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Formal court and legal procedures are slow, costly and often ineffective. The enforcement of contracts is impeded. This is again identified in Doing Business studies both generally and in the case of Nigeria both as an important constraint to doing business and a key indicator of the overall investment climate. There is a consensus on the need to develop alternative dispute resolution modalites, both court connected (that is involving diversion from courts) and free standing. Lagos and several other states already have functioning prototypes of both – in the case of the non-court affiliated Citizens Mediation Centre already serving over 6000 clients a year.
Unreformed secured transaction systems such as Nigeria's limit the use of movable property as colateral. A reform of the legal framework governing secured transactions is one tangible way of addressing and mitigating this issue. Reforming laws could greatly improve access to credit in Nigeria. The "Doing Business Report" highlights this fact impirically: "Credit to the private sector averages 16% of GDP in the 10 economies ranking at the bottom on how well collateral laws are developed, while in the top 10 countries, credit tops 120% of GDP."
The ADR Center of Italy in association with the Nigerian Conciliation and Mediation Group, an NGO have been retained to develop in collaboration with the three pilot states judiciary, bar, state governments, and other stakeholders plans for developing both court connected and independent centers in the three states. An Assessment Report has served as a basis for negotiations with the stakeholders in each state. The Chief Justice of Abia has signed a Memorandum of Understanding committing that state to go forward. Final stages of negotiation are underway in Kaduna and Lagos.
For information about this component contact Mr. Chukwudi Odili, Investment Climate Specialist at codili@msme-nigeria.org
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