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  • How to File Your Personal Income Tax in Nigeria: A Step-by-Step Compliance Guide

    How to File Your Personal Income Tax in Nigeria: A Step-by-Step Compliance Guide

    Filing your Personal Income Tax (PIT) in Nigeria is a legal requirement that ensures individuals contribute their fair share to national development while avoiding penalties for non-compliance. Whether you’re a salaried employee, self-employed, or earning from multiple sources, understanding the filing process is crucial.

    With the annual PIT filing deadline set for March 31st, this guide will walk you through everything you need to know—who needs to file, how to do it, and where to find the right resources for compliance.

    Who Needs to Pay Personal Income Tax in Nigeria?

    In Nigeria, every taxable individual is required to file their Personal Income Tax returns, but not everyone needs to make additional tax payments. Here’s how it works:

    1. Employees under PAYE: If you work for an employer, your taxes are likely already deducted monthly through the Pay-As-You-Earn (PAYE) system and remitted on your behalf. However, you’re still required to file your annual tax returns to confirm compliance. You won’t need to make additional payments unless you have other income sources.

      Calculate your PAYE with our free payroll calculator

    2. Self-employed individuals, freelancers, and business owners: Since you don’t have an employer deducting taxes for you, you must calculate and pay your taxes yourself before filing.
    3. Individuals with additional income streams: If you earn from side businesses, rental properties, investments, or freelance work, you must declare all income sources and pay any outstanding tax obligations.

    Step-by-Step Guide to Filing Your Personal Income Tax in Nigeria

    Step 1: Determine Your Tax Residency

    • Resident taxpayers: If you live and earn in Nigeria for at least 183 days in a year, you’re required to pay PIT to the tax authority of your state of residence.
    • Non-resident taxpayers: If you earn income from Nigeria but reside elsewhere, you may still have tax obligations.

    Read more: Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

    Step 2: Calculate Your Taxable Income

    Your taxable income includes:

    • Salaries, wages, bonuses, and allowances
    • Profits from business or freelancing
    • Rental income from properties
    • Investment returns (dividends, interest, etc.)

    Tax Rates for Individuals in Nigeria

    Personal Income Tax is calculated on a graduated scale as follows:

    Annual Income (₦)

    Tax Rate (%)

    First ₦300,000

    7%

    Next ₦300,000

    11%

    Next ₦500,000

    15%

    Next ₦500,000

    19%

    Next ₦1,600,000

    21%

    Above ₦3,200,000

    24%

     Minimum wage:

    Individuals with gross income less than or equal to the minimum wage (currently ₦70,000 on a monthly basis), are not required to comply with personal income tax remittance. However, such individuals are not exempted from PIT filing.

    Step 3: Pay Your Taxes

    Once your tax liability is calculated, payments can be made via:

    • Online payment portals of state tax agencies
    • Bank deposits (using state IRS payment codes)
    • Remita or state-specific revenue collection systems

    Step 4: Prepare and File Your Annual Tax Return

    By law, individuals must file their annual tax returns on or before March 31st every year. To do this:

    Gather necessary documents:

    • Payslips or financial statements
    • Bank statements showing business income
    • Rental agreements (if applicable)
    • Investment statements

    File your PIT returns through:

    • E-filing platforms of state IRS
    • Physical submission at the State IRS office

    Download the Taxpayer Self-Assessment Form (Form A) from your state’s IRS website and complete the form with details of your income, allowable deductions, and reliefs.

    Step 5: Obtain Your Tax Clearance Certificate (TCC)

    A Tax Clearance Certificate (TCC) is proof that you’ve paid your taxes. It is required for:

    • Business registration and government contracts
    • Visa applications
    • Loan approvals
    • Property transactions

    Read more: Technology as the Key to Combating Payroll Fraud and Financial Leakages in Nigeria’s Public Sector

    Penalties for Late or Non-Filing

    Failure to file your annual PIT returns by March 31st may result in:

    • ₦50,000 penalty for individuals
    • Additional fines and legal actions for tax evasion

    State-Specific PIT Filing Platforms

    Each Nigerian state has its own Internal Revenue Service (IRS) that handles Personal Income Tax. Below are the official IRS websites for all 36 states and the FCT where you can file your taxes:

    State

    IRS Website

    Abia State

    abiairs.gov.ng

    Adamawa State

    adamawatax.ng

    Akwa Ibom State

    akwaibomirs.com

    Anambra State

    airsan.gov.ng

    Bauchi State

    birs.bu.gov.ng

    Bayelsa State

    bayelsatax.gov.ng

    Benue State

    birs.benuestate.gov.ng

    Borno State

    birs.borno.gov.ng

    Cross River State

    crirs.crossriverstate.gov.ng

    Delta State

    deltabirs.gov.ng

    Ebonyi State

    ebirs.gov.ng

    Edo State

    edo-birs.org

    Ekiti State

    ekitistaterevenue.com

    Enugu State

    ensbirs.org

    Gombe State

    girs.gov.ng

    Imo State

    imostateirs.gov.ng

    Kaduna State

    kdsgirs.gov.ng

    Kano State

    kanobirs.com

    Lagos State

    etax.lirs.net

    Ogun State

    ogunstateirs.com

    Rivers State

    riversbirs.gov.ng

    FCT (Abuja)

    fctirs.gov.ng

    Check your state’s IRS website for online filing and payment options

    Conclusion

    Filing your Personal Income Tax (PIT) is not just a legal obligation—it’s also crucial for accessing financial and business benefits. By following this step-by-step guide, you can stay compliant, avoid penalties, and contribute to national development.

    Don’t wait until the last minute! File your PIT before March 31st to stay compliant. Bookmark this guide & share it with others to help them stay tax-compliant in Nigeria!

  • National Repository Portal and Financial Reporting Compliance: A Guide for Nigerian PIEs

    National Repository Portal and Financial Reporting Compliance: A Guide for Nigerian PIEs

    A Landmark Shift in Financial Reporting for Public Interest Entities

    The Financial Reporting Council of Nigeria (FRC) has introduced a transformative change in financial reporting with the National Repository Portal (NRP). This initiative, backed by Section 8(1d) of the Financial Reporting Council of Nigeria Act 2011 (as amended), mandates that:

    “The Council shall receive copies of annual reports and financial statements of Public Interest Entities (PIEs) from preparers within 60 days of the approval of the Board of the Public Interest Entities.”

