Regulatory Digest for October 2024
Introduction
In this edition of our Regulatory Digest, we provide an overview of significant updates in the regulatory space, from guidelines and regulations released during the month, highlighting key developments across various sectors in Nigeria, and other regulatory activities. Notably, the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) have introduced a draft Foreign Exchange Code Book aimed at enhancing transparency and ethical conduct in the foreign exchange market, and an exposure draft outlining new rules for the issuance of commercial papers, reflecting a commitment to improving investor protection and access to funding within the capital market respectively. There has also been significant inter-agency collaborations.
By highlighting and analysing these activities and their potential impact, we aim to provide insights that would enable businesses to navigate the current regulatory environment effectively.
CBN Draft Foreign Exchange Code Book
The Central Bank of Nigeria (CBN) on October 2, 2024 released the draft Nigerian Foreign Exchange (FX) Code Book to establish standards and improve the integrity, transparency, and efficiency of the Nigerian FX market.??The FX Code aligns with the FX Global Code, reflecting globally accepted best practices for foreign exchange conduct and emphasises ethics, governance, transparent execution, effective information sharing, risk management, and robust transaction settlement among market participants, which are primarily banks licensed under the extant laws. A more detailed article will be published soon.
Security and Exchange Commission (SEC) Releases Draft Rules on Issuance of Commercial Paper and Amendment to Rules 8
The Securities and Exchange Commission (SEC) of Nigeria has released an exposure draft outlining new rules on the issuance of commercial paper. The proposed changes aim to enhance the regulatory framework governing commercial paper transactions, ensuring greater transparency and investor protection in the capital market. The new rules contains provisions such as, the condition of issuance, mode of issuance, minimum level of subscribers, registration requirements, This new rules aim to improve access to funding for businesses through streamlined issuance processes, increased confidence among investors, and a more robust framework that aligns with international best practices in securities regulation. A more detailed article will be published soon.
This section highlights major trends across different agencies and industries.
CBN Set to Launch a BVN Platform for Non-Residents
To facilitate the economic involvement of Nigerians in the diaspora, the Central Bank of Nigeria (CBN) is set to launch a non-resident BVN portal through the Nigerian Inter-Bank Settlement System (NIBSS) in December, allowing Nigerians abroad to participate more easily in the economy.This initiative will facilitate easier access to banking services for Nigerians living abroad, allowing them to operate their local bank accounts without hassle.
CBN Partners with International Finance Corporation (IFC)
The CBN have partnered with the IFC, a member of the World Bank Group to increase local currency financing in Nigeria. This partnership will enable the IFC to manage currency risks and expand its investment in Naira across key sectors, such as agriculture, housing, infrastructure, energy, and small and medium enterprises, youth and the creative economy.
The partnership aligns with the CBN's goal to support economic growth and diversification in Nigeria by providing long-term, economically viable financing options for private businesses. The IFC plans to scale up financing in Nigeria, aiming to provide over $1 billion in coming years to support critical sectors and local currency needs.
CBN Reassures Public on Stability and Safety of Nigerian Banking System
The CBN reassured the public of its commitment to maintaining a stable and secure financial system. It affirms that all deposits in Nigerian banks are safe, and it actively enforces banking regulations and best practices to uphold financial stability.
According to the circular, the CBN conducts regular stress tests to identify and mitigate potential vulnerabilities, uses Early Warning Systems to detect emerging risks, and follows a Risk-Based Supervision approach to focus on high-risk institutions. Additionally, it collaborates with international regulators through Memoranda of Understanding to ensure Nigerian banks' subsidiaries operate safely abroad.
CBN Confirms Old Naira Notes Will Remain Legal Tender Indefinitely
The CBN??refutes claims that the old N200, N500, and N1,000 banknotes will cease to be legal tender by December 31, 2024. Citing a Supreme Court ruling from November 2023, the CBN confirms that these banknotes, alongside redesigned versions, remain valid indefinitely. All CBN branches are directed to continue issuing and accepting old and new banknotes from deposit money banks (DMBs).
The Federal Inland Revenue Service (FIRS) introduced a USSD code, enabling citizens to access its tax services across the country using their mobile phones, even without internet connectivity. This move is designed to simplify business operations and upgrade the country's tax administration system.
