UNDERSTANDING THE DESIGNATION - "DATA CONTROLLERS AND PROCESSORS OF MAJOR IMPORTANCE"

The Nigerian Data Protection Commission (the “Commission”) is an independent regulatory body created by the Nigeria Data Protection Act, 2023 (the “Act”) to regulate the processing of personal information in Nigeria. The primary mandate of the Commission is to regulate the processing of personal data within the territorial boundaries of Nigeria. Recently, the Commission issued a directive mandating "ALL entities" that collect personal data of individuals in Nigeria to undergo compulsory registration. The deadline for this mandatory registration has been set for June 30th, 2024. In support of its position on the mandatory registration of all data controllers and processors handling the personal data of individuals in Nigeria, the Commission has cited Section 5(d) of the Act.

However, it is our firm belief that this interpretation of Section 5(d) of the Act is erroneous. The aforementioned section stipulates that "The Commission shall register data controllers and processors of major importance."

According to Section 65, the definition section of the Act, a data controller and processor of major importance “means a data controller or data processor that is domiciled, resident in, or operating in Nigeria and processes or intends to process personal data of more than such number of data subjects who are within Nigeria, as the Commission may prescribe, or such other class of data controller or data processor that is processing personal data of particular value or significance to the economy, society, or security of Nigeria as the Commission may designate.” The interpretation of this section is as follows:

The Act intends for the Commission to stipulate a specific threshold of data subjects, the processing of which would qualify a data controller or processor to be considered of major importance.

Alternatively, the Act intends that the Commission designate a class of data controllers and processors as such of major importance because they process data that is of particular value or significance to Nigeria’s economy, society, or security. For instance, the EU Digital Markets Act 2022, introduced the classification of certain players as "Gatekeepers" owing to their substantial influence and dominance within their respective markets.

The Act does not imply that all data controllers and processors should be automatically regarded as being of major importance. If such were the intention, the Act would have explicitly stated so.

While it is acknowledged that the Commission is, by Section 7 of the Act, independent in the performance of its functions, this independence should not be construed as the ability to import a meaning that is at variance with the intent of the draftsmen. The Supreme Court in Ugo-Ngadi v. F.R.N (2018) 8 NWLR (Pt.1620) 29 SC remarked that “it is a cardinal principle of interpretation that the words of a statute that are unambiguous must be given their ordinary grammatical meaning.” Consequently, the Commission is bound by the literal definition of "data controllers and processors of major importance" as provided in the Act, necessitating the creation of specific designations rather than the indiscriminate inclusion of every data controller and processor into this special category. The approach the Commission wants to adopt would require every business, regardless of the volume of personal data collected, to register for a fee, thereby introducing an additional layer of obligation not envisaged by the Act.

It is pertinent to note that as of 2020, Nigeria's Ease of Doing Business (EDB) ranking stood at 131 out of 190 countries, with a general score of 56.9. In light of the country's current economic challenges, the government's focus should be on reducing barriers and fostering a conducive environment for businesses, particularly small and medium-sized enterprises (SMEs), to thrive and grow. It is worth recalling that the primary objective of the Business Facilitation Act, 2023, is to streamline business operations in Nigeria by eliminating administrative obstacles. By imposing an additional obligation on SMEs, instead of concentrating on the entities that the phrase "data controllers and processors of major importance" was intended to encompass, the Commission may inadvertently hinder the creation of a conducive environment for all businesses.

Conclusion

The recent directive issued by the Nigerian Data Protection Commission, mandating compulsory registration for all entities engaged in the collection of personal data within the Nigerian jurisdiction, necessitates a thorough reevaluation. While the Commission's intention to safeguard the privacy of personal data is undoubtedly commendable, it is essential to address the apparent deviation from the legislative intent behind the Nigeria Data Protection Act.

It is imperative that the Commission prioritise the designation of data controllers and processors of major importance, as outlined in the Nigeria Data Protection Act. This designation should be based on clearly defined criteria stipulated within the Act, ensuring that only entities meeting these specified criteria are subject to mandatory registration.

To uphold the principles enshrined in the Act and foster a conducive environment for business operations, it is crucial for the Commission to reconsider its approach. Rather than imposing additional burdens on all businesses, including small and medium-sized enterprises (SMEs), the Commission should strategically focus its regulatory efforts on entities that meet the criteria outlined in the Act. This targeted approach would not only ensure adherence to the law but also align with the government's broader objectives of promoting economic growth and facilitating seamless business operations.

GRID TO GREEN: NIGERIA'S TRANSITION TO RENEWABLE ENERGY FOR ELECTRICITY SUPPLY

EXECUTIVE SUMMARY

"Grid to Green: Nigeria's Transition to Renewable Energy for Electricity Supply'' delves into the global shift towards sustainable energy sources, emphasizing the urgent need to address climate change and reduce greenhouse gas emissions. The article highlights the significance of renewable energy due to its clean and environmentally friendly attributes. Nigeria's current energy landscape, dominated by thermal and hydroelectric power, is concisely discussed, along with efforts to diversify energy sources through privatization and concession structures. Legislative frameworks supporting renewable energy development, such as the Electricity Act 2023 and the Petroleum Industry Act 2021 are examined, alongside challenges like high initial costs and inadequate infrastructure hindering widespread adoption of renewable energy technologies. Overall, the article underscores Nigeria's strides towards a greener energy future and identifies opportunities for investment and policy intervention to accelerate this transition, emphasizing the importance of leveraging renewable energy potential and implementing supportive policies for a sustainable energy sector.

INTRODUCTION

In recent years, there has been notable global conversation and concerted action towards transitioning from fossil fuels to sustainable energy sources. This shift is primarily driven by the urgent need to address the climate change crisis exacerbated by greenhouse gas emissions. Across the globe, countries are enacting legislation to protect the environment, while companies and individuals are increasingly embracing renewable energy technologies. 

UNDERSTANDING RENEWABLE ENERGY AND ITS SIGNIFICANCE

Renewable energy originates from sources or processes that are constantly replenished. These energy sources include solar energy, wind energy, geothermal energy, and hydroelectric power[1]. Renewable sources are often synonymous with green and clean energy. Renewable sources are recyclable, clean energy does not release pollutants like carbon dioxide, and green energy is derived from natural sources.[2] Renewable energy is derived from natural resources capable of replenishing themselves within a human lifetime without depleting the planet's resources.[3] 

From the above, it is evident that renewable energy, as the name suggests, is energy derived from natural resources that can be renewed and/or recycled. Additionally, it produces minimal to no carbon emissions, thereby posing less risk of ozone layer depletion that could further harm the environment.

GLOBAL SHIFT TOWARDS SUSTAINABLE ENERGY SOURCES

The world's population is steadily increasing[4], leading to a heightened demand for electricity. However, in response to the climate change crisis and the rising cost of fossil fuels, there is a growing emphasis on decarbonization through the utilization of sustainable energy resources to power the electricity sector. Recent policy initiatives further underscore the global commitment to transitioning towards sustainable energy sources.

In 2019, the State of California, United States of America enacted legislation mandating that new residential constructions up to three stories high include rooftop solar panels, demonstrating a proactive dedication to advancing sustainable and renewable energy practices within the state's residential sector.[5] This move aims to enhance energy efficiency, reduce reliance on traditional power sources, and contribute to broadening environmental mitigation goals. It aligns with California's overarching efforts to lead in renewable energy adoption, reflecting a commitment to fostering a greener and more sustainable future in the construction and housing sector.

Similarly, on February 7, 2023, Minnesota Gov. Tim Walz signed a clean energy bill into law, requiring the state's utilities to derive 100% of their electricity from carbon-free energy sources by 2040.[6]

According to the World Economic Forum[7], Europe has made substantial progress in transitioning towards renewable energy sources for electricity generation over the last decade. In 2011, fossil fuels accounted for just under half of the EU's electricity production, with renewable energy sources contributing only 18%. Fast-forward to 2022, and wind and solar power alone generated 22% of EU electricity, surpassing natural gas at 20% and coal at 16%. Hydro and nuclear power still constitute the primary sources of electricity production at around 32%. This significant shift highlights a growing recognition of the importance of clean energy in mitigating environmental impact and fostering a more sustainable future on both regional and global scales.

CURRENT ENERGY LANDSCAPE IN NIGERIA

Nigeria predominantly relies on thermal and hydroelectric power for its electricity generation, boasting an installed capacity of about 12,522 MW.[8] According to data from the Nigerian Electricity Regulatory Commission (NERC)[9], the unbundling of the Power Holding Company of Nigeria (PHCN) has led to a diverse energy mix in the country. Generation companies resulting from this process, such as Afam, Sapele, Egbin, Ughelli (gas-powered plants), and Kainji, Jebba, Shiroro (hydroelectric facilities), contribute a total of 5,048 MW. While gas-based plants are fully privatized, hydroelectric ones operate under long-term concessions, showcasing varied ownership and management approaches. This diverse landscape reflects Nigeria's commitment to harnessing different energy sources for electricity generation, with the involvement of private entities expected to enhance efficiency, foster innovation, and promote sustainable energy practices.

In the current Nigerian electricity generation sub-sector, 23 grid-connected generating plants collectively offer an installed capacity of 10,396 MW. The available capacity is 6,056 MW, with thermal-based generation contributing significantly, boasting an installed capacity of 8,457.6 MW (available capacity of 4,996 MW). Hydropower also plays a vital role, with a total installed capacity of 1,938.4 MW (available capacity of 1,060 MW). This framework incorporates a mix of privatized Generation Companies (GenCos), Independent Power Producers (IPPs), and generating stations under the National Integrated Power Project (NIPP).[10]

Furthermore, the NERC has introduced a Regulation on embedded generation, enabling power generation plants, including those utilizing renewable energy sources, to connect directly to and evacuate through a distribution network.[11]

The above highlights Nigeria's current electricity sources, emphasizing the diverse energy mix resulting from the unbundling of PHCN. The presence of gas-powered and hydroelectric plants, each with distinct privatization or concession structures, underscores the nation's commitment to utilizing varied energy sources. The inclusion of thermal-based generation and hydropower, contributing significantly to the total installed capacity, illustrates the multifaceted nature of the electricity generation sector in Nigeria. The integration of private entities and regulatory support for embedded generation indicates a strategic and evolving transition toward a resilient and diversified energy sector, aligning with both immediate electricity needs and long-term sustainability goals.

LEGISLATION AND FRAMEWORK SUPPORTING RENEWABLE ENERGY DEVELOPMENT IN NIGERIA

As Nigeria actively seeks to enhance its renewable energy sector, several laws and policies have been enacted to facilitate its growth.

THE ELECTRICITY ACT 2023

The Electricity Act (“The Act”) outlines various objectives, one of which is to establish a framework that stimulates the development and utilization of renewable energy sources. The Act aims to create an enabling environment to attract investments in renewable energy, with the ultimate goal of increasing the contribution of renewable energy to the overall energy mix.[12] Section 80 of the Act specifically emphasizes the "promotion of generation from renewable energy," showcasing a strong commitment to fostering the use of renewable energy sources. The Act imposes an ongoing obligation on the Commission and Promotion of the Independent System Operator (ISO) to actively encourage and promote electricity generation from renewable sources.

When issuing generating licenses, the Commission (NERC) is mandated to promote various forms of renewable energy generation, including embedded generation, hybridized generation, co-generation, and electricity generation from sources like solar energy, wind, small hydro, biomass, and other renewables defined in the Act or that may be developed in the future. This legislative provision underscores a proactive stance towards diversifying the energy mix and integrating sustainable practices into the electricity generation sector in Nigeria.

Furthermore, the Act[13] outlines the establishment of an Integrated National Electricity Implementation Plan Policy and Strategic Implementation Plan. This plan, currently underway[14], aims to optimize the utilization of renewable energy sources such as solar, wind, hydro, hydrogen, and other renewable sources of energy. By incorporating these sources into the national plan, Nigeria demonstrates a commitment to the comprehensive integration of renewable energy and aligning its policies with the global transition towards sustainable practices in the energy sector.

PETROLEUM INDUSTRY ACT 2021

The Petroleum Industry Act (PIA), designed for the oil and gas industry, also addresses the crucial issue of gas flaring. Section 105 of the PIA explicitly prohibits the flaring or venting of natural gas, underscoring the commitment to environmental responsibility. Section 104 of the PIA establishes penalties for gas flaring, except as provided in section 104(1)(a), (b), (c) of the PIA. It is noteworthy that these provisions mark a significant step forward for the electricity sector.

The significance of this for the electricity sector lies in the acknowledgment that gas is a cleaner source of energy. Burning natural gas for energy results in fewer emissions of various air pollutants and carbon dioxide (CO2) compared to burning coal or petroleum products for an equivalent amount of energy.[15] This recognition aligns with global efforts to transition towards cleaner energy sources and reduce environmental impact.

The PIA, through penalties and the Nigerian Gas Flare Commercialisation Programme (NGFCP), imposes obligations on oil exploration companies to responsibly dispose of associated gas. This can be achieved through compliant methods, such as entering into a Gas Supply and Purchase Agreement, facilitating the lawful disposal of gas. Such agreements, when established with entities, can contribute to the production of energy for the electricity sector, promoting sustainable practices and aligning with environmental goals. The intersection of the PIA, penalties, and the NGFCP underscores the government's commitment to reducing gas flaring and advancing cleaner energy alternatives in the electricity sector.

THE NIGERIA ENERGY TRANSITION PLAN 

The Nigeria Energy Transition Plan (ETP) represents a crucial initiative by the government to reduce carbon emissions within the country. The ETP [16] acknowledges that emissions in the energy sector are predominantly driven by off-grid diesel/petrol generator use and on-grid gas combustion in power plants, attributed to insufficient generation capacity and grid constraints. The overarching goal of the ETP is to enhance the utilization of renewable energy sources, primarily focusing on solar energy, to address these challenges.

The key strategies outlined in the ETP include the complete elimination of diesel/petrol generators (decarbonization) and a substantial expansion of generation capacity through renewables, particularly solar energy. The plan recognizes that during the transitional phase, there will be an initial increase in gas generation to establish baseload capacity and facilitate the integration of renewable energy sources. This transitional approach is essential for meeting the energy demands while simultaneously working towards a future where renewable energy becomes the primary source.

The ETP envisions significant upgrades to central generation capacity, targeting an operational capacity of 42 GW by 2030. The plan outlines an annual increase of approximately 3 GW, including 1 GW/year for natural gas revamping, 0.8 GW/yr for new solar PV, and 0.3 GW/yr for biomass. This phased approach ensures a gradual transition to renewable energy sources while addressing the immediate need for enhanced generation capacity.

Post-2030, the ETP anticipates the deployment of centralized renewable energy (RE) solutions, with a focus on solar PV and corresponding storage, incorporating hydrogen starting in 2040. The plan outlines an ambitious target of approximately 7 GW/year by 2050 and 5 GW/year between 2050 and 2060, demonstrating a long-term commitment to sustainable and renewable energy development.

In essence, the ETP provides a comprehensive legal framework that aligns with global efforts to reduce carbon emissions, enhance renewable energy integration, and establish a sustainable energy landscape for the future.

RENEWABLE ENERGY POTENTIAL IN NIGERIA

Hydropower Potential

Nigeria's vast hydro potential remains largely untapped, with significant opportunities for development.

Assessment and Current Status

Nigeria boasts a vast untapped hydro potential of approximately 24 GW, along with a smaller hydro potential of around 3.5 GW. However, to date, the exploitation of these resources remains limited. As of 2015, the installed capacity for large hydro was only 1.9 GW, with small hydro accounting for a mere 60 megawatts.[17]

Wind Energy Potential

Nigeria possesses moderate wind potential, with notable variances across different regions.

Assessment and Current Status

Moderate wind potential exists in Nigeria, with average wind speeds ranging from 2.1 m/s to 8 m/s at a height of 10 meters. The northern region displays the highest wind speeds, exceeding 7 m/s. The International Renewable Energy Agency (“IRENA”) estimates the technical potential for wind energy at 3.2 GW, considering the utilization of only 1% of suitable land for project development. While the coastal and offshore areas remain unexplored, the southern region experiences lower wind speeds compared to the wind-rich northern region. The Federal Ministry of Power is conducting offshore wind mapping, National Renewable Energy Action Plan (“NREAP”) targets include achieving 0.17 GW of grid-connected wind capacity by 2020 and 0.8 GW by 2030.[18]

Solar Energy Potential and Challenges

Nigeria boasts abundant solar resources, offering significant opportunities for solar energy development.

Assessment and Current Status

Nigeria exhibits a high solar resource potential, with average annual global horizontal irradiation ranging between 1,600 kWh/m2 and 2,200 kWh/m2. The northern region records the highest solar irradiation, exceeding 2,000 kWh/m2. IRENA estimates the technical potential for solar photovoltaic (PV) energy at an impressive 210 GW, assuming the utilization of only 1% of suitable land for project development. Furthermore, concentrated solar power (CSP) holds substantial promise, with a potential of approximately 88.7 GW, predominantly concentrated in the northern region due to the availability of higher direct normal irradiance.[19]

Challenge [20]

Solar energy faces several challenges in Nigeria, primarily due to high initial investment costs, limited access to financing and infrastructure, inadequate policy and regulatory frameworks, and a maintenance and technical skills gap. The expensive nature of solar equipment inhibits widespread adoption, particularly in low-income areas, necessitating the development of financing mechanisms and partnerships to make solar energy more accessible. Additionally, the lack of financing options and infrastructure hampers project implementation, highlighting the need for specialized loan programs and investment in grid connectivity. Moreover, the absence of a supportive regulatory environment poses hurdles for investors, emphasizing the importance of clear policies to incentivize renewable energy and streamline operations. Lastly, addressing the technical skills gap through training programs and collaboration is crucial for the effective deployment and maintenance of solar energy systems Nigeria.[21]

Natural Gas Reserves

Nigeria's proven reserves of natural gas totalled an estimated 206.5 trillion cubic feet (Tcf) at the onset of 2023. Over the period spanning from 2012 to 2021, the average dry natural gas production in Nigeria amounted to approximately 1.5 Tcf, while dry natural gas consumption averaged 649 billion cubic feet (Bcf) within the same timeframe.[22] Despite the substantial abundance of natural gas resources in Nigeria, the efficient exploitation and application of these reserves in both industrial and domestic spheres continue to present challenges, including but not limited to: limited numbers of appropriate reservoirs conducive for gas re-injection and storage and the economics of the process, the financial commitment required for developing a major and interconnecting network of gas pipelines, and the low technology and industrial base for energy consumption in the country.

