2018 REGULATIONS: THE THINGS YOU NEED TO KNOW

Hello there,

It’s been quite a while. You will agree with me that a lot has happened in the legal industry and the Country as a whole, since we last discussed on this platform. Although we might not be able to tell you ALL that has happened since our last publication on this platform, here, we have attempted to bring you a brief synopsis of some of the things that you might have missed. The good thing though is that all that is contained herein, and a whole lot more, are contained in our LawPavilion STK product. All you have to do to get the full report is to get your own STK product, (if you weren’t on board before) or simply update your product, if you already have one.

Since it will be quite quixotic to do an overview of all that has happened so far at once, we have decided to serve you the juice piecemeal. After all, brevity, they say, is the soul of wit. Here, we will be looking at some of the 2018 Regulations from the different MDAs as contained in our LawPavilion STK product.

1. MDA- CENTRAL BANK OF NIGERIA (CBN)

a. THE BANK VERIFICATION NUMBER (BVN) ENROLLMENT FOR OFIs’ CUSTOMERS -DIRECTIVE TO PLACE ACCOUNTS WITHOUT BVN ON ‘POST NO DEBIT’

This directive sent out by the CBN on January 2, 2018, was addressed to all Other Financial Institutions (OFIs) to forthwith place all accounts without BVN on a ‘post no debit’ status that is, placing an embargo on withdrawal from such accounts. Credit lodgments, inclusive of deposits and inward transfers, may however be received into such accounts.

The directive, which is to take effect immediately, further charges all OFIs to continue to enroll customers of such accounts and only remove the ‘post no debit’ restriction when a valid BVN has been obtained and submitted by the customer. Non- compliance with the directive will be met with appropriate sanctions.

b. SANCTIONS ON ERRING BANKS/E-PAYMENT SERVICE PROVIDERS FOR INFRACTIONS OF PAYMENTS SYSTEM RULES AND REGULATIONS

On January 04, 2018, there was a circular to all deposit money banks, mobile money operators, switches and other payments system service providers on “sanctions on erring banks/e-payment service providers for infractions of payments system rules and regulations”. The Circular became effective from 15th April, 2018.

With the coming into force of this circular, where an operator fails to apply for the renewal of an operating licence three (3) months before the date of the expiration of its licence; or fails to regularize or respond to questions raised by the Bank in the course of processing an application for the renewal of an operating licence within three (3) weeks; such operator will be sanctioned with a penalty of N10,000.00 per day for as long as the infraction subsists.

c. RESTRICTION ON DIVIDEND PAYOUT

Generally, retained earnings are an important source of growing an institution’s capital. However, the CBN has observed that rather than take advantage of this beneficial means of capital generation, some institutions pay out a greater proportion of their profits as dividends.

In a bid to forestall this anomaly, the CBN has, by a directive made in addition to Section 16 and 17 of BOFIA 2004 (as amended) titled “LETTER TO ALL BANKS ON INTERNAL CAPITAL GENERATION AND DIVIDEND PAYOUT” and issued on January 31, 2018, placed a restriction on how dividends are being paid by banks.

By this directive, no DMB or DH will henceforth be allowed to pay dividend out of its reserves.

Consequently, going forward, dividends shall not be paid by any Deposit Money Bank (DMB) or Discount House (DH) that does not meet the minimum capital adequacy ratio, or have a Composite Risk Rating (CRR) of “High” or a Non-Performing Loan (NPL) ratio of above 10%.

Any DMBs or DHs that meet the minimum capital adequacy ratio but have a CRR of “Above Average” or an NPL ratio of more than 5% but less than 10% shall have dividend payout ratio not exceeding 30% of profit after tax.

Also, DMBs and DHs that have capital adequacy ratios of at least 3% above the minimum requirement, CRR of “Low” and NPL ratio of more than 5% but less than 10%, shall have dividend pay-out ratio of not more than 75% of profit after tax.

It is only DMBs and DHs that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%  that are allowed to pay-out dividend without any regulatory restriction.

