Q&A with Laura Alakija: Compliance for Mid-Sized Businesses in Nigeria
Laura Alakija supports Nigerian businesses in establishing anti-corruption compliance programs. She is the Lead Counsel for the corporate law group within Nigeria’s Sterling Partnership law practice, which provides regulatory compliance advice and company secretariat support. Alakija advises local and international clients on business start-ups, licensing, permits and regulatory compliance requirements and has provided support to foreign investors from different jurisdictions including China, Kuwait, Italy, USA, Kenya, Canada, Switzerland and India on business entry into Nigeria. Alakija is a Barrister and Solicitor of the Supreme Court of Nigeria and a member of the Nigeria Bar Association and International Bar Association. Alakija received her LLM Transnational Oil, Gas and Energy Law for the University of Derby, United Kingdom. In a recent interview in Lagos Nigeria, CIPE program officer Laura Van Voorhees discussed Alakija’s experience supporting the compliance operations of small- and mid-sized businesses in Nigeria.
- What advice would you give to a business owner starting their business in Nigeria?
Start properly, keep detailed records, and seek professional advice. I realize that the general perception is that professional advice is expensive. In some respects, that is true. It is also true that it is even more expensive to seek to be compliant after years of default. What we do in our practice is to partner with small businesses by providing regulatory compliance and other legal support with some flexibility surrounding their cash flow and potential for growth. I happen to know that there are a number of law firms and other professionals who adopt a similar approach in catering to the needs of the small and medium sized businesses.
- What are some of the three greatest challenges for small businesses in Nigeria?
In my opinion, these would be structure, tax, and access to funding.
Most small businesses start off without a structure. This means, for instance, that business income and expenditure are not separated from that of the proprietor: there are no accurate records and there is no plan for expansion and succession. This is especially common with businesses started as poverty alleviation programs, possibly because the thinking does not go beyond providing an immediate source of livelihood for the beneficiaries. The absence of structure also means that these businesses operate under the radar and do not pay taxes.
The consequence of foregoing taxes is that such a business does not qualify for any kind of external funding. Whether equity or debt, the key requirements for external funding – outside of a collateral – include regulatory compliance, structure, and a growth/expansion plan. This shows that the business is sustainable and reflect the business’s ability to yield returns to its investors or service its debts as the case may be.
- You have advised businesses which are part of multinational supply chains on compliance issues. What do these investors look for when partnering with local businesses?
In my experience, multinationals and foreign business, which aim to work with local entities, like to see processes, transparency, compliance with local laws, and zero tolerance for corruption. These are essential because a multinational company with offices in many different jurisdictions which, more often than not, will have one set of rules for all its operations will find it easier to partner with an entity which has minimal legal issues and which would very easily comply, for instance, with the FCPA or the UK Bribery Act of 2010. The usual expectation is that such an entity, which may be operated as an offshore subsidiary of the foreign parent company, would have very little or no potential of becoming a liability for the parent company’s global operations.
- What advice do you have for businesses that want to export internationally or work with multinational companies?
Following from my previous comment, businesses are always trying to minimize their risks and exposure to liability within their operating environments. There are no short cuts to setting up a sound business. Nigerian businesses must commit to the right structure and processes, which will in turn attract the sort of partnerships they desire. This is not necessarily a function of starting a huge enterprise, but simply setting in motion an efficient system which, with the right input, can be scaled into a large scale profitable enterprise.
- You recently attended the African Women’s Entrepreneurship Program inaugural meeting of the Lagos chapter. What can you offer to women’s small businesses in terms of advice on regulatory issues?
There are basic regulatory compliance issues that every Nigerian business is faced with. First, it is important to know what these issues are in order to be able to comply, so I advise these businesses to seek out competent professionals and ask the right questions.
Alongside all the other advice provided previously, keep an eye out standards and for labor and employment issues. You will find as your business grows that violations in these areas are the most costly to regularize and have a higher potential than others to be fatal. So ensure that you have the right permits, licenses, certifications, authorizations; that your products are of the highest possible quality, meet the all specifications for products in that class/category and your business is registered with the relevant bodies responsible for consumer protection and for standards and quality. Also, it is imperative to ensure that your business complies and keeps complying with minimum labor and employment requirements – the requirements vary with the size of your business.
- Why is it important to focus on women’s businesses within the scope of global value chains? What can be done to integrate more women into these global value chains?
Empowering women’s businesses directly stimulates social and economic change. More women are taking up responsibility for the survival, welfare, and education of their families. An increase in the population of successful women entrepreneurs, especially for women who have not had access to formal education to acquire a skill and build a business, will have the effect of stimulating social change within a system that has long neglected the potentials of women and taking more children off the streets – as many street hawkers and child beggars in developing economies are on the street to support their families.
I commend the activities of organizations such as the African Women’s Entrepreneurship Program (AWEP), Women in Successful Careers (WISCAR), Women in Management and Business (WIMBIZ) and organizations with similar objectives, as they have developed platforms through which more women can be educated on the opportunities available both in career and business, and granted access to resources. This will inevitably result in increased participation and higher probabilities of success for women’s businesses.
- What has your experience been working as a woman in the compliance sector in Nigeria?
I have had and am still enjoying a good career as a legal practitioner in Nigeria. I have found my work in regulatory compliance very fulfilling because getting things right always puts my clients and their business in better stead and positively impacts their transactions and profitability. I have found in the course of my work that once you have decided that the standard is the same everywhere and for everyone, and have learnt to expect that from yourself and from others, then it is only a matter of time before everyone – colleagues, clients, and regulators – respond to you on the basis of those standards.
- What drew you to an interest in legal and regulatory compliance issues?
My initial interest was in providing transaction support to businesses regardless of size. I quickly found that non-compliance with regulatory requirements was prevalent, particularly with small and medium-sized businesses. I also found that non-compliance is an obstacle to funding and partnerships which have a direct impact on growth and expansion. This is quite apart from the legal implications of non-compliance which, depending on the degree, could be fatal to a small business. Naturally, it became imperative that my advice to any new or prospective clients would start with a compliance check and regularization support in order to ensure compliance, positioning for growth and the ability to take advantage of opportunities as they arise.
- What advice would you give other women wanting to enter the compliance field?
I would say to them, decide early what type of practitioner you would like to be, put in the work, and stay the course till you achieve your goals.