One of the first things that stood out to me was the culture of attention to detail. At Dr. Davies Sunny, SAN & Associates, even the smallest things such as spelling and punctuation in office reports are taken seriously. This emphasis taught me the importance of excellence, not just in big tasks but also in the little things that reflect professionalism. Professionalism, and what truly sets one apart, often lies in the little details. This lesson reshaped how I approach work, teaching me that excellence is built not just on big achievements but also on the precision of the finer points.

I also gained a lot from the hands-on experience with assigned tasks. Each assignment exposed me to new skills, processes, or concepts I had not encountered before and allowed me to put theory into practice. Even when I made mistakes, corrections were always given with patience and understanding, keeping in mind that I was still learning and finding my footing as an intern . This supportive approach not only helped me improve quickly but also built my confidence to take on new challenges without fear of making errors. I was very inspired by the respect and encouragement from senior colleagues. Even when corrections or reprimands were necessary, they were delivered with respect and with the intention to guide, not belittle. This created an environment where learning felt natural and motivating.

Another key takeaway was efficiency and timeliness. Despite the demanding workload, I observed and experienced how deadlines were consistently met without compromising the quality of work. This gave me a deeper appreciation for discipline and structure in handling multiple responsibilities. Equally remarkable was the friendliness that flowed across every level of the organization. From partners to associates, and even the cleaners and kitchen staff, everyone was warm, approachable, and genuinely kind. Also, I really appreciated having a fellow intern to work with; she was supportive and made the last three weeks more enjoyable. This sense of community made coming to
work every day something I looked forward to.

Lastly, some memorable moments made the internship even more enjoyable. “Easy August,” where we got to dress down for the month, brought a refreshing touch of informality. The film show was another highlight that fostered camaraderie and relaxation.

In summary, my internship at Dr. Davies Sunny, SAN & Associates was a blend of learning, growth, and memorable experiences. I am grateful for the knowledge I gained, the people I met, and the environment that made it all possible.

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I spent three weeks interning at Dr. Davies Sunny, SAN & Associates, and it turned out to be a very rewarding experience. It gave me the chance to see firsthand what legal practice really looks like on a daily basis. One of the things that stood out to me right away was how much importance the firm places on detail. Whether it was reviewing documents, doing research, or even helping with records, everything had to be done carefully and correctly. That constant reminder about precision has stayed with me.

The work I was given was varied. Some days involved research on different areas of law, while other days were about going through documents, working on registers, or simply keeping files organised. At first, some of these tasks seemed routine, but I quickly realised how much they contribute to the betterment of client cases. Every small detail really matters, and that’s something you don’t fully appreciate until you’re in an office where the outcome of a client matter depends on those details being
right.

There were also moments outside of day-to-day tasks that made the experience better. I particularly enjoyed the sessions with the lawyers, where they got to discuss areas like arbitration, litigation, and other forms of dispute resolution. These were not just theoretical lessons; they gave me a better understanding of how different approaches work in practice and why lawyers need to be flexible when advising clients. Those conversations were some of my favorite moments because they opened my eyes to the different paths a legal career can take.

But what really made my internship at Dr. Davies Sunny, SAN & Associates memorable was the people. The lawyers and staff were very welcoming, and I always felt like I could ask questions and get guidance without hesitation. Everyone treated me kindly, which made learning so much easier. I was also happy to have a fellow intern during the period. Working alongside someone in the same position made the experience a lot more enjoyable. Looking back, those three weeks gave me more than I expected. I left with better research skills, a stronger sense of how important accuracy is in this profession, and a clearer picture of the work it takes to run a law firm. Most importantly, I left motivated to keep learning and improving as I continue my legal journey.

I am grateful to Dr. Davies Sunny, SAN & Associates for the opportunity and to everyone who made the experience worthwhile. It was a short internship, but one that left a lasting impression on me.

By Oluwasemilore Ogunsakin

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In August 2025, President Bola Ahmed Tinubu signed the Nigeria Insurance Industry Reform Act 2025 (the “Act”) into law. The Act repealed the Insurance Act 2003, and previous legislations regulating the insurance industry which are: the Marine Insurance Act, Motor Vehicles (Third Party Insurance) Act, National Insurance Corporation of Nigeria Act, and the Nigeria Reinsurance Corporation Act, and consolidated their provisions in various parts of the Act. The Act aims to regulate the insurance industry and safeguard the interest of stakeholders by establishing specific requirements and procedures for entities that wish to conduct or participate in insurance business in Nigeria.

This article highlights the key reforms in the Act and how it will affect the conduct of business, investment and participation in the Nigerian insurance industry.

KEY REFORMS OF THE ACT

1. Risk-Based Capital Requirement & Supervision

The Act now mandates that any entity desirous of carrying on or being involved in insurance business in Nigeria under any of the permitted categorisation of insurance business, have and maintain, a minimum share capital of ₦15, 000, 000, 000.00 (Fifteen Billion Naira)  for Non-Life, ₦10, 000, 000, 000.00 (Ten Billion Naira) for Life, and ₦35, 000, 000, 000.00 (Thirty-Five Billion Naira) for Reinsurance business.[1]

The Act further empowers the National Insurance Commission (the “Commission”) to regulate, revise, or supervise the capital base of insurance companies (“Insurers”) or issue entirely new capital requirements for Insurers as it may deem fit using the risk-based capital approach which involves considering the capital required for insurance, market, credit, and operational risk and applying such capital charges on assets and liabilities.[2] The Commission had, pursuant to the provisions of the Act[3], issued a circular on 12^th August 2025 directing existing Insurers to comply with the new capital requirement before 30^th July 2026.

2. Mandatory Minimum Statutory Deposit

All Insurers are required to deposit a percentage of their minimum share capital with the Central Bank of Nigeria (the “CBN”). Intending Insurers are directed by the provisions of the Act to deposit the equivalent of fifty percent (50%) of the minimum capital requirement with the CBN. Eighty percent (80%) of the deposit will then be refunded with interest to the Insurer not later than 60 days after registration. Existing Insurers are also expected to deposit the equivalent of ten percent (10%) of the minimum capital with the CBN. This measure is aimed at ensuring that Insurers have the financial strength to underwrite risks up to the extent of their capital.[4]

Whilst this is not entirely a novel provision, the Act goes a mile further by mandating that statutory deposits be invested in government-approved securities such as bonds, treasury bills or any other instruments as the CBN or the Commission may deem fit. This ensures that the deposits are both secure and liquid enough to support insurers’ obligations to policyholders. In addition, the Act protects these deposits by excluding them from garnishee proceedings. This prevents creditors from attaching them and safeguarding the funds for their intended purpose of meeting insurance liabilities.[5]

3. Reserves and Investment

Insurers

The Act mandates Insurers to establish and maintain a reserve fund where a percentage of the premium on insurance will be set aside for the settlement of unearned premiums, unexpired risks, and outstanding claims as they become due.[6]

Since the extent of liability on any given claim is not known until settlement and the Insurer is expected to settle outstanding or incurred claims from the premium payments made by the insured over an agreed period, this provision alongside the one hundred percent (100%) capital adequacy ratio required to be maintained by the Insurers at all times[7], seeks to reasonably protect the Insurer and the general public from issues of unsettled claims.

Insurers are further required to invest insurance funds in Federal Government-backed securities, bonds, real estate, debt instruments by corporate entities listed on the Stock Exchange, and other investment options permitted by the act.[8]

Reinsurers

Reinsurers (“Reinsurers”) are required to establish a general reserve fund account with a minimum of fifty percent (50%) of the Insurer’s gross profit if the fund is less than the Insurer’s authorised capital for the year; and a minimum of twenty-five percent (25%) where the fund is exactly or exceeds the authorised capital of the Reinsurer.[9]

This act will boost the local economy as other sectors will benefit from the premium contributions expected to be invested in these sectors of the economy by the Insurers.

