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Ease of Doing Business: FG, Lagos To Implement Construction Permit Reform

The harsh economic realities faced by construction industry may fizzle out soon, if efforts by the Federal authorities and Lagos State Government are anything to go by.

Report shows that the Presidential Enabling Business Environment Council (PEBEC) has begun the implementation of a number of reforms with the state through its Ministry of Physical Planning and Urban Development to make the process of getting a construction permit more efficient under the business made easy initiative.

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According to World Bank Group flagship report, Doing Business 2018, the world has witnessed an unparalleled expansion of cities in recent decades. The urban population of developing economies is projected to double by 2030, while the area covered by cities could triple.

In tandem with this trend, the construction industry is forecast to grow by more than 70 percent, reaching $15 trillion by 2025. With the population of cities rising around the world, municipal authorities are struggling to keep up with increased demand for their services.

In developing economies, in particular, building departments operating under tight budgets and resource constraints are finding it increasingly difficult to enforce building codes, ensure that quality standards are met and adhere to efficient service delivery processing times.

Presently, Nigeria lacks an approved and workable building code that sets the standards for construction. Many of the buildings erected do not comply with proper safety standards. Without clear rules, enforcing even basic standards is a daunting task.Structural incidents have multiplied. According to the Nigerian Institute of Building, 84 buildings collapsed in the past 20 years, killing more than 400 people.

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Overly complicated construction rules also can increase opportunities for corruption. Analysis of World Bank Enterprise Survey data shows that the share of firms expecting to give gifts in exchange for construction approvals is correlated with the level of
complexity and cost of dealing with construction permits.

Easy access to information on documentation and fees required by building authorities can make compliance with regulations easier and reduce transactions costs for businesses. This year Doing Business collected additional data in 159 economies on the different ways in which building authorities and related agencies make such information accessible.

In the majority of the 159 economies covered, understanding which documents are needed to apply for a building permit and obtaining necessary forms requires a meeting with a public official. OECD high-income economies make it easier for businesses. In nearly all these economies information on what is needed to obtain a building permit is available on the internet, in printed brochures or on posters displayed at the building authority or a related agency.

In economies where entrepreneurs have access to such information online or through brochures, applications are processed more quickly and building permits granted in less time. In these economies obtaining a building permit and necessary approvals takes 177 days on average.

Where an appointment with an official is required, the process takes 199 days on average.Policies promoting access to information cannot on their own increase the account- ability of officials and actively counteract corrupt practices. But easier access to the information needed to comply with regulatory requirements is associated with lower transactions costs, lower levels of perceived corruption and stronger voice and account- ability mechanisms.

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Specifically, under the ease of doing business programme in Lagos State – especially dealing with construction permits and registering property, soil investigation report for two-storey buildings in non-mashy areas and environmental impact assessment for building a storage warehouse are no longer required during the process of getting construction permit.

Similarly, clients are no longer required to obtain or submit the Certified true Copy (CTC) of the survey plan and the CTC of the land ownership title in dealing with construction permit process because the documents already exist internally at the Lagos Ministry of Physical Planning and Urban development.

The authorities has also removed the Infrastructure Development Charge (IDC), which is the fee for construction permits calculated as an averageN5,000x 1,306 square metres has now been removed for maximum of two-storey warehouses, which are typical constructions by small and medium scale businesses.

The Technical Assistant, Industry Trade and Investment, office of the Vice President, Mr. Soji Akinyele confirmed the development. He said that it is part of the benefits of the PEBEC reform agenda. He said: “Over the past three years, Nigeria has implemented more than 140 reforms, increased its Distance-to-Frontier (DTF) score by over 11 basis points, and moved up 24 places in the World Bank Doing Business Index (DBI) rankings.

He explained that sound regulation of construction helps strengthen property rights, protect the public from faulty building practices and contributes to the process of capital formation. According to him, construction regulation and costs are an important consideration for entreprenuers when deciding where to establish their business.

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Srinivasan noted that global best practices in construction permits include risk-based systems allowing the treatment of buildings according to their risk-level and location, a coherent body of rules that defines what is required from builders and ensures a uniform implementation as well as improvements on the organization of the review process – by better coordinating the efforts of different agencies.

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