December 20, 2023

Navigating the Crossroads: Tradition, Modernity, and Wealth Succession in Nigeria

The Igbinosa family recently found themselves at a crossroads following the passing of their patriarch, Chief Osazuwa Igbinosa, who left behind a substantial fortune. As the family gathered to address the matter of wealth succession, tensions arose, reflecting the delicate balance between tradition and modernity. Chief Osazuwa had not outlined a clear plan for the distribution of his properties, causing uncertainty and discontent among the family members. In this hypothetical scenario, Obasuyi, the second child and first son, stood in anticipation, while Iyobosa, the first child and daughter, challenged the traditional norms, asserting her right to lead and inherit her father’s wealth. The family, torn between adherence to age-old customs and the winds of change, faced a conflict that threatened their unity. This story mirrors the intricate dance between tradition and modernity, a challenge many Nigerian families encounter when navigating the complexities of wealth succession in a changing world. In a country where family ties are deeply rooted, the concept of wealth succession planning holds profound significance. Families are increasingly realizing that without proper planning, accumulated wealth may diminish, leading to financial instability for future generations. Consequently, more Nigerian families are opting for inclusive succession plans that blend traditional values with contemporary needs. This article delves into the role of traditional and cultural beliefs in wealth succession planning, exploring the challenges faced and the opportunities for forward-thinking approaches. Understanding Traditional and Cultural Beliefs Across Ethnicities in Nigeria With over 300 ethnic groups in Nigeria, each region has its own cultural practices regarding wealth succession. Here is an overview of practices in some regions: Northern Region: Influenced by Islamic principles, succession under Islam includes rights for wives and female offspring, challenging the male-centric norms seen in other cultures. South-East Region: Inheritance often goes to the first male offspring, who then distributes the assets among other male siblings. Wives and female offspring typically do not inherit landed property. South-West Region: Distribution methods vary, with estates shared equally among wives or offspring, depending on the chosen model. South-South Region: Primogeniture culture historically favored the first male offspring, leading to discord. The Uhro-System, akin to the South-West’s approach, aims for more equitable distribution. Impact of Traditional Beliefs on Wealth Succession Despite the deep-rooted cultural practices, traditional succession plans alone may not address the complexities of the modern world. Approximately 95% of Nigerian family-owned businesses reportedly struggle to survive beyond the third generation due to the limitations of traditional succession. Primogeniture, prevalent in some cultures, can lead to inequality, family discord, and mismanagement of assets. The emphasis on the eldest male inheriting the majority of assets often neglects individual strengths and may contribute to strained relationships within the family. In summary, while traditional beliefs profoundly influence wealth management, there is a growing recognition that modern challenges require forward-thinking approaches. Balancing tradition with inclusivity and adaptability is crucial for creating sustainable wealth succession plans in Nigeria’s evolving socio-economic landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Tax Appeal Tribunal Rules on VAT Applicability to Rental Income from Real Estate

In a landmark decision on October 19, 2023, the Tax Appeal Tribunal (TAT) in Lagos ruled that rental income derived from real estate properties is not subject to Value Added Tax (VAT). This ruling emerged from a case between NGX Real Estate Limited and the Federal Inland Revenue Service (FIRS), focusing on the applicability of VAT on rental income and the relevant periods defined by amendments to the VAT Act introduced by Finance Acts in 2019 and 2020. Background and Historical Context Before the Finance Act of 2020, there was uncertainty regarding the application of VAT to rent and leases, given the ambiguous language in the VAT Act. The Finance Act of 2019 did not explicitly include or exclude rent or lease, leading to reliance on FIRS Information Circular 9701. This circular suggested that VAT was not applicable to residential property rents but left commercial property rents subject to VAT. Conflicting positions and judgments further complicated the landscape: Appeal by NGX Real Estate Limited NGX, a real estate company, faced a tax assessment of ₦36.2 million from FIRS for unremitted VAT on rental income in the 2020 financial year. Disputing this assessment, NGX filed an appeal with the TAT, asserting that FIRS misinterpreted the VAT Act as amended by Finance Acts in 2019 and 2020. NGX’s argument centered on the definition of “goods” and “services” in the Finance Acts: NGX contended that these amendments indicated a deliberate exclusion of interest in land, supporting their position that rental income, being related to incorporeal property rights, should not be subject to VAT. Implications and Conclusion The TAT’s ruling has significant implications for businesses, particularly those in the real estate sector, clarifying that rental income from real estate properties is not subject to VAT. This decision provides much-needed clarity in an area marked by uncertainty and conflicting interpretations, offering relief to businesses navigating tax obligations related to rental income. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Navigating Capital Needs: Exploring Finance Options for Emerging Corporates