If flared gas is properly harnessed, Nigeria can produce 600,000 MT of LPG per year and generate 2.5 GW of power from new and existing Independent Power Plants to power the economy.[23] 

CONCLUSION

In conclusion, this article explores the global momentum towards sustainable energy sources, emphasizing the urgency driven by climate change concerns and the imperative to reduce greenhouse gas emissions. It provides an overview of Nigeria's current energy landscape, primarily reliant on thermal and hydroelectric power, and discusses efforts to diversify energy sources through privatization and concession structures. Legislative frameworks supporting renewable energy development, such as the Electricity Act of 2023 and the Petroleum Industry Act, are examined, alongside challenges hindering the widespread adoption of renewable energy technologies. Despite promising prospects, including vast renewable energy potential in hydropower, wind, and solar energy, Nigeria must overcome obstacles such as high initial costs and inadequate infrastructure to fully embrace these alternatives. Nevertheless, with continued focus on harnessing these resources, Nigeria is poised to make significant strides towards a greener energy future.

REFERENCES

1.  https://www.twi-global.com/technical-knowledge/faqs/renewable-energy accessed on 4 February, 2024.

2.  https://www.twi-global.com/technical-knowledge/faqs/renewable-energy accessed on 4 February, 2024. 

3.  https://www.ren21.net/why-is-renewable-energy-important/ accessed on 4 February, 2024.

4.  The current world population of 7.6 billion is expected to reach 8.6 billion in 2030, 9.8 billion in 2050 and 11.2 billion in 2100. https://www.un.org/en/desa/world-population-projected-reach-98-billion-2050-and-112-billion-2100 accessed on 6 February, 2024. 

5. https://unboundsolar.com/blog/8-facts-about-renewable-energy-mandates-by-state accessed on 4 February, 2024.

6. https://environmentamerica.org/updates/minnesota-governor-signs-100-clean-electricity-bill/ accessed on 5 February, 2024. 

7. https://www.weforum.org/agenda/2024/01/renewable-energy-transition-generation-eu/ accessed on 4 February, 2024.

8. https://www.trade.gov/country-commercial-guides/electricity-power-systems-and-renewable-energy accessed on 4 February, 2024.

9.  https://nerc.gov.ng/index.php/home/nesi/403-generation accessed on 4 February, 2024.

10.  Ibid 

11.  Ibid  

12.  Section 1(l) of the Electricity Act. 

13.  Section 3 of the Electricity Act.

14. https://independent.ng/plan-for-integrated-national-electricity-policy-underway/ accessed on 4 February, 2024.

15. https://www.eia.gov/energyexplained/natural-gas/natural-gas-and-the-environment.php#:~:text=Natural%20gas%20is%20a%20relatively,an%20equal%20amount%20of%20energy accessed on 5 February, 2024.

16.  https://energytransition.gov.ng/power/ accessed on 5 February, 2024.

17. .https://www.nigeria-energy.com/content/dam/markets/emea/nigeria-energy/en/2023/docs/NE23-NigeriaEnergyRoadmap-Report.pdf accessed on 26 September, 2023.

18. Ibid 

19.  Supra

20.  This is highlighted because solar has the highest level of user penetration in Nigeria, given the aggressive development of solar energy installation -https://link.springer.com/article/10.1007/s10668-022-02308-4  accessed on 8 February, 2024.

21. https://energymall.ng/challenges-of-solar-energy-in-nigeria-overcoming-barriers-to-sustainable-power/ accessed on 6 February, 2024. 

22.  https://www.eia.gov/international/analysis/country/NGA accessed on 23 September, 2023.

23. https://www.linkedin.com/pulse/gas-to-power-nexus-nigeria-challenges-prospects-outlook-ivie-ehanmo?utm_source=share&utm_medium=member_ios&utm_campaign=share_via accessed 6 February, 2024.

CLAIMING FINANCIAL COMPENSATION FOR DATA BREACH IN NIGERIA

Executive Summary:

The protection of personal data is one of the guarantees of a progressive and potentially successful digital economy. This is because data is the fuel that powers the digital economy. Organisations and governments collect and process data to create value, improve efficiency, and solve problems in various sectors of the economy. In the wrong hands, however, data can be weaponised and used for malicious and illegal purposes. The Nigeria Data Protection Act, 2023 (the “Act”) aims to safeguard the privacy and rights of individuals resident in Nigeria, whose data is collected, processed, or stored by various entities. The Act also provides remedies for data breaches, which are incidents where personal data is compromised, exposed, or stolen. One of the remedies available under the Act is financial compensation though it is a discretionary power of the Nigeria Data Protection Commission (the “Commission”).[1] This means that individuals who suffer losses, harm, or injuries due to data breaches can claim money from the responsible parties. However, this is not an automatic right. The Commission has the power to decide whether to award you compensation or not. This article explains how the Commission makes this decision and what factors it considers. This article also references the Nigeria Data Protection Regulation 2019 (“NDPR”) and the NDPR Implementation Framework (“Implementation Framework”). The NDPR, along with other related rules, guidelines, and frameworks made by the National Information Technology Development Agency (NITDA), is still valid and effective pursuant to Section 64 of the Act. The Article finally makes policy recommendations to the Commission.  

Understanding Personal Data Breach

Under the Act personal data breach occurs when there is a breach of security by a data controller or data processor that leads to or is likely to lead to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to personal data transmitted, stored, or otherwise processed. According to an entry[2] in the US National Vulnerability Database, in 2021, a researcher discovered and disclosed an 8.8-severity data breach involving the personal information of Konga customers in Nigeria. Another outlet[3] reported in 2022 that over 500 e-commerce platforms in Nigeria have been targeted by malicious actors using Magecart, a general term given to crime syndicates that contaminate e-commerce sites with skimmers.[4] These are all examples of a data breach.

Seeking Financial Redress for Data Breaches

With data breaches comes the possibility that accessed data can be used for nefarious activities, not limited to identity theft,[5] spamming,[6] doxing,[7] phishing[8] and blackmailing,[9] all of which can cause actual and legal damage. If you are a victim of a data breach, you may be entitled to financial compensation from the responsible parties. The combined  reading of the Act, the NDPR, and other subsidiary legislation provides relief to affected persons in the following ways:

1. The affected person should file a complaint against the data controller or processor with the Nigerian Data Protection Commission (“Commission”).  See Section 46 of the Act. The person can also bypass the Commission and file a civil action in the High Court. See Section 51 of the Act.

2. The complaint to the Commission should cite in what ways the data controller or processor has violated the Act or any subsidiary legislation to the Act. Because there has been a breach, the net should be cast wide. For example, consider:

1. Whether the data controller or processor has the basis for collecting or carrying out specific processing activities which might have caused the breach, See Section 25 of the Act;

2. Whether the data controller or processor has appropriate technical measures to ensure the security, integrity, and confidentiality of personal data; See Section 29 of the Act;

3. Whether the data controller or processor files its data protection audit as and when due. Such audit must also comply with the NDPR and the Implementation Framework;

4. Whether the organisational policies and procedures of the organisation for monitoring and reporting violations of privacy are compatible with industry standards;

5. Whether the data controller or processor complies with the Act on procedures for cross-border data transfer. See Sections 41, 42 and 43 of the Act; and

6. Whether a Data Privacy Impact Assessment (“DPIA”) was conducted before the processing of data that resulted in a breach. See Section 28 of the Act. When an organisation plans to undertake a project that requires extensive use of personal data, a DPIA should be carried out to find potential breach points and develop a plan for mitigating those risks. Section 3.2 (viii) of the Implementation Framework also requires organisations to conduct a DPIA on their processes, services, and technology periodically to ensure continuous compliance.

3. The complaint should detail the emotional and financial costs suffered as a result of the data breach.

4. The Commission may initiate an investigation if it satisfies itself that the complaint has merit. See Section 46 of the Act.

5. If the investigation reveals that the data controller or processor violated the Act or any subsidiary legislation, the Commission may, among other things, order the erring data controller or processor to pay compensation to the data subject who has suffered loss, injury, or harm as a result of the violation. This is without prejudice to the power of the Commission to prosecute such data controllers or processors. See Section 48 of the Act.

Conclusion

Given the persistent increase in data breaches and the sophistication of the technology used by these bad-faith actors, there is a need to highlight the potential harm caused by data breaches to individuals. Granted, the Commission is commendably going after errant data controllers or processors.  According to Dr. Vincent Olatunji, the National Commissioner of the Commission, in 2023, an undisclosed number of banks and institutions in Nigeria paid over N200 million to the Federal Government as penalties for violating the data privacy of Nigerian citizens. While this is commendable, Nigerians need to know that beyond the fines, the Act entitles them to financial compensation for their loss. Although this is a discretionary power exercisable by the Commission, this power should be exercised more rigorously when a fault is found on the part of a data controller.

Policy Recommendations:

1. In light of the escalating threat landscape, the Commission should consider adopting a specific security standard as a minimum technical requirement for data controllers or processors. Alternatively, a review of the security standard ISO 27001:2013 prescribed under the Implementation Framework could provide a more robust foundation. The Commission should also monitor the changing threats to information security systems and adjust the standards accordingly.

2. The Commission should, by Regulations, require data controllers and processors to obtain cyber insurance.  This would mitigate the impact of data breaches on both data subjects, data controllers, and processors by paying for the costs and liabilities associated with data breaches.

[1] See Section 48 of the Act

[2] https://nvd.nist.gov/vuln/detail/CVE-2021-42192

[3] https://brandnewsday.com/2022/02/16/jumia-konga-customers-in-trouble-as-hackers-now-extract-e-commerce-site-payment-details/

[4] Skimmers are tiny, malicious card readers hidden within legitimate card readers that harvest data from every person who swipes their cards.

[5] The hackers can use the names, email addresses, phone numbers, and order details to impersonate the customers and access their online accounts, such as banking, social media, or e-commerce.

[6] The hackers can use the email addresses and phone numbers to send unsolicited or unwanted messages or calls to the customers, advertising products or services, promoting scams, or spreading propaganda.

[7] The hackers can use the personal information to publicly expose or publish the customers’ identities, locations, or other details, without their consent or knowledge.

[8] The hackers can use the email addresses and phone numbers to send fake messages or calls to the customers, pretending to be a legitimate entity and trick them into revealing more sensitive information, such as passwords, payment details, or security codes.

[9] The hackers can use the personal information to threaten or extort the customers, demanding money or other favours in exchange for not exposing or misusing their data.

[10] A standard template for the audit report is included in Annexure A of the Implementation Framework (Section 6.6.2 of the Implementation Framework)

THE RIGHTS OF DATA SUBJECTS UNDER THE NIGERIA DATA PROTECTION ACT: EMPOWERING INDIVIDUALS IN THE DIGITAL AGE

In an increasingly data-driven world, the protection of personal information has become a paramount concern. Recognizing the need to safeguard the privacy and rights of individuals, President Bola Ahmed Tinubu signed into law, the Data Protection Act, 2023, thereby establishing by statute, the Nigerian Data Protection Commission; which is entrusted with the power to make and enforce regulations for the protection and security of the personal data of Data Subjects in Nigeria. The objective of this groundbreaking legislation amongst others, not only establishes a comprehensive framework for data protection but also grants significant rights to data subjects. As the custodians of their data, individuals in Nigeria now have the power to control how their information is collected, processed, and shared. 

Who is a Data Subject?

In the context of data protection and privacy regulation, a data subject is a person whose personal information is being collected, processed, or stored by an organization or entity. This can include customers, employees, website users, or any individual whose personal data is being handled by an organization.

Data Subject Rights and the need for Protection

Data Subject Rights (DSR) are the legal rights created by data protection laws that individuals possess over their data usage. They guarantee individuals' control over the processing of their data. These rights are found under Part VI of the Nigeria Data Protection Act. They include:

• The right to be informed: Data subjects have the right to know how much of their data is being held by an organization and for what purpose. This is why most organizations have privacy policies that outline the type of data they collect, why they collect it, how long they keep it, how they handle it, and so on. Data subjects have the right to access this information and know what data is being collected about them. This right also comes into play if the organization wants to use the data for additional purposes beyond the original reason for collecting it. In such cases, the data subject can enforce their right to be informed and have control over how their data is used.

• The right to access: Data subjects have the right to reach out to any organization that is handling their personal information and ask for essential details. This includes finding out if the organization processes their data and getting information about how the data is being processed. This information can include the purpose for processing, the types of data being processed, who the data is being shared with, how long the data will be stored, the rights that data subjects have regarding their data, and the measures in place to protect the data if it is transferred to another country. Essentially, data subjects have the right to be fully informed about how their personal information is being handled by an organization.

• The right to rectification: If a data subject finds out that the information an organization has about them is incorrect or missing important details, they have the right to ask the organization to fix or update their data. This right is crucial because accuracy can be both subjective and objective. For instance, if a data subject gets married or changes their name, they can request the organization to update their records accordingly. This right holds the same level of importance as other rights under the Nigeria Data Protection Act (NDPA). In situations where it's not possible to correct inaccurate, incomplete, or misleading data, the NDPA allows for the data to be deleted instead.

• The right to erasure:  Individuals have the right to ask organizations to delete their data from their systems under certain circumstances. This can be when the data is no longer needed when it was processed unlawfully, or when it no longer serves the original purpose for which it was collected. This applies to both physical and digital storage of data, and organizations are required by law to comply with such requests within a specific timeframe. However, it's important to note that the right to data erasure is not absolute. Organizations can refuse the request on various grounds, including if there is a legal obligation to retain the data for a specific period. For instance, financial service providers may need to retain transaction data for a certain period of time as mandated by Anti-Money Laundering Laws.

• The right to restrict processing: Individuals can request that organisations limit the way their personal data is used. It’s an alternative to requesting the erasure of data, and might be used when the individual contests the accuracy of their personal data or when the individual no longer needs the information but the organisation requires it to establish, exercise or defend a legal claim. 

• The right to data portability: The right to data portability comprises three separate requests. First, the data subject has the right to request that their data be given to them in a structured, commonly used, and machine-readable format without undue delay. Second, the data subject can transmit the data obtained in a readable format to another organisation without any hindrance. Lastly, the data subject can request for the data to be transmitted directly to another organisation where it is technically possible to do so. The Nigeria Data Protection Commission (NDPC) is empowered under the Act to prescribe conditions and circumstances under which the right to data portability may be exercised and obligations to be imposed on data controllers or data processors in relation to costs and timing. 

• The right to object: Individuals can object to the processing of personal data that is collected on the grounds of legitimate interests or the performance of a task in the interest/exercise of official authority. Organisations must stop processing information unless they can demonstrate compelling legitimate grounds for the processing that overrides the interests, rights and freedoms of the individual or if the processing is for the establishment or exercise of defense of legal claims. The NDPA also allows a data subject to object to the processing of personal data for marketing purposes at any time, and such an objection is absolute.

• Rights related to automated decision-making including profiling: This right is new under the NDPA. The NDPR only provided that notice of the use of automated decision-making should be given to the data subject and also as a basis for invoking the right to data portability. The NDPA provides that individuals now have the power to object to decisions that are made solely based on automated processing of their personal data, such as profiling, without any human intervention, if these decisions have a legal effect on them. For instance, if a bank uses automated algorithms to determine creditworthiness and denies a loan application solely based on this automated decision, the data subject has the right to object. However, it's important to note that automated decision-making is permissible if it is necessary for fulfilling a contract between the data controller and the data subject. In this case, the data subject's rights and interests must be protected by laws or written rules, and their explicit permission should be obtained for such automated decisions to be made.

• Right to lodge a complaint: Where a data subject is dissatisfied with the decision, action, or inaction of a data controller or data processor, they have the right to lodge a complaint with the Nigeria Data Protection Commission (NDPC)  for remedial action. Data subjects may also institute civil proceedings for damages against a data controller or data processor for any wrong or loss suffered by a data subject as a result of the violation of the Act. In addition, the NDPA includes the right to receive compensation for breaches of any of the rights provided by law.

• Right to withdraw consent: Where consent is the legal basis for processing personal data, the NDPA empowers the data subject to withdraw such consent at any time. The Act also requires an organisation to make the withdrawal of consent as easy as when it is obtained. In other words, where the data subject has given consent in a simple format, the data controller must ensure the withdrawal of consent is equally easy without additional barriers. It is important to note that withdrawal of consent does not affect the lawfulness of processing by a data controller undertaken on the basis of consent before the data subject withdrew his consent.

• Right to Erasure or Deletion: Also termed the right to be forgotten or right to de-referencing, it relates to a data subject’s right to demand erasure or deletion of personal data from a controller. This right is exercisable where:

1. the data is no longer necessary in relation to the purpose for which it was collected;

2. the data subject withdraws the consent upon which the processing is based;

3. the personal data have been unlawfully processed and the data subject objects to continued processing of such data

4. the data controller processes data without lawful basis.

Responding to data subject rights requests is not just a legal obligation, it is absolutely crucial for organizations to establish and maintain an effective procedure for handling these requests. It is essential to provide specific role training for all staff members involved in processing data, as they are often the first point of contact for data subjects. While waiting for the Commission to develop an implementation framework for the NDPA, which will provide further guidance, following the steps discussed in this article can greatly benefit your organization. Building an effective system requires constant practice and experience.

However, navigating the complexities of data subject rights requests can be challenging. If you ever find yourself unsure or if you want to improve your current processes, seeking guidance from professionals in the field is a wise choice. Their expertise can bring clarity, efficiency, and assurance of compliance, ensuring that your practices align with the highest standards of data protection.

Written By:

Iquo Essien

Associate Technology, Creativity & Innovation Practice

DATA PRIVACY WEEK 2024: TAKE CONTROL OF YOUR DATA

Have you ever experienced the mind-boggling phenomenon of brainstorming an idea or discussing a product with a friend, only to hop online and stumble upon that exact idea or product? It's like the digital world has a sneaky way of eavesdropping on our conversations!  While it may seem like a magical coincidence, it's actually a result of the intricate web of data and algorithms that shape our online world.

As we celebrate Data Protection Week under the theme: Take Control of your Data, it behoves us to remind ourselves of the power we hold in protecting our own information and the impact it can have on our lives. Although You cannot really control how the tiniest piece of data about you is collected, you can help manage your own data with a few repeatable behaviours like the following:

• Take control of your digital footprint: Reflect on the information you share online and consider its long-term implications. Remember, every piece of data contributes to your digital footprint.

• Adjust your privacy settings to your comfort level: Many web browsers, computers, and devices will often ask you if you want to share certain types of data with a new app or website. Strike up a habit of paying attention to these requests and actually thinking about your answers. Some common types of data you might be asked for include your location, your contacts, your photos and camera, and data about your behaviour and use of service. 

