AfCFTA and Trade Benefits to Nigeria

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By Aderonke Alex-Adedipe and Olawale Atanda

 

The Federal Executive Council ratified Nigeria’s membership of the African Continental Free Trade Area (AfCFTA) on the 11th of November 2020. This occurs more than a year after Nigeria signed the African Continental Free Trade Agreement (the “Agreement”) in July 2019. The Agreement establishes a single market for goods and services across 54 countries, allows for the free movement of business travelers and investments, and creates a unified customs union to streamline trade on the continent.

 

The AfCFTA Agreement comes into effect on the 1st of January 2021. Although, full implementation of the Agreement may take some time as countries would have to negotiate aspects of the Agreement such as trade, dispute settlement processes, tariffs and intellectual property rights.

 

Nigeria is however poised to gain from the investment and trade opportunities that the AfCFTA will inevitably bring. In this article, we highlight some of these benefits.

 

Size of the Nigerian Market

Nigeria has the largest economy and population in Africa with more than $500 billion in GDP and a population of 200 million. This market size allows manufacturers to increase capacity and expand into other African countries. This enables investors benefit not only from the Nigerian market but from other countries on the continent as well.

 

To put this in context, Nigeria contributes an estimated 76% of total trading volume in the ECOWAS region. This is made possible because of the ECOWAS treaty which provides for the free movement of people and goods throughout 15 West African countries. The AfCFTA grants access to 54 countries with a population of 1.2 billion and a market worth a combined $2.6 trillion in GDP.

 

Supply Chain Infrastructure

Producers and retailers expanding their operations to other markets would depend on a distribution network that can efficiently deliver goods to their intended markets. This would give rise to increased investments in the distribution and logistics supply chain to ensure the infrastructure needed for transportation of goods is available. The winners would be investors who invest in the logistics and transportation space to cater for the large volume of goods which would be involved in cross-border trade.

 

Increased Jobs

The AfCFTA also seeks to create a  single liberalized market for trade in services for the continent. Countries such as Nigeria which have an abundant supply of professionals in various services industries such as construction, engineering, technology, and financial services would see increased movement of such professionals to countries with a demand for their services. In addition, labour-intensive trade across borders would require the services of low skilled workers and the free movement of persons guaranteed by the AfCFTA will bring with it the free movement of services these persons will render.

 

Conclusion

Although, there have been valid concerns about the effect the AfCFTA would have on the Nigerian economy, these concerns can be addressed by the government putting in place safeguards to ensure vulnerable industries are protected. Safeguards include improving transport infrastructure and enforcing policies which would see a reduction in the cost of production. This would in turn make goods export friendly.

 

SUITABLE GROUP INVESTMENT STRUCTURE IN NIGERIA; THE TRUST STRUCTURE

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By Seun Timi-Koleolu, Eustace Aroh and Praise Adetunmibi

There is a growing connection amongst people around the world, largely due to the use of technology by startups and other tech companies to solve problems across borders. Technology is also making it possible for investors who see value in such startups to invest in them from any country in the world. Apart from the growing crop of startups arising from Nigeria, there is also a growing crop of investors who are identifying and investing in business opportunities within and out of Nigeria.

Investors in Nigeria range from institutional to individual investors. It is quite common for a group of individuals to pool funds together to invest in businesses (Group Investments).

In establishing an investment group, it is pertinent for the members to utilize a suitable business structure to maximise returns. The business structure an investment group applies will, invariably, affect its returns, tax liabilities, asset protection and operational cost.

What are the available structures for Group Investments in Nigeria?

Group investments in Nigeria may be structured in various ways such as: a Partnership, a Company, a Cooperative Society and a Trust; with each one having its merits and demerits. For Instance, one of the merits of a company structure is its distinct legal personality from its owners. It can own properties as well as enter contracts. There are, however, administrative requirements and tax implications which may make it unsuitable for group investors. A Cooperative Society (CS) structure is another structure that can be considered. The merit of a CS structure is that upon registration, it acquires corporate status and is exempted from Companies Income Tax. The process of establishing a CS is, however, tedious. Another structure an investment group may adopt is a Limited Liability Partnership which enables the partners enjoy limited liability status with minimum tax exposure. Although this structure has been introduced by the Nigerian Companies and Allied Matters Act 2020[i], it is yet to be given effect to at the Corporate Affairs Commission. A useful and typically preferred structure for Group Investment in Nigeria is the Trust structure.

