That small and Medium Enterprises have become the engine room of economic growth is a fact that cannot be disputed. That SMEs have the seemingly lost answers to the ailing economic situation in the Third world is an fact that has been established in countries like Pakistan, Thailand, Mauritius, Philppianes, Malaysia, India and Taiwan

The Law and Micro, small and Medium enterprises in Nigeria
Having established the inevitable nature of small business to the economic growth of the Third world countries, the question is what role does the law of the land play in enhancing the role of small business as the engine room of a developing economy? I dare say that the law, as a dynamic instrument of social and economic engineering, sure has a major role to play in the growing activities of small business in Nigeria.
Thus this piece seeks to do a quick and practical assessment of the legal framework for small business in Nigeria with a view to making workable recommendations that will inject more life into the operations of the subsector.
What exactly do we mean by a legal frame work? Legal framework refers to the legal structures that have been deliberately put in place to enhance the operation and growth of small businesses. Please note the word ‘deliberately”.
I submit that apart from the SMEDAN ACT and probably minute sections of the companies and Allied Matters Act, no deliberate effort has been made be successive Governments in Nigeria to create a legal framework for the operation of small businesses. The implication is that it requires a smart scouting to put the laws that regulate the activities of small businesses in one piece as we are trying to do here
What we shall be doing in the next few paragraphs therefore is to outline major areas of the operations of the small businesses that are covered by the law. We shall later examine the provisions of the SMEDAN ACT, 2003 and how they affect small businesses in Nigeria.

Formation of small Business
 The formation businesses in Nigeria is regulated by companies and Allied Matters Act. The act in part A provides, among other things, for Limited Liability Company. Part B deals with Business name registrations for Partnership and Sole proprietorships.
The foregoing are the most relevant types of business registrations to Small Businesses in Nigeria. Businesses formation is strictly the business of the Corporate Affairs Commission Incorporation of companies is the responsibility of the Corporate Affairs commission and it is centralized.
That is all incorporations are done in Abuja. This makes incorporation difficult, cumbersome, time wasting and expensive.

OBSERVATION ON THE OPERATIONS OF THE CORPORATE AFFAIRS COMMISSION:
The Corporate Affairs Commission is often accused of ineptitude and corruption. The truth of the matter is that the fact that incorporation of a company in Nigeria must be directed to the Federal Capital office of the Corporate Affairs commission puts the workforce of the organization’s headquarters under undue physical and moral pressure. This creates a situation where some members of staff of the corporate affairs commission are easily lured with pecuniary consideration by professionals (particularly legal practitioners) involved with the process of incorporation, who may want to beat time.
It is one’s thinking that the procedure of Incorporation of companies (particularly Limited Liability Companies) should be relaxed (in the interest of Small Businesses) by the Companies and Allied matters Act as follows:
I       Incorporation and registration business name should be      decentralized.

II      Payment of Stamp duty, which one considers as tax before business should be scrapped. The Federal Inland Revenue that receives the Stamp duty has not been able to evolve a sound and effective system for that purpose. Thus apart from the fact that the practice is tax before business, it is also time wasting and not in the interest of small business people in Nigeria.
III      The cost of incorporation is exorbitant and should therefore be reduced.

TAXATION AND LEVIES AND SMALL BUSINESSES
Taxation in Nigeria is enforced by the three tiers (Federal, state and Local Government recognized by the 1999 constitution of the Federal Republic of Nigeria. The sphere of each tier is set out in clear terms in the Taxes and levies (approved list for collection) Decree of 1998. Some of the taxes payable in Nigeria are personal Income Tax, Capital gains Tax, Education Tax, Value added tax (VAT), Nigerian social Investment Trust Fund (NSITF). Withholding Tax, Companies Income Taxes and so on.
One form of Tax is common to incorporated companies in Nigeria is Companies Income tax. This tax, WHICH IS 30% OF THE PROFIT OF A COMPANY IS PAID ANNUALLY.
Our main focus on the various taxation laws and small business in Nigeria today is the jeopardy of multiple taxations that small businesses, particularly those in the urban areas face. The situation is made possible by the sate and Local Governments, exploiting the provisions of Taxes and Levies (approved list of collection) Decree of 1998. Taxes are imposed on small business people with ravaging impunity. It is the case of ‘monkey dey work baboom dey chop’. The way things are going if the situation is not arrested by the law, life may be snuffed out of the overstretched monkey (small businesses).

