IMPACT OF NAFDAC’S REVISED POLICY ON SMALL AND MEDIUM ENTERPRISES IN NIGERIA

Introduction

The National Agency for Food and Drugs Administration and Control (“NAFDAC” or the “Agency”) is established by NAFDAC Act, 1992, to regulate and control manufacturing, importation, exportation, distribution, advertisement, sale and use of processed or packaged food, drugs, cosmetics, medical devices, packaged water, chemicals and detergents (the “regulated products”) in Nigeria.

NAFDAC Act enables the Agency to make regulations or policies, evolve programmes or projects for its effective operations that include ensuring the public’s ease of doing business with NAFDAC. Some of these policies are geared towards encouraging and stimulating growth in the Small and Medium Enterprises (“SMEs”).

SMEs’ growth is critical to Nigeria’s economy that now include governments’ drives for digital economy and diversification of Nigeria’s economy. NAFDAC acknowledged challenges that SMEs undergo during registration of any regulated products with the agency. TheGuardian’s report on 12^th April, 2021, states how the Agency has taken steps to remove “bottlenecks and bureaucratic red tapes” that impede registration of regulated products.

NAFDAC’S Policies

Early April, 2021, the Director-General, NAFDAC, announced the Agency’s policies aimed at encouraging SMEs (the “revised policy”). The revised policy introduced the following key changes:

1. decentralization of registration process: under the revised policy regime, the Agency’s zonal offices across Nigeria are empowered to register regulated products. Previously, all applications for registration of regulated products were carried out in Lagos office only.;
2. facility Requirement: under the revised policy regime, a minimum of one standard room and a store is required for registration and production of regulated products. Previously, facility needed for registration and production of regulated products was “purpose-built facility or suitably adapted to comprise a minimum of four rooms designated as the cloak room, packaging material store, production section and finished product store”;
3. the revised policy allows companies involved in manufacturing of similar products to use the same factory for multiple registration;
4. the revised policy aims at reducing resolution time for registration of regulated products from 120 days to 90 days only;
5. the revised policy has reduced registration tariffs for regulated products by 80% for SMEs.

Impact on SMEs

The Revised policy may effectively reduce financial cost, man-hour and the difficulties in registering regulated products, especially for SMEs resident outside Lagos, who can now approach NAFDAC’s zonal office nearest to its factory or production site.

TheGuardian asserts that the number of regulated products being registered at NAFDAC’s zonal office has increased from 11 to over 80 different products.

The revised policy apparently allows facility sharing among SMEs and will reduce financial and other intangible costs of acquiring production facility and consequent registration. Corporate bodies will save costs of setting up separate factories for registration and production of similar products.

Perhaps the most significant relief to SMEs is reduced registration tariffs and costs of production facility. Money and time saved by SMEs from registering regulated products with NAFDAC can be redirected into the business as operating capital which should improve the overall performance of the business, if judiciously utilized.

With these developments, and with more SMEs flourishing, the rate of unemployment in the nation should be substantially reduced and can also lead to significant growth in the economy.

Conclusion

We commend NAFDAC’s ease of doing business efforts in the revised policy, its implementations, as we hope that more SMEs will take full advantage of the revised policy to scale up their enterprises.

NAFDAC needs to ensure that its public service delivery flows from and is consistent with the revised policy. It needs to ensure optimal internal operation.

NAFDAC’s use of its e-registration of regulated products may eliminate or reduce corruption and extortion, either by 3^rd parties or the agency’s employees.

The Agency may as well consider increasing public awareness that may include collaboration with other stakeholders to spread the gains of the revised policy. While constantly training its staff on the public nature of their duties.