What is a Trust?

A Trust is a legal relationship between a Settlor, a Trustee and a Beneficiary. A Trust is set up by a person called the Settlor through a Trust Agreement or Trust Deed. With this structure, the Settlor transfers property or funds (“Trust Asset”) to a person he appoints as the Trustee who then holds and manages the Trust Assets on behalf of the Beneficiaries.

In the case of a group investment, the Trust should be structured to make the investors both the  Settlors and the Beneficiaries, with one or more of the investors appointed as the Trustees. The investors (as Settlors) will then pool funds together to invest in equity or other target assets and the Trustee will enter into the investment deal on behalf of the Trust. The Trustee is to be responsible for managing and distributing proceeds of the investments to all the investors (in their capacity as Beneficiaries). This structure is also referred to as an ‘Unincorporated Syndicate’.

What are the useful clauses to include in a Group Investment Trust Agreement?

The Trust Agreement must specifically create the Trust and a name should be given to the Trust. The Agreement should clearly appoint one or more of the investors as a Trustee and grant him/her rights to manage the investment on behalf of the Trust. The investors should be identified as Settlors and Beneficiaries unless the proceeds of the investment are to go to a third party (in that case, the third party will be identified as the Beneficiary). The contribution ratio and the profit/asset sharing ratio should be clearly stated in the Agreement. Liability of each of the parties to the Agreement should be clearly detailed.

Conclusion

Where a trust structure is adopted for a Group Investment in a startup, the stock purchase agreement should be reviewed to ensure it allows for the free transfer of shares amongst members of the Group (for instance, transfer of shares should not be limited by a ‘right of first refusal’ which is typically granted to companies.

[i] Please see our article on Companies and Allied Matters Act 2020 https://pavestoneslegal.com/the-nigerian-companies-and-allied-matters-act-2020/

UNDERSTANDING THE #ENDSARS PROTEST VIS-À-VIS RELEVANT HUMAN RIGHTS

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By Seun Timi-Koleolu and Eustace Aroh

INTRODUCTION

The Special Anti-Robbery Squad (SARS) in Nigeria was established to address insecurity and crimes in the nation. Rather than achieve their stated objective, they began profiling and harassing young people which led to wrongful arrests, brutalization and loss of innocent lives. In response to the recent deaths instigated by SARS officers, anti-SARS protests erupted across the nation and around the world. Two weeks later, 12 unarmed protesters were shot at Lekki, Lagos State on October 20, 2020 by members of the Nigerian Army and Police, after the State declared a 24 hours curfew (as reported by Amnesty International).

In view of this tragic development, it is important to us that we create awareness of the human rights that protect Nigerians (as contained in the Constitution of the Federal Republic of Nigeria 1999 (“CFRN”), the African Charter on Human and Peoples’ Rights (“ACHPR”) and the United Nation’s Universal Declaration of Human Rights (“UDHR”)); and its enforcement.

Fundamental Human Right Relevant Provision Details
Freedom of Expression Section 39 CFRN; art 9 ACHPR; art 19 UDHR. These provisions grant every Nigerian the freedom to receive and express their opinion, ideas and information. It also grants the right to establish and operate any medium used in disseminating information in Nigeria subject to the regulations of wireless broadcast.
Right to Life Section 33 CFRN; art 4 ACHPR; art 3 UDHR. Everyone has a right to life and no one must be deprived of his life intentionally. The exceptions to this right are: (1) a valid death sentence by a court of law; (2) where a person dies during the use of reasonable force while engaging in self defense; and (3) where a person dies while effecting lawful arrest or suppressing a riot, mutiny or insurrection provided reasonable force is used.
Freedom of Association Section 40 CFRN; art 10 and 11 ACHPR; art 17 and 20 UDHR. Every Nigerian is entitled to form or join any association of people in Nigeria in support of his interest.
Right to Dignity of Life Section 34 CFRN; art 4 ACHPR; art 1, 4, 5 and 6 UDHR. Every individual is entitled to dignity and respect. He is entitled to be free from slavery and torture.
Right to Liberty Section 35 CFRN Every Nigerian has the right to personal liberty and no person should be deprived of this right except: (1) in execution of a criminal sentence by a court of law; (2) for failure to comply with an order of court; (3) in bringing him before a court; (4) in preventing him from committing an offence; (5) where he is reasonably suspected of committing an offence; and (6) for the purpose of care and treatment for persons with infectious disease, unsound mind or addictions.
Freedom of Movement Section 41 CFRN; art 12 ACHPR; art 13 UDHR. Every Nigerian has the right to move anywhere in Nigeria. This right, however, does not apply where a person has been lawfully sentenced to imprisonment or restricted by a court of law.