4. Enhanced Corporate Governance Requirements

The Act establishes stricter and enhanced corporate governance measures in comparison to the Insurance Act 2003. Insurers carrying on both life assurance and non-life insurance business are expected to submit annual returns duly audited by an external auditor approved by the Commission.[10] Where the Commission does not approve the Insurer’s annual returns, it is precluded from conducting its Annual General Meeting (AGM) or issuing dividends.[11]

Additionally, an Insurer under the Act is not permitted to declare or pay dividend on its shares to members until it has complied with the capital adequacy and solvency requirement under the Act, written off all its expenses not represented by tangible assets, and made adequate provisions for actual and contingent losses on its risk assets and liabilities.[12]

5. Transfer, Acquisition and Merger

The Act introduces broader provisions regulating how Insurers may carry out any scheme of transfer, amalgamation, acquisition of business or any agreement or arrangement for the reconstruction of its business. Beyond requiring the Commission’s consent for mergers, acquisitions, or transfers of insurance business, the Act also makes approval necessary where an Insurer intends to restructure its business, appoint an external management agent to run its operations, or transfer its business to such an agent. The Act also dispensed with the provision of the Insurance Act 2003 which imposed twenty-one (21) days limit on inspection of the scheme of merger or transfer agreement by the policyholders and shareholders of the merging entities. The policyholders of the merging entities are now empowered to inspect the instrument at all reasonable times.[13]

The Commission has also assumed enhanced regulatory function and is saddled with the duty of providing measures, process, procedures, requirements and timeline for merging entities to obtain its approval for the transfer, acquisition or merger of Insurers under the Act. Where the Commission objects to any transfer, acquisition or merger, the applicant may apply to the Federal High Court for a review of the Commission’s decision within six (6) months.[14]

6. Petition for Winding-Up

Policyholders who have held an Insurer’s policy for not less than three (3) years are now empowered by the Act, subject to the approval of the Commission, to file a petition for winding up of an Insurer on any of the grounds provided in section 571 and 572 CAMA. In addition, the Commission itself may petition for the winding up of an Insurer whose licence has been revoked under section 8 of the Act, or where the Insurer is deemed incapable of being revived despite regulatory intervention.[15]

Compulsory Insurance

The Act now mandates the insurance of buildings under construction, public buildings[16], government assets and employees, goods and merchandise, petroleum and gas stations, health care providers’ offices, and operators/entities in the aviation sector. Insurers of public buildings are further compelled by the provision of the Act to make a quarterly deposit of 0.25% of the net premium received quarterly into a Fire Services Maintenance Fund to be established and maintained by the Commission for the purpose of providing equipment to fire-fighting institutions.[17] This is aimed at ensuring bodily injuries, hazards, losses or deaths sustained in the course of work, building construction or business operations are duly attended to for continuous workflow and protection of public interest. The Act also specified various categories of penalty for defaulting entities and individuals in this class who fail to execute an insurance policy as directed under the act, including, cancellation of insurance license in the case of an insurer, fine, and imprisonment for specified terms.[18]

7. Motor Vehicles (Third-Party) Insurance

The Act repeals the Motor Vehicles (Third-Party) Insurance Act and incorporates its provisions with improvements. The Act mandates every user of a private and commercial vehicle to obtain a motor vehicle insurance policy in respect of third-party risks,[19] with new exceptions that include two categories of persons –– the Nigerian Armed Forces and government of a foreign state –– as liability in such cases rests with the office of the Minister of Defence and the relevant diplomatic missions. The Act extends the timeline for instituting proceedings against erring motorists to twelve (12) months from the date of commission of the offence or from when the prosecutor becomes aware of it, whichever is longer.[20]

Motor insurance policies must now include medical expenses for third-party accident victims up to ₦100,000 for out-patient care and ₦250,000 for in-patient treatment. They must also cover property damage to third parties up to ₦3,000,000, or any higher amount prescribed by the Commission.[21] The Act also provides a detailed recourse for third parties where the insured has become insolvent[22] and protects third parties by nullifying policy clauses that attempt to avoid liability or terminate coverage based on conditions being fulfilled or not fulfilled.[23]

ECOWAS Brown Card Scheme

The Act establishes a National Bureau (the “Bureau”) on the ECOWAS Brown Card Scheme pursuant to the provisions of the ECOWAS Brown Card Protocol on Third-Party Motor Insurance[24]. The Brown Card Protocol established the regional framework on the insurance of policyholders against third party motor liabilities from motor accident on member-states’ roads. The Bureau will issue the ECOWAS Brown Card to Insurers who are required to participate in the scheme as members of the Bureau. From the commencement of the Act, every motor vehicle insurance policy issued in Nigeria automatically carries an ECOWAS Brown Card.

The Act[25] further provides that where an accident involves one or more vehicles, an insured person or third-party victim does not need to present a police report before filing an insurance claim, provided there is sufficient proof of loss or damage. A police report is only required in cases involving death or serious bodily injury. Although the scheme applies only to third-party motor insurance, it remains significant for intra-African trade and liability claims and is expected to strengthen Nigeria’s participation in regional commerce.

8. Consumer Protection- Establishment of an Insurance Policyholder’s Protection Fund

 The Act establishes an Insurance Policyholders’ Protection Fund (the “Fund”) to address the distress or insolvency of Insurers and Reinsurers. The Fund will also cover the payment of claims that have been admitted or awarded against an Insurer or Reinsurer but remain unpaid due to insolvency or cancellation of its licence. The Fund is financed by an annual contribution of Insurers and Reinsurers equivalent to 0.25% of their gross premium income and 0.25% of the balance in the Security and Insurance Development Fund as of 31 December of the preceding year.[26]

The Fund upon commencement of operation will be domiciled in a licensed deposit money bank or other recognised financial institutions and administered independently of the Commission’s funds by a competent fund manager.[27]

The Act requires Insurers and Reinsurers to settle claims in full within the period stated in their Service Charter or, where no charter exists, within the timeframe prescribed by the Commission. If a claim remains unsettled after this period, the insured may request the Commission to pay the claim from the Insurer’s statutory deposit, and the Commission is empowered to do so once a written claim is made by the insured or any other entitled party.

In addition, the Act sets a maximum period of 60 days for the settlement of claims or resolution of issues such as incomplete documentation. Within this period, insurers must either settle the claim, respond formally if liability is denied, or face a penalty. Any insurer that fails to comply is liable to a fine of ₦500,000 (Five Hundred Thousand Naira).[28]

Key Observations

While the Act enhances the Commission’s oversight of the insurance industry, certain provisions may inadvertently create governance concerns. For instance, preventing insurers from holding Annual General Meetings where annual returns are not approved could conflict with their statutory obligations under the Companies and Allied Matters Act 2020. The interaction between the Commission’s regulatory powers and existing corporate governance requirements will require careful consideration to avoid unintended conflicts.

A potential area of overlap arises in relation to mergers and acquisitions of insurers. While the Act vests the Commission with powers to approve or reject such transactions, the Federal Competition and Consumer Protection Commission (FCCPC) retains concurrent jurisdiction under the Federal Competition and Consumer Protection Act (FCCPA) to review mergers from a competition perspective. This dual oversight could create procedural and timing complexities unless there is clear regulatory coordination between the Commission and the FCCPC.

Conclusion

The Nigeria Insurance Industry Reform Act 2025 marks a significant milestone in efforts to deepen market penetration and strengthen investor confidence in the sector. Its success, however, will depend on the Commission’s capacity to enforce consistent regulation, Insurers’ commitment to compliance, and the ability to sustain public trust in insurance as a driver of economic growth. If effectively implemented, these reforms will improve investors confidence, protect policyholders interests and deepen the Nigeria Insurance market penetration.