• Create Unique Passwords: Create long (at least 12 characters) unique passwords for your account and device.  Include a combination of uppercase and lowercase letters, numbers, and special characters. Avoid using easily guessable information like birthdays or pet names. Use a password manager to store each password. 

• Turn off default settings: Here are some default settings you should usually turn off unless you need them for the app to function and you trust the app: camera, microphone, location and sync contacts.

• Foster a data-conscious mindset: Develop a habit of regularly reviewing and updating your privacy settings on social media platforms and other online services. Turn on automatic device, software, and browser updates, or make sure you install updates as soon as they are available. Software updates often include security patches that address vulnerabilities and protect against potential threats.

• Enable multi-factor authentication (MFA): Activate MFA whenever possible. This adds an extra layer of security by requiring an extra form of verification, such as a code sent to your phone or email, in addition to your password. This keeps your data safe even if your password is compromised.

• Be cautious of phishing attempts: Stay vigilant against phishing emails, messages, and calls. Be skeptical of unsolicited requests for personal information or financial details. Avoid clicking on suspicious links or downloading attachments from unknown sources. Verify the authenticity of any communication by contacting the organization directly through official channels.

• Be mindful of public Wi-Fi: Exercise caution when using public Wi-Fi networks. Avoid accessing sensitive information, such as online banking or personal accounts, when connected to unsecured networks. Use a virtual private network (VPN) to encrypt your data and ensure a secure connection if necessary.

• Back up your data: Regularly back up your important data to an external hard drive, cloud storage, or another secure location. This ensures that even if your device is compromised, you can still access and recover your valuable information.

• Dispose of data securely: When disposing of old devices or physical documents containing personal information, ensure they are properly wiped or destroyed. 

Unlocking Economic Prosperity in Emerging Countries Using Local Currency Guarantees

INTRODUCTION:

Emerging markets are home to some of the most vibrant and quickly expanding economies in the world. However, these countries also face several challenges, such as limited access to financing, restricted access to funding, lack/poor infrastructure, and high levels of poverty.  

One way to address the challenges faced by emerging markets listed above is the use of Local Currency Guarantees (LCGs). Local currency guarantees can be a valuable tool for addressing these challenges and unlocking economic prosperity in emerging countries. It can be seen as a form of risk mitigation that can help reduce the cost of borrowing for businesses and governments in emerging markets. This article explores the potential of local currency guarantees as a catalyst for unlocking economic prosperity in emerging countries.

What are Local Currency Guarantees?

Local currency guarantees are guarantees that protect lenders and investors providing debt in the event of a loan default caused by the borrower.  Local currency guarantees are a type of financial instrument that protects against exchange rate fluctuations. They are typically used to support infrastructure projects, as these projects are often financed in foreign currency but generate revenue in local currency. By providing a guarantee, local currency guarantees can help reduce the risk of exchange rate fluctuations and make infrastructure projects more attractive to investors.

LCGs can be provided by a variety of sources, including governments, development banks, and private sector institutions. They typically involve a guarantee from the guarantor to repay a loan in local currency if the borrower defaults.  LCGs have been used successfully in several emerging countries, including Nigeria. 

In Nigeria, LCGs have been used to support a variety of sectors, including infrastructure, agriculture, and manufacturing. They have also been used to support small and medium-sized enterprises (SMEs). One example of the use of LCGs in Nigeria is the InfraCredit program. InfraCredit is a private-sector credit enhancement institution that provides LCGs for infrastructure projects. The program has been successful in attracting private capital to infrastructure projects in Nigeria.

How can local currency guarantees be used to unlock economic prosperity in emerging countries?

Local currency guarantees can be used to unlock economic prosperity in emerging countries in several ways. They can help to:

• Increase access to financing for infrastructure projects: By reducing the risk of exchange rate fluctuations, local currency guarantees can make infrastructure projects more attractive to investors, leading to increased investment in infrastructure.

• Promote economic growth: Infrastructure investment is a key driver of economic growth. By increasing access to financing for infrastructure projects, local currency guarantees can help to promote economic growth in emerging countries.

• Create jobs: Infrastructure projects create jobs, both during construction and in operation. Local currency guarantees can help to create jobs in emerging countries by increasing investment in infrastructure.

• Reduce poverty: Infrastructure investment can help to reduce poverty by providing access to essential services such as transportation, electricity, and water. Local currency guarantees can help to reduce poverty in emerging countries by increasing investment in infrastructure.

• Sustainable development: Sustainable development requires investment in infrastructure that is environmentally and socially responsible. Local currency guarantees can help to promote sustainable development in emerging countries by supporting investment in green infrastructure.

• Reduced cost of borrowing: LCGs can help to reduce the cost of borrowing for businesses and governments in emerging markets. This is because lenders are willing to accept a lower interest rate in exchange for the guarantee from the guarantor.

• Reduced risk of exchange rate fluctuations: LCGs can help to protect lenders from the risk of exchange rate fluctuations. This is because the guarantor is responsible for repaying the loan in local currency, even if the currency depreciates.

There are also several challenges associated with using local currency guarantees, including:

• Cost of guarantees: LCGs can be expensive to provide. This is because the guarantor must be able to cover the potential losses if the borrower defaults.

• Limited availability: LCGs are not always available in all emerging markets. This is because there may not be enough demand for LCGs, or there may not be enough capacity to provide them.

• Risk of moral hazard: LCGs can create a risk of moral hazard, where borrowers may be more likely to default because they know that the guarantor will repay the loan.

The Function of Legal Practitioner in Local Currency Guarantee

A legal practitioner can play a crucial role in ensuring the effectiveness and security of LCG. They contribute through various stages, depending on the nature of the guarantee, the parties involved, and the applicable legal framework. from structuring the agreement to managing potential disputes.

However, here are some general areas where legal personnel can play a crucial role:

1. Drafting and reviewing guarantee agreements:

• Negotiate key terms: Legal personnel can assist in negotiating and drafting the local currency guarantee agreement, ensuring it clearly defines the rights and obligations of each party, including the scope of the guarantee, conditions for payment, and dispute resolution mechanisms.

• Compliance with legal requirements: They can ensure the agreement complies with all relevant laws and regulations governing local currency guarantees, including foreign exchange controls and banking regulations.

• Minimize risks: They can identify and mitigate potential legal risks associated with the guarantee, including issues related to currency fluctuations, default, and fraud.

2. Advising on legal and regulatory issues:

• Foreign currency regulations: Legal personnel can advise on the implications of foreign currency regulations on the guarantee, including any limitations on payments or repatriation of funds.

• Tax implications: They can advise on the tax implications of the guarantee for both the guarantor and the beneficiary, including withholding taxes and potential tax treaties.

• Compliance with international law: They can advise on compliance with relevant international law principles, such as the UNIDROIT Principles for International Commercial Contracts.

3. Conducting legal due diligence:

• Due diligence on the guarantor: Legal personnel can conduct due diligence on the guarantor to assess its financial strength, creditworthiness, and ability to meet its obligations under the guarantee.

• Due diligence on the underlying transaction: They can review the underlying transaction for which the guarantee is being provided to identify any legal risks or potential disputes.

4. Representation in case of disputes:

• Dispute resolution: In the event of a dispute regarding the interpretation or performance of the guarantee agreement, legal personnel can represent the guarantor or the beneficiary in negotiations or legal proceedings.

• Litigation and arbitration: They can handle any litigation or arbitration arising from the guarantee, including representing their client in court and defending their interests.

5. Ongoing monitoring and compliance:

• Monitor legal and regulatory changes: Legal personnel can monitor changes in legal and regulatory requirements that may affect the guarantee and advise on necessary adjustments.

• Ensure compliance with the agreement: They can help ensure that all parties comply with the terms of the guarantee agreement and address any potential issues or breaches.

In addition to the roles mentioned above, legal personnel may also be involved in other aspects of local currency guarantees, such as:

• Structuring the guarantee: Legal personnel can advise on the most appropriate structure for the guarantee, taking into account the specific needs and risks of the transaction.

• Obtaining regulatory approvals: They can assist in obtaining any necessary regulatory approvals for the guarantee, such as approvals from central banks or foreign exchange authorities.

• Liaising with government agencies: They can liaise with government agencies on behalf of the guarantor or the beneficiary regarding the guarantee.

By understanding the legal and regulatory framework surrounding local currency guarantees, legal personnel can play a vital role in ensuring the smooth operation and effectiveness of these arrangements.

Specific Contributions of Legal Personnel:

• Expertise in contract law: They ensure the LCG agreement is legally binding and enforceable.

• Knowledge of financial regulations: They understand the legal framework governing financial transactions, including currency exchange and guarantees.

• Experience in dispute resolution: They can effectively handle legal disputes arising from the LCG.

• Attention to detail and risk management: They identify potential risks and implement safeguards to protect the interests of their clients.

Overall, legal personnel play a critical role in ensuring the success and security of Local Currency Guarantees. Their expertise and experience contribute significantly to mitigating risks, resolving disputes, and protecting the interests of all parties involved.

Conclusion

Local currency guarantees can be a valuable tool for unlocking economic prosperity in emerging countries. They can help to address several challenges faced by these countries, including limited access to financing, infrastructure bottlenecks, and high levels of poverty. In the case of Nigeria, Local Currency Guarantees can be used effectively to support infrastructure projects and promote economic growth.

Comprehensive Analysis of the Nigerian Upstream Petroleum Sector: Provisions and Implications of the Petroleum Industry Act 2021

The Petroleum Industry Act 2021 (PIA) is a landmark piece of legislation that establishes a comprehensive and balanced regulatory framework for the Nigerian upstream petroleum sector. The Act addresses a wide range of issues, including ownership, licensing, transparency, environmental responsibility, and market dynamics. In this article, we will provide an overview of the PIA and discuss its implications for the Nigerian upstream petroleum sector.

Ownership and Acreage Management:

The Petroleum Industry Act 2021 (PIA) provides the foundation for the administration of the Nigerian upstream petroleum sector by establishing the government's ownership of data related to operations. Section 68 of the PIA is pivotal in this regard, granting the Government of the Federation of Nigeria authority over the interpretation of upstream petroleum data. In addition, the PIA designates the Commission as the entity responsible for the administration of acreage for upstream petroleum operations. The Minister is granted the power to reclassify areas based on significant petroleum discoveries, subject to the Commission's recommendations, and may apply fiscal terms applicable to onshore operations in the event of such reclassification.

National Grid System

Section 69 of the Petroleum Industry Act (PIA) introduces a significant organizational tool for the sector—the adoption of a national grid system for acreage management. The requirement for the Commission to collaborate with the Surveyor-General of the Federation underscores the importance of precision and efficiency in the administrative aspects of upstream petroleum operations. The national grid system is expected to simplify processes related to licensing, relinquishments, bid procedures, well locations, and regulatory processes.

The national grid system is a geographic information system (GIS) that will provide a centralized, digital repository of all data related to upstream petroleum operations in Nigeria. The system will be used to manage all aspects of acreage management, from licensing and relinquishments to bid procedures and well locations. The system will also be used to facilitate regulatory compliance and improve the efficiency of upstream petroleum operations.

The national grid system will be a valuable tool for the Commission and the upstream petroleum industry. The system will provide a single, authoritative source of information on all upstream petroleum operations in Nigeria. This will help to improve efficiency and reduce the risk of errors. The system will also make it easier for the Commission to monitor and regulate upstream petroleum operations.

The national grid system is a significant step forward for the upstream petroleum industry in Nigeria. The system will help to improve efficiency, reduce risk, and facilitate regulatory compliance. This will create a more attractive investment climate for the upstream petroleum industry and help to boost economic growth in Nigeria.

Licensing and Leasing

Section 70 lays the groundwork for the issuance of licenses and leases for upstream petroleum operations, limiting eligibility to companies incorporated and validly existing in Nigeria. Sections 71 to 76 then elaborate on the Commission's responsibilities in the licensing and leasing process, emphasizing fairness, transparency, and competitiveness. The Act outlines the non-exclusive rights for exploration operations, specifying key parameters for competitive bidding, and establishes the conditions for the granting of various licenses and leases.

Transparency and Reporting

Sections 83 and 101 introduce a transparency framework within the petroleum sector. Licensees and lessees are required to submit to the Commission annual summaries of royalties, fees, taxes and other payments made to the government. The Act further underscores the importance of environmental responsibility by making information on existing contracts, licenses, amendments or side letters with the Nigerian National Petroleum Corporation (NNPC) non-confidential and subject to publication on the Commission's website.

Model Licenses and Leases

Section 85 of the Act emphasizes the need for standardization by requiring the Commission to develop model licenses and leases. These models are expected to adhere to the fiscal provisions outlined in the Act, ensuring consistency across different types of contracts, such as production sharing, profit sharing, risk service, and concession agreements.

Duration and Renewal

Sections 86 to 89 of the Act provide a clear framework for the duration and renewal of petroleum mining leases. The Act sets the maximum initial duration at 20 years, inclusive of the development period. This ensures that lessees have sufficient time to explore and develop their leases, while also providing the government with a mechanism to ensure that leases are not held for speculative purposes.

Renewal of a lease is contingent upon the lessee fulfilling their obligations under the lease, including making timely payments and complying with Commission-determined terms. This ensures that lessees are held accountable for their actions and that the government can protect the public interest.

The balance between industry sustainability and regulatory oversight is achieved through the Commission's ability to determine the terms of lease renewal. The Commission can consider a variety of factors when making this determination, including the lessee's performance, the state of the market, and the environmental impact of the lease. This ensures that leases are renewed in a way that is fair to both the lessee and the government.

The provisions in Sections 86 to 89 of the Act provide a clear and transparent framework for the duration and renewal of petroleum mining leases. This framework ensures that lessees have sufficient time to explore and develop their leases, while also protecting the public interest.

Infrastructure and Rights of Way

Sections 90 and 91 respond to the critical issue of infrastructure development by providing holders of licenses or leases with the right to obtain rights-of-way. While lessees may pursue infrastructure development, the Commission retains the authority to reserve rights-of-way for essential infrastructure, demonstrating a balanced approach that considers both industry needs and regulatory control.

Conversion and Marginal Fields

Sections 92 to 94 provide a structured approach to the conversion of existing licenses and leases. The Act outlines the process for converting oil prospecting licenses and oil mining leases into the new licensing framework established by the Petroleum Industry Act. It also addresses the treatment of marginal fields, providing a pathway for the conversion of existing producing marginal fields into petroleum mining leases.

Transfer of Interests

Sections 95 and 99 establish rules and processes for the transfer of interests in petroleum licenses or leases. The consent of the Minister and recommendations from the Commission are mandatory for such transfers. The Act also addresses defaults, outlining processes for revocation and imposing penalties on defaulting holders while allowing non-defaulting holders to continue.

Domestic Market Obligations

Sections 109 and 110 delve into the obligations related to crude oil and condensates supply and domestic gas delivery. The Act promotes a market-based approach, emphasizing willing buyer and willing supplier dynamics. It allows for the imposition of domestic crude oil supply obligations, with prices negotiated commercially between lessees and licensees. This approach ensures flexibility while maintaining regulatory oversight.

Environmental Management

Sections 102 to 107 underscore the commitment to environmental responsibility within the petroleum sector. The Act addresses various aspects of environmental management and introduces penalties for gas flaring, aligning with global efforts to mitigate environmental impact.

Market Mechanisms and Flexibility

Section 110 allows lessees flexibility in fulfilling domestic gas delivery obligations through voluntary contracts. The Act accommodates exceptions to penalties, recognizing uncontrollable circumstances such as force majeure or inability of purchasers to accept allocated gas volumes. This approach encourages market-driven mechanisms while maintaining regulatory control.

Regulatory Oversight

The paragraphs above collectively highlight the central role of the Commission in overseeing the various aspects of licensing, environmental compliance, and market dynamics within the upstream petroleum sector. The Act entrusts the Commission with creating guidelines, models, and ensuring compliance with the provisions outlined in the Act, ensuring a robust regulatory framework.

Penalties and Sanctions

The Act incorporates various penalties and sanctions for non-compliance, emphasizing the importance of adhering to regulatory requirements. These measures are designed to enforce accountability within the industry, ensuring that companies adhere to their obligations and responsibilities.

Overall Implications

In conclusion, the Petroleum Industry Act 2021 establishes a comprehensive and balanced regulatory framework for the Nigerian upstream petroleum sector. By addressing ownership, licensing, transparency, environmental responsibility, and market dynamics, the Act seeks to create an environment that fosters sustainable development while ensuring regulatory oversight and accountability. It reflects a careful consideration of industry needs, environmental concerns, and the broader economic context within which the sector operates.

BEYOND STITCHES AND DESIGN: UNDERSTANDING THE LEGAL, IP, AND FUNDING OPPORTUNITIES IN THE BUSINESS OF FASHION IN NIGERIA.

Introduction

Nigeria boasts a dynamic creative market, with a notable presence in the fashion sector. According to Euromonitor, the Nigerian fashion market is valued at an impressive $4.7 billion. To put this into perspective, some of the most prominent French companies primarily operate in the cosmetics and fashion domains. Among them, LVMH stands out with a staggering valuation of $500 billion, followed by L’Oreal at $238.98 billion, Hermes at $212.88 billion, and Dior at $157.69 billion. These figures highlight the substantial economic impact and value within the global fashion landscape, showcasing the significance of the Nigerian fashion market. In recent times, there seems to be a growing demand for Nigerian fashion globally, both by international stars and with demands comes compliance. In this article, we will explore the legal considerations for starting a fashion business in Nigeria, intellectual property protection for fashion entrepreneurs, and funding and investment strategies for fashion entrepreneurs in Nigeria.

Legal Considerations for Starting a Fashion Business in Nigeria

In Nigeria, every individual, firm, or company is required to register with the Corporate Affairs Commission within 28 days after the commencement of business. There are a number of options available for fashion entrepreneurs to register their business in Nigeria, which are:

1. Business name for sole proprietorship and partnership

2. Limited Partnership

3. Limited Liability Partnership

4. Private company limited by shares

5. Public Company

6. Unlimited Company

Registration/incorporation with the Corporate Affairs Commission gives legal status to the business, and most people, including but not limited to customers and investors, have more trust in buying or investing in a duly registered business than one that is not registered. Upon incorporation with the Corporate Affairs Commission (CAC), the business proprietor or company, as the case may be, is required to register with the relevant tax authorities, which are the Federal Inland Revenue Service and the State Inland Revenue Services Offices. The purpose of registration with the tax authorities is for the remittance of taxes such as Personal Income Tax and Value Added Tax.