ENFORCEMENT OF FUNDAMENTAL HUMAN RIGHTS

Any citizen of Nigeria whose rights under the Constitution have been breached may apply to a high court in Nigeria for redress and this includes where the government is responsible for the breach. Furthermore, the rights contained in the ACHPR which was domesticated by Nigeria via the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act can also be enforced in the Nigerian high court.

Pavestones Legal as a firm stands against any form brutality including police brutality and harassment. We stand for unity, peace and justice.

TAX INCENTIVES IN NIGERIA: PIONEERS STATUS

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By Seun Timi-Koleolu and Eustace Aroh

 

The Pioneer Status Incentive (“PSI”) is one of the available tax incentives in Nigeria aimed at attracting investment into critical sectors of the Nigerian economy. It was created under the Nigerian Industrial Development (Income Tax Relief) Act (“IDA”) to incentivize qualifying entities. The PSI grants an income tax “holiday” of up to five years (three years initially and renewable for an additional two years) to entities that meet the criteria. In addition, pioneer companies may enjoy other benefits including an exemption from withholding tax on dividends paid out of business profits. Below are highlights:

What are the pioneer industries?

These are the industries which qualify for PSI. Companies that engage in any of the industries below may apply for the PSI. Below is an abbreviated list of applicable subsectors.

Industry Applicable Subsector
Information and communication Publishing of books; software development; motion pictures, videos and television production and distribution; music production and distribution; and telecommunication.
Financial Services Real Estate Investment Trust; and mortgage backed securities.
Administrative Services Business process outsourcing; and transportation (land, water, rail and pipeline).
Trade E-Commerce Services.
Construction Construction and operation of roads, railways, airports, utility projects, water projects, industrial projects residential and non-residential building.
Waste Management Waste treatment, disposal and material recovery.
Electricity and Gas Supply Electric power generation, transmission and distribution; and manufacture and distribution of gas.
Agriculture Crop production; livestock; fishing; and forestry
Mining and Quarrying Mining and processing of coal; mining and processing of metal ores; and quarrying and mining of other minerals
Manufacturing Manufacture of refined petroleum products; processing and preserving of meat or poultry and its products, fish, shell fish, fruits, nuts, vegetable, cocoa; manufacturing of grain mill products, edible oils, diary products, starch and starch products, sugar, coffee and tea products, animal feed; manufacturing of wearing apparel; manufacturing of paper, personal hygiene products, basic chemicals, fertilizers, pesticides, agrochemicals and nitrogen compounds; manufacturing of rubber and plastic products; manufacturing of electrical equipment and electronics; manufacturing of basic metal and steel and fabricated metal products; Manufacture of motor vehicles and components and other transport equipment etc.

What are the Qualifications?

The company must be engaged in the pioneer industry; must have physical long-term assets worth over N100 million; and must be able to show the positive impact its business will have on the Nigerian economy.

How to apply?

Application will be by a letter to the Nigerian Investment Promotion Commission (NIPC) in the first year of production, attaching legal and business documents like incorporation documents, regulatory permits, business plan etc.

What are the Obligations on Beneficiaries?

Beneficiaries are expected to submit an annual performance report to the NIPC and must comply with the requirements of IDA and other relevant regulations of the NIPC.

For more information on incentives in Nigeria, please see our article on www.https://pavestoneslegal.com/doing-business-simplified-incentives-to-invest-in-nigeria/

 

Regulation of Collective Investment Schemes (CIS) in Nigeria

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By Aderonke Alex-Adedipe and Omotola Abudu

  1. Introduction

Recent reports by the Securities and Exchange Commission (SEC) show that there has been an increase in the total net asset value of CIS in Nigeria, from N782.64 billion in May 2019, to N1.322 trillion in May 2020. This is a clear indication that despite the coronavirus pandemic, investments made via CIS have maintained their profit yield. In today’s newsletter, we provide a cursory overview of CIS in Nigeria.