[1] Section 15(1)

[2] Section 15(2), 25 & 26(1)

[3] Section 15(6)

[4] Section 16 and 17

[5] Section 16

[6] Section 21

[7] Section 24

[8] Section 27

[9] Section 23

[10] Section 33

[11] Section 29(7)

[12] Section 35

[13] Section 107

[14] Section 107

[15] Section 111

[16] Section 76 (6)

[17] Section 76 (2)

[18] Section 75 – 78

[19] Section 84 (1)

[20] Section 85

[21] Section 87 (1)

[22] Section 91

[23] Section 88

[24] The ECOWAS Protocol A/P1/5/82

[25] Section 106 (1)

[26] Section 212 (1) (2)

[27] Section 212 (4)

[28] Section 210 (2-7)

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While a successful party to a legal action (“Judgment Creditor in Garnishee Proceedings”) deserves to reap the fruit of a favourable judgment, the question this article seeks to address is if enforcing the same should be at the detriment or inconvenience of individuals or corporate entities, especially financial institutions that were not parties or involved in the matter.

A Party’s Right to Enforce Judgments

One of the ways a successful party in a matter can enforce a monetary Judgment is by a process known as Garnishee Proceedings.

Garnishee Proceedings is a type of post-judgment enforcement procedure, used by Judgment Creditors to recover monetary judgments by attaching/placing a lien on the funds owed to a Judgment Debtor by third parties.

Involving Financial Institutions in Enforcing Judgments

It is no news that financial institutions, particularly banks are always caught up in Garnishee Proceedings. Not as parties to the suit, but as Garnishees2, joined by Judgment Creditors, with the hope of recovering the judgment sum and cost of the proceedings (“Judgment Debt”) by attaching the funds of the Judgment Debtor, that may be domiciled with the financial institutions.

The reality is financial institutions are now forced to incur significant legal and related cost including manpower and lime when successful litigants seek to enforce monetary judgments against Judgment Debtors.

Although the provision of the law is clear on how anyone (in this case financial institutions) maybe joined in Garnishee Proceedings, the practice over the years has taken a troubling turn with financial institutions being joined to Garnishee Proceedings without a knowledge or hint of confirmation on whether the Judgment Debtor has any funds domiciled in such a financial institution.

We have examined Garnishee Proceedings in Nigeria, the seeming abuse of it, the resultant effect on financial institutions as well as the way forward.

Garnishee Proceedings

Section 83 Sheriffs And Civil Process Act (SCPA) provides that a Judgment Creditor may before or after orally examining a Judgment Debtor, file an ex-parte application3 seeking (a) sums owed to the Judgment Debtor by third parties be attached to satisfy the Judgement Debt, and (b) that the Garnishees be made to state why the debt they owe the Judgment Debtor should not be paid to the Judgment Creditor, in satisfaction of the Judgment Debt. Also, the Judgment Creditor or his legal counsel is required to depose to an affidavit, stating the unpaid Judgment Debt and the third parties indebted to the Judgment Debtor who are within the state.

It is important to note that for a Garnishee to be joined in any proceedings, the Garnishee must be indebted to the Judgement Debtor, and the amount to be paid by the Garnishee to the Judgment Creditor is the amount owed by the Garnishee to the Judgment Debtor. In the same vein, a Judgment Creditor has a responsibility, although not mandatory, to speak to the Judgment Debtor, to confirm its debtors, before joining such third-party debtors as Garnishees.

Judgment Creditors’ Habit of Joining Several Financial Institutions in Garnishee Proceedings

The practice today has shifted from joining only third parties who are indebted to Judgment Debtors in Garnishee Proceedings. Judgment Creditors now join several financial institutions in Garnishee Proceedings, without any confirmation or reasonable belief that the financial institutions have monies belonging to the Judgment Creditor. This approach may be attributed to the absence of a central database for the Judgment Creditor to identify the Judgment Debtor’s banks or debtors, or the ability of the Judgment Creditor to request banking information of the Judgment Debtor from a financial institution, without a valid court order (in view of bank’s duty of confidentiality to its customers). This makes the Judgment Debtor cast a wide net by joining as many financial institutions as possible, with the hope that something sticks.

This current practice comes at a cost borne by the financial institutions, the courts, and ultimately, the credibility of the judicial process itself. For financial institutions, this translates into legal and administrative costs. Courts in turn are forced to spend time and resources handling needless applications and resolving objections that could have been avoided altogether.

A New Ray of Hope?: Suntrust Bank (Nig) Ltd V Dada

The Court of Appeal in a recent decision in Suntrust Bank (Nig) Ltd v Dada reiterated the age-long provisions of Section 83(1) of the SCPA and addressed the indiscriminate joining of banks in Garnishee Proceedings, without just cause

The Court of Appeal held that Section 83(1) of the SCPA makes it a condition precedent that a Garnishee must in fact be indebted to the Judgment Debtor. The court condemned the “net casting” practice of indiscriminately listing all banks without first ascertaining whether the banks hold any funds belonging to the Judgment Debtor and highlighted the financial impact ii has on the shareholders of the financial institutions that are forced to bear the cost of litigation. The appellate court stressed that Garnishee Proceedings should only be commenced against banks where there is reasonable evidence that the Judgment Debtor maintains funds with the bank, rather than using a speculative, blanket approach.

This judicial stance reinforces the argument that while Garnishee Proceedings remain vital, they must not be used as a blunt instrument against all banks simply out of convenience or speculation.

Charting the Path Forward

To restore the integrity of Garnishee Proceedings in the Nigerian judicial system, the courts and counsel are required to ensure strict compliance with Section 83 (1) of SCPA, failing which, an application should be dismissed with substantial costs. Courts are required to satisfy themselves that the Judgment Creditor has taken reasonable steps to confinm that the Garnishees are indeed, indebted to the Judgment Debtor and in the case of banks, that the Judgment Debtor maintains an account with the bank, and they are in credit before granting an “order Nisi” in a Garnishee Proceeding.

While we recognise the difficulty in confirming the indebtedness of a third-party to a Judgment Debtor, counsel is required to take proactive steps to ascertain relevant third-party debtors of the Judgment Debtor, before joining them as Garnishees to the Proceedings. This may include applying for the Judgment Debtor to disclose its debtors before instituting Garnishee Proceedings.

Courts on the other hand may award costs against the defaulting party, and upon request, compensate anybody or entity that was indiscriminately joined in a Garnishee Proceeding without just cause, once it is shown to that the Garnishee has no relationship with the Judgment Debtor, and has incurred legal and administrative costs defending the action.

In view of the apparent lacuna in the system that makes it difficult for Judgment Creditors to ascertain or confirm third-party debtors or banks the Judgment Debtor maintains an account with, there may be a need to amend the extant laws to allow successful litigants/Judgment Creditors request from relevant authorities, or bodies, information regarding a Judgment Debtor’s financial status or even debtors and banks without jeopardizing or risking the dissipation of funds. This will reduce the indiscriminate joinder of financial institutions in Garnishee Proceedings.

Conclusion

Garnishee Proceedings remain a vital tool in the enforcement of monetary judgments. However, the increasing trend of joining every financial institution in the proceedings, regardless of their relationship with the Judgment Debtor, undermines the efficiency and fairness of the process, and leaves the Garnishees to bear unnecessary cost, without compensation. Courts are also burdened with the process created for an effective enforcement system.

The way forward is not to curtail the rights of Judgment Creditors or make ii difficult to enforce monetary judgments, but to restore discipline, and precision in the exercise of these rights. With stricter judicial scrutiny, smarter procedural tools, and collaborative legal and regulatory reforms, Garnishee Proceedings can once again serve their true purpose as an efficient and equitable enforcement procedure.

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Historically, Nigeria’s tax landscape has been complex and fragmented with significant challenges for taxpayers and investors alike, ranging from multiple taxation to prolonged disputes and regulatory uncertainty. The Tax Reform Acts seeks to address these issues by harmonising tax administration, enhancing taxpayer protections, and encouraging compliance through clarity and predictability.