    Starting January 2025, all PIEs must file their General-Purpose Financial Statements (GPFS) electronically via the NRP. This move aims to eliminate fragmented financial reporting, strengthen data integrity, and improve regulatory oversight.

    Beyond compliance, this regulatory shift allows PIEs to enhance their financial governance, streamline reporting, and leverage technology for strategic advantage.

    Read more: Financial Reporting in Nigeria: The Critical Role of ICFR

    Key Implications for PIEs and Decision-Makers

    The introduction of the NRP is more than just a compliance shift—it represents a paradigm change in financial governance and digital transformation for PIEs. Here’s what decision-makers need to consider:

    • Stronger Compliance & Regulatory Efficiency – With mandatory digital submission, organizations must ensure their financial statements meet FRC’s standardized format and deadlines to avoid penalties.
    • Enhanced Data Integrity & Transparency – A centralized, digital system reduces errors, ensuring greater accuracy, auditability, and trust in financial reporting. This benefits regulators, investors, and financial institutions.
    • Faster, Streamlined Reporting Processes—Automating submissions will reduce administrative burdens, allowing finance teams to focus on strategic insights rather than manual filing.
    • Strategic Digital Transformation – CFOs and compliance officers must evaluate their current financial systems and integrate AI-driven reporting, automation, and cloud-based solutions for seamless NRP compliance.
    • Competitive Advantage & Investor Confidence – Companies that embrace digital financial governance will stand out in an era where transparency, accountability, and data-driven decision-making are crucial to investor trust.

    Read More: Why Nigeria Is Not Classified as a Hyperinflationary Economy

    Turning Compliance into a Business Advantage

    The introduction of the NRP offers a unique opportunity for PIEs to rethink their financial reporting strategies and leverage digital tools for greater efficiency, accuracy, and transparency. Here’s how:

    • Strengthen Financial Integrity and Investor Confidence
      A centralized, standardized, and digitized financial reporting system enhances trust among investors, regulators, and financial institutions. By ensuring real-time compliance and transparency, PIEs can improve their market reputation and stakeholder confidence.
    • Unlock Data-Driven Decision Making
      The digital submission of financial statements allows businesses to:
      ✔ Leverage AI-driven insights for risk assessment and financial forecasting.
      ✔ Identify financial trends and anomalies with real-time data analytics.
      ✔Improve internal financial planning by accessing structured financial data.
    • Automate Compliance & Risk Management
      With automated submission requirements, PIEs can:
      ✔ Reduce the risk of errors and regulatory penalties.
      ✔ Integrate AI-powered compliance monitoring for real-time tracking.
      ✔ Streamline financial reporting workflows, reducing administrative costs.
    • Improve Operational Efficiency and Cost Savings
      By transitioning from manual to digital submissions, organizations can:
      ✔ Eliminate redundant reporting and free up internal resources.
      ✔ Enhance collaboration between finance teams and regulators.
      ✔ Ensure quick and secure document retrieval when needed.

    Read more: Risk-Based Auditing for Nigerian Non-Profit Organisations

    How PIEs Should Prepare for the NRP Transition

    The FRC has made it clear that:

    “This platform will serve as the official national repository and digital submission hub for financial statements, with the primary objective of creating an efficient, secure, and scalable system that streamlines the submission, management, and retrieval of financial statements for regulatory purposes.”

    To align with this vision, PIEs should take the following strategic steps:

    Assess Current Financial Reporting Processes

    • Conduct an internal audit of existing reporting systems.
    • Identify gaps in data accuracy, compliance, and submission workflows.

    Invest in Digital Reporting and Automation

    • Implement AI-driven financial reporting solutions for accurate and real-time submissions.
    • Adopt cloud-based data management for seamless integration with the NRP.

    Enhance Internal Controls and Audit Readiness

    • Strengthen internal compliance mechanisms to prevent errors.
    • Establish a dedicated compliance team to monitor submissions and updates.

    Seek Expert Advisory and Digital Transformation Support

    • Work with regulatory specialists and digital transformation experts to ensure smooth adoption.
    • Develop a customized compliance strategy tailored to business operations.

    Read more: Technology as the Key to Combating Payroll Fraud and Financial Leakages in Nigeria’s Public Sector

    The Future of Financial Reporting in Nigeria

    The NRP isn’t just about regulatory compliance—it signals the start of a broader digital transformation in financial governance. Organizations that embrace this change strategically will gain a competitive edge through:

    • Stronger financial controls
    • Enhanced regulatory compliance
    • Optimized operational efficiency

    At Stransact, we help businesses navigate digital compliance, develop modern financial reporting solutions, and ensure a seamless transition to the NRP.

    📩 Let’s discuss how your organization can turn compliance into a competitive advantage. Contact us today!

     

  • Expatriate Monthly Returns (EMR) in Nigeria: Key Compliance Rules for Employers

    Expatriate Monthly Returns (EMR) in Nigeria: Key Compliance Rules for Employers

    Expatriate employment in Nigeria is governed by strict regulatory requirements, including the mandatory submission of Expatriate Monthly Returns (EMR). Companies employing foreign nationals must ensure compliance with the guidelines set by the Federal Ministry of Interior (FMI) and the Nigeria Immigration Service (NIS) to avoid legal, financial, and tax-related penalties.

    This article provides an updated guide on managing EMR effectively, incorporating the latest provisions from the Federal Ministry of Interior’s official handbook and clarifying the financial and legal implications of non-compliance.

    What is Expatriate Monthly Returns (EMR)?

    EMR is a mandatory monthly report that companies must submit to the NIS, detailing the utilization of their approved Expatriate Quota (EQ). It also includes records of expatriates visiting Nigeria, under the Combined Expatriate Residence Permit and Aliens Card (CERPAC). The EMR must contain information such as:

    • Personal details of expatriates (name, nationality, passport details)
    • Date of arrival and departure
    • Residential address in Nigeria
    • Work permit or visa details

    Companies must file the report at the NIS Headquarters in Abuja, Zonal Offices, and State Command Immigration offices, ensuring all relevant sections receive the documentation.