Recommendations on Taxation
It is time to save this promising goose (small businesses) that has the potential to lay the golden egg (economic advancement) from the bird flu of multiple taxations and levies. The following are therefore recommended:
1.30% companies Tax is too high for small business in an inclement economy climate kike ours. I was discussing with client a small business person who is into aluminum fabrications and he has said he runs his factory like a local government. He is responsible for everything from road repairs an electricity to security. Such client like many other small business  people is now forced to cough out 30% of their hard earned money even when they cannot see the dividends of tax payment. The can only encourage cutting of corners at the end of the day.

The monster of multiple taxations and levies must be haunted and destroyed: Most of the levies and taxed do not take into consideration the size of the business involve, they come in form of a blanket of levies. A client of ours who runs a small crèche of 12 children was the other day levied N100,000.00 for registration by the Lagos State Ministry of Women Affairs and Poverty Alleviation. The previous year it was only N10,000.00. The way to do this is for there to be harmony on tax laws at the state level. The maximum overall amount of tax that a small business should pay can be legislated on.

III.     Tax holiday for small businesses: considering the challenges of small businesses in finding their financial feet, the law should consider tax exemption for a period of time preferably at the start up point.

 SMALL BUSINESS AND ACCESS TO FINANCE
As it is today, the law is not on the side of the small business person in his quest to get finance for his business. Just recently a national policy on microfinance was put in place and is yet to find its feet.

The issue of finance in small businesses is too crucial and sensitive to be left to the whims and caprices of financial organizations. The interest rates on land facilities are just unrealistic. There is need for a legislation that provides for the entire finance issues that small business face with due consideration to the real estate of the generality of our people.

OTHER AREAS
Other areas that we would have loved to touch but are restrained by pace are law and small business as it relates to intellectual property (copyright trademark and patent). Management issues, employment matters, import and export, general contract issues, partnership, dispute resolution and so on.

The cold fact remains that our law as it is today is yet to catch up with the challenges faced by small business in Nigeria in the areas listed above.

SMEDAN and small Business
SMEDAN is established by small and medium scale Industries Development Agency Act, 2003. The introductory not to the Act gobs a clue to the duties of the body as follows: AN ACT TO ESTABLISH THE SMALL AND MDEDIUM SCALE INDUSTRIES DEVELOPMENT AGENCY TO BE CHARGED WITH THE RESPONSIBILITY FOR PROMOTIONG AND FACILITATING THE DEVELOPMENT PROGRAMMES IN THE SMALL AND MEDIUM SVALE INDUSTIRS SUB-SECTORS AND FOR CONNECTED PURPOSES”.

Section 8 of the Act titled, ‘Functions of the Agency’ function of the Agency. When this read with Section 9 which deals with the ‘Powers of the Agency’  we begin to understand that SMEDAN is  blessed with all that it needs to transform the small and Medium scale  industries in Nigeria into yet a productive and effective entity.
The question is what concrete effort are on the ground to translate the provisions of that beautiful piece of legislation into concrete and enduring actions for which small business people will rejoice forevermore.

CONCLUSION
The law needs to be more sympathetic to the cause of small businesses considering the important place they occupy in economic growth.
The law regulates the activities of people. Except it takes into consideration and moves with the social, economic and political evolution of the people it becomes outdated and irrelevant to the hopes, yearnings, aspirations of the people. The implications that the law loses its purpose in the society as an instrument of social engineering. And the only beneficiaries of this kind of awkward situation are disorder, jungle justice, stagnation and mediocrity.
One major flaw of our law today is that it is yet to take into full consideration the global focus on small businesses as the engine room of economic advancement. The way to do this is to review our business laws with the small business in focus. This I must say is yet to be done.

PREPARED BY:
AJAYI IRIAGBONSE