At the heart of the reform is the Nigeria Tax Act (NTA), a comprehensive piece of legislation that contains robust provisions governing taxation for both individuals and businesses. The NTA introduces a range of fiscal incentives aimed at boosting economic productivity while simultaneously easing the financial burden on everyday Nigerians. A key amendment by the NTA is the removal of value-added tax (VAT) on a number of essential goods and services. Basic food items, educational books, and school tuition at the nursery, primary and secondary levels are now zero-rated VAT while shared road transport services is now exempt from VAT, translating into lower commuting and essential commodity costs for Nigerians.

• To further support low-income households, the NTA exempts annual incomes as high as ₦800,000.00 (Eight Hundred Thousand Naira) from VAT, thereby increasing disposable income among the most vulnerable.
• Rent relief has also been introduced for individuals, allowing the deduction of 20 percent annual rent, up to a maximum of ₦500,000.00 (Five Hundred Thousand Naira) when computing chargeable income. These provisions, taken together, are expected to reduce the cost of living and encourage savings and investment among ordinary citizens.

The Nigeria Tax Administration Act complements the substantive reforms by standardizing tax procedures across board.

A significant institutional innovation under the new framework is the establishment of the Office of the Tax Ombud through the Joint Revenue Board of Nigeria (Establishment) Act. The Tax Ombud’s Office is empowered to receive and investigate complaints against tax authorities, act as an impartial arbiter in disputes related to6, and promote awareness about taxpayer rights and obligations. It also has the authority to make recommendations to tax and governmental authorities and, in some cases, initiate legal proceedings on behalf of taxpayers. This represents a groundbreaking step toward accountability and public trust in Nigeria’s revenue system.

Notably, the Nigeria Revenue Service (Establishment) Act replaces the Federal Inland Revenue Service (FIRS) with the newly created Nigeria Revenue Service (NRS), which now has broader powers to oversee and enforce revenue collection. The NRS is tasked with the crucial role of streamlining operations and improving efficiency in tax administration.

For businesses, the new tax landscape offers various opportunities and obligations. The qualifying threshold for small companies has been raised from ₦25 Million to ₦50 Million annual turnover with fixed assets not exceeding ₦250 Million. This will allow more enterprises to benefit from tax exemptions. Small companies are now fully exempt from Company Income Tax (CIT), while medium and large companies remain subject to a 30 percent rate on their declared profits as reported in their audited financial statements.

A levy known as Development Levy has now been introduced to replace the several levies which were previously paid by various categories of companies, the levy is payable by all companies except small and non-resident companies.

Economic Development Tax Incentive

A key point to note for businesses is the introduction of the Economic Development Tax Incentive, which replaces Pioneer Status Incentive. While the latter provides tax holidays for three to five years, the new regime extends this benefit for periods as long as twenty years for businesses in qualifying sectors.

Agri-business boost

Similarly, new companies engaged in agricultural business are exempt from income tax for the first five years of operation, a move which will likely stimulate investment in agribusiness and enhance food security in the long term.

Exporting activities

Export-oriented businesses also stand to benefit, as profits derived from goods exported from Nigeria are exempt from income tax, provided the proceeds are repatriated through official channels. However, this tax exemption does not extend to companies in the upstream, midstream, and downstream oil and gas sectors.

Specific reforms in the Energy Sector

For companies operating in the oil and gas industry, the reforms carry both new responsibilities and potential benefits. Interestingly, only expenses that are wholly and exclusively incurred in operations during the relevant period are deductible for tax purposes. This marks a clear departure from previous interpretations, under which expenses considered reasonable and necessary could be deducted. The NTA also allows the deductions for interest on capital employed for petroleum operations, development levy payments, and contributions to approved decommissioning and abandonment funds. These changes are expected to have significant effects on companies income taxes payable by oil and gas companies.

In conclusion, Nigeria’s new tax regime marks a significant turning point in fiscal governance. It simplifies compliance, strengthens taxpayer protections, and introduces targeted incentives that could reshape the economic landscape. For households, the relief is immediate and tangible. For businesses, the rules are clearer, albeit with greater scrutiny. And for the country at large, the reforms present a renewed opportunity to build a fairer, more sustainable economy.

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However, creatives and startups can sometimes face significant challenges in accessing traditional financing leveraging their craft, due to the intangible nature of their primary assets. In this context, Intellectual Property (IP) securitisation presents a promising solution, and can enable businesses to leverage their IP assets to secure funding.

As intangible assets increasingly drive economic value, IP securitisation has emerged as a compelling avenue for financing and could unlock significant economic potential. This article explores the concept of IP securitisation, its applicability in Nigeria, and the potential it holds for transforming the country’s financial landscape.

Understanding IP Securitisation

Essentially, IP securitisation is a financial strategy that involves converting IP assets, such as patents, trademarks, or copyrights, into tradable financial instruments that can be bought, sold, or used as collateral for loans and other sophisticated forms of financing. Traditionally, securities in Nigeria have been associated with tangible assets, such as real estate or equipment. As intangible assets increasingly drive economic value, IP securitisation has emerged

as a compelling avenue for financing and could unlock significant economic potential and with the explosion of Nigeria’s entertainment and technology industries, IP in music and films, and even proprietary software may very well become a pivotal form of security.

Recent Statutory and Policy Shift toward IP Securitisation in Nigeria

IP as a means of securing financing has, over time, gained some recognition with room for improvement. For instance, the Companies and Allied Matters Act (GAMA) 2020 affirms the right of companies to create security interests (charges) over their intellectual property; however, in more recent times, additional legal frameworks have emerged to complement existing laws, providing clearer recognition

of IP assets as viable instruments for securing loans. More recently, the Investments and Securities Act, 2025 expanded the definition of securities to include digital and virtual assets.’ While IP is neither a digital nor a virtual asset (intangible), the digital representation of IP, such as music/ film in an encoded format (MP3s), certainly qualifies as a digital asset, which can be leveraged in raising financing.

The current state of our laws suggests that creatives and startups can indeed leverage their respective IP rights in unlocking the financial markets; provide the financing can be structured in an acceptable manner. The gap in the sector may then be such deliberate policy direction and political will to drive implementation, compliance and acceptance of these IP assets as securities in the traditional and non-traditional financial institutions.

Securing Financing With IP Assets

IP Securitisation can be procured through traditional financing methods, which include IP Auction, IP back lending and IP Sale-Leaseback.

IP Auction: IP auctions involve selling IP assets to the highest bidder through a competitive bidding process. This allows IP owners to monetise their assets by attracting buyers willing to pay a premium for the rights to exploit the IP.

IP Sale-Leaseback: This method involves an investor acquiring an IP asset and leasing it back to the company. The company continues to use the IP in its operations, but pays a lease or licensing fee to the flow from IP assets may be unstable as opposed to tangible assets, and with the exception of software, there is no definitive way to determine the true value of most IP assets upfront.

IP-back lending: IP-back lending essentially involves a lender taking an interest in the borrower’s IP assets as security in exchange for a loan. It can be structured for the owner of an IP asset to assign future income streams (such as royalties) to another party in exchange for a lump sum payment. This method allows the IP owner to monetise future revenue without parting with the asset itself. It can also be structured to allow the lender to have access to all present and future income from the IP asset, which will extend beyond stream royalties to ownership of the masters and any licensing or similar rights arising from the same. This has already been done. In 1997, David Bowie, a performing artist in the United States, used royalties from his present and future album sales as collateral to issue bonds, raising a whopping US$55 million. There were certainly several structuring considerations, including his use of funds . This financial innovation gave rise to what are now known as Bowie Bonds.

Essential Parties in IP Securitisation

The IP securitisation typically involves the following entities:

Originator: The original holder of the IP rights. This can be an individual or a corporate entity holding rights to a literary work or software.

Special Purpose Vehicle (SPV): Where required, particularly in the case of a human originator, the originator may set up an independent legal entity which will approach the market to raise the required financing using the IP as security. To effectively do this, the originator, as sponsor of the transaction, may either provide the necessary guarantees by creating a security over the asset in favour of the investors, or outrightly transfer the asset to the SPV as borrower/ issuer.