     

    Learn More About Visa Requirements: Navigating Business Immigration in Nigeria

     

    Consequences of Non-Compliance with EMR

    Failure to submit the EMR as required can expose companies to severe fines, tax liabilities, and business disruptions. Based on the latest regulations:

    1. Financial Penalties for Non-Compliance:
      The Nigeria Immigration Act 2015 (section 105 (4b)) stipulates that any corporate body that fails to file EMR is liable for a fine of ₦3 million upon conviction. Repeated offenses can lead to stricter penalties, including suspension or revocation of the company’s expatriate quota approval.
    1. Delays in Expatriate Quota Renewal:
      Filing duly endorsed EMRs for at least the last three months is a prerequisite for renewing existing expatriate quota positions or applying for new ones. Without this documentation, the Federal Ministry of Interior will reject any quota renewal application, potentially disrupting business operations.
    1. Exposure to Tax Liabilities:
      The Nigerian tax authorities use EMR to track expatriate employees’ presence in the country, ensuring companies fulfill their obligations under the Personal Income Tax Act (PITA). Failing to file EMR could result in:
    • Unintended tax liabilities for expatriates wrongly listed as still employed
    • Risk of backdated tax assessments and penalties
    • Double taxation due to misreported expatriate exits
    1. Legal and Immigration Risks:
      Failure to update the NIS about an expatriate’s exit can result in:
    • Liability for overstayed work permits
    • Scrutiny from law enforcement agencies
    • Possible travel bans or deportation orders affecting expatriates and their companies

     

    Read More: Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

     

    Best Practices for Managing Expatriate Monthly Returns

    1. Ensure Timely Submission:
      The EMR must be filed on or before the 10th day of each month for the preceding month. Late submissions may trigger queries, rejections, or investigations.
    1. Properly Track Expatriate Arrivals and Exits:
      Companies should maintain a real-time record of expatriates’ movement and update their EMR accordingly. Deletion requests should be promptly submitted to NIS when an expatriate exits employment.
    1. Verify Compliance with the Latest Regulations:
      Businesses should periodically review their compliance with the latest immigration and expatriate tax laws, ensuring alignment with the Federal Ministry of Interior’s updated guidelines.
    1. Work with Compliance Experts:
      Given the complexities of expatriate management, working with a professional advisory firm can help businesses:
    • Ensure full compliance with expatriate regulations
    • Avoid penalties and financial risks
    • Streamline immigration and tax compliance processes

    How Stransact People and Regulatory Services Can Help

    At Stransact People and Regulatory Services, we specialize in helping businesses navigate the complexities of expatriate compliance in Nigeria.

    Our services include:

    • Expatriate Quota Advisory & Compliance
    • Preparation & Submission of Expatriate Monthly Returns
    • Immigration & Work Permit Processing
    • Tax Advisory for Expatriate Employees

    Our expert team ensures your company remains compliant, avoiding unnecessary penalties and ensuring smooth business operations.

     

     

    Conclusion

    Managing Expatriate Monthly Returns (EMR) is not just a regulatory obligation—it’s a critical business function that affects tax, immigration, and operational stability. Companies must stay ahead of compliance requirements to avoid fines, tax risks, and business disruptions.

    Need help with EMR compliance? Contact Stransact People and Regulatory Services today. Let’s ensure your business stays on the right side of the law while optimizing expatriate management.

  • Financial Reporting in Nigeria: The Critical Role of ICFR

    Financial Reporting in Nigeria: The Critical Role of ICFR

    Financial transparency and accountability have never been more critical for businesses operating in Nigeria. With increasing regulatory scrutiny and evolving corporate governance standards, companies—especially Public Interest Entities (PIEs) and publicly listed organizations—must ensure their financial statements reflect true and fair positions.

    A robust Internal Control Over Financial Reporting (ICFR) framework is essential for achieving this. But what exactly does ICFR entail, and why does it matter now more than ever?

    ICFR: A Pillar of Corporate Governance

    ICFR is a system designed to provide reasonable assurance regarding the accuracy and reliability of financial statements. Effective internal control mechanisms safeguard against financial misstatements—whether due to error or fraud—and ensure compliance with financial reporting standards and regulatory requirements.

    In Nigeria, the Financial Reporting Council (FRC) has established clear directives under the FRC Act 2011 (Amended 2023) reinforcing the obligation of companies to assess and report on their internal controls.

    Regulatory Framework and Compliance Timelines

    It is important to note that;

    • PIEs must report on their ICFR for financial periods ending 31 December 2024.
    • The 2023 amendment broadens the definition of a public interest entity (PIE), particularly concerning industry regulators like the NCC, NERC, and NCAA. Entities in these expanded sectors should determine whether they now qualify as PIEs.

    This means that companies must not only establish strong internal control mechanisms but also demonstrate their effectiveness through external auditor evaluations.

     

    Read More: Why Nigeria Is Not Classified as a Hyperinflationary Economy

     

    The Business Case for Strong ICFR Implementation

    Beyond regulatory compliance, a well-structured ICFR framework offers tangible benefits:

    • Boosts Investor & Donor Confidence – For businesses seeking foreign investments, grants, or donor funding, demonstrating financial integrity through robust ICFR enhances credibility.
    • Prevents Financial Misstatements & Fraud – In an era where corporate fraud cases continue to make headlines, effective ICFR safeguards organizations from reputational damage.
    • Ensures Operational Efficiency – ICFR is not just about compliance; it streamlines financial processes, reducing inefficiencies and improving decision-making.
    • Enhances Risk Management – Identifying control weaknesses early allows businesses to mitigate financial and operational risks proactively.

     

    Read More: The Legal Propriety of Ungazetted Acts or Regulations in Nigeria

     

    Best Practices for ICFR Implementation

    To navigate the complexities of ICFR implementation, companies should consider these key strategies:

    • Establish a Strong Control Environment – Leadership must set the tone at the top by prioritizing financial discipline and accountability.
    • Comprehensive Risk Assessment – Identifying key risk areas in financial reporting and designing controls to mitigate them is essential.
    • Leverage Technology – Automated financial systems enhance control effectiveness, ensuring real-time monitoring and compliance.
    • Periodic Internal & External Audits – Independent reviews validate the efficiency of control mechanisms and help address deficiencies proactively.
    • Integrate ICFR into the business operations – The effectiveness of internal control over financial reporting (ICFR) is management’s responsibility, not the board’s or the external auditor’s.
    • Set up a Monitoring Committee – Establish a Monitoring Committee that will monitor the implementation of the ICFR and any changes thereon.
    • Training & Capacity Building – Equipping finance teams with knowledge of ICFR principles ensures compliance and long-term sustainability.