Intellectual Property Protection for Fashion Entrepreneurs:

Fashion entrepreneurs in Nigeria can explore a number of intellectual property protections for the product of their creativity. Some of which are:

1. Trademarks: 

A trademark is an intellectual property that is used to distinguish the goods or services of one business from those of another. A trademark can take many forms, including a logo, a word or phrase, or slogan (wordmark), the shape of goods, their packaging, and a combination of colours. However, note that whatever marks that are sought to be registered must be distinctive and must not interfere with the registered trademark of another. A registered trademark in respect of goods gives the proprietor of a trademark the exclusive right to the use of the trademark in relation to those goods. What this means for fashion entrepreneurs is that they can register their distinctive name, for instance, the brand name or the name of any fashion item they have produced for sale. For instance, Hermes registered the mark "Birkin," which is the name of their popular bag.

      2. Industrial Design:

Under the Patents and Designs Act, any combination of lines or colours or both, and any three-dimensional form, whether or not associated with colours, is an industrial design if it is intended by the creator to be used as a model or pattern to be multiplied by industrial processes and is not intended solely to obtain a technical result. This implies that in the context of fashion designing, this definition highlights that aspects such as the combination of lines, colours, and three-dimensional forms are considered part of industrial design.  Fashion designers often create patterns, shapes, and colour combinations that may be intended for mass production in the fashion industry. If a designer intends their clothing design to be replicated through industrial processes, the design or sketch could be regarded as an industrial design under this definition. It underscores the intersection of creativity and mass production within the realm of fashion design. It is, however, important to note that registrable designs under this Act must be new and not contrary to public order or morality.

     3. Copyright:

Under the Copyright Act, artistic works enjoy eligibility for copyright protection. This copyright status bestows upon the owner exclusive rights to both undertake and authorise various acts, including the reproduction, communication to the public, and adaptation of the work. For entrepreneurs in the fashion industry, this signifies that their design sketches hold the potential for robust protection under the Copyright Act, securing their creative endeavours.

It is crucial to emphasize that the protection of these designs, logos, and wordmarks pertains specifically to distinctive designs and words. These protections afford owners exclusive and proprietary rights over their creative work, empowering them to enforce these rights and prevent unauthorised use by others. 

Funding and Investment Opportunities for Fashion Entrepreneurs in Nigeria

Funding is a key part of any business, and this includes fashion businesses. There are a few organisations that make funds available for fashion entrepreneurs to support their businesses. Some of which are:

1. Small & Medium Enterprises Development Agency of Nigeria (SMEDAN): The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established by the SMEDAN Act of 2003 to promote the development of the MSME sector of the Nigerian economy. The Agency positions itself as a one-Stop-Shop for MSME Development. Micro Enterprises are included in the clientele of the Agency since they form the bedrock for SMEs. SMEDAN provides funding for medium and small enterprises in Nigeria; however, in addition to CAC registration, the business must be registered with SMEDAN.

2. Tony Elumelu Foundation: Tony Elumelu Foundation is the leading philanthropy empowering a new generation of African entrepreneurs, driving poverty eradication, catalysing job creation across all 54 African countries, and increasing women's economic empowerment. Since the launch of the TEF Entrepreneurship Programme in 2015, the Foundation has trained over 1.5 million young Africans on its digital hub, TEFConnect, and disbursed up to USD$100 million in direct funding to 18,000 African women and men, who have collectively created over 400,000 direct and indirect jobs. Tony Elumelu Foundation offers a successful applicant a grant of $5,000. It is important to note that the application for this grant opens on 1 January and closes on 31st March every year.

3. Others include loans from foreign investors and financial institutions such as the Development Bank of Africa, Bank of Industry, Afrexim Bank, fashion competitions, private investors such as angel investors, family members, and friends.

How can The Firma Advisory help?

The Firma Advisory can help fashion entrepreneurs seeking to establish themselves within this ecosystem to register their businesses, facilitate intellectual property protection, provide legal advisory services and prepare compliance documentation.

THE FIRMA NEWSLETTER 2023

We are excited to reflect on our year of great achievements, year 2023. Explore our comprehensive recap of the successes and milestones we achieved in 2023 in our exclusive end-of-year newsletter.

Click the link above for an in-depth review of the highlights that shaped our organization. Wishing you a prosperous New Year.

NAVIGATING REGULATORY COMPLIANCE: THE CRUCIAL ROLE OF A COMPANY SECRETARY IN NIGERIA

INTRODUCTION: 

In the complex landscape of corporate governance and regulatory compliance in Nigeria, the role of company secretaries is often underestimated or overlooked. However, these professionals play a critical role in ensuring that businesses adhere to the ever-evolving legal and regulatory framework. In this article, we will explore the indispensable role of company secretaries in upholding corporate compliance standards in Nigeria. 

Corporate governance is the system by which companies are directed and controlled.

The recent instances of corporate failure involving Nigerian companies and banks have shed light on pervasive corporate fraud, inadequate internal control mechanisms, regulatory oversights, and a prevailing lack of adherence to established corporate governance standards. It underscores the essential need for every company to establish a robust corporate governance framework, with a particular emphasis on appointing a dedicated individual responsible for overseeing the proper implementation of this structure. This pivotal role is typically filled by a company secretary. 

WHO IS A COMPANY SECRETARY? 

A company secretary is a corporate professional who is responsible for ensuring that a company complies with all applicable laws and regulations. They also play a key role in corporate governance, providing advice and support to the board of directors.  A company secretary is a highly specialised and regulated role in Nigeria, required by law for most companies. It is compulsory for a public company to appoint a secretary, but it is not compulsory for small companies to have a secretary according to Section 330(1) of the CAMA 2020. The company secretary serves as a link between the company's board of directors, management, and regulatory bodies. 

A company secretary is charged with the duty of ensuring the effective administration of a company. He or she also makes sure that the firm complies with all legal and regulatory requirements and that the board of directors' decisions are carried out.

REQUIREMENTS FOR BECOMING A COMPANY SECRETARY 

Normally, a private company's qualification for a company secretary differs from that of a public company. According to Section 332 of the CAMA 2020, in order to qualify to become a secretary in a public company, an individual must be: 

• A member of the Institute of Chartered Secretaries and Administrators

• A legal practitioner within the meaning of the Legal Practitioners Act

• A member of any professional body of accountants established from time to time by an Act of the National Assembly 

• Any person who has held the office of the secretary of a public company for at least three years of the five years immediately preceding his appointment in a public company 

• A body corporate or firm consisting of members each of whom is qualified under (a), (b), or (c).

  It is the duty of the directors to take reasonable steps to ensure that the company secretary has the necessary skills and experience to perform their duties effectively. 

MANDATORY RESPONSIBILITIES OF A COMPANY SECRETARY ACCORDING TO SECTION 335 OF CAMA 2020

• Duties to the board of directors 

- Advise the board on compliance with applicable laws, rules, and regulations. The company secretary advises the board on legal and regulatory compliance, encompassing corporate governance, risk management, internal controls, and adherence to the company's articles and memorandum of association. They ensure the company aligns with evolving laws and industry standards, fostering transparency and accountability. 

- Provide support to the board in its decision-making process 

The secretary supports the board's decision-making by preparing reports, drafting resolutions, and coordinating meetings. Their role streamlines the decision-making process and maintains the official record of board actions. 

- Act as a confidential advisor to the board 

Serving as a confidential advisor, the secretary leverages their deep knowledge of the organisation to offer impartial insights to the board. This role encompasses strategic guidance, adherence to governance documents, and legal compliance. 

• Duties to the company 

  - Maintain the company's statutory registers and other records 

The company secretary is responsible for the maintenance of vital statutory registers and records, which encompass registers of members, directors, shareholders, and loans. These records serve as a legal foundation for the company's operations and decision-making. 

- Filing statutory returns with the CAC 

They oversee the timely and accurate filing of statutory returns with the Corporate Affairs Commission (CAC). These filings encompass the annual return, financial statements, and other required documents, ensuring that the company meets its legal obligations. 

- Overseeing the company's compliance with all applicable laws, rules, and regulations 

The company secretary plays a central role in ensuring adherence to all applicable laws, rules, and regulations. This involves contract review, risk mitigation, and active communication with regulatory authorities, maintaining the company's legal and operational compliance. 

• Duties to shareholders and other stakeholders 

  - Communicate with shareholders and other stakeholders on behalf of the board of directors 

The company secretary serves as the primary liaison between the board of directors, shareholders, and other stakeholders. They are responsible for tasks such as preparing and

disseminating annual reports, addressing inquiries from shareholders, and participating in shareholder meetings. 

- Promote good corporate governance and ethical conduct within the company The secretary plays a key role in fostering good corporate governance and ethical conduct within the company. This includes the development and implementation of governance policies and procedures and the provision of staff training on corporate governance matters. 

The company secretary also plays a vital role in ensuring that meeting notices are sent to the appropriate recipients. This duty involves sending notices to the board of directors, shareholders, and other relevant meeting participants. The notices inform recipients about essential meeting details, including the agenda, date, time, and location, while complying with legal requirements and the company's governing documents. This responsibility helps maintain transparency, compliance, and effective organisational communication. 

CONSEQUENCES OF FAILING TO APPOINT A COMPANY SECRETARY

According to Section 330(4) of CAMA 2020, if a public company fails to appoint a secretary, both the company and its directors will be liable to fines as specified by the commission. In cases of continued contravention, daily penalties will also be imposed. This underscores the seriousness of not having a company secretary as required by CAMA, with potential financial penalties for both the company and its directors for non-compliance. 

In addition to these legal consequences, it is highly recommended that all companies in Nigeria appoint a company secretary to ensure compliance with legal requirements, effective corporate governance, and improved operational efficiency. 

CONCLUSION 

Navigating regulatory compliance is a complicated and ever-changing task, but it is essential for all businesses. A company secretary plays a crucial role in helping businesses comply with their regulatory obligations. By providing expert guidance and support, company secretaries can help businesses avoid costly fines and penalties, protect their reputations, and maintain a competitive advantage. 

By ensuring that businesses adhere to the highest standards of transparency, accountability, and fairness, company secretaries can help to build trust with stakeholders and create a more sustainable and ethical business environment. 

In the increasingly complex and regulated world of today, the role of the company secretary is more important than ever. By working with company secretaries, businesses can meet their regulatory obligations and promote good corporate governance practices. This can help them avoid costly fines and penalties, mitigate reputational risks, and maintain a competitive advantage.

CYBERSECURITY LEGAL TOOLKIT FOR BUSINESSES IN NIGERIA

Cyberattacks are a common and growing threat to businesses, especially ones that use the internet and social media. A report by Sophos reveals that 86% of Nigerian businesses suffer from cybersecurity breaches, mainly in the public cloud. The report also stated that Nigeria recorded 82,000 cases of data breaches in the first quarter of 2023, up from 50,000 recorded in Q4 2022. This is especially worrisome because cyberattacks damage a business’s reputation, finances, and legal standing.

One of the main techniques of cybercriminals is social engineering, which exploits human psychology to trick employees into revealing data or clicking malicious links. Cybercriminals often impersonate trusted contacts or authorities to manipulate their targets through emails, phone calls, or online platforms. Although data shows that many Nigerians lack basic knowledge and skills for online safety, business owners in Nigeria have a legal obligation to secure their critical IT infrastructure from cyberattacks. They must thus train their employees on online safety and protect their customers’ data and assets from cyberattacks, as these could be misused, exposed, or stolen, exposing the business to administrative sanctions and loss of reputation.

This legal obligation is enshrined in Section 24(1) and (2) of the Nigeria Data Protection Act 2023, which provides that: “A data controller and data processor shall use appropriate technical and organisational measures to ensure confidentiality, integrity, and availability of personal data. Notwithstanding anything to the contrary in this Act or any other law, a data controller or data processor owes a duty of care, in respect of data processing, and shall demonstrate accountability, in respect of the principles contained in this Act.”

The data controller is the person or organization that decides what personal data is collected, how it is used, and who it is shared with. They are ultimately responsible for protecting the privacy of the data and ensuring that it is processed in accordance with the law. While the data processor is the person or organization that processes personal data on behalf of the data controller. This could include storing the data, analyzing it, or sending it to other organizations. The data processor is required to follow the instructions of the data controller and to take appropriate security measures to protect the data.

To assist Nigerian businesses in fending off the incessant cyberattacks, the Office of the National Security Adviser (ONSA), the National Information Technology Development Agency (NITDA), and the UK Foreign Commonwealth and Development Office (FCDO) collaborated to develop a cybersecurity toolkit for SMEs which can be assessed for free on: https://gcatoolkit.org/small- business-dapnigeria/. The toolkit is part of the Digital Access Programme (DAP), which aims to promote digital inclusion and economic growth in Nigeria. The toolkit covers various topics such as cyber risk assessment, data protection, phishing, ransomware, password management, device security, network security, cloud security, incident response, and cyber insurance. The toolkit also includes self-assessment tools, checklists, templates, videos, podcasts, webinars, and case studies to help SMEs implement the recommended actions.

In addition to implementing the tips contained in the cybersecurity toolkit as provided above, we have developed a legal toolkit for Nigerian businesses to go with:

1. Understand that complying with the Nigeria Data Protection Act, Cybercrimes (Prohibition, Prevention, etc) Act and sector-specific laws on cybersecurity, is mandatory. Non-compliance, therefore, can expose your business to prosecution or heavy sanctions as high as 2% of the organisation’s annual gross revenue of the preceding year or payment of the sum of 2 million Naira, whichever is greater.

2. To help you comply with the law, hire an in-house data protection officer or consult experienced law firms like The Firma Advisory. Some data controllers (data controllers and processors of major importance) must have a data protection officer, but the Nigerian Data Protection Commission (NDPC) has not designated them yet.

3. Establish and enforce organisational measures of cybersecurity, compliant with your sector's regulation, and if unregulated, the Nigerian Data Protection Act and the Cybercrimes Act.

4. Use the technical data security standards recommended by your sector regulator or the Nigeria Data Protection Act if your sector is unregulated. The law sets minimum or best practices for security, but you can use higher levels of security to prevent cyberattacks. Section 39(1) of the Nigeria Data Protection Act requires that “Data Controller and Data Processor to implement appropriate technical and organisational measures to ensure the security, integrity and confidentiality of Personal Data in its possession.”

5. All businesses are encouraged to file a data audit report, however, if you handle the data of more than 2000 persons in a period of 12 months, you must file a data audit report with the Nigerian Data Protection Commission.

6. In the event of a cyberattack, report the incident to your customer, your sector regulator and the Nigerian Data Protection Commission. The timeline within which to report varies across sectors, but the Nigerian Data Protection Act requires that a breach be reported within 72 hours of you becoming aware of it.

Conclusion:

Cybersecurity is a vital aspect of any business that operates online, especially in Nigeria, where cyberattacks are prevalent and costly. Nigerian businesses should comply with the cybersecurity legal requirements and endeavour to implement and enforce the cybersecurity toolkit as developed under the DAP initiative. The toolkit provides practical guidance and resources for SMEs to improve their cybersecurity awareness, practices, and resilience. By using the toolkit, SMEs can reduce their exposure to cyber risks, protect their customers' data and assets, and increase their trust and reputation in the digital market. October is cybersecurity awareness month and there is a need for Nigerian businesses to build a culture of vigilance to cyber issues. Cybersecurity is not only a technical issue but also a business issue that affects the bottom line and the reputation of any organization. Therefore, Nigerian businesses should take proactive steps to secure their online presence and operations from cyber threats.

NIGERIA'S PETROLEUM INDUSTRY ACT 2021: A CLOSER LOOK AT THE MIDSTREAM AND DOWNSTREAM GAS OPERATION

Nigeria's Petroleum Industry Act 2021 (“PIA 2021”) has brought significant changes to the country's oil and gas sector. Part IV of this landmark legislation focuses on the administration of midstream and downstream gas operations, shedding light on licensing requirements, regulatory powers, and obligations of industry players. Let's delve into the key provisions of this pivotal part, which is overseen by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“NMDPRA”).

LICENSING REQUIREMENTS

Section 125 of the PIA 2021 outlines a comprehensive list of activities related to midstream and downstream gas operations that require licenses from the NMDPRA. These include establishing, constructing, or operating gas processing facilities, bulk transportation of natural gas, operating gas transportation networks, establishing terminals for importing or exporting natural gas, wholesale gas supply, construction or operation of petrochemical or fertiliser plants, retail gas trading, gas distribution, and the establishment of gas distribution networks.

REGULATORY POWERS OF THE AUTHORITY

The NMDPRA is empowered under Section 126 of the PIA 2021 to issue regulations governing midstream and downstream gas operations. These regulations can encompass a wide range of matters, including the establishment of a wholesale natural gas market scheme and other ancillary issues related to the aforementioned activities. This grants the authority the flexibility to adapt to evolving industry dynamics and ensure compliance with regulatory standards.

Rights of Way

Section 127 of the PIA 2021 ensures that licensees and permit holders have the right of way to lay, operate, and maintain pipelines, communication lines, and other essential infrastructure required for midstream and downstream gas operations. This provision facilitates the development and maintenance of crucial energy infrastructure across the country.

Gas Processing Licenses

Section 128 sets out the criteria and process for granting gas processing licenses. These licenses enable the operation of facilities such as gas conditioning plants and liquefied natural gas (LNG) plants. Factors such as economic feasibility and potential demand are considered when evaluating applications, ensuring efficient resource allocation.

Obligations and Conditions for License Holders

License holders, as stipulated in Sections 129 to 133, must adhere to various obligations and conditions. These include commitments to safe and environmentally sustainable operations, compliance with open access requirements, and the prevention of anti-competitive practices. Ensuring fair and transparent practices is at the core of these provisions.

Bulk Gas Storage and Gas Transportation

Sections 132 to 138 of the PIA 2021 deal with bulk gas storage licenses and gas transportation pipeline licenses. These licenses are granted based on economic feasibility and potential demand. License holders must provide access to their infrastructure, operate safely and efficiently, and avoid activities that could hinder competition. The Act also allows for the transformation of gas transportation pipelines into transmission pipelines upon request, promoting flexibility and adaptability.

Wholesale Gas Supply and Retail Gas Trading

Sections 142 to 147 introduce wholesale gas supply licenses and retail gas supply licenses, respectively. Wholesale gas suppliers must ensure reliable supplies, comply with competition regulations, and have specific powers to recover costs and terminate supply due to non-payment. Retail gas suppliers, on the other hand, must provide reliable services, promote competition, and adhere to safety and environmental standards.

Gas Distribution Licenses

Gas distribution licenses, detailed in Sections 148 to 152, enable the establishment, construction, and operation of gas distribution systems within defined local distribution zones. License holders must operate economically, ensure reliable distribution, and connect willing customers. Rights to enter premises for meter reading and cost recovery are also granted.