Investors or Creditors: Individuals or entities that provide financing by investing in the financial instruments issued by the Originator/SPV.

Trustee: Acts as an intermediary between the investors and the SPV, ensuring the proper management and distribution of funds. These entities will also usually hold the rights to the IP assets for the duration of the financing, and will have the obligation to enforce the same in the event of a default by the Originator/SPV.

Other key participants include the rating agencies, credit enhancers, and insurance companies.

Challenges

While IP securitisation presents opportunities, several challenges remain, including:

1. Valuation Difficulties: The intangible nature of IP assets makes accurate valuation challenging, particularly for newly registered or untested assets. This is further underscored considering that the cash flow from IP assets may be unstable as opposed to tangible assets, and with the exception of software, there is no definitive way to determine the true value of most IP assets upfront.
2. The Risk of Intellectual Property Infringement: The constant threat of infringement raises another concern, as this can drastically jeopardise its value, leaving lenders at risk.
3. The Difficulty of Selling Intellectual Property: Unlike physical assets that can be easily bought and sold, secondary markets for IP are still developing and lack liquidity. This may make it challenging for lenders to quickly sell their interest in a case of default, potentially locking them into long-term commitments with uncertain outcomes. The lack of liquidity may also discourage some investors from entering the market
4. Trend Shift and New Technologies: There is the risk of a new technology making a patent obsolete.New trends and tastes in music can also affect existing literary works. These risks can affect the value of the underlying IP asset, and thus negatively impact the investment offering.
5. Lack of Awareness and Expertise: This is an emerging financing option, particularly in Nigeria. Accordingly, many creatives are understandably not aware of the possibility. Traditional lenders and advisers may also not be familiar with the necessary instruments for making the offering, and this may hinder the growth of IP securitisation.

The way forward: Cultivating an Environment for IP Securitisation

Despite the challenges identified above, the potential of IP securitisation is undeniable. To create a viable environment for IP securitisation in Nigeria, several solutions should be implemented:

1. IP Registration: Proper registration of IP is essential for establishing legal ownership and using IP assets as collateral in financing. For creatives, inventors, and businesses, registering IP rights is a critical step to securing legal protection and reducing the risk of ownership disputes. Although copyright registration is not mandatory, the Copyright Act 2022 recognises registered works and grants a presumption of ownership to the registered party.’ In financing transactions, lenders typically require verified proof of ownership, which can only be reliably provided through formal IP registration.
2. IP Insurance: IP insurance safeguards intellectual property assets like patents, trademarks, and copyrights against risks such as infringement, loss of value, or even invalidation. This crucial protection enhances an IP’s inherent value and significantly boosts its appeal to potential lenders, essentially “de­ risking” these often-intangible assets. Insurers will need to develop creative, tailored policies for diverse IP types, employ sophisticated valuation methods, and likely collaborate with IP experts to offer effective products. By providing this vital security, IP insurance builds lender confidence, unlocking capital that businesses can then leverage for growth and innovation.
3. Legal Framework Reforms, Awareness and Education: Awareness and education are essential for broadening the understanding and adoption of IP financing among creators, innovators, and businesses. Governments can play a key role by establishing supportive legal frameworks, recognising IP as valid collateral, standardising valuation methods, and offering incentives for IP-backed lending. In general, government policy drive in addition to legislation, is required to achieve clear IP securitisation inclusion in our traditional and non-traditional financing options in Nigeria. Public campaigns can simplify complex IP financing concepts for various audiences, from creators and small and medium enterprises (SMEs) to lenders, highlighting their economic benefits and practical applications. Complementary educational initiatives, such as integrating IP financing into academic curricula, offering practical workshops for professionals, and developing certification programs, will help build a knowledgeable ecosystem around IP securitisation.

Conclusion

While the potential of IP securitisation in Nigeria is undeniable, its realisation depends on deliberate policy reforms, institutional readiness, and stakeholder awareness. Involving and ensuring active inclusion of the financial institutions and their regulators. Turning promise into practice requires a concerted effort to create the necessary infrastructure to unlock the true value of intellectual property as a viable asset class. Until then, its transformative power will remain largely untapped.

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The new legislation was driven by the need to align Nigeria’s capital market with global standards and reflect the changing investment landscape, including the evolvement of digital assets over the years, and other financial investment technologies. The ISA 2025 aims to expand the regulatory framework for capital markets in Nigeria and ensure fair, efficient, and transparent markets while enhancing financial stability and reducing systemic risks.^[1]

The changes introduced are clearly targeted at enhancing investor protection through several mechanisms, including improving the regulatory and supervisory roles of the Securities and Exchange Commission (“SEC” or the “Commission”), introducing stiffer penalties for non-compliance, and bringing virtual and digital assets into the regulatory purview of the SEC.

Highlights of the ISA 2025

1. Enhanced Regulatory Powers of the SEC
   • The ISA 2025 not only affirms the position of the SEC as the apex regulatory authority for the Nigerian capital market^[2], but also declares that in the exercise of its functions, the SEC will be independent.^[3] This provision, contained in the enabling laws of key government agencies such as the Central Bank of Nigeria and the Independent National Electoral Commission, essentially ensures that the SEC can now conduct its affairs with minimal intervention from government ministries and ministers.
   • The ISA 2025 now also expressly confirms that one of the SEC’s functions is to review and approve takeovers, business combinations, and related transactions of public companies.^[4] This is presumably to resolve the confusion that arose after the passing of the Federal Competition and Consumer Protection Act, 2018 (FCCPA), which repealed the provisions of the ISA 2007 relating to mergers and similar transactions.^[5] In effect, from the passing of the FCCPA, the SEC lacked legislative backing to regulate mergers, even for public companies. To remedy the situation, the SEC issued circulars to clarify that its no-objection was still required for mergers relating to public companies, but its circulars do not have the force of law. The ISA 2025 has now provided the required legislative basis for it to continue to review and approve mergers for public companies. As the Act was silent on the position of the Federal Competition and Consumer Protection Commission (FCCPC), it appears that public companies will continue to require approval from both the SEC and the FCCPC for their mergers and takeovers.
   • Furthermore, the SEC is now involved directly in the appointment and removal of the chief executive officer and principal officers of Capital Market Operators (“CMO”) and securities exchanges, as the appointment and removal of the said officers are now subject to its prior ratification. Indeed, the SEC can now unilaterally suspend and even remove the said officers for non-compliance with any rules and regulations issued by SEC^[6].
   • The SEC has also now been empowered by the ISA 2025 to intervene in the management and control of CMOs, public companies or regulated entities, where it considers, among others, that the relevant entity has acted in a manner that is detrimental to the interest of investors or shareholders. In such a case, it may appoint Independent Non-Executive Directors to the boards of public companies in which it has intervened or taken regulatory action^[7], and place the directors on probation for a reasonable period.
   • Whereas, under the ISA 2007, penalties for non-compliance are imposed only upon conviction, the Act now empowers the SEC to impose fines and other penalties in lieu of prosecution and conviction for various non-compliance matters.^[8]

   Whilst we appreciate the intent behind empowering the SEC in the manner that the ISA 2025 has now done, it is our view that these wide powers must be exercised with circumspection, so that they do not become counterproductive. In our view, empowering the Commission to unilaterally impose fines in lieu of prosecution may very well run foul of the constitutional right to a fair hearing of the fined entities, and may be successfully challenged in court as the courts have consistently frowned upon situations where executive agencies act as both accuser and judge. The exercise by the SEC of its now-wider powers, and the reception that the same will receive in the market, remains to be seen.