     

    Read More: Strengthening Nigeria’s Manufacturing Industry with Independent Internal Audits

     

    Looking Ahead: Future-Proofing ICFR in Nigeria

    As regulatory expectations evolve, companies must remain agile in their approach to financial reporting. Continuous monitoring, integrating emerging technologies, and maintaining a proactive governance culture will be essential for long-term success.

    For businesses looking to strengthen their ICFR frameworks, the time to act is now. Establishing robust financial controls not only ensures compliance but also builds trust, enhances financial stability, and positions organizations for sustainable growth in an increasingly regulated business environment.

    Are you prepared to navigate the evolving financial reporting landscape? Ensuring your ICFR framework aligns with best practices can safeguard your business against financial risks and regulatory challenges. Taking the right steps today can secure a transparent and resilient future.

     

     

  • Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

    Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

    As an employee, your paycheck is your livelihood. But what if you’re paying more taxes than you should? Pay-As-You-Earn (PAYE) is the system used in Nigeria to deduct income tax from employees’ salaries. While it’s designed to simplify tax compliance, errors can occur, leading to over-taxation.

    In this article, we’ll teach you how to spot common PAYE deduction errors, steps to resolve them, and how Stransact’s PAYE calculator can help ensure accuracy.

    Understanding PAYE in Nigeria

    PAYE is a method of collecting income tax from employees directly through their employers. The tax is deducted monthly based on the employee’s earnings and remitted to the relevant tax authority (usually the State Internal Revenue Service).

    The PAYE system is governed by the Personal Income Tax Act (PITA), 2011 (as amended), which outlines the rules for calculating and deducting taxes.

    Key components of PAYE

    • Taxable Income: This includes your basic salary, allowances, bonuses, and other benefits.
    • Tax Reliefs and Allowances: Certain allowances, like consolidated relief allowances (CRA), are tax-free. Also, certain contributions/expenses are considered tax-free.
    • Tax Bands: Nigeria uses a progressive tax system, meaning the more you earn, the higher your tax rate.

    Common PAYE Deduction Errors

    Here are some common mistakes that could lead to over-taxation:

    • Incorrect Taxable Income Calculation
      Employers may include non-taxable income (e.g., reimbursement made due to company’s expenses made from personal account) in your taxable income, leading to higher PAYE tax deductions
    • Miscalculation of Consolidated Relief Allowance (CRA)
      The CRA is a tax-free allowance granted to all employees. It includes:

      • 20% of gross income plus
      • N200,000 or 1% of gross income (whichever is higher).
        If your employer fails to apply this correctly, your taxable income will be overstated.
    • Exclusion of Tax-Deductible Expenses
      Certain contributions/expenses are deductible for tax purposes. They include:

      • Pension contribution
      • Contribution to the National Housing Fund
      • Interest on mortgage loan
      • Life assurance premium
    • Wrong Application of Tax Bands
      Nigeria’s tax bands are progressive, with rates ranging from 7% to 24%. If your employer applies the wrong band, your tax deductions could be higher than necessary.

    How to Spot PAYE Errors

    • Review Your Payslip
      Check your gross income, taxable income, and net pay. Ensure that non-taxable allowances and tax-deductible expenses are excluded and that the CRA is applied correctly.
    • Verify Your Tax Bands
      Use the current tax bands to confirm that your employer is applying the correct rate.
      The bands are calculated as follows on an annual basis:

      • First N300,000: 7%
      • Next N300,000: 11%
      • Next N500,000: 15%
      • Next N500,000: 19%
      • Next N1,600,000: 21%
      • Above N3,200,000: 24%
    • Compare with Previous Payslips
      Look for sudden increases in tax deductions without a corresponding increase in income.
    • Confirm Pension and NHF Deductions
      Ensure that your pension (8% of basic, housing, and transport) and NHF (2.5% of monthly income) contributions are correctly deducted before tax calculation.

      NOTE:
      The NHF contribution is required but not obligatory for private sector employees but compulsory for public sector workers.

    Steps to Resolve PAYE Discrepancies

    • Discuss with Your Employer
      Politely bring the issue to your employer’s attention. Provide evidence (e.g., payslips, tax calculations) to support your claim.
    • Contact Your State Internal Revenue Service (SIRS)
      If your employer doesn’t resolve the issue, reach out to your State Internal Revenue Service. They can investigate and ensure compliance with tax laws.
    • Seek Professional Help
      Tax consultants, like Stransact, can help you review your payslips, identify errors, and liaise with your employer or tax authorities on your behalf.

    How Stransact’s PAYE Calculator Can Help

    At Stransact, we understand how complex PAYE calculations can be. We developed a PAYE calculator to help employees and employers ensure accuracy.

    Here’s how it can help you:

    • Quick Calculations: Instantly compute your net pay based on your gross income, allowances, and deductions.
    • Error Detection: Identify discrepancies in your tax deductions by comparing your payslip with the calculator’s results.
    • Compliance Assurance: Ensure your employer is applying the correct tax bands and reliefs.

    Conclusion

    PAYE errors can cost you thousands of naira yearly if left unchecked. By taking proactive steps to verify deductions, leveraging available tax reliefs, and seeking expert assistance when needed, you can ensure your salary reflects what you truly deserve.

    Stay tax-smart! Double-check your deductions with Stransact’s PAYE calculator today.

  • Why Nigeria Is Not Classified as a Hyperinflationary Economy

    Why Nigeria Is Not Classified as a Hyperinflationary Economy

    The Financial Reporting Council of Nigeria (FRC) recently issued a detailed assessment of the applicability of IAS 29, Financial Reporting in Hyperinflationary Economies, to Nigeria. Despite inflationary pressures, the FRC concluded that Nigeria does not meet the criteria of a hyperinflationary economy, and IAS 29 should not be applied for financial reporting.

    Here’s a breakdown of their analysis and the reasoning behind this decision.

    IAS 29 Indicators and the FRC’s Assessment

    IAS 29 outlines five key indicators to determine if an economy qualifies as hyperinflationary. The FRC evaluated Nigeria against each of these indicators:

    1. Preference for Non-Monetary Assets

    IAS 29 suggests that in hyperinflationary economies, the general population prefers to hold wealth in non-monetary assets or stable foreign currencies.