Domestic Gas Aggregation License

Section 153 introduces the domestic gas aggregation license, emphasizing the importance of preventing anti-competitive behaviour. The holder of this license supports the domestic gas delivery obligation, manages supply and demand, and ensures transparency in dealings with suppliers and customers. An escrow account is established to handle financial transactions.

Gas Pricing and Public Service Obligations

Sections 167 to 172 address gas pricing, public service obligations, and cost recovery mechanisms. The Authority conducts periodic pricing methodology reviews, ensuring transparency, reasonable returns, and non-discrimination in pricing. Public service obligations may be imposed on licensees, covering security of supply, economic development, environmental protection, and health and safety.

Determining Domestic Gas Demand

Under Section 173, the Authority determines the domestic gas demand requirement annually for strategic sectors. Wholesale customers have the right to negotiate supply contracts directly with lessees or suppliers, promoting market flexibility.

Conclusion

In summary, Part IV of Nigeria's Petroleum Industry Act 2021 is a comprehensive framework governing midstream and downstream gas operations. It establishes clear guidelines for licensing, regulatory oversight, and the rights and obligations of industry players. The provisions outlined in this part aim to promote transparency, competition, and the efficient development of Nigeria's gas resources, under the watchful eye of the NMDPRA.

As Nigeria continues to strive for energy security and sustainable economic growth, the effective implementation of these regulations will play a crucial role in shaping the future of its gas industry.

Written By: Chijioke Odu - Energy Law Practice

BRICS: A NEW VISION OF GLOBAL ECONOMIC COOPERATION AND DEVELOPMENT

Introduction

The BRICS (Brazil, Russia, India, China, and South Africa) represent a coalition of five (5) emerging economies collaborating on multifaceted matters including trade, finance, development, and security. Originating from an initial abbreviation "BRIC" coined by economist Jim O'Neill of Goldman Sachs in 2001, this alliance collectively commands substantial global land area, population, and economic output, contributing to 26.7% of the world's surface, 41.5% of its populace, and 26.6% of its nominal GDP as of 2022.

BRICS Institutional Framework

In addition to its foundational goals, the group has instituted several organizations, notably the BRICS Business Council, the Contingent Reserve Arrangement, and the New Development Bank, each geared towards achieving its overarching objectives. These entities which will be considered below aim to facilitate trade, investment, and financial stability within the BRICS nations.

1. BRICS Business Council (the “Council”): Established in 2013, the Council serves as a platform where representatives from diverse industries across the five countries collaborate to harmonize policies pertaining to trade and investment. It operates through five industry-specific working groups encompassing infrastructure, manufacturing, financial services, energy, green economy, and skills development.

2. Contingent Reserve Arrangement: Created in 2015, this arrangement provides financial support to BRICS nations during instances of balance of payments or liquidity challenges. With a value of $100 billion, it complements existing international financial agreements, bolstering global financial safety nets.

3. New Development Bank: Founded in 2015 and popularly known as the BRICS Development Bank, the Bank's primary objective is to finance sustainable development and infrastructure projects not only within the BRICS countries but also in other emerging economies. Its substantial authorized and subscribed capital, equally shared by the five (5) founding members, fuels development initiatives via various financial instruments and local currency lending, thereby reducing reliance on the US Dollar and avoiding exchange rate risk and variations in US interest rates. The NDB also seeks to create a unique position vis-a-vis established global financing organisations like the International Monetary Fund (IMF) by not including political conditions as a criteria for the grant of loans to countries. 

Additionally, BRICS has held annual summits since 2009 and conducts regular meetings to reinforce collaboration on shared interests and challenges encompassing political, economic, social, and environmental domains. This concerted effort aims to amplify the group's influence on global matters.

Initiatives

The BRICS collective strives to establish an equitable and all-inclusive global framework that respects diverse pathways of development, ensuring benefits for all member nations across multiple spheres. This objective is met through reinforcing economic integration, exploring alternatives to the US dollar, promoting the use of national currencies in international trade, and establishing an internal payment system. Moreover, initiatives like BRICS+ and the BRICS-Africa Dialogue Forum expand their engagement with other developing nations and regional organizations.

Challenges

Numerous challenges confront the BRICS in their cooperative endeavours, we have identified a few of them and proposed solutions to address each one:

1. Addressing internal political and economic turmoil through measures such as strengthening democratic institutions, fostering inclusive growth, and improving public welfare systems.

2. Extending membership to other emerging economies by establishing transparent criteria, aligning new members with BRICS values, bolstering communication among existing members, and refining internal decision-making mechanisms.

3. Navigating differing perspectives on United Nations Security Council reform by adopting unified stances through dialogue and negotiations, advocating for representation of emerging economies, and endorsing interim measures.

4. Resolving territorial disputes between China and India by facilitating adherence to existing agreements, reopening diplomatic channels, fostering trust-building initiatives, and concentrating on shared cooperative areas between the two (2) member nations.

5. Balancing interactions with established powers like the US, EU, and Japan through peaceful coexistence, dialogue, cooperation, and support for multilateralism and equitable international norms.

Highlights of the 15th BRICS Annual Summit

The recent BRICS Summit in Johannesburg, South Africa (August 22-24, 2023) underscored collaboration among the five (5) emerging economies. Key outcomes include:

1. Endorsement of the Johannesburg Declaration 2023, thereby reaffirming commitment to international law, multilateralism, and a just global order. The declaration spans trade, finance, development, health, education, climate change, security, and peace. Notably, six new countries—Iran, Saudi Arabia, UAE, Argentina, Egypt, and Ethiopia—will join BRICS from January 1st, 2024, enhancing diversity and influence. The inclusion of these new countries as members will expand BRICS strategic relations within the continent as well as bolster economic integration between new and existing members of the Bloc, which is in line with the mandate of the organization to lessen the dependence of its members on the USD as the dependence of its member state s on the USD a the reserve currency for international trade.

2. President Xi Jinping's emphasis on unity, critiquing unilateral policies and advocating cooperation among BRICS and other developing nations.

3. Inclusion of side events and forums like the BRICS Business Forum, BRICS+ Dialogue, BRICS-Africa Dialogue Forum, and BRICS Outreach Dialogue, facilitating engagement with various stakeholders.

Conclusion

The BRICS effort is a shining example of collaboration and expansion, demonstrating the strength of cooperation in reshaping the world into one that is more inclusive and egalitarian. This partnership approach has a resonance that should be especially felt by African leaders as it offers a compelling framework for addressing the particular issues and opportunities the continent is currently facing.

African leaders should therefore grasp the opportunity by leveraging on the continent’s diversity and resources to shape a better future, using multilateralism to pave an empowered path for global prosperity, justice, and well-being to establish deeper alliances both inside and outside of the continent after being encouraged by the BRICS Summit's openness and expansion. African nations need to collectively raise their voices on the international scene and promote fair trade policies, sustainable development, and poverty eradication by coordinating their efforts with BRICS and other emerging economies. 

EXPLORING THE LEGAL AND REGULATORY LANDSCAPE OF THE NIGERIA'S CONSTRUCTION INDUSTRY: A COMPREHENSIVE ANALYSIS

Overview  

The construction industry plays a crucial role in Nigeria's economic growth and development, encompassing a wide range of activities related to infrastructure, building design, planning, construction, and maintenance. This sector significantly contributes to the country's GDP and job creation for both skilled and unskilled workers. It provides vital infrastructure such as roads, bridges, airports, housing, and public facilities, all of which enhance the overall quality of life. 

In Nigeria, the construction industry involves various stakeholders, including government agencies, private firms, international contractors, architects, engineers, suppliers, and professionals across the construction value chain. Notably, both local and international contractors and firms actively participate in projects, contributing to the development and successful execution of various infrastructure ventures, spanning from transportation and energy to commercial buildings and public facilities. This emphasis on infrastructure development in Nigeria fosters economic activities, attracts investments, and positively impacts social well-being.

This article delves into the legal and regulatory aspects of Nigeria's construction industry, examining the pertinent legal framework, essential stakeholders, regulatory agencies, and standard contract forms that shape the industry's operations.

Legal and Regulatory Framework for the Construction Industry in Nigeria

In Nigeria, the construction industry operates within a robust legal framework and regulatory system designed to ensure safety, quality, and adherence to standards.

Legal considerations governing the construction sector encompass various essential components, including but not limited to:

1. The National Building Code, 2018: Serving as a comprehensive manual governing construction practices, the National Building Code outlines regulations and criteria for planning, construction, renovation, and upkeep of structures. It addresses critical areas such as structural stability, fire prevention, electrical setups, plumbing, and accessibility. The code's objective is to enhance safety precautions for both lives and assets within the nation. This code is embraced by the government as a vital tool to prevent unnecessary loss of life and property during construction ventures. It provides crucial directives for material specifications and quality management, ensuring adherence to baseline criteria. Importantly, it aims to safeguard lives and property and promote public well-being and security across various building types. While nationally applicable, individual states retain the flexibility to customise and tailor the code to their unique circumstances and requirements.

2. Urban and Regional Planning Act, Cap N138, LFN 2004: Governing land use, zoning, and development control in Nigeria, the Urban and Regional Planning Act provides guidelines for land use classifications, building setbacks, building heights, zoning regulations, and other planning considerations. The Act establishes the Development Control Department, responsible for approving and rejecting development permits. It ensures that the grant of a development permit aligns with the conditions attached to a certificate of occupancy or a customary right of occupancy. Additionally, the Development Control Department holds the authority to revoke previously issued development permits, subject to the conditions specified in Section 41 of the Act.

3. Environmental Impact Assessment Act, Cap E12, LFN 2004: The Environmental Impact Assessment Act (EIA) is the key legal framework governing the significant environmental effects of projects in Nigeria. As outlined in Section 2(1) and (2) of the EIA, any project, whether public or private, cannot proceed without considering its environmental impacts beforehand. If a proposed project is expected to have a significant environmental impact in terms of scope, nature, or location, it must undergo an environmental impact assessment as mandated by this Act. This highlights the importance of assessing and mitigating potential environmental damage prior to project commencement. In cases where negative effects are identified, measures to mitigate them must be put in place; otherwise, project approval may be withheld. Moreover, the Act specifies that activities related to projects under the Mandatory Study List category (as provided in the Schedule of the Act) cannot be undertaken by any Federal, State, or Local Government entity, or their affiliated authorities or agencies until action is taken by the designated Agency, currently the National Environmental Standards and Regulations Enforcement Agency (NESREA).

4. National Environmental (Construction Sector) Regulations, 2011: The National Environmental (Construction Sector) Regulations (NECR) issued by NESREA is designed to promote responsible environmental practices and effective waste management within construction, decommissioning, and demolition activities. It aims to safeguard the Nigerian environment from pollution and its adverse consequences. The NECR places a strong emphasis on the Duty of Care principle, which mandates proper handling, transportation, and disposal of waste materials by every facility. This principle is particularly crucial due to the potential harm that construction-related waste can pose to both the environment and human health. Notably, Regulation 14 of the NECR expressly prohibits the use of asbestos at construction sites. The regulations also provide guidelines for the appropriate handling of asbestos-containing materials during demolition or renovation projects. Operators are required to remove asbestos materials from structures prior to any potentially disruptive activity to ensure safety and environmental protection.

Regulatory Agencies and Stakeholders

1. Architect Registration Council of Nigeria (ARCON): This regulatory body oversees the field of architecture within Nigeria. It holds the authority to register and oversee architectural practices in the country. No individual is permitted to create or take complete responsibility for architectural building plans or engage in professional activities unrelated to ship construction or landscape golf links under any name or title incorporating the term "architect," except if they are a Nigerian citizen duly registered with the Council.

2. The Council of Registered Builders of Nigeria (CORBON): CORBON is established as a corporate entity with regulatory authority under Section 2 of the law. Its mandate encompasses the regulation, oversight, and management of building construction, maintenance, and related practices within Nigeria. CORBON is responsible for governing and supervising the entire spectrum of the building profession, ensuring its adherence to established standards and principles.

3. Standards Organisation of Nigeria (SON): SON is tasked with creating standards for products, measurements, materials, processes, and services, and promoting these standards at the national, regional, and international levels. They also certify products, aid in producing high-quality goods and services, enhance measurement accuracy, and disseminate information about standards.

4. NESREA: This agency is tasked with safeguarding and fostering the environment, conserving biodiversity, and promoting sustainable development of Nigeria's natural resources, including environmental technology. The agency is also entrusted with the enforcement of all environmental laws, guidelines, policies, standards, and regulations within the country.

Contract Law and Standard Forms

Within the realm of construction contracts, the significance of having written agreements is underscored by Section 4 of the Statute of Frauds Act, 1677. While the fundamental principles of contracts—namely Offer, Acceptance, Intention to create legal relations, Consideration, and parties' Capacity—serve as guiding beacons for construction contracts, the construction industry employs standardized contract forms, often referred to as "boilerplate contracts." These forms are pre-printed, non-negotiated provisions that streamline the contractual process.

In Nigeria, various prominent types of standard contract forms are utilized, including but not limited to:

• The Fédération Internationale Des Ingénieurs-Conseil (FIDIC) Forms: FIDIC contracts hold the distinction of being the most widely used standardised international construction contracts globally. The FIDIC Red Book serves as the principal and prevalent form for projects where the Employer provides design, following the traditional Design, Bid, and Build approach. Payment is based on the measurement of work performed. Meanwhile, the FIDIC Yellow Book, known as a Plant and Design-Build contract, entails Contractor-led design and typically involves lump sum payment.

• Joint Contract Tribunal (JCT): The JCT Standard Building Contract is intended for extensive or intricate construction projects that require comprehensive contractual provisions. The JCT contract is tailored to shift risk from the client to the contractor. It stipulates provisions for opening up works for inspection and mandates the contractor to uphold workmanship aligned with the contract.

• The Federal Ministry of Works Contract: This contract is a variation of the JCT form.

Two pivotal clauses within construction contracts are the force majeure and dispute resolution clauses. The force majeure clause exonerates liability in the face of unforeseen events, often labelled "acts of god," encompassing natural disasters, wars, and more recently, pandemics. The inclusion of this clause is vital, as it absolves liability for unforeseeable events that could impede construction progress.

The dispute resolution clause outlines the protocol for addressing disputes that may arise. Arbitration is the predominant method for resolving such disputes in construction contracts, governed by the provisions of the Arbitration and Mediation Act, 2023. The parties involved in a dispute have the freedom to choose the methods through which their conflicts can be resolved, as long as they follow measures essential for promoting peaceful coexistence and safeguarding public interests. This clause establishes a structured approach to handling conflicts that may jeopardise the smooth execution of construction projects.

As Nigeria continues its pursuit of robust infrastructure and sustainable development, it is important for stakeholders in the construction sector to uphold safety, quality, and environmental considerations. The construction industry contributes not only to the nation's economic growth but also to its social well-being and future prosperity.

Written By:

Ndidiamaka Ojomah

Associate, Energy Practice Group

EXEMPTION FROM REGULATORY COMPLIANCE FOR SMALL BUSINESSES IN NIGERIA UNDER THE COMPANIES AND ALLIED MATTERS ACT 2020

INTRODUCTION

Small businesses play a crucial role in the economic development of any nation, and Nigeria is no exception. Recognizing their significance, the Nigerian government has implemented measures to support the growth and sustainability of small businesses. One of such initiative is the exemption from regulatory compliance, which provides relief to small businesses by reducing the burden of excessive regulations and fostering a favorable environment for entrepreneurial endeavors.

In this article, we will explore the benefits and implications of exemption from regulatory compliance for small businesses in Nigeria under the Companies and Allied Matters Act (CAMA) 2020. There are provisions for exemptions from certain regulatory compliance requirements for small businesses. The CAMA 2020 introduced various reforms to enhance the ease of doing business and promote entrepreneurship in Nigeria.

One of the key provisions in CAMA 2020 related to exemptions for small businesses is the categorization of companies into different tiers based on their size and activities. The Act introduced the concept of "Small Companies" under Section 394 which are granted certain exemptions to reduce the regulatory burden on them.

Here are the key provisions related to exemptions for small businesses under CAMA 2020:

Small Companies: A company is classified as a "Small Company" if it meets two of the following criteria (S.394 (3)):

1. Its annual turnover is not more than ₦120 million.

2. Its net assets value is not more than ₦60 million.

3. It has not more than 50 employees.

4. Absence of alien participation Section 392 (d)

5. Absence of government participation Section 394 (e)

For Small Companies, the exemptions under CAMA 2020 include;

1. Annual General Meeting (AGM) Section 237 (1): Small Companies are not required to hold an AGM.

2. Audit Requirements Section 402 (1): Small Companies are exempted from the mandatory audit of their financial statements and appointment of auditors.

3. Filing of Annual Returns, Section 419: Small Companies are allowed to file abridged annual returns, which contain less detailed information compared to larger companies.

4. Disclosure Requirements: Small Companies have reduced disclosure requirements for financial statements.

5. Company Secretary Section 330(1): Small Companies are not required to employ a qualified company secretary for the company. Nevertheless, one of the directors is required to have the necessary skills to act as the company secretary.

BENEFITS AND IMPLICATIONS

The provisions outlined above have several benefits for small businesses in Nigeria and their regulatory compliance.

1. Cost savings: Exemption from appointing auditors and conducting annual audits provides significant cost savings for small businesses. This exemption allows them to save on the expenses associated with hiring auditors and conducting comprehensive audits. As a result, small businesses can redirect these financial resources towards other critical areas, such as marketing, research and development, employee training, or investing in new technologies. The ability to allocate resources more efficiently enhances their competitiveness and promotes business growth.

2. Reduction of administrative burdens: In addition to the cost savings, reduced filing requirements alleviate administrative burdens for small businesses. By simplifying the compliance procedures and reducing paperwork, small businesses can save time and effort spent on fulfilling various reporting obligations. This reduction in administrative tasks allows small business owners and employees to focus on core operations and strategic initiatives, ultimately leading to increased productivity and effectiveness.

3. Legal protections and credibility: The simplified compliance requirements encourage small businesses to formalize their operations and register as legal entities. By doing so, they gain access to legal protections that safeguard their assets and intellectual property. This legal framework enhances their credibility with stakeholders, including customers, suppliers, and partners. Being recognized as a registered and legitimate entity increases the trustworthiness of the business, which can lead to improved business opportunities and partnerships. Moreover, legal protections provide small businesses with a recourse mechanism in case of any legal disputes, providing them with a sense of security and confidence.

