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Highlights from Recent Circulars Issued by the Central Bank of Nigeria

This information is courtesy of Advocaat Law Practice in Lagos, Nigeria.

Below is a summary of the information contained in recent circulars issued by the Central Bank of Nigeria.

Automation of Form NXP on the Trade Monitoring System (TED/FEM/FPC/GEN/01/003).

The CBN issued the above circular to all authorized dealers, Nigerian Customs Service (NCS), pre-shipment
inspection agents and the general public notifying them of the automation of Nigerian Export Proceeds (NXP)
Form from October 31, 2019, the e-form NXP will replace the hard copy Form ‘NXP’ for commercial exports (Oil &
Gas and Non-Oil). The e-form ‘NXP’ application is a mandatory document that must be completed by all exporters
for shipment of goods outside Nigeria. The CBN also mandates exporters to obtain a valid Tax Identification
Number (TIN) from the Federal Inland Revenue Service (FIRS)/Joint Tax Board (JTB) as this will be a prerequisite
for customers to access the Trade Monitoring System for e-form ‘NXP’ application.

The Trade Monitoring System for e-form ‘NXP’ application can be accessed at www.tradesystem.gov.ng.

Revised guidelines for the registration of cash-in-transit and currency processing companies (COD/DIR/GEN/INM/13/132).

The CBN’s revised Guidelines for the Registration of Cash-In-Transit (CIT) and Currency Processing Companies
(CPC) (Guidelines) for the registration of cash-in transit and currency processing companies in Nigeria is in
furtherance of the circular on “Notice to Companies Providing Currency Sorting and Distribution Services and
Deposit Money Banks providing these Services for themselves or other Banks in Nigeria”, earlier released in 2009
by the CBN. As a result of the Guidelines, all entities that engage in or intend to engage in currency distribution
and/or currency processing services in Nigeria, either for themselves or for other Bank(s) must register with the
CBN. In addion to other registration requirements, prospective cash –in-transit and and currency processing
companies (CPC) companies must have a minimum share capital of N1 billion for National CIT and N500 million
for a Regional CIT.

Furthermore, companies who intend to provide both CIT and currency processing services are required to meet
all the requirements for registration as specified under CIT and CPC Guidelines. They are required to have a
minimum share capital of N4.0 billion whilst companies registered to operate both Regional CPC and CIT shall
have a minimum share capital of N2.5 billion. Banks desirous of providing currency processing and distribution
services can jointly (two or more banks) float a subsidiary company which must meet the registration
requirements for CIT and CPC and be subject to the regulatory and supervisory framework of the CBN.

For addional informaon on the circular, please refer to:
hps://www.cbn.gov.ng/Out/2019/CCD/Revised CIT and CPC Guidelines 2019.pdf

Implementation of the cashless policy (PSM/DIR/GEN/CIR/01/016).

The CBN had by a circular exempted some institutions from the cash less policy which required that deposits and
withdrawals above N500,000 (Five Hundred Thousand Naira) for individuals and N3,000,000 (Three Million
Naira) for corporate entities on bank account attract additional charges. The exempted institutions are:

a) Revenue generating accounts of the Federal, State and Local Governments;

b) Embassies, Diplomatic Missions, Multilateral Agencies, Aid Donor Agencies in Nigeria, Ministries,
Departments and Agencies of Government (revenue collection only);

c) Mobile Money Operators (Float accounts only); and

d) Micro-finance Banks (MFBs) and Primary Mortgage Institutions (PMIs) accounts with DMBs.

However, with effect from March 31, 2020, the above instuons will no longer be exempted from CBN’s cashless
policy.

For addional informaon on the circular, please refer to:
hps://www.cbn.gov.ng/Out/2019/PSMD/Implementaon of the Cashless Policy.pdf

Regulation for the operation of indirect participants in the payment system (PSM/DIR/CON/CWO/02/091).

The CBN released a Regulation for the Operation of Indirect Participants in the Payments System (the Regulation), which will take effect from 11 November, 2019. The Regulation applies to indirect participants in the payment
system and it is aimed at setting out the procedures for effective integration of indirect participants in the
payments system in Nigeria, standardizing the operation of indirect participants in the payments system,
providing mechanism and framework for the clearing, settlement of indirect participants payment instruments
through the direct participating banks and strengthening indirect participants for effective contribution to digital
financial services in Nigeria.

