate investigations

IV. Undertaking inspection

V. Undertaking the registration of food, drugs, cosmetics, medical devices, bottled water and

chemicals

9.6 The Standard Organisation of Nigeria

The Standard Organisation of Nigeria (SON) is the body saddled with the responsibility of

maintaining the standard of consumable products in the country whether locally produced or

imported into the country. The bottom-line here is to make inquiries into the establishment,

constitution and functions of the organisation as provided in the SON Act to examine how it

operates to guarantee the quality of what the public consume. The exercise also looks into the

problems that companies encounter in the process of carrying out their duties, and suggests ways

of surmounting or circumventing obstacles that may not allow companies to carry out their

functions effectively (Obumneme-Okafor, 2010).

Functions of the Council and the Organisation

The functions of the council and the organization are numerous and varied. The major aim is to

ensure that the products being pushed to the market by the manufactures/producers are of the

required quality and the process through which they produce is of the acceptable and suitable

standard. According to Obumneme-Okafor (2010), these include inter alia to:

Functions of the Council and the Organisation

Functions of the Council and the Organisation

Advise the Federal Government basically on the national policy on standards, standard
specifications, quality control and metrology
 Designate, establish and approve standards in metrology, materials, commodities,
structures and processes for the certification of production in commerce and industry
Offer the required measures for quality control of raw materials and products in
compliance and consistency with the standard specification
Organise tests and do everything necessary to guarantee compliance with approved

Undertake investigations as necessary into the quality of facilities, materials and products
in Nigeria and establish a quality assurance system including: certification of factories,
products and laboratories, and ensure reference standards for calibration and verification
of measures and measuring instruments (Sections 4 and 5, SON Act 2004).

9.6.1 In-Text Question (ITQ)

What is the major responsibility of Standard Organisation of Nigeria (SON)?

9.6.2 In-Text Answers (ITAs)

The Standard Organisation of Nigeria (SON) is the body saddled with the responsibility of

maintaining the standard of consumable products in the country whether locally produced or

imported into the country.

Any 3 functions of SON

I. Advise the Federal Government basically on the national policy on standards,

specifications, and quality control

II. Offer the required measures for quality control of raw materials and products in

consistency with the standard specification

III. Organise tests and do everything necessary to guarantee compliance with approved

standards.
9.7 Independent Corrupt Practices and other Related Offences Commission (ICPC)

On September 29th, 2000, the Nigerian President, Chief Olusegun Obasanjo, GCFR inaugurated

the Independent Corrupt Practices and Other Related Offences Commission. This idea was brought

up purposely to receive and investigate reports of corruption and inappropriate cases for

offender(s) to be prosecuted. ICPC is also saddled with the responsibility to examine, review and

enforce the correction of corruption prone systems and procedures of public bodies, with a view

to eliminating corruption in public life, and to educate and enlighten the public on and against

corruption and related offences with a view to enlisting and fostering public support for the fight

against corruption. The Commission is at the core of Nigeria ‘s fight against corruption. In the

order set out at section 6 of the Act 2000, the first duty of the Commission is to receive complaints,

investigate and prosecute offenders.

Duties of the Commission

Duties of the Commission. Section 6 (a-f) of the ICPC Act 2000 sets out the duties of
the Commission as paraphrased in the following:
Receiving and investigating complaints from members of the public on allegations of
corrupt practices and inappropriate cases, and prosecute the offenders.
Examining the practices, systems and procedures of public bodies and where such systems
aid corruption, to direct and supervise their review
Instructing, advising and assisting any officer, agency, or parastatal on ways by which
frauds or corrupt practices could be eliminated or minimized
Advising heads of public bodies of any changes in practice, systems or procedures to
reduce the likelihood or incidence of bribery, corruption and related offences
Educating the public on and against bribery, corruption and related offences
Enlisting and fostering public support in combating corruption

9.7.1 In-Text Question (ITQ)

What is the major responsibility of Independent Corrupt Practices and Other Related

Offences Commission (ICPC)?

9.7.2 In-Text Answers (ITAs)

ICPC is saddled with the responsibility to examine, review and enforce the correction of corruption

prone systems and procedures of public bodies, with a view to eliminating corruption in public

life.

Any 3 duties of ICPC

I. Receiving and investigating complaints from members of the public on allegations of

corrupt practices.