    • FRC’s Position:
      While demand for foreign currency exists, data shows a significant increase in investments in monetary assets such as treasury bills, mutual funds, fixed deposits, and specialized deposit-taking institutions over the last three years. This suggests confidence in Naira-denominated financial instruments.

    These trends indicate that Nigerians are not aggressively divesting from the Naira, undermining the argument for hyperinflation classification.

    Conclusion: This indicator is not met.

    1. Pricing in Foreign Currency

    In hyperinflationary economies, monetary amounts are often denominated in stable foreign currencies.

    • FRC’s Position:
      Prices of goods and services in Nigeria are predominantly quoted in Naira, including those on major e-commerce platforms like Jumia and Konga. Salaries and wages are also paid in Naira.

    Conclusion: This indicator is not met.

    1. Inflation-Adjusted Credit Pricing

    Credit purchases in hyperinflationary economies are typically priced to compensate for inflation-driven losses during the credit period.

    • FRC’s Position:
      In Nigeria, credit terms are based on contractual agreements and risk assessments rather than inflation adjustments. There is no evidence of inflation-driven pricing for credit transactions.

    Conclusion: This indicator is not met.

    1. Linkage of Wages, Prices, and Interest Rates to a Price Index

    In hyperinflationary economies, wages, prices, and interest rates are adjusted regularly to reflect inflation.

    • FRC’s Position:
      Nigeria’s wage adjustments have not been systematically linked to inflation rates. The national minimum wage remained ₦30,000 for five years before being increased to ₦70,000 in 2024. However, this latest wage review has been agreed to be reassessed after three years, suggesting that wages are not necessarily indexed to inflation but rather subject to periodic policy reviews.

    Conclusion: This indicator is not met.

    1. Cumulative Inflation Rate Exceeding 100% Over Three Years

    A cumulative inflation rate approaching or exceeding 100% over three years is a key indicator of hyperinflation.

    • FRC’s Position:
      Nigeria’s cumulative inflation exceeded 110.9% as of December 2024, crossing the 100% threshold. However, the International Monetary Fund (IMF) and Economic Intelligence Unit (EIU) project that inflation will stabilize at 21% by the end of 2025.

    Conclusion: This indicator is met.

    Other Contributing Factors

    The FRC considered additional factors to assess Nigeria’s economic trajectory:

    • Structural Reforms: The government’s removal of fuel subsidies and floating of the Naira caused temporary inflationary pressures but are expected to stabilize the economy long-term.
    • Agricultural Initiatives: Increased food production and import adjustments are projected to reduce food inflation.
    • Crude Oil and Refinery Developments: The operationalization of refineries, such as the Dangote Refinery, is expected to lower import costs, reduce foreign exchange demand, and stabilize fuel prices.

    Read More: Strengthening Nigeria’s Manufacturing Industry with Independent Internal Audits

    FRC’s Conclusion

    While Nigeria meets the cumulative inflation criterion under IAS 29, the remaining four indicators were not satisfied. The FRC emphasized that hyperinflationary classification requires a holistic assessment, not just one criterion.

    Based on this balanced judgment and IMF validation, Nigeria does not qualify as a hyperinflationary economy. Therefore, IAS 29 should not be applied for financial reporting in Nigeria for 2024.

    Implications for Nigerian Businesses

    1. Financial Reporting Stability:
      Nigerian businesses can continue preparing their financial statements under existing standards without adopting IAS 29 adjustments. This ensures consistency in reporting practices and avoids the complexities associated with hyperinflationary accounting.
    2. Focus on Economic Fundamentals:
      The FRC’s position reflects confidence in the underlying stability of Nigeria’s economic structure despite inflationary pressures. Businesses should focus on strengthening internal controls, optimizing cash flow management, and leveraging local economic opportunities to mitigate short-term inflationary challenges.
    3. Enhanced Monitoring and Adaptability:
      Organizations should remain vigilant and responsive to updates from the FRC. Proactive measures such as scenario planning and stress-testing financial models will help businesses adapt swiftly to potential future changes in reporting requirements.

    Discover Our Financial Reporting Solutions

    Looking Ahead

    Nigeria’s economy is at a critical inflection point. With IMF and EIU projections of inflation stabilization, combined with policy-driven economic reforms, businesses should prepare for measured inflationary management rather than hyperinflationary disruptions.

    Organizations must stay proactive, ensuring that financial reporting, risk management, and compliance strategies align with evolving regulatory guidance

  • AI Adoption: Redefining Efficiency and Innovation in Your Business

    AI Adoption: Redefining Efficiency and Innovation in Your Business

    Generative AI is reshaping Nigeria’s business landscape. With the Nigerian AI market projected to reach $1.40 billion by 2025 and potentially $4.64 billion by 2030, this surge reflects more than a trend; it signals an economic transformation. The World Trade Organization estimates that Nigeria, along with three other African nations, could share in a $136 billion economic boost driven by AI.

    Yet, many Nigerian businesses have not fully integrated AI into their operations, missing opportunities for innovation, efficiency, and competitive advantage. Ignoring AI is no longer viable. This article explores the hidden costs of ignoring AI and how Nigerian businesses can harness its potential to stay ahead.

    A Brief History and Post-COVID Popularization of AI

    AI’s evolution has been decades in the making, with early developments focusing on rule-based systems and expert programs in the 20th century. The advent of machine learning in the early 2000s marked a shift towards data-driven models, enabling systems to improve with experience. However, it was the rise of deep learning in the 2010s that truly revolutionized AI, making technologies like image recognition, natural language processing, and generative models viable at scale.

    The COVID-19 pandemic acted as a major accelerator for AI adoption. Businesses faced unprecedented challenges, including remote work, supply chain disruptions, and changing consumer behaviors. AI provided solutions by enabling automation, improving remote collaboration, and delivering real-time analytics to navigate uncertainty.

    Current AI Trends and its Global Adoption

    The adoption of generative AI has seen a significant surge globally. According to recent surveys, 72% of organizations are now using some form of AI, up from 50% just a year ago. This rapid uptake is driven by the tangible benefits AI offers, such as increased productivity and cost savings. Leading businesses are leveraging generative AI in multiple areas, including marketing, sales, product development, and IT.