Indirect participant refers to a licensed deposit-taking institution which is a non clearing financial institution but
settles its payments obligations through direct participating banks. For an institution to qualify as an indirect
participant, such institution is expected to have a satisfactory risk-based rang from the CBN and secure a leer
of recommendation from its direct participating bank duly signed by the Chief Risk Officer and an Executive
Director of the direct participating bank; and must comply with the Nigeria Uniform Bank Account Number
(NUBAN) Standards.

For addional informaon on the circular, please refer to:
hps://www.cbn.gov.ng/Out/2019/PSMD/Circular and Regulaon for the Operaon of Indirect Parcipants in
the Payments System (002).pdf

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Nigeria’s Innoson: Making Cars or Selling a Feeling?

This article and embedded image is courtesy of David Hundeyin and The Africa Report.

A Nigerian carmaker with Chinese technical partners, working out of a less-than-ideal semi-rural location in Umudim, Nnewi, plans to not only out-compete Toyota and Honda in annual new car sales, but also to eventually displace used car imports.

It intends to do this while charging $19,000 for its cheapest base model in an extremely poor market with zero export potential, while eschewing automation to employ as many people as possible.

Innocent Chukwuma is not the typical Nigerian multimillionaire.

Since founding Innoson Group in 1981 as a motorcycle spare parts importer, Chukwuma has amassed wealth by figuring out how to stay one step ahead of Nigeria’s famously volatile regulatory environment.
It is his most recent venture that best illustrates this entrepreneurial talent and provides key insights into the extreme sport of running a consumer business in Nigeria.

Innoson Vehicle Manufacturing (IVM), which is the Innoson Group’s latest addition, potentially upends all existing conventional wisdom about how Nigerian consumer businesses must relate to the market and the authorities.
On paper, IVM is producing poorly-marketed $19,000 vehicles with near-zero export potential for an impoverished Nigerian market that did not ask for them and cannot hope to afford them.

It looks like a zombie business that should not exist.

Baffling strategy

Nigeria registered just over 10,000 brand new car sales in 2018, with the country’s auto sales market dominated by used vehicles imported from Europe and North America. According to US government data, the miniscule market for brand new vehicles in Nigeria is currently dominated by Japanese brands like Toyota and Honda.

Innoson has a technical partnership with several Chinese automakers, enabling it to manufacture models like the BAIC BJ80 under its own brand name. It has a goal of eradicating “tokunbo” (the local Nigerian term for “imported used car”) from the Nigerian market, but exactly how it intends to do this remains unclear.

The pricing strategy is a head-scratcher. Per head GDP figures for Nigeria and surrounding countries show that there is statistically no market for products that require significant discretionary income. Nigeria’s 2018 per head GDP, for example, was just $2,028. Nearby Ghana, Cameroon and Benin were about the same or worse.

The cheapest vehicle in IVM’s product range – a four-speed, 1.5 litre automatic B-segment sedan called the ‘Fox’ – starts from about $19,000.
According to the company, the Umudim facility currently has a production capacity of about 10,000 vehicles a year, with plans to expand this to 60,000.

Chukwuma has also said that IVM would rather employ human labour over automation wherever possible, because he believes that business should contribute to society, rather than simply seeking profitability.

Nigeria’s Civil War

To understand IVM and its apparently impossible strategy, it is important to situate it in the context of the rise of Nnewi as an industrial hub in south-eastern Nigeria. The story began in the immediate aftermath of the 1967-1970 civil war.
The war saw a nationwide series of property seizures targeting people from the Igbo ethnic group, regardless of whether they were part of the Biafran war effort.

After the war, a large number of such expropriated properties and businesses were not returned, which created a new phenomenon within the typically enterprising and travel-focused Igbo culture.

Driven by the bitter memory of these losses, a drive to “invest at home” was born, leading to the now-common spectacle of palatial countryside homes that lie empty all year round until their owners return from Lagos, Abuja and Port Harcourt for Christmas.
Another outcome of the post-civil war Igbo movement was that certain previously unheralded areas were earmarked for development of industrial clusters.

Nnewi was one such area, going in the 1970s from an unspectacular rural area into an international vehicle spare parts business nexus, and then into a manufacturing hub. Those who made this decision did so in spite of factors like the ease of doing business, infrastructure and access to power.
Innocent Chukwuma was one of the spare parts importers who decided to locate their business in a challenging location. Over the next three decades, this group of entrepreneurs became extremely skilled at being the proverbial ‘water’, improvising niftily and finding their way around Nigeria’s market and regulatory minefield.

During the Structural Adjustment Policy era of the 1980s and the accompanying austerity, Chukwuma famously turned the reduced general disposable income into a business opportunity by disrupting the motorcycle import market with Nigeria’s first motorcycle assembly facility in Nnewi.