  1. What is a CIS?

According to the Investment and Securities Act, a CIS is a scheme or a company which invites members of the public to invest money or other assets in a portfolio and share the risk and benefit of investment in proportion to their participatory interest in the portfolio of the scheme.  It is essentially a joint investment vehicle which allows investors to pool funds to invest in select securities, boost returns and minimize risk.

  1. What types of CIS are available in Nigeria?

Under Nigerian law, there are five recognised types of CIS. They are Unit Trust Scheme, Venture Capital Funds, Open-ended Investment Companies, Real Estate Investment Schemes and Specialized Funds, with the most common type being Unit Trust Scheme. A Unit Trust Scheme is a fund into which individual investors or subscribers contribute small sums of monies to form a pool and enable professional fund managers invest in money market instruments, shares and stocks on their behalf.

  1. How are Investors protected?

The provisions of the Securities and Exchange Commission 2013 Rules (“the Rules”) along with the recently released Amendment to Rules on Collective Investment Schemes 2019 (“the Amendment”) jointly ensure the protection of investors who wish to pool their funds into CIS and the accountability of fund managers. The Rules and the Amendment contain provisions which prevent self-dealing and ensure that interests of the investors are placed above those of the fund managers.

  1. Who are the relevant parties to a CIS?

For every CIS, there is a relationship between key parties, which promotes a strong level of accountability and clarity.

  1. The Unit Holder/Subscriber
  2. The Fund Manager
  3. The Trustee
  4. The Custodian
  5. The Registrar

6. Conclusion

While the SEC has gone through commendable lengths to ensure proper accountability and transparency of the parties involved in CIS, attention should also be placed on the actions of digital players who operate CIS related platforms, in order to regulate them and ensure due process is followed in the handling of customers funds .

Setting Up a Venture Capital Company for Startup Investment in Nigeria

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By Seun Timi-Koleolu and Olawale Atanda

Startups require funding for their operations and to scale.[i] This is where venture capital companies (VCs) come in. VCs (as a subset of private equity) provide early or late stage financing to startups. VC funding is booming in Nigeria and has led to startups receiving increased financing year-on-year. Nigeria attracted $747 million in VC funding in 2019 with a majority of investments going to fintech companies. Although, a large number of these VCs are foreign, there is an increasing number of local VCs such as Ventures Platform, EchoVC, and Microtraction which invest in Nigerian startups. In this article, we list important points to consider when setting up a VC fund in Nigeria.

 

Company Structure

In Nigeria, VCs may be registered[ii] as a Limited Liability Partnership or a Limited Liability Company under the Companies and Allied Matters Act 2020.[iii] VCs may also register as limited partnerships under the Partnership Law of Lagos State but would however need to register as business names by the Corporate Affairs Commission to operate outside the state.

 

Regulation

The Securities and Exchange Commission (SEC) mandates private equity funds (such as VCs) to register with the commission where investor funds are above ₦1 billion. Registered VCs are prevented from soliciting funds from the public and may only privately source funds from qualified investors. They may also not invest more than 30% of their assets in a single investment. Under SEC regulations, the fund manager of a registered private equity fund must have a minimum paid-up capital of ₦20,000,000.00.

 

Raising Funds

VCs raise funds from a variety of sources which consist of banks and other financial institutions, insurance companies, pension funds, (“institutional investors”) high net worth individuals, etc. However, regulations that cover institutional investors may restrict the extent to which they may invest in VCs. For example, the Banks and Other Financial Institutions Act limits investments to the extent that such investment does not at any time exceed 10% of the bank’s shareholders funds and not more than 40% of the investee company’s paid up share capital. Foreign VCs who bring in funds into the country are guaranteed the transferability of interests on dividends and repatriation of investments in startups. Funds should be brought in through authorized dealers (usually banks) who then issue a Certificate of Capital Importation (CCI) as proof of the importation of capital. The CCI allows foreign VCs to repatriate funds without restriction.