Every bank is forthwith required to submit their Board approved dividend payout policy to the CBN before payment of dividend will be permitted.

d. ABOLISHMENT OF PAYMENT OF COMMISSION FOR FOREIGN EXCHANGE ON INVISIBLE TRANSACTIONS

It is now otiose to pay commissions on foreign exchange for invisible transactions such as Business Travel Allowance (BTA), Personal Travel Allowance (PTA), Medical and School Fees to dealers. This is because the charges have been abolished by the CBN via its communication to the general public on February 12, 2018 titled: Charges on the Sale of Foreign Exchange for Invisible Transactions (BTA, PTA, School Fees, and Medical).

e. AMENDMENT OF THE COMMERCIAL AGRICULTURE CREDIT SCHEME (CACS) GUIDELINES

There’s been a revision of the existing Commercial Agriculture Credit Scheme (CACS) Guidelines by the CBN to include Non interest Financial Institutions (NIFls). This is to deepen access to finance and reduce exclusion rate.

By this revision, all (NIFIs) are eligible to participate under the CACS provided they sign a Participation Agreement with the CBN.

The NIFIs can now secure Long term (not exceeding seven years) financing for projects under the target activities such as agricultural commodities and value chains. All repayments under the facility are to be amortized i.e spread over multiple period and the NIFI is to bear the credit risk of repayment by investor wherein the collaterals pledged by the borrowers are to mitigate that risk.

Securities that can be used under the Non-interest window are Federal Government of Nigeria Sukuk; CBN Non-Interest Liquidity Management Instruments (such as CBN Safe Custody Account (CSCA), CBN Non-Interest Note (CNIN) and CBN Asset-Backed Securities (CABS); Sukuk backed by the guarantee of the Federal Government; Sukuk given regulatory treatment by the CBN; and any other securities acceptable to the CBN.

f. NON-OIL EXPORT STIMULATION FACILITY (NESF) GUIDELINES

On March 9, 2018 the CBN sent a guideline to all deposit money banks and development finance institutions on the Non-Oil Exports Stimulation Facility (NESF).

According to the apex bank, the Non-Oil Export Stimulation Facility (NESF) is introduced to engender growth in the non-oil sector of the economy and foreign reserve account.

To be eligible to participate under the NESF, a company must have non-oil export-oriented enterprise that is duly incorporated in Nigeria under the Companies and Allied Matters Act (CAMA); have verifiable export off-take contract(s) and Satisfactory credit reports from at least two licensed indigenous Credit Bureau.

The transactions that qualify for funding under the NESF includes export of goods processed or manufactured in Nigeria; export of commodities and services, which are allowed under the laws of Nigeria; imports of plant & machinery spare parts and packaging materials, required for export-oriented production that cannot be sourced locally; resuscitation, expansion, modernization and technology upgrade of non-oil export industries; export value chain support services such as transportation, warehousing and quality assurance infrastructure; working capital/stocking facility; and structured trade finance arrangements.

Only Deposit Money Banks (DMBs) and Development Finance Institutions (DFIs) are the eligible financial institutions under the facility.

Term loans under the Facility shall not exceed 70% of verifiable total cost of the project subject to a maximum of N5,000,000,000.00 and shall have a tenor of up to 10 years the expiration of which will not exceed 31st December 2027 while working capital/stocking facility shall be for one year with the option of roll-over once subject to the approval of the CBN. Repayment of loan is to be quarterly at an interest rate of 9% per annum.

g. REGULATION FOR DIRECT DEBIT SCHEME IN NIGERIA, 2018 (REVISED)

This Regulation issued by the CBN on February 2018 is to promote sound financial system in Nigeria, issue guidelines and facilitate the development of an efficient and effective payments system in Nigeria.

The regulation explains direct debit as “a cashless form of financial settlement which facilitates recurring payments. It permits the originator of the instruction, known as ’’Biller’’, to collect amounts due from a payer through the Payer’s bank by leveraging an instruction or mandate provided by the payer.”

