Category: News

At Stransact, we remain aligned to the ever-evolving landscape of business, regulation, and industry developments. Our weekly insights are designed to equip you with the foresight and clarity to make informed decisions and lead with impact.

1. Avoid These Payroll Penalties: What Every Nigerian Employer Should Know

Many Nigerian businesses are losing money not to fraud, but to payroll errors. Stransact offers practical strategies to help businesses stay compliant, avoid fines, and focus on sustainable growth.

Discover what payroll compliance really means and how to stay ahead before it costs your business.
👉 Read the article

2. Renewed Hope Nigeria First Policy: A Strategic Shift Towards Local Content and Economic Sovereignty

Many Nigerian businesses are missing out on growth not because of lack of potential, but because of poorly structured procurement processes.

Want to find out how this policy could affect your industry and what to do next.
👉 Read the article

3. Third-Party Risk Management: Are Your Vendors Your Weakest Link?

Vendors remain central to Nigeria’s economic growth, but without adequate governance, they can introduce significant operational, financial, and reputational risks.

Discover why businesses are under growing pressure to strengthen their third-party risk management (TPRM) strategies—and how this shift represents a competitive edge for prepared service providers.

👉 Read the article

4. Navigating the Future of Tax Compliance: FIRS to Roll Out E-Invoicing in Nigeria

This initiative is designed to improve VAT collection, reduce tax leakages, and align with Nigeria’s digital economy strategy by enabling real-time invoice validation, standardization, and secure transmission through integrated enterprise systems.

The implementation of E-invoicing by the FIRS signals a clear direction toward a data-driven, digitally enabled tax system in Nigeria.
👉 Read the article

5. Navigating Global Governance in Oil & Gas: Why Board Advisory Matters More Than Ever

Governance in the energy sector is no longer a compliance checkbox; it’s a business strategy.

Discover how governance consulting is transforming African oil & gas boardrooms.
👉 Read the article

 

Follow Stransact for weekly insights on the future of business, finance, and regulation in Nigeria.

At Stransact, we stay tuned to the pulse of business, policy, and industry trends. Each week, we bring you carefully curated insights to keep you informed, help you think ahead, and lead with confidence.

1. The New Reality for Nigerian Manufacturers – And How to Compete in It

Nigeria’s manufacturers are adapting to inflation, FX pressures, and shifting consumer demand. What does it take to survive—and thrive—today?
Discover actionable strategies for resilience, including supply chain reengineering, tax planning, and financial transparency.
👉 Read the article

2. Cybersecurity as a Boardroom Priority

With cyber threats escalating, boards can no longer treat security as a tech issue alone.
This piece explains why cybersecurity must be a strategic risk priority—and how boards can play a proactive governance role.
👉 Read the article

3. Financial Reporting in Nigeria: The ICFR Imperative

Robust Internal Controls over Financial Reporting (ICFR) are more than a compliance checklist—they’re essential for trust and transparency.
Explore the practical benefits of ICFR and why Nigerian companies should embrace them, especially ahead of regulatory reforms.
👉 Read the article

4. Ungazetted Regulations: Legal Grey Areas You Shouldn’t Ignore

Can a policy be enforced if it hasn’t been officially gazetted?
This legal insight breaks down the implications of implementing laws or directives not yet published in Nigeria’s official gazette.
👉 Read the article

5. Nigeria’s Investment & Securities Act of 2025: A Capital Market Milestone

The newly passed ISA 2025 ushers in major reforms for market operators, investors, and regulators.
Get a concise breakdown of what’s changed—and what it means for capital market development.
👉 Read the article

 

Follow Stransact for weekly insights on the future of business, finance, and regulation in Nigeria.

 

The evolution of Nigeria’s capital market regulation is a testament to the nation’s commitment to a robust and transparent financial ecosystem. This journey, which began several decades ago, has been marked by significant legislative milestones that have shaped not only the current investment landscape but also how our capital market works.