Taxes

Taxes payable by VCs are dependent on the structure of the fund. Where a VC is registered as a Limited Liability Company, the company will be liable to pay income tax on its profits as provided under the Company Income Tax Act (CITA). Funds registered as business names will not subject to corporate income tax, instead, each partner would be taxed based on its individual income from the business. The investee company is however required by the CITA to withhold 10% of the interest on dividends due to investors. Where a VC is a resident of a country that Nigeria has a double tax agreement with, the withholding tax rate is pegged at 7.5%.

 

Conclusion

Nigeria is a profitable market for VC funds which is evidenced by the impressive growth of startups and tech companies over the years. VCs who intend to set up shop in Nigeria or as foreign VCs, invest in Nigerian startups must be conversant with the rules on investing in Nigeria. This is important to ensure adherence with regulatory rules and conformity to proper business and corporate governance procedures.

[i] You can access our article on startup funding here https://pavestoneslegal.com/startup-funding-raising-capital-as-a-startup-in-nigeria/

[ii] Although, the Companies and Allied Matters Act 2020 has been passed into law, the Corporate Affairs Commission is yet to begin the registration of Limited Liability Partnerships.

[iii] You can read our analysis on the Companies and Allied Matters Act 2020 here    https://pavestoneslegal.com/tag/cama-2020/

REGULATION OF CRYPTOCURRENCIES AND OTHER DIGITAL ASSETS IN NIGERIA

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By Aderonke Alex-Adedipe and Eustace Aroh

  1. INTRODUCTION

Through Blockchain, digital assets were introduced to the world in 2009 with no central controlling authority. Very quickly, cryptocurrency transactions became popular in various parts of the world including Nigeria and have remained unregulated. Specifically, the Central Bank of Nigeria declared in 2018 that cryptocurrencies are not regarded as legal tender, discouraging Nigerians from participating in cryptocurrency transactions. Recent events however continue to suggest that cryptocurrency is largely embraced as Nigeria remains the largest source of bitcoin trading in Africa.

In recognition of the above, the Nigerian Securities and Exchange Commission (“SEC”) on September 14, 2020 issued its Statement on Digital Assets and Their Classification and Treatment (the “Statement”). The Statement proposes a set of rules which seek to regulate cryptocurrencies and other digital assets classified as securities.  This article highlights some salient provisions in the Statement and their effects on transactions relating to digital assets in Nigeria.

 

  1. WHAT CLASS OF DIGITAL ASSETS WILL BE REGULATED?

According to the Statement, digital assets provide investment opportunities. The SEC, being the primary regulator of investments and securities in Nigeria, assumes jurisdiction over the regulation of digital assets, provided they can be classified as securities.

It is SEC’s position that all virtual crypto assets are deemed as securities, except otherwise proven by the issuer of the asset who is required to make an initial filing with SEC. Where upon assessment, the asset is found to constitute securities, it will have to be registered with SEC. Consequently, all digital assets including Digital Assets Token Offering (DATOs), Initial Coin Offering (ICOs), Security Token ICOs and other Blockchain-based offers of digital assets classified as securities by SEC, will need to be registered.

 

  1. WHO WILL BE REGULATED UNDER THE PROPOSED RULES?

Any person engaging in receiving, dealing, transmitting and executing orders on behalf of people, portfolio management, investment advice, custodian or nominee services as it relates to virtual digital assets services must be registered by SEC. The regulation will cover digital assets within Nigeria, by Nigerian issuers or sponsors and foreign issuers targeting Nigerian investors. Foreign issuers or sponsors will be recognized where a reciprocal agreement exists between Nigeria and the foreign country or where the country is a member of the International Organisation of Securities Commission. Foreign issuers or sponsors may, however, be required to establish a branch office within Nigeria.

 

  1. CONCLUSION

Although countries have continuously stated that cryptocurrencies do not qualify as an official legal tender, the unprecedented growth rate of digital assets have forced countries to issue rules regulating digital asset transactions. In Nigeria, specifically, the SEC has stated that the intention of the proposed rules is to safeguard the interest of participants, rather than stifle the growth of technology. The rules if implemented with these factors in mind, will ensure protection and transparency of digital asset transactions in Nigeria.

REQUIREMENTS FOR IMPORTING PHARMACEUTICAL PRODUCTS INTO NIGERIA

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According to the UN International Trade Statistics Database, importation of products by Nigerians increased from N132.6 million to N159 million between May to June,2020. This indicates that in spite  of the decrease in economic activities brought on by the Coronavirus pandemic, importation still remains pivotal in Nigeria. One significant group of products that have gained traction, especially in the wake of the pandemic are pharmaceutical products (“Pharma Products”). In our article today, we highlight the stages required to import Pharma Products into Nigeria.