    The Hidden Costs of Ignoring AI

    • Operational Inefficiencies
      Businesses that ignore AI face significant operational inefficiencies. Without AI, processes remain manual and time-consuming, leading to slower operations and higher labor costs. For example, tasks that could be automated, such as data entry, customer support, and inventory management, continue to require substantial human effort. This not only increases operational costs but also reduces overall productivity and efficiency.
    • Competitive Disadvantage
      Competitors leveraging AI gain significant advantages through optimized operations and enhanced customer experiences. AI-driven insights allow them to predict trends and respond swiftly to market changes. Businesses that neglect AI risk losing market share and customer loyalty.
    • Missed Opportunities for Innovation
      By not leveraging AI technologies, businesses miss out on numerous opportunities for innovation and growth. AI can drive innovation by enabling the development of new products and services, optimizing existing processes, and uncovering new business models.For instance, AI can help identify emerging market trends, personalize customer experiences, and streamline supply chain operations. Without AI, businesses are unable to fully capitalize on these opportunities, limiting their potential for growth and success.

     

    Read More: Navigating Global Challenges Affecting Nigeria’s Manufacturing Industry

    Empowering Businesses with Generative AI

    Generative AI has revolutionized how businesses approach operations, decision-making, and innovation, enabling them to achieve more with less effort. By optimizing workflows, managing schedules, and improving time management, AI enhances daily productivity, allowing teams to focus on strategic goals. It analyzes vast amounts of data to identify trends, track customer behavior, and provide actionable insights, helping businesses stay competitive. AI also automates repetitive tasks, reducing errors and increasing efficiency across various functions, from customer support to data management.

    In addition to these benefits, AI applications such as predictive maintenance, dynamic pricing, and supply chain optimization streamline operations and reduce costs. Predictive maintenance uses real-time data to foresee equipment failures, minimising downtime and optimising maintenance schedules. Dynamic pricing adjusts pricing strategies in real-time based on demand, competitor behavior, and market conditions, maximizing revenue. Supply chain optimization forecasts demand, manages inventory, and streamlines logistics, ensuring efficient operations and cost reduction.

    Furthermore, AI enhances recruitment processes, generates optimized product designs, and enables real-time adaptation in production lines. Technologies like federated learning, TinyML, and AI-driven sustainability promote innovation while preserving privacy and reducing environmental impact. By leveraging these AI capabilities, businesses can unlock new opportunities, drive growth, and maintain a competitive edge in the market.

     

    Read More About our IT & Digital Transformation Services

     

    Use Cases for Nigerian Businesses

    AI offers immense potential for driving innovation and solving challenges across industries in Nigeria. Here are key applications tailored to specific sectors:

    Financial Services

    AI is transforming the financial sector by enhancing security, improving customer experiences, and streamlining operations. Nigerian banks and fintech companies can utilize AI for:

    • Fraud Detection: AI identifies suspicious transactions in real time, reducing financial crimes.
    • Personalized Financial Advice: AI analyzes customer data to offer tailored investment plans and financial recommendations.
    • Automated Customer Service: AI-powered chatbots provide 24/7 support, handling routine inquiries and freeing up human agents for complex issues.

    Agriculture

    In a nation where agriculture remains a vital economic driver as the largest contributor to the GDP, AI is paving the way for smarter farming practices:

    • Optimized Farming Practices: AI offers insights on soil conditions, weather patterns, and irrigation needs, enabling better resource management.
    • Increased Crop Yields: AI-powered predictive analytics help farmers choose the right crops and planting schedules to maximize productivity.
    • Real-Time Data Analysis: AI processes data from drones, sensors, and satellites to help farmers make informed decisions.

     

    Read More: How Cybersecurity and Data Privacy Drive ESG Strategies in Nigerian Businesses

     

    Education

    AI has the potential to revolutionize education in Nigeria by making learning more accessible and personalized:

    • Personalized Learning Experiences: AI adapts content delivery to suit individual learning paces and styles.
    • Automating Administrative Tasks: AI simplifies grading, scheduling, and other administrative duties, allowing educators to focus on teaching.
    • Virtual Tutoring: AI-powered platforms provide students with interactive and cost-effective tutoring outside the traditional classroom.

    Healthcare

    In the healthcare sector, AI is addressing critical challenges and enhancing service delivery:

    • Disease Diagnosis: AI assists medical professionals in diagnosing illnesses quickly and accurately through advanced image and data analysis.
    • Patient Records Management: AI organizes and secures electronic health records for seamless access and updates.
    • Telemedicine Services: AI supports remote consultations, enabling patients in underserved areas to access quality healthcare.

    Retail

    AI is reshaping retail operations and customer engagement, helping businesses adapt to changing consumer behaviors:

    • Inventory Management: AI predicts stock needs, reducing overstocking or shortages.
    • Demand Prediction: AI analyzes purchasing patterns to forecast future demand, improving supply chain efficiency.
    • Personalized Shopping Experiences: AI customizes product recommendations and promotions to enhance customer satisfaction and loyalty.

     

    Read More: Economic Resilience: A Nigerian Business Owner’s Guide to Financial Mastery

     

    Steps to Begin AI Adoption

    Adopting AI can seem daunting, but with the right approach, businesses can seamlessly integrate this transformative technology into their operations. Below are actionable steps to guide businesses on their AI adoption journey.

    Assessing Readiness:
    Evaluate your organization’s readiness for AI by:

    1. Identifying areas for automation.
    2. Ensuring access to high-quality data.
    3. Assessing IT infrastructure.
    4. Analyzing workforce skills and training needs.
    5. Gauging cultural readiness for change.

    Building a Strategy:
    A clear strategy ensures successful integration:

    1. Define goals—enhancing productivity, reducing costs, or driving innovation.
    2. Start small with pilot projects.
    3. Align AI initiatives with business needs.
    4. Allocate a realistic budget for tools and training.
    5. Manage risks like data privacy concerns.
    6. Set KPIs to measure success.

    Partnering with Experts:
    Collaborating with AI specialists can simplify adoption:

    1. Consult experts for tailored solutions.
    2. Leverage platforms offering cutting-edge tools.
    3. Co-create solutions to address unique challenges.
    4. Join AI-focused industry networks to share knowledge.
    5. Outsource complex projects if internal resources are limited.

     

    Explore our Technology Services

    Conclusion

    In a world where innovation drives progress, the cost of ignoring AI is far too great. Businesses that fail to embrace this transformative technology risk falling behind, losing their competitive edge, and missing out on unprecedented opportunities for growth and efficiency. The future belongs to those who act now—who invest in AI to innovate, solve problems, and meet the evolving needs of their customers.