In the aftermath of recent economic challenges, businesses found themselves compelled to increase leverage for survival. This has underscored the longstanding imperative to fortify capital structures and diminish reliance on borrowing, especially for emerging corporates such as Small and Medium Scale Enterprises (SMEs) and early-stage startups. Governmental interventions, though aimed at aiding enterprises by facilitating debt raising, may have inadvertently exacerbated the issue of over-leveraging. Entities undergoing significant transformations, ownership changes, and startups, SMEs, and early-stage companies aiming to optimize their financial structures are confronted with capital gaps. While traditional debt remains a significant funding avenue for entrepreneurs and emerging corporates, particularly through bank financing, it poses challenges, especially for innovative and fast-growing organizations with a heightened risk-return profile. While bank funding will persist as a crucial source, there is growing apprehension that credit limitations might become the new norm, prompting the need to diversify funding options for SMEs and emerging corporates. This diversification is crucial for sustaining their roles in investment, growth, innovation, and job creation. Motivations for Considering Capital Raise Options by Emerging Corporates Emerging corporates often seek external finance for various reasons, notably to generate working capital for growth objectives. Loans provide a means to meet short-term financial demands and fuel expansion, bridging the gap between consumer orders and supplier payments. Increasing the capital base is another key motive for capital raising, especially for companies in sectors subject to regulatory capital requirements. Adapting to macroeconomic conditions and adhering to regulatory standards may necessitate periodic injections of additional capital. Expanding operations is a critical driver for capital raising, particularly for startups eyeing market share growth. The dynamic business environment demands steady resource expansion to navigate challenges, seize opportunities, and ensure sustained growth. Diverse Sources of Finance for Emerging Corporates While bank loans and stock finance are conventional sources, emerging corporates explore alternative avenues such as private equity. Private equity involves direct investments from funds and investors outside public markets. Shareholders anticipate returns on equity investments, and this approach offers benefits like investor selection, flexibility, financial input, and enhanced technical capabilities injected into the business. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Importance of Conducting a Due Diligence in a Transaction

Certainly, due diligence is a critical aspect of various transactions in the business world, playing a pivotal role in ensuring informed decision-making, risk mitigation, and overall transaction success. As the business landscape becomes increasingly complex with factors such as intricate business structures, global expansions, heightened competition, and growing investments, due diligence has gained prominence among investors and corporations. Due diligence involves a meticulous examination of a business, typically conducted by a potential investor in a company. It is carried out from two main perspectives: The timing of due diligence is crucial, and it is typically conducted before any binding contract is entered into between the buyer and the seller. Common scenarios for conducting due diligence include: In essence, due diligence serves as a safeguard against unforeseen risks and uncertainties, allowing parties involved in a transaction to make well-informed decisions that align with their strategic objectives. Whether buying, selling, or investing, due diligence is a valuable tool for navigating the complexities of the modern business environment. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Establishing Effective Enterprise Risk Management: A Holistic Approach to Resilience in Organizations