Stage 1- INCORPORATION / REPRESENTATION

Investors seeking to import Pharma Products must either register with the Corporate Affairs Commission as a pharmaceutical company or appoint a duly registered pharmaceutical company in Nigeria using a power of attorney, authorising it to act on their behalf. Registration as a pharmaceutical company must comply with the requirements of the Pharmacists Council of Nigeria (“PCN”).

Stage 2- REGISTRATION OF PREMISES

A suitable warehouse or building has to be secured for the storage of the Pharma Products being imported. Such premises must be registered for inspection in accordance with the provisions of the National Agency for Food and Drug Administration and Control (“NAFDAC”) Act and the Inspection, Location and Structure of Pharmaceutical Premises Regulation.

Stage 3- NAFDAC REGISTRATION

Before any pharmaceutical product can be imported into Nigeria, it must have been registered by NAFDAC. This process comprises of two stages:

  1. an application to bring in samples;
  2. an application for full registration

Once duly registered, the application shall be valid for 5 (five) years. This stage is highly critical as importation of unregistered Pharma Products is a violation of the provisions of the Act guiding NAFDAC.

Stage 4- CLEARING

Once the Pharma Products have arrived at the ports and are ready to be cleared, an application has to be made to the Port Inspectorate Directorate (PID) of NAFDAC and should be accompanied by shipping documentation, required permits and licenses from PCN and other agency permits. Once the payment of  inspection and analysis fees is made, it is to be followed by physical inspection at the port and upon successful vetting, the Pharma Products are released to the warehouse.

Stage 5- ADVERTISING

Finally, it is pertinent for intending importers to know that before the cleared Pharma Products can be advertised, traditionally and via social media, necessary approvals must be gotten from NAFDAC and the Advertising Practitioners Council of Nigeria, via its Advertising Standards Panel Committee. Importers intending to market their Pharma Products should note this stage as NAFDAC may withdraw its certificate of registration from defaulters.

Note

This article  is simply a guide for intending investors and importers and should not be construed as legal advice. You may contact us if you have enquiries with respect to the foregoing at info@pavestoneslegal.com

To read more articles on importation of goods into Nigeria, click here . You can also learn more about NAFDAC requirements to set up a restaurant in Nigeria by clicking here.

REVIEW OF THE NIGERIA BROADCASTING CODE – THE 2020 AMENDMENT

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By Aderonke Alex-Adedipe and Eustace Aroh

Introduction

The National Broadcasting Commission (“NBC”), the apex regulator of broadcasting in Nigeria, is authorized by its enabling Act (the National Broadcast Commission Act 1992) to create a code setting the standards of the contents and quality of materials for broadcast in Nigeria. In 2016, the NBC issued the sixth edition of the Nigeria Broadcasting Code (the “Code”). Subsequently, on June 11, 2020, the NBC released the amendment to the Code (the “Amendment”). As a result of some of the changes perceived as unfavourable by stakeholders, the Amendment has remained subject of controversy.

 

Anti-Competition and Sub-licensing

Under the Amendment, broadcasters and licensees are prohibited from entering into agreements with the intent of preventing or restricting competition. Furthermore, broadcasters and licensees are not permitted to acquire broadcasting rights in Nigeria or anywhere in the world, which may prevent broadcasters, licensees and persons in Nigeria from sub-licensing to third parties.

The Amendment further provides guidelines for sub-licensing with a view to preventing anti-competition. For instance, broadcasters are required to grant access to its premium content in the sport and news genre to all pay TV platforms. Broadcasters are also required to offer sports and news program to other broadcasters for retail in Nigeria on a non-exclusivity basis.

 

Sporting Rights

The Amendment generally prohibits the exclusivity of sporting rights in Nigeria. It further states that bids for sporting rights in Nigeria must be reasonable and subject to verification by the NBC. Where a broadcaster acquires a right to broadcast live foreign sports events, the broadcaster must make the right available to other broadcasters. Furthermore, to transmit prime foreign sports content, the content owner must have acquired prime local sports content with at least 30% of the entire cost of acquiring the foreign content. Where an advertiser intends to advertise any product during a foreign sport event, the advertiser must also advertise during a prime local sports event.