II. Advising heads of public bodies of any changes in practice, systems or procedures to

reduce the likelihood or incidence of bribery, corruption and related offences.

III. Educating the public on and against bribery, corruption and related offences.

9.8 Summary of Study Session 9

You have been made to understand in this study that there are rules and regulations that guide the

operations of business organizations. Some of us believe that these regulations are there to make

things difficult for business activities but they are necessary to ensures the legitimacy of any action

of any organisation during the period of satisfying a need. The major question here is that how

many of us will be happy when we eventually discovered that the product we bought is not of

quality or it is contaminated? The same thing happens in our own personal business because there

are some persons in society that will consume our products or services as well. If all of us could

have this mindset, the issue of fake products will be totally eliminated. Moreover, legal framework

helps us to know other benefits that our businesses can enjoy by being legally protected. Imagine
having a business running legally in the University of Lagos, it would be difficult for any

individual, group of individuals or the University itself to treat your venture anyhow. It is,

therefore, important for us to register our companies, pay tax regularly and avoid doing illegal

businesses.

9.8.1 Self-assessment Questions (SAQs)

1. ____________ contributes majorly to the success and failure of any venture

A. Business environment

B. Legal environment

C. Legislative environment

D. Rules and regulations

2. ___________, ________________ and ______________ in a business perspective can be

termed as legal structures that guide the formation, operations and activities of enterprises

A. Laws, rules and regulations

B. Legislation, rules and regulations,

C. Act, legislation and laws

D. Regulations, rules and policy

3. Business organisation is a legal _____________

A. Company

B. Venture

C. Entity

D. Entity of a company

4. _______________________ provides guidelines and directions with which enterprises

A. Organisational structure
 B. Legal structure

C. Regulation structure

D. Law structure

5. What is the full meaning of CAC?

A. Cooperate Affair Commission

B. Corporate Affair Commissions

C. Cooperate Affair Commissions

D. Corporate Affairs Commission

6. The following are functions of CAC, except

A. Incorporation of companies

B. Registration of business name

C. Change of register office

D. Registration of incorporated Trustees

7. What is the full meaning of NAFDAC?

A. National Agency for Food and Drug Administration and Control

B. National Agency of Food and Drug Administration and Control

C. National Agent for Food and Drug Administration and Council

D. National Agency of Food and Drug Administration and Council

8. The Standard Organisation of Nigeria (SON) is the body saddled with the responsibility

of maintaining the standard of ________________ in the country

A. Products

B. Consumable goods

C. Services
 D. Structure

9. Independent Corrupt Practices and other Related Offences Commission (ICPC) is also

saddled with the responsibility to ___________________ the correction of

corruption prone systems and procedures of public bodies.

A. examine, review and enforce

B. review, examine and enforce

C. enforce, examine and review

D. examines, enforces, and reviews

10. The following are duties of ICPC, except

A. Receiving and investigating complaints from non-members

B. Examining the practices, systems and procedures

C. Advising heads of public bodies of any changes in practice

D. Educating the public on and against bribery, corruption and related offences

9.8.2. References/ Suggestions for Further Reading

Barringer, B. & Ireland, D. (2010) Entrepreneurship: Successfully launching new ventures (3rd

ed.). Harlow: Prentice Hall.

Heriot, K. (2006) Cases in entrepreneurship and small business management (8th ed.). Mercer

University, Harlow: Prentice Hall.

Ibekwe, M. Z. (2018). The Relevance of Corporate Affairs Commission to Small and Medium

Enterprises (SMES) in Nigeria (A Study of Konum Farms Limited, Amai, Delta State).

Covenant Journal of Entrepreneurship, 1(2), 53-63.

Obumneme-okafor, n. j. (2010). the standards organisation of nigeria (son) and the Protection Of

The Consumer in Nigeria. The Nigerian Academic Forum, 19(2), 1-6.

Scarborough, N. (2011) Essentials of entrepreneurship and small business management (6th

ed.). Harlow: Prentice Hall.

Urlacher, L. (1999) Small business entrepreneurship: An ethics and human relations

perspective. Harlow: Prentice Hall.

Wickham, P. (2011) Strategic entrepreneurship (5th ed.). Teesside Business School, Harlow:

Prentice Hall.

Should you require more explanation on this study session, please do not hesitate
to contact your e-tutor via the LMS.