4. Transparency and trust: Reduced compliance obligations enable small businesses to maintain transparency in their operations. By following streamlined compliance procedures, they can easily track and report their financial transactions, ensuring accountability and preventing fraudulent activities. Transparent operations foster trust and integrity within the business environment, attracting customers who value ethical practices. Additionally, transparent financial reporting can facilitate access to capital and financing options for small businesses, as lenders and investors prefer businesses with clear and reliable financial information. This transparency also fosters trust among stakeholders, leading to stronger relationships and potential business growth.

CONCLUSION

In view of the highlighted exemptions from regulatory compliance provided by the Companies and Allied Matters Act (CAMA) 2020, it is evident that the compliance regimen has been significantly simplified for small businesses. The exemption/non-mandatory requirement from appointing auditors, a secretary, having annual general meetings and reduced filing obligations alleviate administrative burdens and financial pressures on small businesses. These provisions enhance the ease of doing business, promote entrepreneurship, and encourage formalization. It is crucial for small businesses in Nigeria to remain aware of and adhere to all applicable regulations specific to their industry and seek guidance from legal professionals or relevant government agencies to ensure compliance and sustainable growth. It's important to note that while these exemptions exist, companies must still comply with essential requirements such as tax obligations, financial records maintenance, and other legal obligations.

Written By:

Adaeze Uzoagu

Corporate Finance and Energy Practice

PLASTIC POLUTION: UNLEASHING THE POWER OF CHANGE FOR A SUSTAINABLE TOMORROW

INTRODUCTION

Plastic pollution has become a global environmental crisis that demands urgent attention. From its humble beginnings to its widespread use in almost every aspect of our lives, plastic has become an integral part of modern society. However, the convenience and versatility of plastic have come at a great cost to the planet. In this paper, we will explore the history of plastic, its life cycle, the consequences of plastic waste, how plastic enters the world's oceans, the types of plastic and where they are found, stakeholders in plastic pollution, and the pressing need for solutions.

THE HISTORY OF PLASTIC

Plastic was first developed in the 19th century as a substitute for natural materials such as ivory and tortoiseshell. In the 19th century, inventors and scientists experimented with materials such as Parkesine (invented by Alexander Parkes) and celluloid (invented by John Wesley Hyatt), which were early forms of synthetic plastics.

In 1907, Leo Baekeland invented Bakelite, the first fully synthetic plastic, by combining phenol and formaldehyde. Bakelite was heat resistant and electrically non-conductive, making it suitable for electrical and industrial applications. Since then, the production and consumption of plastic have skyrocketed, with new formulations and uses being discovered constantly.

THE LIFE CYCLE OF PLASTIC

The life cycle of plastic begins with the extraction and refinement of fossil fuels, such as oil and natural gas, from which plastic is derived. The production process involves polymerization, where small molecules called monomers are chemically bonded to form long chains called polymers. These polymers are then shaped into various plastic products through processes like extrusion, injection molding, or blow molding. The products are used, often for short periods, and eventually discarded.

CONSEQUENCES OF PLASTIC WASTE

Plastic waste poses numerous detrimental effects on the environment, wildlife, and human health. Improper disposal leads to littering, clogged drainage systems, and soil pollution. Wildlife often mistake plastic debris for food or become entangled in it, leading to injury, suffocation, or starvation. Moreover, when plastic breaks down into microplastics, it infiltrates ecosystems, potentially entering the food chain and posing risks to human health.

PLASTIC ENTERING THE WORLD’S OCEANS

A significant portion of plastic waste ends up in the world's oceans through various pathways. It can be carried by rivers, blown by the wind, or directly dumped into coastal areas. Once in the ocean, plastic debris is subjected to currents, resulting in vast accumulation zones such as the Great Pacific Garbage Patch. Marine animals and seabirds often mistake plastic for prey, leading to fatal consequences.

FACTORS CONTRIBUTING TO PLASTIC POLLUTION 

Plastic pollution is a significant environmental issue, and several factors contribute to its occurrence. Here are some of the key factors:

1. Single-Use Plastics: The widespread use of single-use plastics, such as plastic bags, bottles, straws, and food packaging, is a major contributor to plastic pollution. These items are often discarded after a single use and can end up in the environment, particularly in oceans and waterways.

2. Improper Waste Management: Inadequate waste management systems, including lack of proper collection, recycling infrastructure, and disposal facilities, contribute to plastic pollution. When plastics are not properly managed, they can end up in landfills, litter streets, or be illegally dumped, eventually finding their way into water bodies.

3. Plastic Production and Consumption: The high demand for plastic products, coupled with the ongoing production of virgin plastics from fossil fuels, contributes to the accumulation of plastic waste. The sheer volume of plastic being produced and consumed globally adds to the pollution problem.

4. Lack of Awareness and Education: Insufficient awareness and understanding of the consequences of plastic pollution among individuals, communities, and industries can contribute to irresponsible plastic use and disposal practices. Education and awareness campaigns are crucial in promoting behaviour changes and responsible plastic management.

5. Inadequate Recycling and Circular Economy Practices: Limited recycling rates and inefficient recycling processes result in a significant portion of plastic waste not being recycled properly. Additionally, the lack of a robust circular economy, where plastics are reused, recycled, or repurposed, exacerbates plastic pollution.

6. Illegal Dumping and Littering: Improper disposal practices, including littering and illegal dumping of plastic waste, contribute to plastic pollution. When plastics are not disposed of correctly, they can be carried by wind and water to natural habitats, causing harm to wildlife and ecosystems.

Addressing plastic pollution requires a multi-faceted approach, including the reduction of single-use plastics, improved waste management systems, promotion of recycling and circular economy practices, and raising awareness about the environmental impact of plastic pollution.

STAKEHOLDERS IN PLASTIC POLLUTION

Plastic pollution is a complex and multifaceted issue, and there are several key players and stakeholders involved in its creation, management, and mitigation. Here are some of the most prominent ones:

1. Manufacturers and Producers: Companies that produce and manufacture plastic products play a significant role in plastic pollution. They are responsible for the design, production, and distribution of single-use plastics and other plastic items that often end up as waste.

2. Consumers: Individuals who use plastic products and dispose of them improperly also contribute to plastic pollution. Consumer behaviour, including overconsumption and improper waste disposal, plays a critical role in the accumulation of plastic waste in the environment.

3. Government and Regulatory Bodies: Governments at the national, regional, and local levels have a role in regulating plastic production, use, and waste management. They can implement policies, regulations, and bans on certain types of plastic products, promote recycling initiatives, and set guidelines for waste management.

4. Waste Management Industry: Waste management companies and facilities are responsible for collecting, processing, and disposing of plastic waste. Their effectiveness in managing plastic waste impacts the level of pollution in the environment.

5. Environmental NGOs: Non-governmental organizations (NGOs) focused on environmental conservation and sustainability advocate for reducing plastic pollution. They often conduct research, raise awareness, and work on solutions to mitigate plastic's negative impact on the environment.

6. Plastic Recycling Industry: Recycling companies play a crucial role in reducing plastic pollution by processing and transforming plastic waste into new products. However, challenges like limited recycling infrastructure and the complexity of plastic types make recycling less effective for certain plastics.

7. Retailers and Supermarkets: Retailers and supermarkets play a role in reducing plastic pollution by making choices about the packaging of products they sell. They can promote the use of eco-friendly packaging or encourage the use of reusable bags.

8. Plastic Industry Associations: Trade associations representing the plastic industry may influence policy decisions, advocate for their interests, and promote responsible plastic use and recycling initiatives.

9. Research Institutions: Academia and research institutions conduct studies and provide scientific evidence about the impact of plastic pollution on the environment and human health. They also contribute to the development of alternative materials and waste management strategies.

10. International Organizations: Entities like the United Nations Environment Programme (UNEP) and the World Health Organization (WHO) work on global environmental and health issues, including plastic pollution. They facilitate international cooperation and promote awareness of the problem.

11. Communities and Civil Society: Local communities and grassroots organizations can play a role in raising awareness about plastic pollution, organizing clean-up efforts, and advocating for changes in local policies and practices.

POSSIBLE REMEDIES FOR PLASTIC POLLUTION

1. Reducing Single-Use Plastics: Governments and businesses can implement bans or regulations on single-use plastics, encouraging the use of reusable alternatives and eco-friendly packaging.

2. Improving Waste Management: Investing in efficient waste collection and recycling infrastructure can help prevent plastic from entering the environment. Proper waste disposal and recycling systems are essential.

3. Promoting Recycling and Circular Economy: Encouraging plastic recycling and supporting the development of a circular economy where plastic waste is reused or repurposed into new products can reduce the demand for new plastic production.

4. Educating and Raising Awareness: Public awareness campaigns can educate people about the impact of plastic pollution and promote responsible plastic use and disposal habits.

5. Innovation and Alternative Materials: Supporting research and development of biodegradable or compostable plastics and alternative materials can offer sustainable alternatives to traditional plastics.

6. International Cooperation: Plastic pollution is a global problem that requires cooperation between nations to address it effectively. International agreements and collaborations can help tackle plastic pollution on a larger scale.

7. Community Involvement: Engaging communities in clean-up drives and local initiatives can create a sense of responsibility and ownership in tackling plastic pollution.

8. Corporate Responsibility: Companies can take proactive steps to reduce plastic use in their products and packaging and adopt more sustainable practices throughout their supply chains.

Addressing plastic pollution requires a comprehensive approach involving all stakeholders: governments, businesses, communities, and individuals. By working together, it is possible to mitigate the harmful effects of plastic pollution and move towards a more sustainable future.

RECOMMENDATION TO ADDRESS PLASTIC POLLUTION

1. Implement Plastic Use Reduction Policies: Governments and regulatory bodies should enact and enforce policies to reduce the use of single-use plastics. This could include bans on specific plastic items like plastic bags, straws, and Styrofoam containers. Additionally, incentivizing businesses to adopt sustainable packaging alternatives can help reduce plastic consumption.

2. Invest in Recycling Infrastructure: Governments and private sectors should invest in robust recycling infrastructure to increase the recycling rates of plastic waste. This includes establishing recycling facilities, improving waste collection systems, and creating awareness campaigns to encourage proper recycling practices.

3. Support Research and Development: Funding and supporting research on biodegradable plastics and alternative materials can lead to the development of more eco-friendly options. Governments and industries should collaborate with research institutions to accelerate the adoption of these alternatives.

4. Promote a Circular Economy: Encourage the adoption of a circular economy model, where plastics are reused, recycled, or repurposed, reducing the demand for new plastic production. Businesses should explore ways to design products with recyclability and reusability in mind.

5. Educate and Raise Awareness: Launch public awareness campaigns to educate individuals, businesses, and communities about the consequences of plastic pollution. Provide practical tips for reducing plastic waste and promote responsible plastic disposal practices.

6. Corporate Responsibility: Companies should take responsibility for their plastic footprint by implementing sustainable practices throughout their supply chains. This includes reducing plastic packaging, investing in recycling programs, and prioritizing eco-friendly materials.

7. Encourage Consumer Behavior Change: Encourage consumers to adopt sustainable habits, such as using reusable bags, bottles, and containers, and supporting businesses that prioritize environmentally friendly practices.

8. International Collaboration: Foster international cooperation to tackle plastic pollution, as it is a global issue. Encourage joint initiatives, knowledge sharing, and best practices between countries to create a united front against plastic pollution.

9. Support Non-Governmental Organizations: Extend support to environmental NGOs working towards plastic pollution awareness and mitigation. Collaborate with these organizations to amplify efforts and mobilize resources effectively.

10. Monitor and Measure Progress: Establish a framework for monitoring and evaluating the impact of implemented strategies. Regularly assess progress, identify challenges, and make necessary adjustments to ensure effective outcomes.

11. Incentivize Innovation: Provide incentives, grants, or tax benefits to businesses that develop and adopt sustainable alternatives to plastic, fostering innovation in the sector.

12. Involve Local Communities: Engage local communities in clean-up initiatives, plastic waste reduction programs, and sustainable practices. Empower them to take an active role in protecting their environments.

By implementing these recommendations, we can work together to address plastic pollution and create a more sustainable and environmentally conscious future. It requires collaboration between governments, businesses, communities, and individuals to achieve meaningful and lasting change.

INFRASTRUCTURE FINANCE MODELS IN NIGERIA: A COMPARATIVE ANALYSIS OF TRADITIONAL, MODERN AND EMERGING TRENDS

Overview

Nigeria, widely regarded as Africa's most populous country, is rapidly urbanizing and expanding its infrastructure. Recognizing the importance of strong infrastructure in driving economic growth and attracting foreign investment, the country has established various infrastructure financing models.  This article will look at Nigeria's various infrastructure financing models, including their advantages, disadvantages, and overall impact on the country's development.

Conventional Infrastructure Financing Models

Government Funding

Nigeria has traditionally relied on public funds to finance infrastructure projects such as roads, bridges, airports, and power plants. Government funding was critical in the early stages of Nigeria's infrastructure development; however, progress was hampered by budget constraints and inefficiencies in project implementation. Among the most notable projects are the Lagos-Ibadan Expressway, the Second Niger Bridge, and the Abuja-Kano Road; the Lagos-Kano railway, which is currently under construction; the construction of a new terminal at the Murtala Muhammed International Airport in Lagos; the renovation of the Nnamdi Azikiwe International Airport in Abuja; the construction of new dams and the rehabilitation of existing water treatment plants; the construction of new power plants; and the construction of new power plants

Bilateral and Multilateral Funding

To supplement government funding, Nigeria sought financial assistance from multilateral institutions and bilateral partners. Organizations such as the World Bank, the African Development Bank, and the International Monetary Fund provided loans and grants for infrastructure projects.  These funds bridged the financing gap and brought in technical expertise and international best practices.

New Approaches to Infrastructure Financing in Nigeria

Given constraints such as bureaucratic bottlenecks, population explosions, and a lack of industry and technical expertise within government bodies, which typically limited countries' capacity to provide sufficient infrastructure to meet the ever-expanding needs of their citizens, new solutions were required, leading to the introduction of Infrastructure financing models that aimed to meet the identified needs. Among these are:

Public-Private Partnerships (PPPs)

Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects such as public transportation networks, parks, and convention centres.

The Kaduna Polytechnic Student Hostel Renovation Project was Nigeria's first public-private partnership project. Kaduna Polytechnic and the concessionaire, Mark Point Limited, signed off on the project in August 2020. The project is a Rehabilitate, Operate, and Transfer (ROT) PPP arrangement for a concession period of sixteen (16) years.

Because of their ability to leverage private sector resources, expertise, and efficiency, public-private partnerships (PPPs) have emerged as a preferred infrastructure finance model in Nigeria. PPPs involve the collaboration of the public and private sectors to design, finance, build, and operate infrastructure projects.  This model promotes risk-sharing and innovation while reducing the burden on government finances. Let us consider the common types of PPPs available for infrastructure development in Nigeria:

• Build-Operate-Transfer (BOT): A private entity designs, finances, builds, and operates the infrastructure project for a specified period.  Ownership is eventually reverted to the government.

• Build-Own-Operate (BOO): In a BOO model, the private entity not only constructs and operates the infrastructure but also owns it for the duration of the project.

• Build-Transfer-Operate (BTO): Similar to BOT, the private entity builds the infrastructure and then transfers ownership to the government. However, the private entity is responsible for running the project for a set period before handing over control to the government.

• Rehabilitate-Operate-Transfer (ROT): A private company is hired to repair an existing infrastructure asset, operate it for a set period, and then return it to the public sector at the end of the concession period.

Benefits of PPPs

• Enhanced Efficiency: Private sector involvement brings efficiency to project management, construction, and operation, ensuring timely completion and improved quality.

• Access to Capital: PPPs attract private sector investments, allowing the government to leverage additional funds without straining public finances.

• Risk Sharing: The private sector shares financial and operational risks, alleviating the burden on the government and taxpayers.

Challenges of PPPs

• Complex Legal Framework: Establishing a robust legal and regulatory framework for PPPs requires expertise and time.

• Revenue Generation: Sustaining revenue streams to repay private partners and ensure project viability can be challenging, especially for projects in remote areas.

• Political and Regulatory Risks: Changes in government policies, regulations, or political instability may impact project continuity and profitability.

Blended Finance

Blended finance refers to an approach where public and private funds are combined to support projects that aim to achieve both financial returns and social or environmental benefits. In simple terms, it is a way to blend money from different sources, like governments, philanthropic organizations, and private investors, to support projects that have a positive impact on society or the environment. Blended finance is often used to attract private capital to projects that are not financially viable or attractive to investors alone.

Benefits of Blended Finance

• It can help attract private investment to projects that would otherwise be too risky or unprofitable.

• It can help achieve social and environmental goals.

• It can help to build partnerships between the public, private, and nonprofit sectors.

  Challenges of Blended Finance

• It can be complex and time-consuming to structure blended finance deals.

• There is a lack of standardized terms and definitions for blended finance, which can make it difficult to track and compare deals.

• There is a risk that blended finance could be used to greenwash projects that are not actually sustainable.

Sovereign Wealth Funds (SWFs)

Sovereign Wealth Funds (SWFs) have gained popularity in Nigeria as long-term investment vehicles for infrastructure development. SWFs are state-owned investment funds that manage surplus funds and invest them in various assets, including infrastructure projects. Nigeria's Sovereign Investment Authority (NSIA) manages the country's SWFs, with a specific focus on infrastructure, agriculture, and healthcare investments.

Infrastructure Investment by SWFs

The NSIA's infrastructure investment strategy concentrates on transportation, infrastructure, energy, water, and telecommunications sectors. By partnering with private investors and international financial institutions, the NSIA aims to attract foreign direct investment and boost infrastructure development in Nigeria.

Benefits of SWFs

• Long-Term Stability: SWFs provide a stable source of funding for infrastructure projects, reducing dependency on short-term financing.

• Diversification: Investments in infrastructure diversify the country's revenue streams, reducing reliance on oil and gas revenues.

  Challenges of SWFs

• Low Returns: Infrastructure projects often have long gestation periods and may not yield high immediate returns, requiring patient capital.

• Accountability and Transparency: Ensuring accountability and transparency in SWF operations is crucial to preventing corruption and mismanagement of funds.

Infrastructure Bonds

Infrastructure bonds are another type of financing used in Nigeria to fund infrastructure projects. The government or private entities issue these bonds to raise capital from investors, with the proceeds used to fund infrastructure development. Projects funded by infrastructure bonds in Nigeria include:

• The Lagos-Ibadan Expressway: The Lagos-Ibadan Expressway is a major highway that connects the two largest cities in Nigeria. The expressway was partially funded by a N100 billion infrastructure bond that was issued in 2013.

• The Abuja Light Rail: The Abuja Light Rail is a light rail system that is currently under construction in the capital city of Nigeria. The light rail is being funded by a N250 billion infrastructure bond that was issued in 2018.