2. Unbundling of Securities ExchangesUnder the ISA 2007, there were no categories of securities exchanges. The ISA 2025 has now introduced the classification of securities exchanges^[9] into composite and non-composite exchanges. A composite securities exchange may engage in the listing, quotation, and trading of various types of securities, commodities, or financial instruments, while a non-composite securities exchange may either (a) specialise in the listing of only one type of securities or commodities (known as mono securities exchanges) or (b) serve as an alternative trading system that brings together orders from buyers and sellers either physically or online. This distinction was likely introduced, to accommodate online exchanges for digital and virtual assets, who may require registration only for those assets, and not for traditional securities such as bonds etc. The definition of “securities exchange” has now been expanded by the ISA 2025, to be “… an organised facility which maintains and provides an infrastructure (a) for bringing together buyers and sellers of securities, virtual assets… (b) for matching bids and offers for securities, virtual assets…., and (c) whereby a matched bid and offer for securities, virtual assets… constitutes a transaction.”By this definition, platforms established, even if only for facilitating crypto and other digital and virtual asset transactions, including peer-to-peer transactions, are now classified as exchanges, and are now required to be registered with the Commission.^[10]
3. Expansion of Recognised SecuritiesPerhaps the most significant change introduced by the ISA 2025 is the expansion of what is considered as “securities”. Previously, securities simply related to bonds, stock, debentures, shares, and similar traditional products. Now, “securities” is defined to include virtual and digital assets, and investment contracts,^[11] and where applicable, trading in the said assets, including cryptocurrency, Non-Fungible Tokens (NFTs), and digital currencies, will now be subject to the SEC’s regulatory purview.The SEC has always been forward thinking and had prior to now issued five (5) rules in respect of virtual and digital assets.^[12] In spite of the rules however, there remained some uncertainty around the legality of trading in digital and virtual assets in Nigeria, particularly considering the stance of other key regulators like the CBN, which direct financial institutions to freeze bank accounts used in any transaction related to specified virtual assets. This legislation has now put paid to the debate, clarifying the ambiguity around the acceptance of cryptocurrency in Nigeria, confirming that it is acceptable, but may only be traded under the purview of the SEC.
4. Legal Entity Identifier and Dematerialisation of Securities in the Secondary MarketThe ISA 2025 mandates that all securities transactions in the secondary market must be in dematerialised form.^[13] This means that cash transactions and non-dematerialised securities are prohibited in the secondary market. While this has been in practice in the capital market, its entrenchment in the ISA 2025 reinforces the form of securities to be traded in the secondary market for efficiency and accuracy of financial data and risk management.All entities involved directly or indirectly in securities transactions are now required to obtain a legal entity identifier,^[14] which is a code that will uniquely identify every distinct entity that is a part to a financial transaction, and which must be disclosed in every securities transaction, for accuracy of financial data and risk management.
5. Stricter Penalties and Prohibited SchemesThe ISA 2025 imposes stiffer penalties for non-compliance.The ISA 2025 specifically empowers the Commission to enter and seal up all prohibited schemes, and to obtain an order from the Investment and Securities Tribunal (Tribunal) or the Federal High Court to forfeit all the assets of the scheme to the Federal Government. Prohibited schemes are now clearly defined to include ponzi and pyramid schemes,^[15] and their promoters are liable upon conviction to a fine of not less than N20,000,000 (Twenty Million Naira) or imprisonment for up to 10 years, or both.
6. Tax-Exempt Status for Collective Investment SchemesThe ISA 2025^[16] now specifically provides that for the purposes of taxation, collective investment schemes (Schemes) are to be treated as pass-through vehicles, except where they qualify as specialised or alternative schemes. While the ISA 2025 does not define these specialised or alternative schemes in detail, Section 151(1) authorises the Commission to register the following as Schemes:
   1. unit trust schemes;
   2. open-ended or closed ended investment companies;
   3. real estate investment companies or trusts;
   4. specialised or alternative investment schemes; or
   5. such other schemes as may be approved by the Commission.

   On this basis, it appears that by the operation of the ISA 2025, unit trust schemes, open-ended or closed ended investment companies, and real estate investment companies or trusts are not subject to income tax at the fund level, even though their members (with the exception of unit trust members^[17]) may be taxed on distributions. This aligns with the prevailing practice, as income received by Schemes is usually distributed to unit holders and not retained as profits.

   However, this new pass-through treatment under the ISA 2025 appears to conflict with Section 23 (1) (s) of the Companies Income Tax Act, Cap C21, Laws of the Federation of Nigeria, 2004, as amended by the Finance Act, 2021 (CITA) which provides that the dividend and rental income received by real estate investment companies on behalf of its shareholders are only exempt from income tax if: (a) at least 75% of the dividend or rental income is distributed; and (b) such distribution is made within twelve (12) months of the end of the financial year in which the dividend or rental income was earned.

   In contrast, the ISA 2025 appears to confer full pass-through status on REICOs and REITs, without conditioning tax exemption on any distribution threshold or timeline. This raises the question whether the ISA 2025 has impliedly amended Section 23(1)(s) of CITA. It will be interesting to see how this inconsistency plays out in practice.

7. Inclusion of a Regulatory Framework for Financial Market InfrastructureThe ISA 2025 has established a framework for the regulation of Financial Market Infrastructure^[18] which includes entities set up to carry out centralised multilateral clearing, settlement, caching or recording activities; or provide a platform for trading securities. It also includes systematically important market participants, trade repositories, securities exchanges, central counterparties, central clearing houses, central depositories and securities allotment.^[19] The provisions of the ISA 2025 on these entities are however in broad, general terms, allowing them to maintain their SRO (self-regulatory organisation) status by continuing to issue rules, subject to the approval of the SEC.
8. Exemption of Market Contracts from Insolvency LawsMarket contracts^[20] are explicitly exempted from insolvency laws, ensuring that actions taken under the rules of a securities exchange or financial market infrastructure will not be disrupted by insolvency proceedings. As such, a collateral, debt, or liability that is settled or cleared (as the case may be) through a relevant financial market infrastructure, will not be taken into account for the purpose of a winding up proceeding or other debt recovery proceedings against the relevant market participant, until the Financial Market Infrastructure has commenced and concluded its internal default proceedings.^[21]
9. Management of Systemic RiskThe ISA 2025 provides an extensive framework for the management and mitigation of systemic risk in the capital market. The SEC has the power to issue directives or suspend trading on a recognised exchange to manage risks. It can also issue directives to capital market participants to provide information regarding any contract, agreement or arrangement. The ISA 2025 has prioritised the management of system risk for the purpose of monitoring, mitigating, or managing systemic risk in the capital market or in the public interest^[22]. Failure of market participants to comply with the directives of SEC will attract penalties.
10. Regulation of Commodity Exchanges and Warehouse ReceiptsThe ISA 2025 now expressly establishes a robust framework for operations in commodities trading and mandates operators such as commodity brokers, commodity exchanges, warehouses used for storing commodities connected to an exchange or which issues warehouse receipts tradable on an exchange, and trading advisers to register with the SEC, failing which they will be penalised.^[23] The Act also prescribes copious obligations for the relevant market participants, and imposes stiff penalties in the event of a breach or non-compliance. It is expected that the framework created by ISA 2025 for commodities exchanges and warehouse receipts will boost market participation in commodities trading in Nigeria.
11. Composition of the Investment and Securities TribunalThe Investment and Securities Tribunal is now expanded to consist of 12 members, appointed by the President on the recommendation of the Minister of Finance. The membership of the Tribunal shall comprise of:
    1. a Chairman, who shall be a legal practitioner with at least 15 years post call experience in capital markets matters;
    2. five (5) full time members comprising four (4) legal practitioners with at least ten (10) years post call experience in capital markets matters and one (1) person not being a legal practitioner, with ten (10) years’ experience in capital market matters; and
    3. six (6) part time members, two of whom shall be legal practitioners with at least ten (10) years post call experience in capital market matters and four others who are knowledgeable in capital markets matters.