The process typically involves five parties being the biller, biller’s bank, payer, payer’s bank and payment Service Provider.

A Biller is an entity duly incorporated to carry on business in Nigeria who has been on-boarded to the Direct Debit scheme by a bank or Payment Service Provider after satisfactory due diligence.

Both the biller’s bank and the payer’s bank on the other hand, are either a member of the clearing system or integrated with Payment Service Providers that accept Direct Debit for processing.

Generally, Direct Debit transactions are either fixed Direct Debit which enables the debit of fixed amounts from a payer’s account in accordance with the payer’s Mandate; or variable Direct Debit which enables the debit of variable amounts from a Payer’s account up to the maximum amount stated in the payer’s Mandate.

h. TEMPORARY ENGAGEMENT OF PRE-SHIPMENT INSPECTION AGENTS (PIAs) FOR NON-OIL EXPORTS

The CBN has sent a notice to all authorised dealers, Nigeria Customs Service, Nigerian Export Promotion Council, all terminal operators and the general public as a whole on February 28, 2018 intimating them of the temporary engagement of Pre-Shipment Inspection Agents (PIAs) for non-oil exports.

The engaged PIAs are MESSRS. COBALT INTERNATIONAL SERVICES LIMITED, CARMINE ASSAYER LIMITED and NEROLI TECHNOLOGIES LIMITED.

i. THE REGULATORY FRAMEWORK FOR THE USE OF UNSTRUCTURED SUPPLEMENTARY SERVICE DATA (USSD) IN THE NIGERIAN FINANCIAL SYSTEM

The Central Bank of Nigeria (CBN), in furtherance of its mandate to develop and enhance the security of the electronic payments system in Nigeria, has released the Regulatory Framework for the use of USSD in the Nigerian Financial System. The Framework is to take effect from 1st June, 2018.

The Framework seeks to establish the rules and risk mitigation considerations when implementing USSD for financial services offering in Nigeria.

Service providers that provide financial services through the use of USSD in Nigeria includes the financial institutions, Mobile Money Operators (MMOs),  Mobile Network Operators (MNOs), Value Added Service Providers/ Aggregators (NCC Licensees).

The regulatory framework discussed other issues like vulnerabilities and mitigations, dispute resolution, Service Level Agreement among Others

Now, the framework mandates service providers to put in place systems that enable users/subscribers to block their account from operating USSD service and stipulates that with effect from June, 2018, no USSD Financial Service should be activated for customer unless the deactivation mechanism is put in place.

j. Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2018/2019

The Monetary, Credit, Foreign Trade and Exchange Policy Guidelines is a biennial publication of the apex bank which provides policy guidance to financial institutions for the fiscal period in the medium-term horizon. It is designed to assuage policy ambiguity, demonstrate the direction and policy continuity of the Bank as maintained over time, and to provide prudential guidelines to financial institutions to avoid regulatory capture.

The 2018/2019 Monetary, Credit, Foreign Trade and Exchange Policy Guidelines covers the period January 2018 to December 2019 and is designed to ensure both price and financial stability.

The circular permits the guidelines to be fine-tuned by the Bank to take account of new developments in the domestic and global economies within the period under review. However, such amendments are to be communicated to the relevant institutions/stakeholders in supplementary circulars. 

The publication has five Sections: section one is the Introduction, section two reviews the developments in the global and domestic economy in 2017 as a background to the policy measures in 2018/201; section three outlines the monetary and credit policy measures and guidelines to be implemented in the 2018/2019 fiscal years; section four looks at the applicable foreign trade and exchange policy measures while section five focuses on consumer protection issues.

k. CBN ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM (ADMINISTRATIVE SANCTIONS) REGULATIONS, 2018

This circular was issued on April 9, 2018 was pursuant to the requirements of the Financial Action Task Force (FATF) Recommendation on effective, proportionate and dissuasive sanctions and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) 2007 Mutual Evaluation recommendation that Nigeria’s AML/CFT sanctions regime should be reviewed and made to be proportionate and dissuasive.