    Don’t let inaction become your greatest expense. Explore the vast potential of AI today and secure your place as a leader in tomorrow’s economy.

  • From Traditional to Digital: How Financial Services Can Thrive in the Era of Fintech

    From Traditional to Digital: How Financial Services Can Thrive in the Era of Fintech

    Nigeria’s financial services sector stands at the edge of transformation. With advancements in technology and a growing demand for accessible financial solutions, the time to innovate is now. Despite challenges like low insurance penetration and a significant unbanked population, Nigeria’s vibrant, tech-savvy demographic offers an unparalleled opportunity to redefine financial services delivery.

    Imagine insuring your phone in seconds, accessing personalized health plans, or using POS terminals as multi-functional financial tools – all with a few taps on your mobile device. These possibilities are no longer distant dreams but tangible opportunities waiting to be seized. In this article, we explore how financial institutions can harness the power of fintech to enhance service delivery and foster financial inclusion in Nigeria.

     

    Read More: From Waste to Wealth: Why Nigerian Business Leaders Must Shift to a Circular Economic Model Today

     

    Post-COVID Agility: A New Paradigm in Financial Services

    The COVID-19 pandemic reshaped consumer expectations, placing a premium on digital-first services. Today, customers demand the ability to handle transactions, seek support, and explore financial products entirely from the comfort of their homes.

    Globally, we’ve seen the rise of remote banking, digital investment platforms, and even teleconsultations for insurance. Yet, many Nigerian financial institutions lag in adopting these customer-centric solutions. With 64 million unbanked adults and widespread dissatisfaction with traditional service delivery, the need for modernization has never been more urgent.

    Key Opportunities in Nigeria’s Financial Services

    1. Banking: Expanding Financial Inclusion Through Technology

    Despite progress in digital banking, 64 million Nigerians—about 32% of the adult population—remain unbanked. Mobile banking apps and USSD services have significantly improved access by enabling users to open accounts, transfer funds, and pay bills without visiting physical branches. However, challenges such as limited digital literacy and inconsistent internet access hinder adoption.

    Opportunities:

    • AI-Driven Financial Tools: Offer personalized financial planning solutions based on customer data for savings, investments, and budgeting.
    • Smart ATMs: Deploy machines capable of instant cash deposits and withdrawals, enhancing user convenience.

     

    Read More: How Cybersecurity and Data Privacy Drive ESG Strategies in Nigerian Businesses

     

    2. Insurance: Making Coverage Affordable and Accessible

    Nigeria’s insurance sector remains underdeveloped, with one of the lowest penetration rates globally. As of recent data, insurance penetration in Nigeria is estimated to be around 0.3% of GDP, significantly lower than the global average of over 7%. This indicates a vast untapped market and underscores the need for strategic initiatives to drive growth.

    Opportunities

    • Leveraging Mobile Apps for Microinsurance: Mobile apps can be used to offer microinsurance products, such as daily health coverage and device insurance. This approach can make insurance more accessible and affordable for the average Nigerian, who may not have the means to purchase traditional insurance policies.
    • Telematics for Usage-Based Insurance: Telematics technology can be used to offer usage-based insurance, where premiums are calculated based on actual usage and driving behaviour. This model can make insurance more affordable and personalized for customers.

    3. Mortgage and Credit Services: Bridging the Financing Gap

    Nigeria’s mortgage market faces barriers such as high-interest rates, complex application processes, and limited access to long-term financing. Post-COVID trends in remote work and homeownership aspirations present a renewed opportunity to rethink mortgage solutions.

    Additionally, there is an urgent need to democratize access to loans for house rent, home purchases, and business investments. Many Nigerians are hesitant to take loans due to fears of rejection or challenges in navigating the process. Fintech platforms can address these concerns by integrating seamless loan application processes into mobile apps. With the advent of the BVN system, tracking and monitoring credit scores has become easier, enabling financial institutions to offer more tailored and accessible loan products. Solutions like micro-loans, simplified credit card acquisition, and transparent repayment terms can further empower individuals and businesses.

    Opportunities:

    • Streamlined Loan Platforms: Enable quick applications and approvals through user-friendly mobile apps.
    • Innovative Financing Models: Collaborate with fintech to introduce rent-to-own solutions or micro-loans with transparent repayment terms.
    • Blockchain Transparency: Use blockchain to enhance trust and security in property transactions.

     

    Read More: Forensic Audits: When and Why Your Business Needs One

     

    4. Investment Services: Democratizing Wealth Creation

    Investment services in Nigeria are often seen as exclusive to high-net-worth individuals, leaving a significant portion of the population underserved. With only about 2% of Nigeria’s population investing in the stock market, there is a clear need to make investment services more accessible.

    Opportunities:

    • Creating User-Friendly Platforms for Micro-Investments: Developing platforms that allow individuals to start investing with small amounts can democratize access to wealth creation. These platforms can offer fractional shares, enabling users to invest in high-value stocks with minimal capital.
    • Incorporating AI/Robo-Advisors: AI-driven robo-advisors can provide personalized investment advice at a lower cost compared to traditional advisors. These tools can analyze individual financial situations and recommend tailored investment strategies.
      Robo-advisory services are expected to become a $1.2 trillion industry globally by 2024, highlighting their growing importance

    Redefining Financial Services in Nigeria

    Transitioning from traditional to digital financial services is more than a technological upgrade – it’s about reimagining how financial institutions connect with customers, deliver value, and drive economic growth. By addressing gaps in access and trust while leveraging global best practices, Nigeria’s financial sector can unlock unprecedented growth.

    Are you ready to take your financial services to the next level? At Stransact, we specialize in guiding organizations through transformative journeys. Whether you’re looking to digitise operations, enhance customer experiences, or explore untapped opportunities, our team has the expertise to help you thrive in the fintech era.

     

    Find out we solve business problems

     

    Your Next Step

    Contact us today to learn how we can help you navigate Nigeria’s evolving financial landscape. Together, we can create solutions that empower your business and drive lasting impact. Email us at [email protected]

  • Strengthening Nigeria’s Manufacturing Industry with Independent Internal Audits

    Strengthening Nigeria’s Manufacturing Industry with Independent Internal Audits

    Nigeria’s manufacturing sector contributes significantly to the economy, with 19% and 18% of GDP in 2022 and 2023, respectively. Despite challenges like currency devaluation and inadequate infrastructure, the sector remains resilient. Effective internal auditing is vital for ensuring operational efficiency, regulatory compliance, and accountability within this complex industry.