Early Beginnings: 1962–1979

The Nigerian government took its first step in 1962 by establishing an adhoc consultative and advisory body known as the Capital Issues Committee under the Central Bank of Nigeria. This committee was tasked with overseeing capital market activities, coordinating the orderly issuance of securities and maintaining investor confidence.

Recognizing the need for a more structured approach, the committee was transformed into the Securities and Exchange Commission (SEC) in 1979 through the enactment of SEC Decree No. 71 of 1979. This decree provided SEC with statutory backing and also positioned it as the primary regulator of Nigeria’s burgeoning capital market. Nine (9) years after, the establishment of the Securities and Exchange Commission, the enabling law, Decree No. 7 of 1979, was re-enacted as SEC Decree No. 29 of 1988 with additional provisions to address observed lapses in the previous arrangement and to enable the Commission pursue its functions more effectively.

The 1990s: Addressing Emerging Challenges

As Nigeria’s economy expanded, the capital market faced new challenges that the existing regulatory framework struggled to address. It became clear that a reform was necessary. The government in response introduced the Investment and Securities Act (ISA) No. 45 of 1999. This Act which repealed the SEC Act of 1998 aimed to modernize the regulatory environment, granting SEC enhanced powers to oversee and regulate the capital market more effectively. A notable innovation was the establishment of the Investment and Securities Tribunal (IST), which was designed to expedite the resolution of disputes arising within the capital market, thereby enhancing investor protection and market integrity.

The 2000s: Comprehensive Reforms with ISA 2007

Building upon the foundation laid in the previous decade, the Investment and Securities Act was further reviewed and amended as the Investment and Securities Act (ISA) of 2007 to address the evolving complexities of the capital market. This legislation introduced several key reforms which enhanced SEC regulatory powers, implemented provisions to safeguard investors against malpractices and encourage the introduction of new Financial Instruments as well as diversifying investment opportunities.

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

ISA 2025: A Comprehensive Overhaul for a Digital and Global Age

In March 2025, Nigeria took a bold step forward as President Bola Ahmed Tinubu signed the Investments and Securities Act 2025 into law. This act replaces the ISA 2007 and reflects a forward-looking strategy that aligns domestic capital markets with global trends—particularly around digitization, sustainability, and inclusive finance.

Here are the key highlights:

1. Recognition and Regulation of Digital Assets

A pivotal aspect of the ISA 2025 is the formal recognition of virtual and digital assets as securities. This inclusion brings Virtual Asset Service Providers (VASPs), Digital Assets Offering Platforms (DAOPs), and Digital Assets Exchanges under the regulatory oversight of the Securities and Exchange Commission (SEC). By integrating digital assets into the formal financial system, the Act seeks to foster innovation while ensuring robust investor protection.

2. Criminalization of Unlawful Investment Schemes

In response to the proliferation of Ponzi schemes and fraudulent investment operations, the ISA 2025 prescribes severe penalties, including substantial fines and imprisonment, for individuals and entities involved in these schemes.

The Act also imposes stronger penalties for insider trading, market manipulation, and other forms of market misconduct. These measures aim to ensure fairness and protect investors from unethical practices.

3. Enhanced Regulatory Powers of the SEC

The Act significantly boosts SEC authority, granting it the powers to obtain electronic records, including phone and internet data, to aid its investigations and enforcement actions. This will further strengthen the Commission’s capacity to detect, monitor and manage systemic risks within the capital market.

4. Regulation of Commodities Exchanges and Warehouse Receipts

The ISA 2025 introduces a comprehensive framework for the regulation of commodities exchanges and warehouse receipts. This measure is expected to drive growth in agriculture, mining, and other commodity-dependent industries by promoting structured financing mechanisms and reducing risks for market participants.

5. Facilitation of Sub-National Fundraising

The Act expands on the categories of issuers and entities permitted to raise funds from the capital market, including sub-national bodies such as state and local governments. This provision enhances their flexibility to access capital for developmental projects, subject to SEC approval and oversight.