    The Tribunal shall have and exercise jurisdiction throughout the Federation and divide the Federation into such number of divisions as may be deemed appropriate. ^[24]

Conclusion

The ISA 2025 demonstrates Nigeria’s acceptance of growth in the financial market focused on investors protection through a robust framework set up to accommodate emerging investment vehicles and global market practices. With innovations such as the regulation of digital assets and commodity exchanges, and the expansion of the supervisory powers for the SEC, the ISA 2025 aims to strengthen the integrity, transparency, and efficiency of Nigeria’s financial markets. Most importantly, the new framework for local and foreign investments will enhance market stability in an increasingly complex global financial landscape. However, the test lies in the implementation of its provisions, stakeholder engagements, and the SEC’s strategy for optimising its regulatory powers.

[2] Section 3(1), ISA 2025

[3] Section 1(3)

[4] Section 3(3)(p)

[5] See Section 165, FCCPA 2018

[6] Sections 29(2); 62(2), ISA 2025

[7] Section 3 (4)b, ISA 2025

[8] See Section 26(3), 61(5), among others

[9] Securities Exchange are entities that provide infrastructure for buying and selling securities.

[10] Section 28 (1) ISA 2025

[11] Sections 357 ISA 2025

[12] Captured under the umbrella name – New Rules on Issuance, Offering Platforms, and Custody of Digital Assets, issued on 11^th May, 2022.

[13] Section 122 ISA 2025

[14] Section 123 ISA 2025

[15] Section 196 ISA 2025

[16] Section 195

[17] Dividends distributed by Unit Trusts are tax exempt by the provision of Section 23 (1) (f) of the CITA

[18] Sections 41-44 ISA 2025

[19] Section 357 ISA 2025

[20] Contracts amongst specified parties, entered in relation to transactions subject to the rules of relevant FMIs, or otherwise for clearing, settlement etc by relevant FMIs. See Section 357 .

[21] Section 45 ISA 2025

[22] Section 82 -83 ISA 2025

[23] Sections 224 – 267 ISA 2025

[24] Section 318 ISA 2025

The post Nigeria’s Investments and Securities Act 2025: A New Era for Capital Markets appeared first on Dr. Davies Sunny, SAN & Associates.

In recent weeks, conversations in the legal space have focused on the Bill which was introduced by the Deputy Speaker of the House of Representatives seeking to expand the channels for acquiring Nigerian citizenship to include CBI.

This article explores the socio-economic impact of including CBI as a way to acquire Nigerian citizenship, and the requirement for a constitutional amendment.

Citizenship in Nigeria – the current framework

CBI is not a new trend and definitely not peculiar to Nigeria, countries like Canada, Austria, the United States of America, Turkey, the United Kingdom, and in Africa – Mauritius all provide for CBI as a channel to becoming a citizen.

Presently, the Nigerian Constitution recognizes three (3) ways to citizenship:

1. Citizenship by Birth¹, which applies to every person:

1. born in Nigeria before or after the date of independence², either of whose parents or any of whose grandparents belongs or belonged to a community indigenous to Nigeria or is a citizen of Nigeria; and
2. born outside Nigeria but having a parent who is a citizen of Nigeria.

2. Citizenship by Registration, this is applicable to women who are, or have been married to a Nigerian citizen, and people of full age and capacity born outside Nigeria, but whose grandparents were citizens of Nigeria. This is not automatically applicable and is only granted at the satisfaction of the President to a person who is of good character, who has shown clear intention to be domiciled in Nigeria and has taken the Oath of Allegiance prescribed in the Constitution.³

3. Citizenship by Naturalisation, is for foreigners who have, among other requirements, legally resided in Nigeria for a continuous period of at least fifteen (15) years, or an aggregate of fifteen (15) years in the last twenty (20) years preceding their application.⁴

As such, for CBI to be validly and legally implemented in Nigeria the Constitution must be amended to include the same.

Proposed Constitutional Amendments to Implement CBI

The Bill proposes to alter Chapter 3 of the Constitution which provides for Citizenship by the inclusion of a new Section 28A aimed to provide for the acquisition of Nigerian citizenship by qualified foreign investors.

The Bill also proposes that a foreigner seeking citizenship under the new Section 28A shall submit an application to the appropriate ministry, accompanied by evidence of investment in the Nigerian economy.

It also goes on to propose that the investment referred to under the section must exceed a specified financial threshold or be in specific strategic sectors deemed critical to the development of Nigeria, and as determined by the ministry responsible for granting citizenship in Nigeria.

Challenges and Key Considerations

While CBI programmes globally offer significant economic benefits, at the same time they also come with challenges that must be carefully managed. Issues such as security risks, economic dependence, and governance concerns have sparked debate over the long-term sustainability of these initiatives. We have identified some of the challenges and loopholes in the Bill below:

• First, the Bill does not specify the relevant investment thresholds or the strategic investment sectors. It does not also provide the relevant Minister or Ministry that will prescribe these thresholds or sectors. Accordingly, in the event that the Bill is passed in its present form, there will be questions on what the foreign investor needs to do, to obtain the CBI.
• Another point to consider is whether the investment to be made is all that will be required by a prospective applicant under the Bill.
• Currently, Section 27 of the Constitution in providing for — Citizenship by Naturalisation – requires foreigners seeking citizenship to satisfy the President that they are of good character, and obtain the opinion of the Governor of the state where they hope to reside, indicating that they are acceptable to the local community and have been assimilated into the way of life of Nigerians in that part of the country. These conditions are key to ensure that Nigerian citizenship (not being by birth) is granted to only fit and proper persons. However, the Bill as drafted appears to suggest the only requirement to meet is the investment (unspecified threshold) into a strategic sector (unspecified). If the Bill remains in its current form, we need to ask ourselves whether Nigerian citizenship is now for sale — purely a commodity in a business transaction, and whether without any due diligence, national security now takes the back seat when compared to “revenue generation and economic stimulation”.

As the Bill gains traction (it has passed its Second Reading at the House of Representatives), it is essential for the National Assembly to collaborate with the relevant Ministry responsible for citizenship — the Ministry of the Interior – and relevant stakeholders to ensure that:

1. the Bill does not create a loophole where national security is concerned (as this is the government’s primary responsibility);
2. the Bill is evaluated to ensure that the same is cohesive with all current relevant laws and sections of the Constitution; and
3. the right procedure for its introduction is adopted. This should involve a constitutional amendment, as earlier stated. By virtue of section 9(2) of the Constitution, this category of amendment must be approved by at least two-thirds (2/3) majority of members of both Houses of the National Assembly (the Senate and the House of Representatives), and then supported by a resolution of two-thirds of the Houses of Assembly of each state, before being presented to the President for the final presidential assent.

Recommendations

To maintain credibility and effectiveness, Nigeria must implement strong vetting procedures.

The Nigerian Constitution is a jealous wife — it does not permit dual citizenship, except for persons who are citizens by birth. So, any person holding a Nigerian passport (not being a Nigerian citizen by birth), who acquires the citizenship of another country, automatically forfeits their Nigerian citizenship. Indeed, a citizen of another country (again, not being a citizen of such country by birth), who becomes naturalised or is registered as a citizen of Nigeria, is required to renounce their citizenship of such other country within twelve (12) months of the grant of citizenship, failing which their Nigerian citizenship is automatically forfeited.

The sponsors of the Bill will need to critically consider this option and confirm whether their intention is for foreign investors who apply for Nigerian citizenship by investment, can do so, whilst holding multiple citizenships. Where this is not the case, Section 28(2) of the Constitution may need to be amended. Whatever the intention is, it is critical to consider the viability of the proposed channel vis-a-vis Nigeria’s existing constitutional and policy framework.

Conclusion

We recognize that CBI if properly implemented, will present a promising opportunity to attract foreign capital, create jobs, and fund critical development projects and sectors that could result in immediate economic growth. However, transparent and accountable systems must be put in place prior to formal enactment to ensure effective implementation. It will also need to be introduced in a proper manner, bearing in mind all relevant provisions of extant laws and the Constitution.

A well-executed citizenship by investment framework has the potential to complement Nigeria’s efforts in diversifying its portfolio and economy. It can also unlock new job opportunities, fund infrastructure development and other opportunities that will elevate Nigeria’s reputation as a top investment hub globally.