The Central Bank of Nigeria (CBN) in collaboration with the Office of the Attorney-General of the Federation (OAGF) has developed a robust administrative sanctions regime. And the Administrative Sanctions Regime has been gazetted to give it legal effect and ensure compliance with FATF and GIABA requirements.

2. MDA: NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL (NAFDAC)

TITLE: NTB Calendar FIRST QUARTER

The ‘NTB Calendar FIRST QUARTER’ details the NAFDAC’S NIGERIAN TREASURY BILLS ISSUE PROGRAMME for the FIRST QUARTER of 2018.

3. MDA: Nigeria Extractive Industries Transparency Initiative (NEITI)

TITLE: NEITI COUNTRY WORKPLAN 2018

The 2018 NEITI Workplan is developed in line with the FGN key priority objectives under the Economic Recovery and Growth Plan (ERGP) to consolidate on the implementation of the NEITI Strategic Plan 2017-21. The NEITI strategic plan is also targeted at deepening the implementation of the EITI in Nigeria.  

The strategic goals of the work plan are to deepen openness in the extractive sector through timely audits and other impactful studies; shape extractive sector and overall governance reforms through policy engagements, thought leadership and inter-agency coordination; strengthen accountability in the use of extractive revenues through strategic communication with critical stakeholders and empowerment of accountability actors and develop operational capacity, legitimacy and support through effective administration and human resource management and adequate funding.

The priority areas as identified in the workplan are Industry Audit reporting; dissemination of NEITI Industry Audit Report findings to strategic stakeholders, broaden and deepen engagements; ensure optimum regulation & compliance to NEITI mandate based on the NEITI Act and the EITI requirements; provide operational, administrative and logistic support; evaluate governance and anti-corruption initiatives at all levels of governance and provide data-based coordination; effective implementation of internal control mechanism through continuous monitoring & evaluation, internal auditing & procurement process.

4. MDA: NIGERIAN COMMUNICATIONS COMMISSION (NCC)

a. TITLE: THE NIGERIAN COMMUNICATIONS ACT 2003 CONSUMER CODE OF PRACTICE REGULATIONS 2018

This practice Regulations apply to all Licensees of the Commission.
The objectives of the Regulation is to prescribe the procedures to be followed by a Licensee in preparing approved consumer codes of practice in accordance with section 106 of the Act; and determine and describe the required contents and features of any consumer code prepared by, or otherwise applicable to a Licensee.

Within thirty days of submission of an individual consumer code by a Licensee, the Commission shall either approve the proposed individual consumer code,
identify areas that require amendment in the proposed consumer code, and direct the Licensee to resubmit it to the Commission for approval; or
extend the time required by the Commission for review of the proposed consumer code.

Approved individual consumer codes may be published or distributed by the Commission in any way it deems appropriate.

Every Licensee shall be subject to the compliance provisions set out in Part IX provisions of the General Code, or equivalent provisions of any approved individual consumer code.

Any Licensee that contravenes any of the provisions of these Regulations is liable to such fines, sanctions or penalties, including any enforcement penalties determined under the Enforcement Regulations.

b. THE 2017 ANNUAL REPORT OF THE NIGERIAN COPYRIGHT COMMISSION FEBRUARY, 2018

This report details the achievements made by the Commission in year 2017.
The Commission in 2017 planned and executed strategic programmes which resulted in the achievements which includes : Proactive Enforcement Interventions, ratification of copyright treaties, finalization of the copyright reform process, Strengthening Human and Institutional Capacity for Better Service Delivery, Enhancing Copyright Awareness and Education, Promoting Effective Rights Management and Regulation of Copyright Industries, Deepening Strategic Engagement with Stakeholders, Expanding International Cooperation Enhancing the funding profile of the Commission.

It also identified some of the challenges encountered in the course of the year. Some of which are economic, infrastructure, enforcement and prosecution by way of non co-operation of complainants.