NITDA in Collaborative Talks With Various Agencies
The Director-General of NITDA held a strategy meeting with the Chief of Defence Staff, with the goal of fostering cooperation between NITDA and the Defence sector by harnessing technology to enhance national security. The collaboration will focus on identifying areas where technological innovations can be integrated into defence operations. By leveraging advancements in information technology, both agencies aim to improve operational efficiency, enhance data security, and develop robust systems for intelligence gathering and analysis.
NITDA partnered with the National Agriculture Development Fund (NADF) through a Memorandum of Understanding (MoU), with the shared goal of enhancing the agricultural sector by harnessing innovative technologies to boost food production and efficiency in the agricultural industry.
JICA Strengthens its Partnership with NITDA
The President of the Japanese International Cooperation Agency (JICA) visited the National Centre for Artificial Intelligence and Robotics (NCAIR) and was received by the DG of NITDA. The visit aimed to focus on ensuring innovation and knowledge sharing, with special emphasis on the startup ecosystem. This collaboration can potentially facilitate knowledge sharing between Japanese experts and Nigerian stakeholders. JICA's experience in implementing technology-driven solutions can provide valuable insights into best practices that can be adapted to Nigeria's unique context.
NITDA in collaborative talks with National Agency for the Prohibition of Trafficking in Persons
The Director General (DG) of the National Agency for the Prohibition of Trafficking in Persons made a courtesy call on NITDA. This visit seeks to establish a collaborative effort between both Agencies to leverage emerging technologies in combating human trafficking, cybercrimes, and violence against individuals.
PenCom Warns Against Investment in Commercial Papers
The National Pension Commission (PenCom) issued a circular to the Local Pension Fund Administrators (LPFAs), cautioning them against investing in a specific portfolio until guidelines or regulations are issued by the Securities and Exchange Commission (SEC) regarding the issuance of commercial papers. This warning is due to the lack of established rules and regulations by the SEC governing the issuance of commercial papers. Notably, the SEC has since released a draft proposal outlining its rules on commercial paper issuance.
FCCPC Enforces Consumer Protection on Billing and Metering Practices
The Federal Competition and Consumer Protection Commission (FCCPC) engaged DisCos over the prepaid metre phases out and has directed Ikeja and Eko DisCos to stop replacing Unistar prepaid metres due to non-compliance with NERC regulations. The FCCPC emphasised that DisCos must involve consumers in decisions like band classification and adhere strictly to billing rules, especially for unmetered customers. By mandating that DISCOs engage with consumers before categorising them into billing bands and halting unauthorised metre replacements, the FCCPC is holding these companies accountable for their practices, which would drive improvements in customer service and operational standards within the sector.
FCCPC Warns Banks Over Online Banking Disruptions, Emphasises Customer Rights
The FCCPC expressed concern over widespread disruptions in online banking services in Nigeria, which are preventing customers from accessing funds and completing transactions, causing significant inconvenience and financial hardship. The FCCPC is working with regulatory bodies and may take action to ensure that customer rights are protected and accountability is upheld. The Commission has called on banks to restore services quickly, improve customer support, and communicate transparently with customers about disruptions.
Federal High Court Dismisses the Case Against Binance Executive
Following the Economic and Financial Crimes Commission (EFCC) dropping the money laundering charges against Binance executive, the Federal High Court in Abuja dismissed the case and ordered his release. However, despite the dismissal of the charges against the Binance executive, the EFCC will proceed with its case against Binance as a company, indicating ongoing scrutiny of the company due to allegations of financial impropriety.
Notable regulatory developments have occurred within various sectors in Nigeria which highlights significant effort of the government towards developments in the regulatory landscape. This month, we saw key initiatives from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) aimed at enhancing transparency and investor protection in the financial sector. Additionally, inter-agency collaborations and consumer protection measures which underscores a proactive approach to addressing challenges within various sectors,??and ultimately contributing to a more stable and resilient regulatory framework that supports sustainable growth in Nigeria's economy.
To stay ahead of the curve, regulatory agencies must adapt to shifting trends and prioritise stakeholder concerns, relying on collaboration and innovation to achieve regulatory success and drive long-term prosperity.
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