In any organization, managing risk is crucial due to the inherent uncertainties in the dynamic business environment. To navigate these uncertainties effectively, companies must adopt a comprehensive Enterprise Risk Management (ERM) program that encompasses the identification, control, monitoring, and reporting of risks. This approach is essential for minimizing the impact of risks on the organization and fostering resilience. ERM is an ongoing process, driven by the board of directors, implemented by management, and practiced by employees at all levels. It involves recognizing, understanding, and managing risks across the organization’s operations, creating a holistic image of the business. Given the interconnected and rapidly evolving nature of risks, senior management and boards must dedicate significant time to risk management. As companies aim for organic growth or strategic partnerships, their risk exposure increases. Without a clear understanding of specific risks and vulnerabilities, an ERM program cannot succeed. Identifying and evaluating risks are crucial steps in enabling a company to assess threats and opportunities, supporting the achievement of organizational goals. ERM goes beyond addressing negative risks; it also emphasizes managing positive risks or opportunities that can enhance business value. The goal is not to eliminate all risk but to preserve and add enterprise value by making informed risk decisions and achieving operational efficiency. Building an effective ERM function requires several key components: By integrating these components, organizations can establish a robust ERM framework that enhances their ability to anticipate, assess, and respond to risks, ultimately contributing to the achievement of corporate objectives in a changing business landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Taxation of Digital Assets in Nigeria- Cryptocurrencies and Non-Fungible Tokens (NFTs)

The digital economy, powered by internet, mobile devices, and digital tools, encompasses economic activities supported by digital technologies. With constant advancements, this economy combines human expertise with technological capabilities, offering limitless, data-driven, and mobile-centric experiences. In Nigeria, recent attention to the taxing framework has emerged through Finance Acts, introducing changes to outdated legislative provisions. As technology permeates the economy, even sectors like electoral processes incorporate digital tools. This article examines the taxation of unique digital assets—Cryptocurrencies and Non-Fungible Tokens (NFTs) in Nigeria. It delves into the current and potential implications for holding these assets and anticipates changes in the tax legislation affecting digital asset creators, buyers, and sellers. Digital Assets Defined: Digital assets, following the International Accounting Standards Board (IASB) framework, are digital resources controlled by an entity, providing measurable economic benefits. These encompass various forms like videos, images, data, and more, stored digitally and offering value. Cryptocurrencies and NFTs: Cryptocurrency (Crypto), a digital currency recorded on a blockchain, serves as a digital asset. Bitcoin, a popular Crypto, operates independently of central authorities and can be volatile. Non-Fungible Tokens (NFTs) represent unique digital files tokenized on the blockchain. Each NFT possesses distinct identifiers, history, and value. Factors like rarity and utility influence NFT value, often associated with art, trading cards, or blockchain game items. Taxation of Digital Assets in Nigeria: As of now, Nigeria lacks specific laws for taxing digital assets. The Finance Bill, 2022, awaiting presidential assent, proposes amendments indicating Nigeria’s move towards taxing digital assets. The bill suggests that digital assets, including Cryptocurrencies and NFTs, will be considered chargeable assets under the Capital Gains Tax (CGT) Act. If enacted, every individual or company making gains on digital asset disposal, regardless of residence, will be subject to a flat 10% CGT rate. The bill also places reporting obligations on buyers and sellers of cryptocurrencies, potentially applying retrospectively from January 1, 2022. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Data Privacy, Security and the Boardroom: From Ticking the Compliance Box to Absolute Necessity