    This article highlights the importance of internal audit independence and its impact on the growth of Nigeria’s manufacturing sector.

    The Importance of Internal Audit in The Manufacturing Industry

    Internal auditing safeguards financial integrity and improves governance by evaluating risk management and operational efficiency. Manufacturing’s intricate supply chains and regulatory requirements demand robust financial reporting and accountability.

    Key roles of internal auditing:

    • Risk Evaluation: Identifying gaps in processes and recommending improvements.
    • Compliance Assurance: Ensuring adherence to IFRS and regulatory standards.
    • Operational Efficiency: Highlighting cost-saving opportunities and reducing waste.

    Read More: Financial Management Strategies for Sustainable Growth in Nigeria’s Oil and Gas Industry

    Fundamentals of Internal Audit Independence

    Internal audit independence ensures objectivity and reliability. It has two dimensions:

    • Structural Independence: Reporting directly to the board or audit committee.
    • Mental Independence: Remaining unbiased, free from conflicts of interest.

    Independence strengthens corporate governance, builds trust among stakeholders, and positions companies for informed decision-making. For manufacturing firms, it transforms internal auditing from a routine check to a strategic tool for identifying inefficiencies and growth opportunities.

    Efficiency of Internal Audit Independence

    Independent internal auditors contribute to:

    • Improved Risk Management: Focus on high-priority risks to optimize resources and reduce losses.
    • Fraud Prevention: Strengthened internal controls and accurate financial reporting.
    • Cost Savings: Identifying inefficiencies and ensuring regulatory adherence.

    With sufficient expertise, resources, and management support, internal audit functions add immense value that outweighs their cost.

    Read More: Forensic Audits: When and Why Your Business Needs One

    Impact on the Growth of the Manufacturing Industry

    Effective internal auditing bolsters the manufacturing industry by:

    • Regulatory Compliance: Navigating complex rules to protect reputation and attract investors.
    • Strong Governance: Upholding ethical standards and earning stakeholder trust.
    • Strategic Decision-Making: Delivering data-driven insights for market adaptability.

    A robust internal audit function signals good governance, building investor confidence crucial for sustainable growth.

    Challenges and Recommendations

    Maintaining the independence of internal auditors is crucial yet challenging in Nigeria. Systemic factors and organizational cultures often undermine their autonomy, compromising the quality of audits. One significant challenge is the reporting lines. Internal auditors frequently report to management rather than the board or audit committee, jeopardizing their independence and creating a potential conflict of interest.

    Resource constraints and organizational culture can also impede internal auditor independence. Inadequate funding and staffing can hinder the ability to conduct thorough audits, while a culture that lacks transparency and accountability can pressure auditors to conform to management’s wishes. Additionally, management override of controls and insufficient training can further exacerbate these challenges.

    Regulatory pressures and personal relationships can also threaten auditor independence. Balancing compliance demands with objectivity is difficult, and avoiding conflicts of interest can be challenging. To ensure effective internal auditing, these challenges must be addressed to safeguard auditor independence and enhance audit quality. This requires a commitment to establishing clear reporting lines, providing adequate resources, fostering a culture of transparency and accountability, and implementing robust governance structures.

    Read More: Navigating Global Challenges Affecting Nigeria’s Manufacturing Industry

    Conclusion

    Internal auditing is essential for the success of any organization including Nigeria’s manufacturing sector. Internal auditors contribute to growth, compliance, and sustainability by providing objective insights and driving operational efficiency. As the industry expands, the importance of internal auditing will become even more pronounced.

    To achieve significant success and the optimal benefit of Internal Auditing, outsourcing the function to a reputable accounting firm can enhance audit quality. External auditors offer an objective perspective and specialized expertise. At Stransact Chartered Accountant, we provide exceptional internal audit and control services while ensuring high-quality standards and independence is maintained. Send us an email at [email protected] to learn more.

  • Reducing Financial Leakages

    Reducing Financial Leakages

    The Problem

    An upstream Nigerian oil and gas company faced persistent financial leakages that significantly impacted its cash flow. Despite generating substantial revenue from crude oil exploration and production, the company struggled with high tax liabilities and inefficient tax processes, leaving little room for reinvestment in critical projects and operations.

    The company’s challenges included unclaimed capital allowances, over-remittance of withholding taxes (WHT), underutilisation of available tax incentives, and poor tracking of recoverable Value Added Tax (VAT). Frequent tax audits revealed inconsistencies that led to substantial penalties and interest on overdue taxes. These inefficiencies created a liquidity crunch, necessitating a robust tax strategy to eliminate financial leakages and stabilise cash flow.

    The Solution

    Our tax experts conducted a comprehensive review of the company’s tax processes to identify inefficiencies and implement a strategic tax planning framework. We began with an in-depth analysis of the company’s tax compliance records over the past five years and assessed its effective tax rate. This included a detailed tax health check covering areas such as overpayment, unclaimed capital allowances, missed incentives, and audit triggers.

    We recalibrated the compliance framework to ensure accurate reporting of deductible expenses, maximisation of capital allowances, and proper tracking of WHT credits. The fixed asset register was reviewed and restructured to align with the Nigerian Petroleum Profits Tax (PPT) Act and Petroleum Industry Act (PIA). This involved categorising assets appropriately and updating depreciation schedules for accurate tax computations.

    To build the company’s internal capacity, we conducted regular training sessions for the finance team, equipping them with the knowledge and tools for proactive tax management.

    The Result

    Through these interventions, the company achieved substantial financial savings within the first fiscal year. Over $15 million in overpaid taxes was recovered from the Federal Inland Revenue Service (FIRS) and used to offset subsequent liabilities, significantly improving cash flow.

    The utilisation of tax incentives and allowances reduced the company’s effective tax rate by 15%, freeing up additional resources for capital reinvestment. Outsourcing tax filing eliminated manual errors and reduced the average time spent on tax compliance by 40%, allowing the finance team to focus on strategic activities.

    Our streamlined tax management framework ensured full compliance with regulatory requirements, minimising audit risks and penalties. This not only plugged financial leakages but also created a sustainable pathway for growth and resilience in a volatile industry.