The Impact of Government Policies on Nigerian Businesses

Policies are one of the things that a state or country with proper management cannot do without. Before the emergence of countries in Africa, i.e., the precolonial era, policies were already being made to benefit the inhabitants of communities. Monarchs and aristocrats have used these proposed actions for centuries. It is what leaders choose to do about a public or social problem.

Different policies are put in place to address different aspects of a nation. Let’s explore the impact of government policies on Nigerian businesses.

Table of Contents

Meaning of Government Policy

The word policy has been defined in different areas of study, such as insurance, law, economics, and others. For this article, we will be defining it in business terms.

Policies are a set of plans, strategies, or proposed actions for the workers of a particular business to keep to reach a set goal. So, policies simply mean a specific plan put in place to keep up with a particular goal for the country’s economy.

Note that policies are not rules, laws, or regulations. They are strategies put in place to facilitate the obedience of laws. This simply means that they guide decision-making. Here is a list of policies that are currently active in Nigeria.

The whistle-blowing plan of the Ministry of Finance
The revised National Tax Plan and its implementation
The National plan on the environment (Revised)
The revised National Gas Plan (2017)
Ratification of the convention creating the plan African agency for the Great Green Wall
The lifting and allied work equipment safety regulation.

Read also: Privacy Policy for Business Websites: All You Need to Know.

Objectives of Government Policy

To ensure a balance of payment

The process of keeping track of the inflow and outflow of money in the economy is called balance of payment (BOP). When inflow is more than outflow, it is called balance of payment surplus. But when it is the other way around, i.e., outflow more than inflow, it is called balance of payment deficit. If both are equal, it is BOP equilibrium.

These policies are put in place to make sure it is either a surplus or an equilibrium. It needs to be either of the two because it shows how healthy the economy is.

To ensure stable prices

Inflation reduces the value of money and the consumers’ purchasing power. One of the aims of government policy is to reduce inflation and stabilize the price of goods.

To increase the standard of living

Policies increase the standard of living through the provision of employment. They do this by increasing the demand for employees by implementing fiscal policies such as reducing taxes, providing subsidy grants, etc.

Do you want to connect with other entrepreneurs and business owners for collaborations, partnerships, etc? Join our WhatsApp community and be a part of us.

Importance of Public Policy to Businesses

A country’s authority has a crucial role when it comes to structuring businesses. Public policy, just like government policy, is vital to the progress and development of a country or state. The jurisdiction, which is the overall leader, puts policies in place to facilitate the progress and smooth running of activities.

The act of making policies helps solve social, financial, and economic problems. When these policies are implemented, the main aim is to facilitate business growth in ways it was lacking. For example, trade barriers have been put on certain goods to reduce importation, thereby allowing the market to be owned by local businesses in the county.

This singular act has led to more revenue generation as the companies make more profit, increasing the GDP rate, creating wealth, and making doing business easy. There are also policies that deal with licensing and certification of businesses. They are to ensure that the organization is fit to provide services and provide them to a required capacity.

Read also: An Introduction to Cloud Deployment Models for Businesses.

Impact of Government Policy on Businesses

The impact of government policy on Nigerian businesses can be viewed in two ways: the positive impact and the negative impact.

Positive impact

Policies boost business efficiency at a reduced cost. Policies like the provision of grant subsidies help reduce the cost of production while obtaining quality products.
Decreasing taxes helps the business. It boosts the company’s savings and investment, which helps create more wealth. It also helps reduce unemployment.
A politically stable society attracts more foreign investors, which helps with the growth and expansion of businesses.
An increase in fines and levies helps business owners sit tight and avoid criminal activities. This act allows them to curb the rate of crime in the society.
The reduction of inflation increases the rate of demand for goods coupled with the high purchasing power of the masses.
Specific government policies change the social behaviors of the consumer towards the business.

Negative impact

Policies are known to regulate an economy to be the best it can be. Now, imagine leaders making policies that do not benefit businesses. The first phase of concern will be inflation, which will reduce the purchasing power of the masses and cause the standard of living to go up.

Companies will have to lay off staff as they will not be able to meet up with their income. Investment will drop, and businesses cannot make extra income from their savings and investments. There will be less efficiency at a high production rate, leading to less quality goods, making citizens turn to foreign-made goods.

When the demand for foreign goods increases, the country will have more imports than exports, leading to a trade deficit whereby the government might borrow to cover the deficit.

Read also: Community Development Programs in Nigeria: A Movement for Change.

Conclusion

Government policies play a vital role in shaping the country’s business. Making proper policies is needed for the growth of the companies, which helps the development of the economy.

Everything is connected, from government policy to business, to the growth of the economy, to the generation of revenue, to the building of infrastructure, and back to the masses. If there is a mistake somewhere, it affects the cycle, causing an economic imbalance.

Are you a business owner in Nigeria? Subscribe to our newsletter to receive notifications of our insightful articles on Business growth.

Edited by Oluwanifemi Akintomide.

About Author

Obanya Isioma

Obanya Isioma a writer with an eye for creativity and never fails to express herself in her work. A poet and a content writer, who started writing as a hobby and ended up becoming the passion, which she uses to create exceptional work.

She is always ready to learn and never scared to take up new challenges.