The widely accepted notion that personal data is the “new gold” has ushered in a wave of regulatory compliance obligations, both globally and domestically, under data protection laws like the EU General Data Protection Regulation 2016 (GDPR), California Consumer Privacy Act of 2018 (CCPA), and Nigeria Data Protection Regulation 2019 (NDPR). Organizations now face heightened pressure from informed customers, data subjects, and regulatory bodies to prioritize and invest in data privacy compliance. Data privacy has evolved from being the sole responsibility of the Data Protection Officer (DPO) or the Information Security team. It has become a Board and governance issue, with regulatory compliance no longer just a checkbox exercise. This shift is particularly crucial given the increasing frequency of data breaches and their potential impact on an organization’s reputation and bottom line. This article delves into the compelling reasons for Boards of Directors to actively engage in data privacy compliance and outlines practical steps to promote effective board participation in data privacy matters. Moving Beyond Checkbox Compliance – The Board’s Active Role in Data Privacy: For businesses across various sectors, personal data is a valuable asset. Consequently, protecting personal data is integral to a business’s sustained success. The Board of Directors (BoD), as the highest decision-making body, plays a strategic role in shaping the organization’s approach to data privacy. The BoD is tasked with setting the right tone at the top and exercising oversight regarding compliance with applicable data privacy laws and regulations. In jurisdictions like Nigeria, where the maximum fine for a data breach under the NDPR can be as high as 2% of a company’s revenue, the BoD cannot afford to ignore data privacy. The potential consequences, including reputational risks, business disruptions, and loss of revenue, underscore the significance of prioritizing data privacy and protection. Moreover, effective data privacy and security practices can directly influence sales. Building and maintaining trust with customers are critical for all businesses, and concerns about data security can significantly impact customer relationships. Thus, attention to privacy matters can potentially boost sales and, consequently, a company’s bottom line. BoDs should view expenditures on data privacy, information technology, and security as investments in the company’s growth rather than costs to be minimized. In the age of data as the “new gold,” global regulations demand organizations to prioritize data privacy. No longer confined to compliance checkboxes, it’s now a Board and governance imperative. Boards of Directors (BoDs), recognizing personal data’s value, play a strategic role in shaping the organization’s data privacy approach. With hefty fines and reputational risks at stake, the BoD’s active engagement is crucial. Beyond risk mitigation, effective data privacy practices directly impact sales by fostering customer trust. BoDs must view investments in data privacy and security as vital contributions to the company’s growth. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Navigating the Technological Wave: Revolutionizing Accounting Practices in Nigeria

In today’s global landscape, the surge in technological advancements, including artificial intelligence and automation, has sparked questions and concerns across various sectors. The accounting profession in Nigeria stands amidst this transformative wave, where technology plays a pivotal role in reshaping traditional practices and introducing unprecedented efficiency. As with any technological evolution, a spectrum of opportunities and challenges accompanies these advancements. Industry leaders must adeptly navigate the complexities of emerging technologies, harnessing their potential for business success. This article delves into the profound ways technology is reshaping and enhancing accounting procedures in Nigeria, spotlighting the benefits it brings to the profession. The Impact of Technology on Accounting Procedures Technology’s rapid evolution has significantly influenced how accounting services are delivered in Nigeria, introducing both innovation and efficiency. The transformative impact can be witnessed through several key avenues. Embracing the Future: Opportunities and Challenges While technology opens new frontiers for efficiency and innovation in accounting procedures, it also presents challenges that must be navigated. Leaders in the accounting profession must adapt to the evolving technological landscape, harnessing its potential to drive growth and ensure sustainable business practices. In conclusion, the integration of technology into accounting procedures in Nigeria signifies a paradigm shift towards enhanced efficiency, accuracy, and strategic focus. As the profession embraces these technological advancements, it is poised to unlock new possibilities, providing clients with value-driven insights and positioning the accounting sector at the forefront of the digital era. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Enhancing Sustainability through IFRS: Financial Reporting’s Role in Facilitating Global Market Access