6. Introduction of Legal Entity Identifiers (LEIs)

To enhance transparency and traceability in securities transactions, the ISA 2025 mandates the use of Legal Entity Identifiers (LEIs) by all market participants. This global standard facilitates the identification of legal entities participating in financial transactions, thereby improving risk management and regulatory compliance.

7. Introduction of Enhanced Investor Protection Measures

The ISA 2025 reinforces investors’ protection by introducing more stringent disclosure requirements. Companies are now required to provide detailed information on their financial performance, governance, and sustainability practices, thereby promoting enhanced transparency across the capital market.

8. Incentivizing Sustainable Investments

The Act promotes investment in environmentally and socially responsible projects by providing tax incentives for green bonds and other sustainable financial instruments. This initiative aligns Nigeria’s capital markets with international trends in sustainable finance.

9. Support for Alternative Financing Mechanisms

ISA 2025 introduces a regulatory framework for alternative investments, such as private equity, venture capital, and crowdfunding platforms. This will provide startups and businesses with access to diverse sources of funding and help improve entrepreneurship.

10. Strengthened Market Surveillance and Risk Management

The SEC is equipped with enhanced surveillance capabilities, including the ability to monitor market activities in real time. This enables the prompt detection and response to potential risks and instances of market manipulation, thereby strengthening overall market stability.

11. Support for Cross-Border Securities Offerings

The ISA 2025 enables cross-border securities offerings, providing Nigerian companies with greater access to international capital markets while ensuring adherence to both domestic and global regulatory standards. This development enhances Nigeria’s attractiveness to foreign investors and strengthens its position in the global investment landscape.

12. Mandatory Corporate Governance Standards

The Act mandates that companies, especially fintechs and digital platforms, implement robust corporate governance codes. This requirement promotes better management practices, fostering increased trust and confidence among investors and other stakeholders in the market.

Read More: Strengthening Financial Transparency in NGOs: Best Practices for Audit and Compliance

What This Means for Market Participants

Investors

The ISA 2025 significantly strengthens investor protection by criminalizing fraudulent activities like Ponzi schemes and imposing harsh penalties on those involved. It also enforces stricter disclosure requirements, ensuring companies provide clearer and more detailed information, which enhances transparency and accountability. The introduction of Legal Entity Identifiers (LEIs) further improves market transparency, allowing investors to easily track and identify market participants, thus reducing the risk of fraud.

In addition to these measures, the Act regulates digital assets, introducing robust safeguards for financial transactions. These reforms are aimed at increasing investor confidence in the integrity and stability of the market, ensuring a more secure environment for investment, and fostering trust among market participants.

Capital Market Operators

The ISA 2025 expands opportunities for capital market operators, allowing them to participate in digital assets, commodities exchanges, and alternative investments. It also imposes stricter compliance requirements, including enhanced reporting, anti-money laundering controls, and stronger corporate governance. Also, the SEC gains broader oversight powers, including real-time monitoring of market activities, to prevent manipulation and ensure transparency

Regulators (Securities and Exchange Commission – SEC)

The ISA 2025 enhances the SEC’s powers, allowing it to regulate digital assets, commodities exchanges, and suspend trading during financial instability. It also strengthens enforcement by enabling access to electronic records for investigations. With provisions like Legal Entity Identifiers (LEIs) and cross-border offerings, the SEC is better positioned to integrate Nigeria into global capital markets.

Financial Institutions (Banks, Investment Firms, etc.)

The ISA 2025 requires financial institutions dealing in securities, investments, or digital assets to adjust their product offerings to comply with new regulations, including those for digital securities and blockchain-based products. These institutions must also adhere to stricter reporting requirements, ensuring better accountability to regulators and investors.

