Regulatory Conversations – A Public-Private Dialogue Holds On Sept 18, 2018


Thursday, September 13, 2018  11.14AM  / CBI


The Convention on Business Integrity in collaboration with Business Day Newspapers invites you to a forum on ‘Regulatory Conversations’ – public-private sector dialogues aimed at promoting good corporate governance, integrity and sound practices in efforts to grow and diversify Nigeria’s economy.


The first in the series is titled, The Role of Effective Nigerian Regulatory Actions in Attracting and Retaining Foreign Direct Investment. In this first edition the dialogue seeks to identify how to ensure regulatory actions improve FDIs to Nigeria and safeguards the public interest. 



Two major regulatory actions that took place over the last 10 days have prompted deeper reflection over the aim of regulation and the role of the regulator in Nigeria. The first involves action by the Central Bank of Nigeria (CBN) against a number of banks (Standard Chartered, Diamond, Stanbic IBTC and Citibank) fined N5.8bn for facilitating the transfer of US$8.1bn against Certificates of Capital Importation (CCIs) whose validity is now disputed by the CBN. There was also a call on the client of those banks, MTN Nigeria to refund the said sum to the regulator - repatriated dividends to the tune of US$8.1bn and not simply back to its Nigeria operations. This makes an unprecedented sum of N5.8bn in fines and disgorgements of US$8.1bn now demanded by the CBN. The banks have now been debited at source by the CBN. The second action involves a call by the Attorney-General of the Federation against MTN Nigeria on a tax matter demanding the payment of another US$2bn in alleged unpaid back taxes.


According to experts (such as Prof. Julia Black in her seminal article, Regulatory Conversations), sound regulation entails at least three things: standards setting, information gathering and behaviour modification. Regulators use instruments such as codes of conduct, guidelines, circulars and so on to transmit acceptable processes and procedures that must be followed or benchmarks that must be attained in order to comply with stipulations meant to keep industry players from harming the public interest. Standards must be set and monitored otherwise they are meaningless. And to monitor, there has to be information gathering through regular observation, measurement, assessment, reflection and judgement.


Judgements arrived at must be effectively and efficiently applied towards behaviour modification usually through sanctions of various weights and sometimes through rewards as well. It is therefore not unusual for punishments to far outweigh the crime and for rewards to outweigh the good deeds in what is an application of the norm of reciprocity by a regulator on behalf of society. These actions regulate the social system towards balance, cubing excesses in individual entity behaviour and best case, also rehabilitating the erring party through behaviour modification. So, regulation is a very good thing and regulators have a very important role to play in the society.



Proshare Nigeria Pvt. Ltd.




Many factors are considered by investors when evaluating various investment destinations and opportunities, but the starting place is usually a Country Risk assessment. Here many models abound but it is usual for analysts to consider at least six (6) risk classes which are each very detailed and complex:

  1. Economic Risk (tax administration and fiscal policies fall in here),
  2. Transfer Risk (restrictions on capital movements are considered here),
  3. Exchange Rate Risk (adverse movements in rates are considered here),
  4. Location Risk (Transparency International’s Corruption Perception Index will feature here),
  5. Sovereign Risk (Nigeria’s Sovereign Credit rating – 4 notches below investment grade will be considered) and
  6. Political Risk (the way leaders emerge and are replaced, conflicts and their management, relationships amongst the elites etc. all feature here).


The way and manner in which our regulatory actions are conducted therefore affect various risk classes directly which make up country risk.


“There can be no reward without risk and the higher the risk, the higher the returns so many feel investors will continue to come to Nigeria regardless of what happens in Nigeria since it is one of the last few frontiers where ‘super-profits’ can be made by investors” is the general maxim out in the market but this is now being challenged by two key factors:


1. FDIs to Nigeria are on the decline. Capital Importation into Nigeria has shown a decline so far in 2018 over 2017 figures. According to www.tradingeconomics.comEgypt recorded a capital and financial account surplus of 8617.10 USD Million in the first quarter of 2018. Capital Flows in Egypt averaged 1246.25 USD Million from 1993 until 2018, reaching an all-time high of 10682.60 USD Million in the second quarter of 2015 and a record low of -4588.40 USD Million in the first quarter of 2011… [while] Nigeria recorded a capital and financial account deficit of 10292.68 USD Million in the first quarter of 2018. Capital Flows in Nigeria averaged - 113.75 USD Million from 2008 until 2018, reaching an all-time high of 20302.97 USD Million in the third quarter of  2010 and a record low of -15439.95 USD Million in the first quarter of 2010.”


2. Lack of progress on key reforms keeps our Sovereign Rating from improving. Our unimpressive Sovereign Credit Rating is not attractive to the long-term funds needed to grow our economy. Our current rating is no better than what we attained in 2006 when the country was first rated, making us attractive only to short-term, ‘hotmoney’ which speculates on our markets but typically doesn’t stay invested long enough to do our economy much good. Eventually on exit it leaves with a profit that depletes our foreign reserves.


Nigeria has to take deliberate steps to run its regulatory actions in ways that reduce uncertainty, improve integrity and encourage inward investment to the great opportunities the country is known for.




Session Chairman: Dr. Christopher Kolade, CON

Date:     18th September 2018

Time:    10:00 – 13:00

Venue:  The Civic Center, Ozumba Mbadiwe, Victoria Island, Lagos

Target Participants: EFCC, ICPC, NCC, NAICOM, SEC, FIRS, FRC, NSE, CBN, MoJ, CIBN, NESG, Bankers Committee, LCCI, CIIA, AIPM, Association of Chief Compliance Officers of Banks, The Compliance Institute, LBS, BusinessDAY, PremiumTimes, AIT, Channels TV, TVC, The Convention on Business Integrity, ActionAid Nigeria, and some Professional Services Firms.


Proshare Nigeria Pvt. Ltd.


Related News

1.       Corporate Governance As A Strategy For Investment Drive – August ... Aug 11, 2018

2.      Swift Correction Of Honest Mistakes Helps Build Institutional ... Sept 05, 2018

3.      MTN Nigeria, Banks and CBN Action – An Update and Initial - Proshare Sept 01, 2018

4.      MTN Seeks Judicial Intervention, Sues The Attorney General and Central Bank Over $10.1b Demand

5.      Banks, MTN Engage CBN Over $8.1b Fine; Factually Incorrect Premises Highlighted

6.      Leadership Lessons In Alibaba''s Jack Ma Succession Plan Letter - Full Text

7.      CFA Society, IOD partner to launch Business Network on Ethics and ... Jun 25, 2018

8.     UN Global Compact engages Nigerian SMEs on Governance and ... Mar 02, 2018

9.      NSE, CBI Honour Companies and Directors for Passing Corporate ... Feb 23, 2018

10.  34 Companies, 435 Directors Passed the Corporate Governance ... Jan 22, 2018

11.   Inauguration of the Corporate Governance Rating System (“CGRS ... Dec 21, 2017

12.  The Governing Board of the Integrity Organisation appoints ... - Proshare Sept 01, 2016

13.  NSE, CBi Launched Corporate Governance Rating System - Proshare Nov 03, 2014



Related News