Financial reporting stands as a linchpin in facilitating global market access while ensuring transparency and accountability in the corporate realm. In recent times, a surge in emphasis on sustainability, encapsulating environmental, social, and governance (ESG) factors, has reshaped the landscape. Recognizing the significance of sustainable practices, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) have collaboratively worked towards fortifying International Financial Reporting Standards (IFRSs) to address sustainability concerns comprehensively. The joint efforts of IASB and ISSB aim to furnish stakeholders with standardized information for evaluating a company’s sustainability performance by integrating sustainability factors into financial reporting. Traditionally centered on financial reporting, IASB has expanded its focus to incorporate disclosures on sustainability as sustainability gains prominence. To propel sustainability reporting further, the collaboration between IASB and ISSB has been instrumental. The ISSB, established to formulate a comprehensive set of sustainability reporting standards, aims to seamlessly integrate them into the existing IFRS framework. The combined efforts of these boards seek to elevate the quality, consistency, and comparability of sustainability information globally. This article delves into the role of IFRS in promoting sustainability through financial reporting and its consequential impact on global market access. The Vital Role of Financial Reporting in the Global Economy Financial reporting, encompassing the compilation, presentation, and distribution of organizational financial information, serves as a pivotal bridge between companies and investors. It includes components such as financial statements, notes to accounts, management discussions, relevant disclosures, and analysis, aiming to provide a transparent and accurate depiction of a company’s financial health, performance, and risks. This information aids in evaluating a company’s potential and attracting investments. Financial reporting acts as a conduit for relevant and reliable information between companies and investors, facilitating informed decision-making and effective resource allocation. Transparent financial reporting fosters trust, attracts investment, and enhances market efficiency. However, traditional financial reporting frameworks have predominantly emphasized financial measures, often sidelining non-financial aspects like sustainability. In the global economy, financial reporting is indispensable, functioning as a linchpin of transparency, trust, and decision-making. It offers a comprehensive view of businesses’ financial performance and position, enabling stakeholders to assess their health and make informed decisions. Accurate financial reporting contributes to thriving economies, aids investors in making sound investments, and enables businesses to access capital for sustained growth. With the increasing internationalization of investments, there is a growing need for a framework that ensures comparability and consistency in financial reporting. The recently introduced sustainability standards, IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 – Climate-related Disclosures, are poised to enhance comparability, transparency, and consistency in sustainability-related information across companies’ financial reports. These standards are expected to bolster investor confidence, fostering a seamless flow of investments across borders. The Evolution of Sustainability Reporting and IFRS In recent decades, the business landscape has witnessed a profound shift, acknowledging the imperative for companies to adopt sustainable and responsible practices. Consequently, sustainability reporting has emerged as a vital mechanism for disclosing a company’s environmental, social, and governance performance, extending beyond the confines of traditional financial reporting. Integrating sustainability factors into financial reporting becomes pivotal in providing stakeholders with a holistic perspective on a company’s ability to create long-term value. Stakeholders such as investors, lenders, and creditors have increasingly advocated for more consistent, comprehensive, and verifiable sustainability-related information to aid their assessment of organizations’ enterprise value. Aspects such as workforce, accumulated expertise, and relationships with communities significantly contribute to an entity’s resilience and viability. Therefore, stakeholders actively seek information on sustainability-related risks and opportunities, influencing their decisions in providing resources to organizations. The recently released IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 – Climate-related Disclosures underscore IFRS’s commitment to incorporating sustainability considerations into financial reporting. These standards reflect the dedication to promoting transparency in disclosing sustainability-related information and further establish IFRS as a catalyst in advancing global sustainability reporting practices. In conclusion, the symbiotic relationship between financial reporting and global market access has entered a new era with the heightened emphasis on sustainability. The collaboration between the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) signifies a concerted effort to fortify International Financial Reporting Standards (IFRSs) and address the evolving landscape of sustainability concerns comprehensively. As businesses increasingly recognize the importance of sustainable practices, the expanded focus of IASB to incorporate disclosures on sustainability, in conjunction with the ISSB’s formulation of comprehensive sustainability reporting standards, is pivotal. This collaborative effort aims to provide stakeholders with standardized information, integrating sustainability factors into financial reporting for a more holistic evaluation of a company’s performance. Financial reporting, traditionally centered on financial measures, now plays a dual role by encompassing non-financial aspects such as sustainability. This evolution is crucial in providing investors, lenders, and creditors with a comprehensive perspective on a company’s ability to create long-term value. The recently introduced sustainability standards, IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 – Climate-related Disclosures, mark a significant stride towards enhancing comparability, transparency, and consistency in sustainability-related information across companies’ financial reports. As financial reporting acts as a linchpin in the global economy, fostering transparency, trust, and informed decision-making, the integration of sustainability factors enhances its relevance. These advancements are poised to bolster investor confidence, facilitate a seamless flow of investments across borders, and contribute to the sustainable growth of businesses. With IFRS at the forefront of this transformative journey, it solidifies its position as a catalyst in advancing global sustainability reporting practices, aligning financial reporting with the imperative of responsible and sustainable business practices in the contemporary corporate landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Evaluating the Legal Basis of CBN’s 2023 Regulation Regarding the Collection of Social Media Handles