IVM is following a similar template. The prevailing idea of a carmaker has been entirely coloured by Ford Motor Company and the democratisation of the personal automobile, which is why factors like affordability and marketing are so important.
In reality, prior to the Ford revolution, cars were generally built to order for rich people and government bodies – and the industry worked just fine.

IVM has now realised that it is possible to have their cake and eat it – they can bill themselves as Nigeria’s answer to Henry Ford while actually running a business whose bread and butter is government supply contracts and made-to-order cars for rich clients.

Import substitution

Since 2013, Nigeria has pursued an automotive policy that seeks to help local assembly by discouraging imports through tariffs of as much as 70%. President Muhammadu Buhari’s administration has doubled down on this and other import substitution efforts, effectively leaving Innoson (the only Nigerian carmaker working under a local brand name) as the “star pupil” in its class.

Despite having held a position in Goodluck Jonathan’s re-election campaign organisation, Chukwuma has avoided the typical consequences of such political exposure by positioning IVM as a key part of the answer to Buhari’s economic rallying cry.

Just like under the previous administration, he has successfully leveraged IVM’s perception as the first “true” Nigerian carmaker to seal several supply and maintenance contracts with Nigerian state and federal government bodies, as well as the army and airforce.
While IVM pays only the barest minimum attention to its consumer-facing branding and marketing efforts, the company has a sleek and extremely savvy lobbying and networking reach that brings the bacon home through government contracts and made-to-order luxury vehicles.

Since formally commencing operations in 2010, the Umudim production line has remained busy. The company is notoriously secretive about its annual sales figures, but a visit to the factory always shows dozens of pickup trucks, buses and SUVs emblazoned in the colours of different government agencies.
As with so many other instances of doing business in Africa, there is a lot more going on than meets the eye.

Clearly, Innoson Vehicle Manufacturing will never have the production capacity and market dominance of Toyota. It will also never have the technical excellence and global marketability of Tesla – but the point is that it does not need to.

This small automaker is demonstrating that indigenous African market strategies for delivering expensive products to poor markets can indeed work. The secret lies in knowing how to work the angle and ‘be water’.

Apparently, nobody in Nigeria knows how to do this better than Innocent Chukwuma.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

New African Wealth Report Reveals The Richest Cities on the Continent

New World Wealth and AfrAsia Bank have published the latest African Wealth Report, showing the levels of wealth of various African nations at the end of 2018.

According to the report, South Africa is still the richest country in Africa, with the high net worth (HNWI) population of 39,200 people holding the most wealth at $649 billion.

This is double that of the second wealthiest African nation, Egypt, where the HNWI population of 16,700 people holds $303 billion.

Egypt is followed by Nigeria ($225 billion), Morocco ($114 billion) and Kenya ($93 billion).

Total wealth held on the continent amounts to US$2.2 trillion. Around US$920 billion (42%) of this is held by HNWIs, New World Wealth said.

While South Africa ranks at the top of the list, on a per capita basis ($11,450), it is only the second wealthiest nation – following behind Mauritius, where wealth per capita sits at $31,000.

Africa’s richest cities

South African cities ranks as the top richest cities on the continent, with Johannesburg and Cape Town holding the most HNWI wealth among the major cities covered, taking the first and second spots, respectively.

Total wealth held in Johannesburg amounts to US$248 billion, while total wealth held by Cape Town amounting to US$133 billion.

Most of Johannesburg’s wealth is concentrated in Sandton, New World Wealth said, which is home to the JSE (the largest stock market in Africa) and to the head offices of most of Africa’s largest banks and corporates.

Cape Town, meanwhile, is home to Africa’s most exclusive and expensive suburbs such as Clifton, Bishopscourt, Camps Bay and Bantry Bay. It is also a hotspot for wealthy second home owners from around the world. Major sectors there include: real estate, financial services (fund management), retail and tourism.

Also in the top five from South Africa is Durban and Umhlanga (combined), which holds total HNWI wealth of US$54 billion.

This figure includes wealth held in Durban, Umhlanga, La Lucia and Ballito. Notably, Umhlanga and Ballito are two of the fastest growing areas in SA, in terms of wealth growth over the past 10 years, the group said.

Among other African countries, Cairo (Egypt), Lagos (Nigeria) and Nairobi (Kenya) stand out as wealthy cities, sitting on par with South Africa’s popular HNWI areas.

Total wealth held in Cairo amounts to US$129 billion – and the city is home to more billionaires than any other African city (four billionaires live there, compared to just two in Johannesburg).

