IIEffective Insolvency and Creditor Rights Systems
There is insufficient publicly available information as to Nigeria's compliance with the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights Systems. Nigerian law is based on the principles of British common law, as a result of its historical link with the United Kingdom during the colonial era. Chapter 20 of the Laws of Nigeria comprises the Bankruptcy Law, but this deals with individual bankruptcy and is rarely used. For commercial insolvency issues, provisions in the Nigerian Constitution (1999) and the Companies and Allied Matters Act (1990) address related issues. According to the INSOL International, the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) is the professional organization dealing with insolvency issues. A 2004 article by A. Ona regarding the BRIPAN mandate reports that the organization has been working to expand awareness of insolvency issues. In a 2009 interview for The Guardian, the current BRIPAN President Seyi Akinwumi announced his organization’s intention to help in drafting legislation dealing with insolvency and bankruptcy, business restructuring, and related issues.
Read More
IDInternational Financial Reporting Standards
According to an assessment of the accounting and auditing environment in Nigeria conducted by the World Bank in 2004, although Nigerian Statements of Accounting Standards (SASs) are based on the International Financial Reporting Standards (IFRSs), differences exist. A January 2009 PricewaterhouseCoopers report on IFRS adoption notes that (as of January 2009) all financial statements in Nigeria were required to be prepared in accordance with the Nigerian SASs and that the Nigerian standard setting body had not yet announced any IFRS adoption or convergence plans. However, a 2009 Institute of Chartered Accountant of Nigeria (ICAN) self-assessment states that the Nigerian accounting standards-setter is currently incorporating IFRSs into the Nigerian accounting standards. The exact date of convergence, the assessment notes, was to be announced at the World Standard Setters’ Conference which was held in London September 10-11, 2009. There is no further information with respect to Nigeria’s announcement at this conference. However, with regards to banks, in November 2009, the Central Bank of Nigeria governor Mallam Sanusi Lamido Sanusi announced a definitive deadline of December 2010 to adopt IFRSs for application by banks. As for the regulation and enforcement of financial reporting requirements, the World Bank concluded that Nigeria needs to strengthen enforcement mechanisms to improve compliance. The World Bank also recommended establishing an independent oversight body responsible for the adoption and enforcement of accounting and auditing standards by public interest entities. Simplified reporting requirements for small and medium-sized enterprises should also be developed, the report noted.
Read More
IIPrinciples of Corporate Governance
According to the 2008 Doing Business Guide published by the U.S. Department of Commerce, Nigeria's legal, accounting, and regulatory framework is consistent with international norms, however, the implementation of laws is “uneven”. The two most relevant laws regarding corporate governance are the Companies and Allied Matters Act 1990, which defines the duties of the managers of limited liability companies, and the Investment and Securities Act (ISA), which charges the Securities and Exchange Commission (SEC) with regulating and developing the capital market and preserving orderly conduct, transparency, and market confidence. The 2003 Code of Corporate Governance, issued by an SEC-appointed committee, is a voluntary code which includes best practices with regard to the roles and duties of the Board of Directors and Management, the role and duties of the Audit Committee and the rights of shareholders. The Code is implemented on a comply-or-explain basis; however, a 2008 presentation by SEC Deputy-General, Musa Al-Faki notes that in order to improve enforcement, the Commission made some of the provisions legally binding. For instance, per the presentation, certain sections of ISA 2007 contain provisions from the code. In addition, the SEC has also set up a committee to review the 2003 Code and this committee, at the time of the Al-Faki presentation, was in the process of making new recommendations. Despite the above information, there is no assessment directly addressing Nigeria's compliance with the principles of corporate governance developed by the Organization for Economic Development and Cooperation.
Read More
IDInternational Standards on Auditing
According to a 2009 Institute of Chartered Accountants of Nigeria (ICAN) self-assessment, in May 2008, the ICAN adopted thirty International Standards on Auditing (ISAs) with modifications to reflect the local legal environment by issuing new and revised Nigerian Standards on Auditing (NSAs). The ICAN expressed its commitment to further its convergence by continuing to review and adopt new and amended ISAs, including clarified ISAs. Earlier in a 2004 accounting and auditing assessment conducted by the World Bank, the evaluators pointed out that Nigeria did not have any national auditing standards. At the time of the assessment, companies were recommended to use the ISAs and the ICAN advised its members that compliance with ISAs is optional. The World Bank found compliance to be weak and enforcement mechanisms inadequate outside of the banking sector. The World Bank recommended the creation of an independent oversight body responsible for the adoption and enforcement of accounting and auditing standards by public interest entities.
Read More
IDAnti-Money Laundering/Combating Terrorist Financing Standard
In 2008, the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA) – which conducts Financial Action Task Force (FATF)-style self and mutual evaluations on the efficacy and progress of domestic measures of member countries – released the findings of the mutual evaluation they conducted on Nigeria's Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime against the FATF’s 40+9 recommendations. According to the findings of this report, Nigeria largely complies with 7, partially complies with 20 and does not comply with 20 FATF recommendations and special recommendations. Nigeria has been making efforts to strengthen its AML framework since it appeared on the list of non-cooperative countries and territories (NCCT) in 2001. As a consequence, Nigeria’s name was taken off the list in June 2006. Despite these efforts numerous flaws still persist. Most significantly, the 2008 GIABA mutual evaluation report notes that terrorism and terrorist financing have not been sufficiently criminalized under the legal framework. Furthermore, Nigerian authorities have not issued clear guidance to financial institutions resulting in weak customer due diligence (CDD), record keeping, and suspicious transaction reporting requirements. However, a bill on terrorism prevention is currently before the National Assembly. The GIABA mutual evaluation notes that the bill is comprehensive and has incorporated all the measures in UN Security Council Resolutions 1267 and 1373. A 2009 Update by GIABA on Nigeria's progress since the 2008 mutual evaluation concludes that Nigeria has made significant efforts to address the shortcomings observed by the assessors and that the Nigerian authorities are determined to address all other concerns raised by the 2008 mutual evaluation in order to build a robust AML/CFT regime in the country. Moreover, the FATF's 2008-2009 Annual Report names Nigeria as one of the jurisdictions that have undertaken to implement the FATF's 40+9 recommendations.
Read More
IDCore Principles for Systemically Important Payment Systems
In a 2006 report, the IMF notes that the Central Bank of Nigeria (CBN) introduced a Real Time Gross Settlement (RTGS) system in November 2005 as part of its move toward electronic banking. The CBN website states that the country's RTGS system, the Central Bank of Nigeria Inter-bank Fund Transfer (CIFT), is expected to achieve secure interoperability with other payment and settlement systems in the country, thereby ensuring immediate payment settlement with intraday finality as well as delivery versus payment in all securities transactions. Further, the website reports that the CBN is the main regulator of payment systems. The Nigeria Deposit Insurance Corporation complements the oversight function of the CBN to ensure the efficiency and effectiveness of payment systems. The CBN adds that all systems operate largely in accordance with the Core Principles for Systemically Important Payment Systems (CPSIPS) and the Lumfalussy Standards. However there is no validation of this information from a third party source, and no further information is publicly available regarding Nigeria's compliance with the CPSIPS.
Read More
