A lot of business persons do not know the various regulations and regulatory bodies overseeing the business community in Nigeria. Running a business entails a lot. Asides the growth of your business, if your business does not carry government permit, you are at risk. Big risk. To ensure originality, the government of Nigeria has put in place some regulating practices. To bring order and allow legit businesses to thrive by putting an end to illegal business activities.
However, there are several regulatory bodies, which influence daily human activities in Nigeria. In other words, every worker, consumer, or a businessperson, are to follow certain laws set by the government. The corresponding regulatory bodies controls the implementation and execution of these government laws across organizations and companies in Nigeria.
In this article, you will get useful information about regulatory bodies in Nigeria, their functions and importance.
What are regulatory bodies?
Regulatory bodies are various government agencies by the legislature that implement, execute, and control the enforcement of specific laws.
Role of regulatory bodies
Every business is subject to laws that govern social and economic matters. Including, income taxation, payroll taxation, environmental laws, occupational health and safety laws, real estate law, professional laws, employment laws, criminal laws, and laws that are specifically related to your particular industry, such as insurance or transportation.
Regulatory bodies establish standards for different business sectors, protect the rights of consumers, and business owners.
Furthermore, regulatory bodies serve specific functions in government: they implement laws and they enforce laws. In addition, regulatory bodies provide administrative requirements, restrictions and conditions. Also, they set the adequate standards for specific activities and see to the implementation of these set standards. Regulations are the means by which a regulatory bodies implements laws enacted by the legislature. However, you can think of regulations as formal rules based on laws enacted by a legislature that govern specific social or economic activities.
Some regulatory bodies include:
- Corporate Affairs Commission (CAC)
- Federal Inland Revenue Service (FIRS)
- Standard Organization of Nigeria (SON)
- National Agency for Food and Drug Administration Control (NAFDAC)
- Nigeria Communications Commission (NCC)
- Economic and Financial Crime Commission (EFCC)
- Central Bank of Nigeria (CBN)
- Nigeria Council on Privatization (NCP)
Corporate Affairs Commission
The Corporate Affairs Commission (CAC) is, the first body every business owner must identify with. Corporate Affairs Commission is one of the major regulatory bodies. This is because it is the agency responsible for regulating the formation and operation of companies in Nigeria. In other words, your business cannot be a ‘registered’ business without proper confirmation from CAC. Also, Corporate Affairs Commission is an autonomous body with its head office in Abuja and major branches across Nigeria.
Furthermore, the CAC is in charge of implementing the provisions of the Companies and Allied Matters Act (CAMA). CAMA is the primary law governing companies and businesses in Nigeria. And it deals with the various types of company structures, legitimacy, eligibility, the registration process, and rules for operation. In addition, they oversee various services such as incorporation of companies (whether private or public, or limited by guarantee), registration of business names, and registration of incorporated trustees (NGO’s).
Federal Inland Revenue Service
If you run a business, you know that some taxes are levied on you as a business owner. Sometimes, they are levied on your employees, the products you sell or on the services you offer. Some taxes are levied by the Federal Government while some are levied by the State Government.
However, the Federal Inland Revenue Service is one of the regulatory bodies. It responsible for assessing, collecting and accounting for taxes and other revenues accruing to the Federal Government. The body enforces tax laws and ensures tax compliance by the citizenry. Also, it is responsible for giving penalties and sanctions for non-compliance by individuals and businesses. As a business person, you are to identify with the Federal to make sure you pay your taxes when due to avoid sanctions.
The Federal Inland Revenue Service regulates two important taxes. They are the Value Added Tax (VAT) and Companies Income Tax.
The Value Added Tax is a consumption tax payable on the goods and services consumed by any person, be it government agencies, organizations or individuals. The target of value added tax is based on the consumption of goods and services. Except in a case where an item is specifically exempted by law (such as it is for pharmaceutical products, basic food items, etc.), such item is subject to the tax.
The standard rate of tax is currently 5% of invoice value of goods and services. Also, the Value Added Tax system in Nigeria is administered by the Federal Inland Revenue Service and all existing manufacturers, distributors, importers and suppliers of goods and services are required to register for VAT.
The VAT payer is to obtain and complete Value Added Tax registration form and return it, along with required documents, to the nearest FIRS Tax Office. A permanent VAT registration number is then issued to the taxpayer.
Companies Income Tax is a tax imposed on the profits of Nigerian companies on a preceding year basis. The standard rate is 30%. As a company owner, you are under an obligation to pay this tax on an annual basis.
Respective states tax offices like the Lagos State Inland Revenue Services (LIRS) is responsible for personal income taxes such as the Pay As You Earn (PAYE) tax, which in turn is deducted from salaries. Also, this income tax is applicable to both company owners and workers.
Standard Organization of Nigeria (SON)
The Standards Organization of Nigeria (SON) is one of the regulatory bodies and the apex body in charge of standardization in Nigeria. Every product made or imported into Nigeria must have the SON permit to prove authenticity and product quality. To make things simple, standardization is the process of making things conform to a standard or meet stipulated requirements to prove quality. Through standardization, technical standards for products are being developed and implemented based on the agreement of different groups or entities that include governments, standard organizations, interest groups and users.
Furthermore, the SON’s main responsibility is to make sure that products that undergo manufacturing locally in Nigeria have the required level of satisfaction desired by consumers. They achieve this by making sure that companies and business owners comply with the various policies of the government on standardization. Also, they check products for conformity. In addition, the Standard Organization of Nigeria ensures that imported goods meet the minimum requirements of industry standards in Nigeria, or other approved and domesticated international standards. Their major aim is to keep improving and enhancing the lives of Nigerians through quality standardization and assurance.