The Central Bank of Nigeria (CBN) serves as the apex regulatory body for the financial services industry in Nigeria, wielding the authority to combat money laundering, terrorism financing, and proliferation financing of weapons of mass destruction. Empowered by the Banks and Other Financial Institutions Act 2020, the CBN Governor issued the Central Bank of Nigeria (Customer Due Diligence) Regulations, 2023 on June 20, 2023. This regulation aims to enhance Anti-Money Laundering (AML), Combatting the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) standards and compliance among financial institutions. Notably, it introduces a controversial provision mandating the submission of customers’ social media handles as part of the Know Your Customer (KYC) requirements. The inclusion of this new Customer Due Diligence (CDD) requirement has sparked considerable debate, drawing criticism from key stakeholders, including the National Assembly and the Nigeria Data Protection Commission (NDPC). Critics argue that the regulation is unnecessary, arbitrarily restricts freedom of expression and privacy, and potentially violates the constitutional right to privacy as guaranteed under Section 37 of the Constitution of the Federal Republic of Nigeria, 1999. Furthermore, concerns have been raised about the regulation’s compatibility with the Nigeria Data Protection Act 2023 and the Nigeria Data Protection Regulation 2019. Critics contend that the regulation may contradict the principle of minimal data collection (Data Minimization) embedded in existing data protection laws in Nigeria. This article aims to scrutinize the constitutional and statutory right to privacy in Nigeria, exploring the legal foundation for data processing by controllers in the financial services sector, specifically regarding social media-related personal data. Additionally, it will assess global practices in similar jurisdictions. The ultimate goal is to form a comprehensive position on the legality of the CBN’s new regulation within the framework of Nigeria’s privacy regime. Constitutionally, Section 37 guarantees the right to privacy, emphasizing its significance and restricting derogation except under specific conditions outlined in Section 45 of the Constitution. The Nigeria Data Protection Act, enacted in June 2023, builds on its predecessor, the Nigeria Data Protection Regulation 2019, reinforcing privacy rights and introducing the concept of a legal basis for processing data. Under the legal basis framework, data controllers or processors must establish grounds for collecting and processing data. These can include obtaining consent, fulfilling contractual obligations, complying with legal requirements, protecting vital interests, performing tasks in the public interest, or pursuing legitimate interests. In conclusion, the Central Bank of Nigeria’s (CBN) issuance of the Central Bank of Nigeria (Customer Due Diligence) Regulations, 2023 has ignited a contentious debate surrounding the mandatory submission of customers’ social media handles as part of Know Your Customer (KYC) requirements. Positioned as a measure to fortify Anti-Money Laundering (AML), Combatting the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) standards, the regulation has faced notable resistance from key stakeholders, including the National Assembly and the Nigeria Data Protection Commission (NDPC). Critics argue that the regulation, by delving into individuals’ social media information, encroaches upon privacy rights and freedom of expression, potentially infringing upon the constitutional right to privacy as outlined in Section 37 of the Constitution of the Federal Republic of Nigeria, 1999. Moreover, concerns have been raised about the regulation’s alignment with the recently enacted Nigeria Data Protection Act 2023 and the Nigeria Data Protection Regulation 2019, with critics suggesting a possible contradiction with the principle of minimal data collection embedded in existing data protection laws in Nigeria. To comprehensively assess the legality of the CBN’s regulation, this article undertakes a meticulous scrutiny of both constitutional and statutory provisions governing privacy in Nigeria. The exploration of global practices in jurisdictions facing similar challenges provides valuable context. Emphasizing the significance of Section 37 and the nuanced legal basis for processing data, the analysis will shed light on the implications of the CBN’s regulatory move within Nigeria’s evolving privacy landscape. In the evolving digital age, where the intersection of financial regulations and individual privacy is increasingly complex, this examination strives to provide a balanced and informed perspective on the legitimacy of the CBN’s regulatory measures. The dynamic nature of privacy laws and the evolving global discourse on data protection underscore the importance of ongoing scrutiny and adaptability in navigating the delicate balance between regulatory imperatives and individual rights within the Nigerian financial landscape. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

Loading...