 

Web/Online Broadcast

According to the Amendment, all operators, web and online broadcasters are now required to register with the NBC. The owners of the platform shall be responsible for their content and must comply with all laws and regulations including those relating to fake news and hate speech. In effect, online platforms like Netflix and IrokoTV are now required to be registered with the NBC.

 

Unpaid Advertising Rates

Where a broadcaster’s advertising rate has remained outstanding and unpaid for 45 days, the broadcaster is expected to notify the NBC. The NBC will then issue a notice of default to all its licensees. After a period of 60 days from the issuance of the notice of default, no broadcaster shall broadcast any advert, sponsored programmes or events of the advertiser in default or any of its agents.

Conclusion

Although the intention of the NBC is to promote broadcasting of local content and competition in the market, some of the provisions in the Amendment have been widely criticized as hampering the general principle of freedom of parties to contract, mandating parties to sublicense their broadcasting rights to third parties and generally stifling investment within the entertainment sector.

Data Protection Update: Insights on the Data Protection Bill 2020

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By Seun Timi-Koleolu and Olawale Atanda

The National Information and Technology Development Agency (“NITDA”) recently published the Draft Data Protection Bill 2020 (the “Bill”) for the input of stakeholders. The Bill, if enacted, will be an addition to the laws that govern the use and protection of the data in Nigeria.

The Bill seeks to establish a framework for the protection of personal data particularly to protect data subjects’ data vis-à-vis the use of such data by organisations and security agencies; establish a regulatory authority that will coordinate data protection and privacy issues and have oversight on data controllers and data processors; and ensure that personal data is processed in accordance with NITDA’s data protection principles.

The protections offered in the Bill are similar to those stated in the Nigeria Data Protection Regulation, 2019 (“NDPR”) issued by NITDA which regulate the collection and processing of data. However, the bill includes novel additions and expands on existing data protection rules which we have highlighted below.

 

Key Changes and Improvements in the Bill

  1. Scope of the Bill – The Bill builds on the scope of the NDPR by expressly listing the persons and bodies that will be subject to its provisions. These are: persons resident in Nigeria and Nigerian nationals irrespective of residence; public and private companies in Nigeria; unincorporated joint ventures or associations operating in Nigeria; any institution or body which maintains an office, branch or agency through which business activities are carried out in Nigeria; and foreign entities targeting persons resident in Nigeria.

 

  1. Categories of Data – The categories of data to be protected are expanded and include personal information such as religious affiliation, sexual orientation, and even trade union memberships. The Bill goes further to protect other personal information such as banking records, academic transcripts, health records, and personal subscription data. It should be noted that what constitutes personal data is not exhaustive under the Bill as it makes a provision for definitions to be included in guidelines to be made by the Data Protection Commission.

 

  1. Establishment of Data Protection Commission – The Bill seeks to establish a Data Protection Commission (the “Commission”) to enforce its provisions by regulating the processing of personal information; having oversight over data processors and controllers, amongst others. The powers of the Commission are similar to that of NITDA. It is important that there is a clear delineation of powers between the Commission and NITDA before the Bill is passed into law.

 

  1. Rights of a Data Subject – The Bill provides for persons to be notified within 48 hours after a data breach affecting them has been reported by the individual or body in possession of their data (“data controller”) to the Commission. The Bill, however, does not state when or how the data controller is to report to the Commission upon being aware of the breach of the data it controls.

 

  1. Penalties for Breach of Data Bill – The Bill strictly penalizes breaches of data by individuals/bodies, data controllers/processors, and staff of the Commission. The Bill provides for fines of up to ₦10,000,000.00 (Ten Million Naira) and imprisonment terms of up to 5 (five) years for persons or bodies convicted under the Bill. The Bill also provides for the forfeiture of assets by convicted persons under the Bill and allows for the compensation of victims of data breaches.

 

Conclusion.

The Bill, on its face, seems to repeat provisions already in the NDPR. It sheds light, however, on protections provided in the NDPR. There are also novel inclusions such as the Data Protection Commission and the significant expansion of penalties for data breaches. The Bill is in draft form and it is expected that NITDA would provide clarity on the questions that arise from the review of the Bill before it is passed into law.