The dominant source of sustainable wealth in the current global knowledge economy for nations, hinges on the quantum of intangible property such as copyright, owned by its citizens. Nigeria has a vibrant and diverse creative talents and the Commission is determined to do everything possible within its power to ensure that the copyright system in Nigeria is positioned to significantly provide good returns on investments and contribute substantially to the growth of our economy.

5. MDA: NIGERIAN ELECTRICITY REGULATORY COMMISSION (NERC)

a. TITLE: METER ASSET PROVIDER REGULATIONS

These Regulations shall come into effect on the 8th day of March 2018.

The main objective of these Regulations is to provide standard rules to encourage the development of independent and competitive meter services in NES; eliminate estimated billing practices in NESI; attract private investment to the provision of metering services in NESI; close the metering gap through accelerated meter roll out in NESI and enhance revenue assurance in NESI.

The Distribution Licensee is responsible for meeting its metering targets as specified by the Commission from time to time.

To qualify as a meter asset provider, applicants shall submit a completed application form; certificate of incorporation and memorandum and articles of association; tax clearance certificates; certified audited financial statements for 3 consecutive years prior to the year in which the application is made; detailed resumes of Applicant’s board of directors, management and technical staff; ten-year Business Plan; and applicant’s relevant experience in asset finance, metering and other relating business.

Upon completion of evaluation of bids, successful applicants shall submit an application for the grant of a Meter Asset Provider Permit to the Commission and the Commission shall grant a Meter Asset Provider Permit to the Successful Applicant.

A Meter Asset Provider Permit issued to an Applicant shall be specifically related to a successful procurement process with a Distribution Licensee; such permit holder may acquire several of such permits under distinct procurement processes conducted by Distribution Licensee.

The tenure of a Meter Asset Provider Permit shall be for a period of 15 years

Other issues discussed are rights of Distribution Licensees, Obligations of the Distribution Licensee, Rights of the MAPs, obligations of the MAP to the Distribution Licensee, Obligations of the MAP to Customer, MAP Key Performance Indicators (KPIs), Obligations of the Customer.

With the coming into effect of this regulation, customers are now eligible for installation of an appropriate meter; repair or replacement of customer’s meter by the MAP within two (2) working days at no additional cost within the amortization period of the asset unless the damage was as a result of the willful action of the customer.

b. TITLE: UNIFORM SYSTEM OF ACCOUNTS REGULATIONS

The main objective of these Regulations is to implement the Uniform System of Accounts Guidelines 2014 on the generation of all accounting reports required by the Commission based on information extracted from the general and subsidiary ledgers of Licensees.

By the provision of the regulation, all Licensees are required to file Regulatory Accounting Reports with the Commission in both hard and electronic copies and same shall be  signed by both the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the Licensee. The Regulatory Accounting Reports is to be prepared in accordance with Historical Cost Convention, Regulations of the Commission, and other relevant provisions of CAMA.

All Licensees shall have a financial year end of 31st December for the preparation of the statutory financial statements under CAMA and the preparation of their Regulatory Accounting Reports under these Regulations.

All Licensees are also requested to file monthly, quarterly, annual and statutory reports.

All Regulatory Accounting Reports filed with the Commission must disclose the name, position, and contact details of an accounting officer designated by the Licensee to respond to any additional enquiries from the Commission on the Regulatory Accounting Reports.

Shareholders of Licensees shall appoint an Auditor that is qualified for appointment under section 357 of CAMA and shall notify the Commission in writing within 14 days of the appointment of an Auditor or any change thereof. 

6. MDA: NOTAP

TITLE: REVISED GUIDELINES FOR REGISTRATION AND MONITORING OF TECHNOLOGY TRANSFER AGREEMENTS IN NIGERIA

The objective of the publication is to facilitate the acquisition of foreign technology and ensuring the domestication of same.

