On September 24, Nigeria’s BusinessDay reported that a study conducted by the Centre of International Private Enterprise (CIPE) in collaboration with the Lagos State Chamber of Commerce and Industry (LCCI) on the “Impact of Regulatory Agencies on Businesses.” revealed that regulatory challenges and their attendant costs have been the major factors stifling healthy growth of businesses across several sectors of the Nigerian economy. The study report revealed that beyond infrastructure shortcomings, infractions by most of the regulatory agencies including Standards Organization of Nigeria (SON) and National Agency for Food and Drugs Administration Control (NAFDAC), have forced some businesses to close shop, relocate to other countries, or move into the informal sector. This characterization of Nigerian regulators raises the question of what the ideal characteristics of a regulator should be in order for them to facilitate and not hinder the going concern of the particular industries they regulate. The answer according to Dame Suzi Leather is that a good regulator is “independent, possesses authority and initiative, and is accountable.”
Independence connotes freedom from undue influence from the sector being regulated, political authorities/parties and any other interests that is not the publics. The ultimate goal of a regulator should be to serve the public’s interest.
Second, good regulators must have sufficient legal authority, spelt out in the enabling law, to carry out their duties, and to impose sanctions if needed. Sanctions could be monetary like fines or reputational like blacklists, and if enforced consistently will help decrease the likelihood of infractions.
The goal of regulation should be to prevent incidences from happening rather than reacting in the pages of newspapers when one does. One may surmise that prevalence of poor compliance incidents is a sign of failure in providing regulatory oversight. Possessing authority also includes being an expert on trends and practices within the industry that a regulator oversees.
Third, a good regulator should be able to take initiative to anticipate risk and prevent problems. Having initiative means being excellent at providing clear guidance on how the regulated companies will behave and anticipating regulatory responses to changing realities.
Finally, accountability is a stance of being committed to integrity and a constant awareness of the fact that one is acting on behalf of the public. Accountability also means a willingness to bear scrutiny when one’s actions are questioned and a willingness to invite the public into the decision making process e.g. the public should be able to comment in a representative manner on proposed policies and actions.
Asides from the quartet of independence, authority, initiative and accountability mentioned above, the World Bank outlines that 10 key principles of the independent economic regulator to include Independence, Accountability, Transparency and Public Participation, Predictability, Clarity of roles, Completeness and clarity of rules, proportionality, requisite powers, appropriate institutional characteristics and integrity.
In sum, regulation is not necessarily a bad thing as it helps the public make better decisions, clarifies the rules of the game and it dissuade crimes and abuse. However, regulators must realize that their role is a scared public trust and should carry it out with the gumption it deserves.