In Lagos, total wealth held in the city amounts to US$96 billion. This is the largest city in Africa, in terms of population and GDP (but not in terms of wealth).

The richest cities in Africa.

The richest areas in South Africa.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Overview of Complying With Nigeria’s Recent Data Protection Regulation

Nigeria’s Data Protection Regulation came into effect in January 2019, and companies operating in the country have an obligation to ensure they are compliant.

Nigerian law firm Aelex has provided an overview of gaining compliance.

Step One
Determine the processing activities of the organisation.

The NDPR has defined processing as any operation or set of operations which is performed on personal data such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.

Identify the type of personal data that are collected and the nature of processing. The identification would assist in determining the most effective means to comply with the NDPR.

Step Two
Ascertain whether the organisation is a data controller or a data administrator/processor.

A data controller is one who determines the purpose and manner in which personal data is to be processed. On the other hand, a data administrator simply processes data.

Identify the circumstances where your organisation is a data controller or administrator/processor, as most obligations are imposed on the data controller. The data controller has the responsibility to ensure that the consent of the data subject is obtained without fraud, coercion or undue influence, and is liable for any breach of the NDPR. As such, the data controller will be liable for a violation done by a data administrator/processor. Also, depending on the circumstance, the data controller or the processor may be responsible for the actions and inaction of any third party.

Step Three
Appoint a Data Protection Officer (DPO)

As a data controller, an organisation must appoint a DPO. The DPO may be an individual or any entity. The duty of the DPO is to ensure that the organisation complies with the provision of the NDPR.

Step Four
Assess your organisation’s processing activities

Conduct an assessment of the organisation’s processing activities to determine the necessary steps to ensure alignment with the NDPR. Questions such as the following, should be addressed:

  1. How is data collected?
  2. Which department receives such data?
  3. Why does the organisation process such data?
  4. What will be the legal basis for processing such data?
  5. What are the security measures taken by the organisation to prevent data breach?

Step Five
Begin Implementation of the NDPR

To implement the NDPR, an organisation should adopt the following within the stated timelines:

  • Make available the data protection policies (such as the privacy policy) for the general public. This should have been carried out since 25th April, 2019.
  • Conduct an audit of the organisation’s privacy and data protection practices on or before the 25th of July, 2019.
  • Where an organisation is a data controller and it processes personal data of more than 1000 people in 6 months, it should submit a summary audit to NITDA. No compliance timeline was indicated for this obligation in the NDPR.
  • Where an organisation is a data controller and it processes personal data of more than 2000 people in a year, it must submit an audit to NITDA on the 15th of March 2020 and the 15th March of every subsequent year.

In closing, it should be noted that the mass media and civil society have been given the right to uphold accountability and foster the objectives of the NDPR.

To read more about the Regulation, click here.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

African Growth at 7-Year High, But Not Thanks to Its Major Economies

Growth in Africa’s two largest economies may be sputtering along but that won’t stop the continent’s gross domestic product from expanding at the fastest pace since at least 2012.

GDP growth for the continent is forecast to accelerate to 4 percent this year, up from an estimated 3.5 percent in 2018, making it the fastest-growing region in the world after Asia, according to the African Development Bank. And that’s despite Nigeria and South Africa, which make up almost half of the continent’s GDP, “pulling down Africa’s average growth,” as the Abidjan-based lender said in its latest economic outlook report.

Nigeria’s GDP will expand by 2.3 percent in 2019, which is below the rate of population growth, as the government struggles to reduce the nation’s oil dependence and attract foreign investment. South Africa’s expansion will be even slower, at 1.7 percent, as the continent’s most-industrialized economy battles to recover from last year’s recession. Both countries are in the AfDB’s list of 10 slowest-growing economies.

While the powerhouses in western and southern Africa struggle to gain meaningful momentum, the continent’s economic growth will once again be driven by East Africa, which will be the fastest-expanding region for the fifth straight year. Ethiopia, Kenya, Rwanda and Tanzania all feature on the AfDB’s list of 10 fastest-growing economies for 2019. Egypt, the biggest economy after Nigeria and South Africa, will also help drive growth. Output in the Arab world’s most-populous country will rise around 5.5 percent this year as the government’s structural reforms attract more investment.

Subdued growth in southern Africa is due to South Africa’s weak output, which affects neighboring countries, the AfDB said. While West Africa’s prospects are more upbeat, they may be clouded by risks including uncertainty in global commodity prices and security concerns in some countries, the lender said.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: EJ Yao [1], [2].