The guidelines detailed the requirements for registration of Trademarks, Patent and Design, technical know-how agreement, license agreement: technical know-how agreement, renewal of technical know-how agreement, management services agreement, consultancy services agreement, technical services agreement, software license agreement application for registration of technology transfer agreement, evaluation of technology transfer agreement, communications with applicants, remittance of approved technology fees, monitoring the implementation of technology transfer agreements and technology transfer agreements among others.

7. MDA: SON

TITLE: OHSAS 18001: 2018 TRANSITION POLICY

The International Organization for Standardization has published the ISO 45001:2018 Standard in March, 2018. The publication has given a three-year moratorium to all systems previously certified to OHSAS 18001:2007 to transit to the new Standard ISO 45001:2018.

However, the publication of the new standard does not automatically mean cessation of the OHSAS 18001: 2007. Rather, re-assessment/re-certification and Surveillance audits will take place during period of co-existence; but all OHSAS 18001: 2007 certificates will have expiry dates of March, 2021. New applicants are therefore encouraged to apply straight to the new Standard ISO 45001: 2018.

The Stand-alone transition audit, Surveillance/Transition audit, and the recertification/transition audit are the three transition program options for clients under this policy.

When ready for the transition, the client is required to contact the SON-MSC for the relevant application form. Information received from the form will be reviewed and if considered adequate, the application will be accepted. The client will be scheduled for audit within a month. On completion of the audit, a certificate will be issued expiry of which will be aligned to the existing three (3) years certification program of the client’s first date of certifications will be maintained for all clients irrespective of the Transition plan.

8. NAICOM

TITLE: GUIDELINES FOR MICROINSURANCE OPERATION IN NIGERIA

The guideline precludes any person from commencing or carrying on any class of Microinsurance business without being registered or authorized by the Commission. This Guidelines are to supersede all other microinsurance guidelines and it becomes effective from 1st January, 2018.

The main objective of the Guidelines are to provide minimum standards for the conduct of Microinsurance business in Nigeria; ensure consumer protection; establish general features of Microinsurance; establish duties and responsibilities of Microinsurance operators and insurance intermediaries and establish conditions for entry and exit from the Microinsurance market.

The Guidelines define Microinsurance as “insurance developed for low income populations, low valued policies, micro and small scale enterprises provided by licensed institutions, run in accordance with generally accepted insurance principles, and funded by premiums”.

Any applicant who wishes to operate as a Microinsurer must be a Limited Liability Company duly registered by Corporate Affairs Commission, Nigeria.

In respect of the insurance business transacted by it in Nigeria, a Microinsurer is expected at all times, to invest and hold invested in Nigeria assets equivalent to not less than the amount of policyholders’ funds.

9. MDA: INEC

TITLE: CONSOLIDATING FREE, FAIR AND CREDIBLE ELECTIONS IN NIGERIA (2017-2021)

The 2017-2021 Plan seeks to consolidate the conduct of free, fair and credible elections in Nigeria.

The purpose of the strategy is to provide a strategic direction for INEC, propose what needs to be done by the organization to achieve its mandate following a review of the previous strategic plan; provide a framework and focus for improvement within the Commission as a whole; optimise the Commission’s organizational systems and structures; provide a monitoring and evaluation framework for measurement of the performance of the Commission, among others.

The priorities of the 2017 – 2021 strategic plan is to improve voter education, training and research; register political parties and monitor their operations; interact nationally and internationally with relevant stakeholders; and strengthen INEC for sustained conduct of free, fair and credible elections.

The plan did not shy away from the challenges militating against the Commission, some of the identified challenges include irregularities which put the credibility of the entire electoral process in doubt; problems with the legislative framework, which put constraints on the electoral process; organisations not playing their roles to ensure credible, free and fair election; the non-inclusiveness of the electoral system; lack of independence of electoral commissions; long process of election dispute resolution; irresponsible behaviour by many politicians and their followers, manifesting in thuggery and violence; lack of strong and effective democratic institutions and monetization of politics. Influence of money on our politics; to mention but a few.