Therefore, if you are into manufacturing and importation of unrecognized goods, you should first seek to register your products with them and get proper permit to avoid unnecessary harassments.
National Agency for Food and Drug (NAFDAC)
As one of the regulatory bodies in Nigeria, NAFDAC is in charge of safeguarding public health. This body sees to the control and maintenance of sale, manufacturing, distribution, exportation, advertisement, importation and use of chemicals, packaged water, medical devices, cosmetics, drugs and food related products in Nigeria.
After looking out for the expiry date of a product, the next thing to check is the NAFDAC number. As a business person, do not sell, distribute or market a product without a NAFDAC number inscribed on it. As the major objective of NAFDAC is to safeguard the health of Nigerians, their major function is to ensure proper investigation of products. Also, they do this to ensure only the right quality food and drugs, and other regulated products undergo production, advertisement, importation, distribution, sales and usage in Nigeria.
You should ensure that your regulated goods or products have a NAFDAC number, that depicts quality and credibility.
Nigeria Communications Commission (NCC)
Nigeria Communications Commission is one of the regulatory bodies that oversees businesses in the telecommunications sector in Nigeria. It is being weighed with the task of assuring the availability of qualitative and economical telecommunication services across the country. Also, they ensure an enabling and conducive environment for competition among operators in the telecommunications industry. If you are running a business in the telecommunications sector, you must have a license issued by the Nigeria Communications Commission to operate and be regularly checked. For example, MTN bears a fine of N330 billion for failing to disconnect improperly registered SIM cards. That is one of the jobs of NCC.
Economic and Financial Crime Commission (EFCC)
Amongst other regulatory bodies, EFCC is concerned with the investigation of issues involving money fraud, money laundering and any other form of financial Crime. The Economic and Financial Crime Commission in a regulatory body in Nigeria responsible for the influence of economic and financial crimes like Advance Fee Fraud (419), money laundering, etc. Many illegal businesses have had severe negative consequences on Nigeria like decreased Foreign Direct Investments in the country and tainting the national image.
Furthermore, as a businessperson, you should be fully aware of this regulatory body and hence, mind the kind of investments you make. Always research about the nature of some businesses before you opt in for partnership or investments to avoid selling your business out to a potential fraudster. Also, to avoid the troubles from EFCC, have a legal backup for your business and every financial transaction related to your business. Note that, EFCC has high-level support from the Presidency, the Legislature and key security agencies in Nigeria. Hence, you need to beware of your business activities.
Central Bank of Nigeria (CBN)
As the name implies, Central Bank of Nigeria is one of the major regulatory bodies in Nigeria that oversees every financial transaction within the country. CBN has the mandate derived from the 1958 Act of Parliament, as amended in 1991, 1993, 1997, 1998, 1999, and 2007. The Central Bank of Nigeria Act of 2007 of the Federal Republic of Nigeria entrusts the Bank with the overall management, control and administration of the monetary and financial sector policies of the Federal Government.
The objects of the Central Bank of Nigeria includes:
- Ensuring monetary and price stability.
- Issuance of legal tender currency in Nigeria.
- Maintaining external reserves to safeguard the international value of the legal tender currency.
- Promoting a sound financial system in Nigeria.
- Consequently, the Bank is also charged with the responsibility of administering the Banks and Other Financial Institutions (BOFI) Act (1991) as amended. CBN has the sole aim of enabling high standards of banking practice.
- Maintaining financial stability through its surveillance activities, as well as the promotion of an effective payment system.
In addition to its core functions, the Central Bank of Nigeria has over the years performed some major developmental functions with focus on all the key sectors of the Nigerian economy (financial, agricultural and industrial sectors). Overall, the bank carries out these mandates through its various departments.
National Council on Privatization (NCP)
The National Council on Privatization (NCP) is under the sponsorship of the Nigerian government. It is to determine the political, economic and social objectives of the privatization and commercialization of Nigeria’s public enterprises. Major roads in Nigeria have billboards with NCP as their sponsors.
The Functions of the National Council on Privatization (NCP) include:
- Approving various policies on privatization and commercialization.
- Creation of guidelines and criteria for the valuation of public enterprises for privatization and choice of strategic investors.
- Approving public enterprises to privatized or commercialized.
- To improve the prices of shares or assets of the public enterprises that are offered for sale.
- Ensuring the appointment of privatization advisors and consultants.
- To approve the budget of the Council.
- Note: The Bureau of Public Enterprises is the secretariat of the National Council on Privatization.
Other regulatory bodies that you need to know include:
- The National Pension Commission (PENCOM) – responsible for regulating and administering pension matters in Nigeria.
- Consumer Protection Council (CPC). This is for consumer complaints, ensure that the best practices are maintained by service providers.
- Also, the Securities & Exchange Commission (SEC) for the regulation of securities issued to the Nigerian Public.
- Trademarks, Patent & Design Registry responsible for registering, administering and regulating intellectual property rights relating to trademarks, patent and industrial design;
- Another NCC, but this time, it is the Nigerian Copyright Commission. It is responsible for intellectual property rights but as it relates to copyright.
- The Nigerian Investment Promotion Council (NIPC) which is a one-stop investment center that promotes and coordinates foreign investments in Nigeria.
In summary, there are quite a number of other agencies that regulate different matters in Nigeria. As a business owner, it is wise for you to know which applies to your business and comply with the necessary regulations.
Also read: Registering-your-business-name