• The Mambilla Hydroelectric Power Project: The Mambilla Hydroelectric Power Project is a hydroelectric power project that is currently under construction in the northeastern part of Nigeria. The project is being funded by a N620 billion infrastructure bond that was issued in 2020.

  Benefits of Infrastructure Bonds

• Access to Capital Markets: Infrastructure bonds provide institutional and retail investors with a broader range of options.

• Fixed Income Investment: Infrastructure bonds offer consistent returns to investors, making them an appealing investment option.

  Challenges of Infrastructure Bonds

• Interest Rate Risk: Interest rate fluctuations can affect borrowing costs and the attractiveness of infrastructure bonds.

• Market Perception: Market confidence in the project's viability and the creditworthiness of the issuer usually determine the success of infrastructure bond issuances. 

Commodity-linked Bonds 

Commodity-linked bonds are a type of bond that is linked to the price of a commodity, such as oil or gas. These bonds can be a way to attract investors who are looking for exposure to the infrastructure sector but who are also concerned about the risks of inflation.

Benefits of Commodity-linked Bonds

• Hedging against inflation: Commodity-linked bonds can be used to hedge against inflation, as the price of commodities tends to rise with inflation. This can be beneficial for investors who are concerned about the impact of inflation on their portfolios.

• Diversification: Commodity-linked bonds can help diversify a portfolio, as they offer exposure to a different asset class than stocks or bonds. This can help reduce risk and improve returns.

• Potential for higher returns: If commodity prices rise, investors in commodity-linked bonds can potentially earn higher returns than they would from traditional bonds. However, it is important to note that commodity prices can also fall, which means that there is also the potential for losses.

• Longer maturities: Commodity-linked bonds can have longer maturities than traditional bonds, which can be beneficial for investors who are looking for a steady stream of income.

  Challenges of Commodity-linked Bonds

• Volatility: The price of commodities can be volatile, which means that the value of commodity-linked bonds can also be volatile. This can make them a risky investment for some investors.

• Complexity: Commodity-linked bonds can be complex, and it is important to understand the terms and conditions of the bond before investing.

• Limited liquidity: Commodity-linked bonds may have limited liquidity, which means that it may be difficult to sell them if you need to cash out.

Infrastructure investment funds

Infrastructure investment funds are a type of pooled investment vehicle that invests in infrastructure projects. These funds can be a way for investors to access the infrastructure sector without having to invest in individual projects.

Advantages of Infrastructure Investment Funds

• Stable cash flows: Infrastructure assets tend to generate stable cash flows, which can provide a reliable source of income for investors. This is because infrastructure assets are often essential services that are in high demand, even during economic downturns.

• Low correlation to other asset classes: Infrastructure assets tend to have a low correlation to other asset classes, such as stocks and bonds. This means that they can help reduce the volatility of a portfolio.

• Long-term growth potential: Infrastructure assets have the potential to generate long-term growth as they are essential to the functioning of the economy. This is in contrast to other asset classes, such as stocks, which can be more volatile in the short term.

• Tax benefits: In some cases, infrastructure investments can offer tax benefits, such as depreciation allowances.

  Challenges of Infrastructure Investment Funds

• Illiquidity: Infrastructure assets can be illiquid, meaning that they can be difficult to sell quickly. This is because they are often large and complex assets.

• Regulation: Infrastructure assets are often subject to regulation, which can increase the cost of investing in them.

• Political risk: Infrastructure assets can be subject to political risks, such as changes in government policy.

Emerging Infrastructure Financing Options

In addition to the previously mentioned traditional methods, new infrastructure financing options have emerged to bridge the gap and provide innovative solutions. These options leverage new approaches and advancements in information and communication technology and alternative financing mechanisms to mobilize capital for infrastructure development.

Green Bonds

Green bonds are a type of debt security specifically designed to finance environmentally sustainable projects. Green bonds can be used to finance a wide range of infrastructure projects, including renewable energy projects, energy efficiency projects, and water conservation projects.

The Nigerian government issued the first sovereign green bond in Africa in December 2017 under the aegis of the Ministry of Environment and Finance and the Green Bond Advisory Group (GBAG). The bond raised NGN 10.69 billion (US$28 million) and was used to finance energy efficiency and renewable energy projects.

Since then, there have been a number of other green bonds issued in Nigeria, including corporate green bonds and green project bonds. These bonds have raised a total of over NGN 50 billion (US$120 million) for a variety of green projects.

Advantages of Green Bonds as an Infrastructure Financing Model

• Attracting new sources of capital: Green bonds are attractive investments with potential financial and environmental returns. They can attract new investors to infrastructure projects, reducing financing costs.

• Improving transparency: Green bonds require detailed information about the use of proceeds, enhancing transparency and accountability.

• Benefits investors and the public, ensuring infrastructure projects are financed for the right reasons.

• Promoting sustainable development: Green bonds finance environmentally beneficial projects like renewable energy and water conservation.

• Contributes to sustainable development and reduces the environmental impact of infrastructure projects.

• Enhancing credit rating: Issuing green bonds signals a commitment to sustainability, improving the issuer's credit rating.

• Reducing borrowing costs: Green bonds can lead to lower interest rates as investors value their environmental impact.

• Building a reputation for sustainability: Issuing green bonds establishes a reputation for sustainability, benefiting both issuers and stakeholders

  Challenges of Green Bonds as an Infrastructure Financing Model

• Greenwashing: This is the practice of making misleading or deceptive claims about the environmental benefits of a project. Greenwashing can be a problem with green bonds, as there is no one standard definition of what constitutes a "green" project. This can make it difficult for investors to assess the true environmental impact of a bond.

• Lack of liquidity: The green bond market is still relatively small, which means that there is not as much liquidity as there is in other bond markets. This can make it difficult for investors to buy and sell green bonds, reducing their attractiveness as an investment.

• Cost: There are some additional costs associated with issuing green bonds, such as the cost of third-party verification and reporting. These costs can make green bonds less attractive to some issuers.

• Project risk: Green projects often have longer payback periods and higher risks than traditional infrastructure projects. This can make it more difficult for investors to assess the risk-return profile of green bonds.

Infrastructure-as-a-service (IaaS)

IaaS is a cloud-based model in which infrastructure assets are provisioned and managed as a service. IaaS can be a cost-effective way to access infrastructure capacity, and it can also help reduce the risk of stranded assets.

The IaaS market in Nigeria is on the rise. According to a report by International Data Corporation (IDC), the market can grow at a Compound Annual Growth Rate (CAGR) of 25% over the next five years. This growth is being driven by several factors, including the increasing adoption of cloud computing by businesses in Nigeria, the growing availability of high-speed internet, and the government's support for the cloud computing industry.

Some IaaS providers operating in Nigeria include global brands like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform, as well as Nigerian-owned IaaS providers such as Rack Centre and Cloudflex. These providers offer many services, including virtual machines, storage, networking, and disaster recovery.

Benefits of Infrastructure-as-a-service (IaaS) as an Infrastructure Financing Model

• Cost savings: IaaS can help businesses save money on infrastructure costs by eliminating the need to purchase and maintain their hardware and software. Businesses can simply pay for the resources they need as they need them, which can lead to significant cost savings over time.

• Scalability: IaaS can help businesses scale their infrastructure up or down as needed, which can be beneficial for businesses that experience fluctuations in demand. This can help businesses avoid overprovisioning their infrastructure, which can lead to unnecessary costs.

• Flexibility: IaaS can help businesses be more flexible in their IT deployments. Businesses can easily move their workloads to different cloud providers or regions, which can be beneficial for businesses that need to be able to quickly adapt to changes in their business environment.

• Security: IaaS providers typically offer a high level of security for their infrastructure. This can help businesses reduce their risk of data breaches and other security incidents.

  Challenges of Infrastructure-as-a-service (IaaS) as an Infrastructure Financing Model

• Cost: IaaS can be a more expensive financing model than traditional methods, such as debt financing. This is because IaaS providers charge businesses for the resources they use, even if they are not fully utilized.

• Risk: IaaS providers are responsible for the security and reliability of their infrastructure. However, businesses that use IaaS are still exposed to some risks, such as data breaches and service outages.

• Complexity: IaaS can be a complex financing model to manage. Businesses need to understand the different pricing options available and how to optimize their usage of resources.

• Vendor lock-in: Businesses that use IaaS may become locked into a particular vendor. This can be a problem if the vendor's prices increase or if the vendor's service is not reliable.

Infrastructure debt securitization

Infrastructure debt securitization is the process of pooling together infrastructure debt obligations and issuing securities backed by those obligations. Infrastructure debt securitization can help reduce the cost of infrastructure financing and make it more accessible to investors.

Benefits of Infrastructure debt securitization as an Infrastructure Financing Model

• Increased access to capital: Securitization can help increase the pool of capital available for infrastructure projects by providing investors with a more liquid and diversified investment. This can be especially important for large or complex infrastructure projects that may not be able to obtain financing from traditional sources.

• Lower borrowing costs: Securitization can help lower borrowing costs for infrastructure projects by spreading the risk of default across a wider pool of investors. This can make it easier for projects to obtain financing at lower interest rates.

• More efficient use of capital: Securitization can help make more efficient use of capital by freeing up the originator to fund new projects. This is because the originator does not need to retain the debt obligations on its balance sheet, which can free up capital for other purposes.

• Increased transparency: Securitization can help increase transparency in the infrastructure financing market by providing investors with more information about the underlying assets. This can help reduce the risk of default and make it easier for investors to make informed investment decisions.

  Challenges of Infrastructure debt securitization as an Infrastructure Financing Model

• Large loan sizes and investor attraction: Difficulty pooling enough loans to create attractive securitizations for investors

• The size of infrastructure loans can pose a challenge.  

• Lack of transparency and complexity: Infrastructure projects often lack transparency, making the assessment of associated risks difficult for investors.

• Complexity and opacity hinder investor understanding.

• High illiquidity of infrastructure debt: Investors may face challenges selling their investments due to the high illiquidity of infrastructure debt.

• Lack of market liquidity adds to investment difficulties.

• Varying regulatory environments: Regulatory frameworks for infrastructure debt securitization differ across countries.

• Structural and marketing challenges arise due to regulatory variations.

Infrastructure Crowdfunding

Infrastructure crowdfunding is the process of raising capital for infrastructure projects through small investments from a large number of people. Infrastructure crowdfunding can be a way to tap into a new source of capital for infrastructure projects, and it can also help build public support for those projects. Below are instances of Infrastructure crowdfunding in Nigeria:

• In 2017, a group of Nigerians raised $1.2 million to build a solar-powered water pump in a rural community. The project was funded through the crowdfunding platform, Crowdfund.ng.

• In 2018, a group of Nigerians raised $200,000 to build a community library in Lagos. The project was funded through the crowdfunding platform, Gofundme.

• In 2019, a group of Nigerians raised $500,000 to build a community playground in Abuja. The project was funded through the crowdfunding platform, Fundly.

  Advantages of Infrastructure Crowdfunding

• Reaching a wider audience: Crowdfunding platforms allow project creators to reach a wider audience of potential investors than they would through traditional fundraising methods. This can be especially helpful for projects that are located in rural areas or that are focused on serving a specific community.

• Building community support: Crowdfunding can help build community support for infrastructure projects. When people invest in a project, they are not just investing their money; they are also investing their time and energy. This can help to create a sense of ownership and responsibility among the community members, which can be essential for the success of the project.

• Attracting small investors Infrastructure projects can be expensive, and traditional financing methods may not be available to small investors. Crowdfunding can help attract small investors who may not be able to afford to invest in a project on their own. This can help diversify the pool of investors and reduce the risk for the project creator.

• Building awareness: Crowdfunding can help build awareness about infrastructure projects. When people see a project on a crowdfunding platform, they are learning about the project and the need for it. This can help raise awareness of the project and the importance of infrastructure investment

  Challenges of Infrastructure Crowdfunding

• High cost of infrastructure projects: Infrastructure projects are typically very expensive, and this can make it difficult to raise the necessary funds through crowdfunding.

• Lack of awareness: Many people are not aware of the potential of crowdfunding for infrastructure projects. This can make it difficult to attract investors and generate the necessary support.

• Regulatory hurdles: In some countries, regulatory hurdles need to be overcome to launch an infrastructure crowdfunding campaign. This can be a time-consuming and complex process.

• Risk: Infrastructure projects are often associated with a high degree of risk. This can make investors hesitant to participate in crowdfunding campaigns for these projects.

Conclusion

Nigeria's infrastructure finance models have evolved in response to the challenges posed by traditional financing methods. Infrastructure Bonds, PPPs, and Sovereign Wealth Funds have emerged as effective mechanisms for funding infrastructure projects, while newer models such as Green bonds, Infrastructure-as-a-service (IaaS), Infrastructure debt securitization, and Infrastructure crowdfunding offer environmentally sustainable avenues for achieving Infrastructure development goals. 

While each model has benefits and drawbacks specific to the industry, their combined implementation is critical to meeting Nigeria's growing infrastructure needs and propelling economic development. By embracing innovative financing models, Nigeria can establish a sustainable infrastructure ecosystem that attracts investments and supports long-term growth.

HARNESSING NIGERIA’S CLIMATE SUPERPOWER: EXPLORING THE POTENTIAL OF CARBON SEQUESTRATION AND OFFSET PROJECT.

Introduction

Climate change is a global crisis that demands urgent and collective action. As its impact continues to intensify, countries worldwide are grappling with the need to reduce greenhouse gas emissions and mitigate the effects of a warming planet. In this context, Nigeria, as one of the most populous and ecologically diverse countries in Africa, holds a unique position to contribute significantly to global climate action.

Nigeria, often called the "Giant of Africa," boasts of abundant natural resources and a rich biodiversity encompassing expansive forests, wetlands, grasslands, and coastlines. These diverse ecosystems play a crucial role in the global carbon cycle and have the potential to act as powerful carbon sinks, helping to mitigate the impacts of climate change.

In recent years, there has been growing recognition of the importance of carbon sequestration and offset projects in addressing the climate crisis. Nigeria's vast and diverse landscapes present a wealth of opportunities for carbon sequestration and offset initiatives. Reforestation and afforestation programs, which involve the planting of trees or restoring degraded forests, can enhance carbon sequestration capacity while simultaneously preserving biodiversity and ecosystem services. Likewise, sustainable agricultural practices, such as agroforestry, can contribute to carbon sequestration and offset goals, while improving soil health and promoting food security.

CARBON SEQUESTRATION

Carbon sequestration refers to the process of capturing and storing carbon dioxide, preventing it from entering the atmosphere and contributing to the greenhouse effect. This can be achieved through natural processes or technological advancements.

Natural Carbon Sequestration:

Natural carbon sequestration occurs through biological processes in ecosystems such as forests, wetlands, and oceans. Trees and plants absorb CO2 through photosynthesis, converting it into organic matter and releasing oxygen. Forests, in particular, are highly effective at sequestering carbon due to their large biomass. Wetlands, including marshes and mangroves, also sequester significant amounts of carbon through the accumulation of organic matter in their soils. Oceans act as carbon sinks by absorbing CO2 from the atmosphere and through the formation of calcium carbonate shells by marine organisms.

Technological Carbon Sequestration:

Technological carbon sequestration involves capturing CO2 from industrial processes and power generation and storing it underground or in other long-term storage solutions. Carbon capture and storage (CCS) technologies capture CO2 emissions at the source, compressing and transporting it to storage sites, such as depleted oil and gas fields or deep saline aquifers.

CARBON OFFSET PROJECTS

Carbon offset projects aim to compensate for greenhouse gas emissions by investing in activities that reduce emissions or remove CO2 from the atmosphere elsewhere. These projects help achieve carbon neutrality by balancing emissions with equivalent reductions or removals.

Renewable Energy Projects:

Investing in renewable energy projects, such as wind farms, solar power installations, or hydroelectric plants, can displace fossil fuel-based electricity generation and reduce CO2 emissions. These projects help transition to cleaner energy sources and contribute to sustainable development.

Afforestation and Reforestation:

Afforestation involves establishing forests in areas that previously lacked trees, while reforestation refers to restoring forests in areas that were previously deforested. Both activities enhance carbon sequestration by increasing the total biomass of trees and plants. They also provide additional benefits such as habitat preservation and watershed protection.

Energy Efficiency Initiatives:

Energy efficiency projects focus on reducing energy consumption and emissions in buildings, industries, and transportation. Examples include upgrading insulation, adopting energy-efficient technologies, and promoting public transport systems. These projects help decrease overall energy demand and associated carbon emissions.

Methane Capture and Destruction:

Methane is a potent greenhouse gas with a higher warming potential than CO2. Methane capture and destruction projects involve capturing methane emissions from sources such as landfills, wastewater treatment plants, and agricultural operations. These projects mitigate the release of methane into the atmosphere, reducing its impact on global warming.

Improved Agricultural Practices:

Certain agricultural practices, such as conservation tillage, precision farming, and the use of organic fertilizers, can help reduce greenhouse gas emissions from the sector. These practices enhance soil health, sequester carbon in soils, and minimize the release of other potent greenhouse gasses like nitrous oxide.

SIGNIFICANCE OF CARBON SEQUESTRATION AND OFFSET PROJECTS

Carbon sequestration and offset projects play a crucial role in addressing climate change and achieving global climate goals for several reasons:

• Promoting Sustainable Development: Many carbon sequestrations and offset projects align with sustainable development goals, offering social, economic, and environmental benefits. These projects create employment opportunities, stimulate economic growth, enhance energy security, and improve air and water quality.

• Encouraging Innovation and Technology Deployment: Carbon sequestration and offset projects drive the development and deployment of innovative technologies and practices. This includes advancements in carbon capture and storage, renewable energy systems, and sustainable land management techniques.

• Supporting Biodiversity and Ecosystem Conservation: Many carbon sequestration projects, such as afforestation and restoration initiatives, contribute to the conservation of ecosystems and the protection of biodiversity. They provide habitat for wildlife, enhance ecosystem services, and support the resilience of natural systems.

• Facilitating Climate Finance: Carbon offset projects create financial mechanisms that allow entities to invest in emission reduction activities, providing a market-based approach to climate action. This mobilizes climate finance, both public and private, to support sustainable development and the transition to a low-carbon economy.

NIGERIA’S UNIQUE CLIMATE SUPERPOWER

Nigeria possesses a unique climate superpower due to its geographical location, diverse ecosystems, and potential for climate action. Let's explore the key aspects that make Nigeria a climate superpower in its own right.