While the introduction of CBI may be a step in the right direction, our call is for the right procedure to be followed and all relevant matters including national security be well considered.

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Disclaimer: This article is provided for general information and educational purposes only. It should not be construed as legal advice from Dr. Davies Sunny, SAN & Associates or the author. We advise that you seek legal and or other professional advice on issues raised in the article.

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In Nigeria, digital assets have seen remarkable growth over the past decade. As one of Africa’s largest economies and a hub for blockchain innovation, the country has experienced a significant surge in its usage.

This article analyses the taxation of digital assets in Nigeria and the likely impact on businesses providing digital services.

Capturing the Digital Assets Ecosystem under Nigerian Tax Law

The Finance Act 2020 introduced the concept of “Significant Economic Presence” as the basis for taxing digital and online transactions by non-resident companies. This marked a significant step towards adapting the tax system to the evolving global digital economy while ensuring that digital transactions and services are captured within the tax bracket in Nigeria. Similarly, the Capital Gains Tax Act was amended by the Finance Act 2020 to include Digital Assets in the list of chargeable assets upon disposal.

The term “Digital Assets” means digital representation of value that can be digitally exchanged including, but not limited to, crypto assets, utility token, security tokens, non-fungible tokens (NFT), such other similar digital representation or derivatives of any of the listed or similar assets and any othe asset as may be defined by the relevant authority.

Read more…

The post The Nigeria Tax Bill 2024: Taxation of Digital Assets in Nigeria appeared first on Dr. Davies Sunny, SAN & Associates.

The Nigerian Communications Commission (NCC) recently unveiled its Draft Licensing Framework (the “Framework”) for International Application-to-Person (A2P) Messaging. This development underscores Nigeria’s commitment to establishing a regulated ecosystem for digital communications in line with global trends.

A2P messaging enables Over-The-Top (OTT) service providers communicate directly with their customers via Short Message Service (SMS) transmitted over mobile networks and reaching recipients via their cellular connection. Unlike Person-to-Person (P2P) messaging, which facilitates communication between individuals, A2P messaging is largely used for automated business communications such as OTPs (one-time passwords), alerts, notifications, and promotional & marketing messages. An example is an OTP received as an added layer of security when you need to login to your Netflix or Facebook account.

Given the increasing reliance on OTT services provided by service providers domiciled outside Nigeria, particularly in the banking, social media and e-commerce spaces, international A2P messaging has become important for seamless business operations and security purposes.

However, the absence of a regulatory framework in Nigeria has raised concerns in recent times, including the use of unknown or unsecured technologies used by Local Mobile Network Operators (MNOs) to independently monetise international A2P SMS traffic, inconsistent termination rates set by individual operators, spam messages, fraud, and revenue leakage due to its unregulated nature has prompted the need for the NCC to regulate the ecosystem.

This article provides an overview of the NCC’s draft Framework and recommendations to be considered.

Overview of the Draft Licencing Framework

Licence Centralisation and Limitation

The Framework aims to centralise the A2P ecosystem by establishing a single A2P messaging platform through which all A2P messaging traffic in Nigeria will be routed. Additionally, the NCC proposes the introduction of an International SMS Aggregator Licence (the “Licence”) at a fee of N10, 000, 000 (Ten Million Naira) for a five (5) year tenure, renewable upon expiration.

In response to this some stakeholders have called for the introduction of a regulatory levy on A2P SMS instead of the creation of a central aggregator, together with a transparent reporting framework to ensure the NCC achieves visibility, these concerns mostly stem from the monopolistic tendencies that could be fostered by the utilisation of a single platform. Whilst this could be a valid concern, the Framework indicates that, International A2P messaging services will operate within a competitive market and that the NCC will also have the prerogative to issue additional licences if it is determined that the level of competition in the market is insufficient to promote fair practices and ensure optimal service delivery.

Some of the limitations imposed on the use of the licence include:

• Licencees will not provide telecommunication services such as transmission networks, switches, external fibre links;
• Licensees are restricted to offering only services within scope of the Licence, excluding activities that contradict its conditions or provisions of the Act; and
• The Licence does not qualify the licencee for the assignment of International Signalling Point Code (ISPC) and National Numbering Code[1].

Partnerships and Compliance Obligation

The Framework mandates local MNOs to integrate their systems to the unified A2P platform to enable the NCC’s oversight and consequently curb fraudulent practices within the ecosystem. Another key highlight of the Framework is the obligation placed on licencees to comply with the specific conditions listed in the Framework[2], Nigerian Data Protection Act, consumer protection laws and other relevant NCC regulations. This highlights the NCC’s focus on safeguarding consumer privacy and ensuring regulatory compliance.

Security Protocol

The NCC’s intention to develop the Framework and regulate the A2P ecosystem is laudable as, the Framework incorporates robust security measures to protect consumers from spam messages, fraudulent schemes and data breaches that have plagued the space. To tackle unauthorised system access and spam messages on consumers, Licensees are required to implement systems for fraud detection, data protection, encryption protocols and continuous security monitoring. For instance, in Libya, Vox Limited, an international A2P Service Provider implemented a security protocol that identifies, predict and mitigates fraud across a single omnichannel system.

Standardised Tariff and Revenue Generation

To ensure fairness and address the inconsistencies in the termination rates, the NCC proposes a standardised termination rate for international A2P SMS traffic. Specifically, the framework intends to introduce and enforce a structured rate to govern the pricing of International A2P SMS services. In addition, the Framework creates a new revenue stream for the Federal Government of Nigeria through the collection of levies and remittance of taxes on International A2P SMS traffic.

Recommendations

Notwithstanding the above and while the Framework is commendable, we have highlighted below certain recommendations to be considered.

Definition of Key Stakeholders

Although the Framework defines some terminologies, it lacks a comprehensive section that lists and defines the roles and responsibilities of key stakeholders such as Service Provider, Message Provider etc. We recommend a section in the Framework that lists, defines and highlights the roles and responsibilities of key stakeholders.

Also, the Framework appeared to have missed out on provisions for audits or mandatory reports to ensure compliance and accountability among licensees. We recommend the expansion of the NCC’s role in auditing compliance, monitoring quality of service and ensuring international operators comply with local laws.

Access Management

Given the requirement for service providers to route their A2P SMS traffic through a central hub, there is a need for a role-based authorisation, such that only authorised personnel can access the sensitive parts of the system. We recommend that the Framework should clarify and specify whether role-based access control will be enforced or if operators will develop their own security protocols.

Industry stakeholders have also expressed concerns around the utilisation of a central hub, particularly as routing through a centralized platform may introduce additional latency, impacting time-sensitive messages such as OTPs and transactional alerts and ultimately could lead to poor user experiences and dissatisfaction.

There are also concerns around the increased exposure to data breaches and non-compliance with privacy requirements where A2P messaging will be required to be routed through the central hub.

Implementation Timeline

The mandatory routing of A2P traffic through a central hub in crucial, however, a phased implementation timeline might be more practical and would allow operators to adapt to their systems accordingly. This would certainly provide clarity on the approach brands and Over-The-Top (OTT) service providers route their A2P SMS traffic particularly for operators who may need to re-engineer their systems.

Conclusion

It is crucial for enterprises and the broader industry to understand the evolving A2P messaging market. From a qualitative perspective, the Framework for International A2P messaging marks a progressive step in Nigeria’s telecommunications sector, offering a balance between consumer protection and industry growth. Evaluating how enterprises currently utilize A2P SMS to engage with customers and employees is vital.

While the Framework presents areas for improvement, it provides an invaluable opportunity for stakeholders to review and offer comprehensive feedback during the consultation period. By doing so, they can contribute to shaping a robust and progressive standard for the industry. The NCC is currently engaging the general public on the Framework and has encouraged critical stakeholders to submit comments and feedback.

[1] International Signalling Point Code and National Numbering Plan are used to identify specific points within the network for routing and signalling purposes.

[2] Section 4.6 of the Framework.

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