Geographical Location:

Nigeria is situated in West Africa, a region that is highly vulnerable to the impacts of climate change. Its location provides Nigeria with the opportunity to showcase leadership and resilience in the face of climate challenges. As a populous and influential country in the region, Nigeria can inspire and drive climate action among its neighbouring countries, promoting a collective response to climate change. Nigeria's geographical location and diverse ecosystems give it a unique advantage in harnessing carbon sequestration and offset projects. The country is home to the second-largest tropical rainforest in the world, the Niger Delta wetlands, and vast grasslands. These ecosystems have significant carbon storage potential and can serve as a crucial buffer against climate change.

Rich Biodiversity and Ecosystems:

Nigeria is blessed with diverse ecosystems, including tropical rainforests, wetlands, savannah grasslands, mangroves, and coastal areas. These ecosystems not only provide habitats for unique and diverse species but also play a vital role in climate regulation and carbon sequestration. Nigeria's rainforests, for example, are the second-largest in the world and are capable of storing substantial amounts of carbon dioxide. Tropical rainforests are known for their ability to absorb and store vast amounts of carbon dioxide. Nigeria's rainforests alone store an estimated 2.6 billion metric tons of carbon. However, deforestation and unsustainable land-use practices have led to the degradation of these forests, releasing large amounts of CO2 into the atmosphere. By implementing forest conservation and restoration initiatives, Nigeria can preserve its forests' carbon storage capacity and enhance their resilience to climate change.

POLICY AND INSTITUTIONAL FRAMEWORK

The Nigerian Climate Change Act 2021

The Climate Change Act establishes a robust framework that effectively addresses Nigeria's climate mitigation and adaptation objectives in the short, medium, and long terms. Of particular significance are the provisions that mandate public and private entities to actively promote a low-carbon economy and sustainable livelihoods. Additionally, the Act places responsibility on the Council and its Secretariat to collaborate closely with pertinent stakeholders, particularly civil society organizations. These measures establish a strong legal basis for potential climate litigation. The Act enables legal action to be taken in cases where the Council fails to regulate offences and penalties resulting from non-compliance with climate obligations imposed by the law.

The Act establishes the National Council on Climate Change (the "Council") which is vested with the powers to develop policies and make decisions on all matters concerning climate change in Nigeria. The Council is required to administer the climate change fund which was established by the CCA, collaborate with the Federal Inland Revenue Service ("FIRS") to develop a mechanism for imposing a carbon tax, and coordinate the implementation of sectoral targets and guidelines for the regulation of Green House Gas ("GHG") emissions and other anthropogenic causes of climate change. The membership of the Council includes members of the various ministries and departments of the Federal Government of Nigeria. The Council will also include a representative of the private sector on climate change, or environment-related matters, as well as representatives of women, youth and persons with disabilities, who will be nominated by the most representative registered national umbrella association.

The Act also provides that the Federal Ministries of Environment and National Planning are saddled with the responsibility of setting the carbon budget (which means the approved quantity of GHG emission that is acceptable over a specified time) and the budgetary period for Nigeria, and periodically revise the carbon budget in line with Nigeria's Nationally Determined Contributions in order to comply with international obligations. The goal of the carbon budget is to keep the average increase in global temperature within 2 degrees Celsius and make a concerted effort to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels.

The National Climate Change Action Plan

The National Policy on Climate Change is a strategic policy response to climate change that aims to foster a low-carbon, high-growth economic development path and build a climate-resilient society through the attainment of set targets. The plan explicitly identifies climate change as one of the major threats to economic development goals and food security. The National Action Plan serves as a basis for establishing national goals, objectives and priorities on climate adaptation and for identifying activities to ensure that the national emissions profile is consistent with the carbon budget goals. It prescribes measures and mechanisms for identifying actions for adaptation and mitigation against climate change; identifying strategic areas of national infrastructure requiring climate proofing; enhancing energy conservation, efficiency and use of renewable energy in industrial, commercial, transport, domestic and other uses; and achieving Nigeria's climate change goals.

The Climate Change Act also provides some components of the Action Plan, some of which include an articulated carbon budget for the five-year cycle and for each of the years in the five-year cycle, details on the level of compliance with international climate commitments, past, current and projected GHG emission profile of GHG emission sectors of the economy, and incentives for private and public entities that achieve GHG emission reduction.

To unlock the full potential of carbon sequestration and offset projects, Nigeria needs a robust policy and institutional framework that supports climate action and promotes sustainability. The government can develop and enforce regulations that incentivize carbon sequestration initiatives, such as tax credits for companies investing in offset projects or financial incentives for farmers adopting sustainable land management practices. It is also crucial to strengthen the institutional capacity for monitoring, reporting, and verification (MRV) of emissions and carbon sequestration. Accurate data and measurement systems are essential for tracking progress, evaluating the effectiveness of projects, and ensuring accountability. 

Let's explore key elements that should be considered in developing Nigeria's policy and institutional framework for carbon sequestration and offset projects.

• Policy Alignment: Nigeria should align its policy framework with international agreements and commitments, such as the Paris Agreement and the Sustainable Development Goals (SDGs). This involves integrating climate change considerations into national development plans, sectoral policies, and strategies. The policy framework should emphasize the importance of carbon sequestration, emissions reduction, and sustainable land and resource management.

• Incentives and Support Mechanisms: The government can establish incentives to encourage participation in carbon sequestration and offset projects. These incentives can include tax credits, grants, subsidies, and favourable loan conditions for individuals, communities, and businesses investing in climate projects. Additionally, providing technical and financial support to project developers, particularly in the early stages, can help overcome barriers and facilitate project implementation.

• National Carbon Market: Establishing an operative national carbon market can create a platform for companies to trade carbon credits, promote emission reductions and finance carbon sequestration projects. Nigeria can develop a cap-and-trade system or implement other market-based mechanisms to set a price on carbon and create incentives for emission reductions. The carbon market should be transparent, regulated, and accessible to various sectors, promoting a market-driven approach to climate action.

• Capacity Building: Strengthening the institutional capacity for carbon sequestration and offset projects is crucial. This includes training and equipping government agencies, research institutions, and private sector entities with the necessary technical expertise, tools, and knowledge to support project development, MRV, and policy implementation. Building local capacity ensures sustainability and facilitates effective management and governance of carbon sequestration initiatives.

• Stakeholder Engagement and Participation: It is essential to engage and involve relevant stakeholders in the development and implementation of the policy framework. This includes representatives from local communities, indigenous groups, civil society organizations, private sector actors, and academia. Stakeholder engagement ensures that the policy framework reflects the diverse perspectives and interests of different actors, fosters social acceptance, and enhances the effectiveness of climate initiatives.

• International Cooperation and Partnerships: Nigeria should explore collaborations with international organizations, research institutions, and private sector entities to leverage expertise, access technology, and mobilize climate finance. Engaging in international partnerships can facilitate knowledge exchange, capacity-building, and the transfer of best practices, enabling Nigeria to implement world-class carbon sequestration and offset projects.

Additionally, Nigeria's wetlands, such as the Niger Delta, serve as important carbon sinks and biodiversity hotspots. They provide crucial ecosystem services, including flood regulation, water purification, and shoreline protection. Preserving and restoring these ecosystems is crucial for mitigating climate change, enhancing resilience, and ensuring the sustainability of Nigeria's natural resources.

CONCLUSION

Carbon sequestration and offset projects in Nigeria have the potential to make significant contributions to climate change mitigation and sustainable development. Nigeria, with its abundant natural resources and significant carbon footprint, can harness its potential as a climate superpower by implementing these projects. These initiatives involve capturing and storing carbon dioxide (CO2) from the atmosphere or offsetting emissions through investment in emission reduction activities elsewhere. One important aspect of carbon sequestration and offset projects is the utilization of natural carbon sinks. Nigeria is blessed with diverse ecosystems, including forests, wetlands, and grasslands, which have the capacity to sequester substantial amounts of carbon. By protecting and restoring these ecosystems, Nigeria can enhance their ability to absorb and store CO2. Initiatives such as sustainable forest management, afforestation, reforestation, and wetland conservation can significantly increase carbon sequestration and preserve biodiversity. Participating in Reducing Emissions from Deforestation and Forest Degradation (REDD+) initiatives is another avenue for Nigeria to explore. REDD+ is an international mechanism that provides financial incentives to developing countries for reducing deforestation and investing in sustainable forest management. Nigeria can engage in projects that measure and monitor forest carbon stocks, implement sustainable land-use practices, and receive financial rewards for verified emission reductions. This can not only sequester carbon but also promote sustainable development and community livelihoods. Carbon capture and storage (CCS) projects offer another promising approach. Nigeria's industrial sectors, including oil and gas, emit significant amounts of CO2. CCS involves capturing CO2 emissions from industrial processes, transporting them, and safely storing them underground in geological formations. Implementing CCS projects can help Nigeria reduce greenhouse gas emissions, particularly from its energy-intensive industries, while also creating opportunities for technological advancements and economic growth. In addition to sequestration projects, Nigeria can engage in offsetting activities by investing in renewable energy projects. By increasing the share of renewable energy in its energy mix, Nigeria can offset emissions from fossil fuel-based energy sources. This can involve developing wind or solar farms, which generate clean energy and contribute to emission reduction targets.

The Firma Advisory and its sister organization, Africa Policy Conversations, offer professional guidance and collaborative partnerships to stakeholders and policymakers, aiming to explore alternative avenues through which Nigeria can effectively leverage its climate strengths and make significant contributions to sustainable development. Kindly send an email to us at hello@thefirmaadvisory.com or africapolicyconversations@gmail.com.

NAVIGATING THE INVESTORS & EXPORTERS FX WINDOW: ESSENTIAL KNOWLEDGE FOR PROFITABLE VENTURES

The Investors' & Exporters' FX Window, also known as the I&E FX Window, is a special trading segment introduced by the Central Bank of Nigeria (CBN) to enhance liquidity and facilitate foreign exchange (FX) transactions for investors, exporters, and end-users. This window aims to deepen the FX market and ensure efficient price discovery based on prevailing market conditions. By providing a dedicated platform for FX trades, the CBN aims to accommodate all FX obligations and promote a competitive marketplace.

Purpose of the I&E Window

The primary goal of the Investors' & Exporters' FX Window is to enhance liquidity in the Nigerian FX market. It serves as a market trading segment for investors, exporters, and end-users, allowing FX trades to be made at exchange rates determined based on prevailing market circumstances. This ensures efficient and effective price discovery in the Nigerian FX market.

Eligible Transactions

The I&E Window allows for various types of transactions, including invisible transactions, bills for collection, and trade-related payment obligations. Invisible transactions cover a wide range of activities such as loan repayments, dividends/income remittances, capital repatriation, consultancy fees, technology transfer agreements, personal home remittances, and other eligible invisible transactions outlined in the CB Foreign Exchange Manual.

Bills for collection, which involve the collection of payments on behalf of customers, are also eligible to access the I&E Window. Additionally, any other payment obligations arising from trade activities can be processed through the I&E Window at the customer's discretion.

It's important to note that for the above permitted invisible transactions and bills for collection, only US dollars sourced from the CBN FX Window (limited to Secondary Market Intervention Sales - SMIS) Wholesale (Spot and Forwards) are eligible for purchase. Any other trade-related payment obligations can be executed through the I&E FX Window at the customer's request.

Participants

The supply of foreign currency to the I&E FX Window comes from various entities, including portfolio investors, exporters, Authorized Dealers (such as banks), and the Central Bank of Nigeria (CBN). Portfolio investors engaged in the Nigerian market who possess foreign currency that they want to exchange for the Naira can participate in this window. Exporters, businesses involved in export activities, can convert their foreign currency earnings into the local currency through the I&E Window.

Authorized Dealers, CBN-licensed entities such as banks, act as intermediaries in FX transactions and facilitate the buying and selling of foreign currency for their customers. The CBN also actively participates in this window as a major provider of liquidity and ensures professional market conduct.

Price Discovery Mechanism

To facilitate price discovery in the Nigerian FX market, participants at the I&E Window currently trade via telephone. However, the CBN encourages corporates to onboard the FMDQ Thomson Reuters FX Trading & Auction Systems to enhance market transparency. FMDQ, as the designated platform, polls buying and selling rates from major participants and provides indicative market depth information, contributing to the price discovery process.

Role of FMDQ

FMDQ Securities Exchange (FMDQ) plays a crucial role in the I&E Window by providing market information and transparency. The organization publishes information on its corporate website and data subscription portal daily, including details about the activities in the I&E FX Window. The Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate, which serves as the reference rate for spot FX operations in various recognized FX trading segments, is also available on the FMDQ platform.

Difference between NAFEX and I&E Window Rates

It's common for people to confuse the NAFEX rates and I&E Window rates. However, there is a significant difference between the two rates and how they are applied. NAFEX rates refer to the Nigerian Autonomous Foreign Exchange Fixing, which is a reference rate used for spot foreign exchange operations in recognized FX trading segments, including the I&E Window, interbank market, and other approved trading segments.

On the other hand, I&E Window rates are the exchange rates at which foreign currency trades are executed within the Investors' & Exporters' FX Window. These rates are determined based on prevailing market circumstances and serve as benchmarks for transactions conducted in the I&E Window.

Conclusion

The Investors' & Exporters' FX Window plays a crucial role in enhancing liquidity, transparency, and price discovery in the Nigerian FX market. By providing a dedicated platform for investors, exporters, and end-users, the CBN ensures efficient and effective price discovery based on prevailing market conditions. The participation of various entities, such as portfolio investors, exporters, and Authorized Dealers, contributes to a competitive marketplace.

Market participants can rely on the I&E FX Window and the supporting infrastructure provided by organizations like FMDQ to engage in FX trading with confidence and efficiency. The I&E Window is a significant step towards deepening the Nigerian FX market and accommodating the FX obligations of investors, exporters, and end-users. Through this window, the CBN aims to foster a vibrant and diverse FX market that supports economic growth and stability in Nigeria.

The Firma Advisory is always available to provide advisory services to investors and exporters on ways to navigate their foreign exchange transactions. Kindly reach out to us at hello@thefirmaadvisory.com for more information.

 

IMPLICATIONS OF THE FUEL SUBSIDY REMOVAL

What is fuel Subsidy?:

Simply put, fuel subsidy, within the Nigerian context, is an attempt by the Nigerian government to cushion the high prices of purchasing PMS (premium motor spirit) and HHK (household kerosene) by its citizens. The government achieves this by selling the oil products to marketers at a rate lower than the market price, which in turn sets a cap on the pump prices they can sell to the public through the government petroleum agencies and regulatory bodies.

What are the positive impacts of the fuel Subsidy?:

1. Affordable and Access to Fuel: The subsidy makes the petroleum products available at affordable prices to the general populace but more especially to the lower-income groups.

2. Poverty alleviation: Subsidies are intended to alleviate the financial burden of low-income earning households, allowing them enough room to reallocate their resources to other needs within the home. 

3. Social Stability: A sharp rise in oil prices within an economy heavily reliant on oil for its revenue can lead to social instability and unrest within the State; as prices of other commodities begin to rise due to the sharp rise in global oil prices.

4. Economic Boost: Subsidised fuel prices can stimulate economic activity within sectors reliant on petroleum like the transportation sector. Lower fuel prices can reduce the cost of transportation expenses, enabling businesses to operate more efficiently.

5. Industrial Development: Subsidies can help support the growth and development of domestic industries, particularly those that depend on affordable energy sources. Lower energy costs incentivize investment and promote the competitiveness of industries, potentially leading to economic diversification and industrialization.

What are the negative impacts of fuel subsidy?;

1. It places an economic burden on the government who have to divest large monies from development to pay for the subsidies.

2. Subsidies distort the market dynamics and discourages local oil refining while encouraging importation, leaving the country open to the volatile fluctuations to international oil prices.

3. The subsidy regime is susceptible to mismanagement, inefficiency, and corruption; the regime has been associated with smuggling and diversion of subsidised petroleum products to other markets outside Nigeria. There have also been reports of ghost marketers and fraudulent claims, which continue to hamper the benefits of the subsidy program.

4. Fuel subsidies have often contributed to fiscal imbalances, leading to strained government resources and leaving the government with no option but to borrow to sustain the program. This has been shown to have long-lasting negative consequences for the nation.

5. Lowered cost of purchasing petroleum products lead to high consumption and inefficient use of energy resources. In an age where we are pursuing green energy transitions, subsidy leads to cushioned or reduced cost of petroleum products, which in turn results in inefficient use and higher consumption of those resources, leading to increased carbon emissions.

SHOULD NIGERIA REMOVE FUEL SUBSIDIES?

Removal of fuel subsidies in Nigeria has been an ongoing conversation for over a decade, and successive governments have continued to find ways to put a complete end to the scourge that comes with the subsidies. The discussion on the removal of subsidies led to the development of the SURE-P (Subsidy Reinvestment and Empowerment Program) program, which was targeted at reinvesting funds recuperated from removing subsidies into other developmental projects.

The group managing director of the NNPC ltd, Mr. Mele Kyari stated in a recent interview with Arise TV that despite the provision of the Petroleum Industry Act (PIA) 2021 terminating subsidy as of February 2022, the federal government continued to intervene with the provision of subsidy up until 2023. He further stated that the federal government has not been able to pay the monies for subsidy for the last couple of months, which means that the NNPC has had to shoulder the responsibility of subsidy and therefore has not been able to make any remittances to the federation account (this is why the fuel prices changed as soon as the new administration announced the end of the subsidy regime).

Removal of the subsidy should usher in a regime of new players in the market space, which should lead to competition; these market forces will eventually force the pump prices of petroleum and other products to become cheaper than they are now. Already, we are beginning to see movements within the industry as new players apply for and receive permits from the NMDPRA.

Going forward, the decision to discontinue fuel subsidies, completely, in Nigeria should be thoroughly reviewed, with a balanced assessment of the benefits and negatives. While the elimination of subsidies can result in fiscal sustainability, efficient resource allocation, economic diversification, improved governance, and environmental sustainability, it can also result in higher living costs, inflationary pressures, social unrest, and disproportionate impacts on vulnerable populations. Policymakers must carefully manage the transition, put mitigation measures in place, and ensure that alternative social safety nets are in place to safeguard society's most vulnerable sectors while we wait for the market to stabilize. Finally, while it may appear like the hardship of the removal of the fuel subsidy is biting hard on every Nigerian, it is a welcome relief that the regime is finally over. It seems like the era of fuel queues due to the unavailability of petroleum is at an end, and we are hopeful that if managed properly, the current hardship will abate soon enough while the expected positive economic impact of the subsidy removal will bring lasting prosperity. In the end, Nigerians should be the real winners in the long run, if the right things are done.

Chijioke Odu ESQ.

Associate

Energy and Corporate Finance Law Practice