Digital Asset Providers (VASPs, DAOs, and Exchanges)

The ISA 2025 formally recognizes digital asset providers and exchanges as market participants, requiring them to operate under SEC supervision to ensure compliance with market standards. These entities must implement measures to protect investors, including robust security protocols, transparent trading practices, and adherence to anti-money laundering laws. They will also face penalties for misconduct, such as failing to register with the SEC or engage in fraudulent activities, and will be held accountable for not disclosing key information to investors.

Legal and Compliance Professionals

The ISA 2025 will drive a greater demand for legal and compliance professionals due to new requirements for corporate governance, disclosure, and anti-money laundering practices. These professionals will be essential in advising companies on navigating the complexities of the updated regulatory environment, including the regulation of digital assets, commodities exchanges, and cross-border offerings.

Tax Authorities

The ISA 2025’s inclusion of digital assets will require tax authorities to establish clear tax guidelines for transactions involving digital currencies and tokens. Additionally, with the SEC’s enhanced powers to track electronic records, tax authorities will gain access to more detailed financial transaction data, improving tax compliance and enforcement.

Read More: Cybersecurity as a Boardroom Priority: Moving from IT to Strategic Risk

A Defining Moment for Nigeria’s Capital Market

The evolution of Nigeria’s capital market regulations, culminating in the passage of the Investments and Securities Act (ISA) 2025, represents a critical milestone in aligning the country’s financial ecosystem with global standards. By introducing groundbreaking provisions such as the regulation of digital assets, enhanced investor protection, and expanded regulatory powers for the Securities and Exchange Commission, the ISA 2025 significantly improves market transparency, accountability, and stability. These reforms provide vast opportunities for investors, market operators, and regulators, while also addressing emerging challenges such as fraud, market manipulation, and the need for sustainable investment practices. As Nigeria continues to position itself as an attractive destination for global capital, the ISA 2025 lays a solid foundation for a more inclusive, secure, and competitive capital market.

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!

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!

 

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.

2. 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.

3. 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.

4. 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.

5. 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

Nigeria’s public sector has long struggled with financial leakages, with payroll fraud being a major contributor. The prevalence of ghost workers—fictitious employees fraudulently added to payroll systems—continues to drain public funds. Conservative estimates place these losses in the hundreds of billions of naira, money that could otherwise be directed towards critical public services such as healthcare, education, and infrastructure.

Tackling payroll fraud is not just an administrative necessity but a moral imperative in a time of economic hardship. With the nation in an economic downturn, every naira must be spent on delivering tangible value. This calls for a decisive embrace of technology to foster transparency, efficiency, and accountability in public sector payroll management.

The Scale of the Problem

The scale of Nigeria’s payroll fraud is staggering, with audits revealing alarming figures over the years:

•    In 2016, the Integrated Payroll and Personnel Information System (IPPIS) identified over 70,000 ghost workers, saving the federal government over ₦220 billion annually.
•    State-level audits have unearthed similarly shocking numbers: Kano State uncovered 8,000 ghost workers, Plateau State found 5,000, and Niger State identified 7,000.

These ghost workers exploit loopholes to receive salaries while living abroad, leaving government service, or in some cases, never having existed at all. Beyond the financial losses, such fraudulent practices erode public trust in the government’s ability to manage taxpayer funds effectively.

 

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

 

Current Interventions: IPPIS and Beyond

The introduction of the IPPIS has been a significant step forward in tackling payroll fraud by digitising payroll processes and reducing manual handling. However, despite its successes, the system has limitations:
•    Data discrepancies due to inconsistent data entry.
•    Resistance from stakeholders unwilling to transition to a transparent system.
•    Limited integration with other critical national systems such as the Bank Verification Number (BVN) and National Identification Number (NIN).

For instance, linking payroll systems with BVN and NIN could ensure real-time monitoring of employees’ financial activities, such as overseas travel and leave, preventing fraud. Furthermore, integrating biometric verification and automated personnel audits could enhance payroll accuracy and reduce irregularities.

Building Trust Through Technology

To effectively combat payroll fraud and financial leakages, Nigeria's public sector must embrace advanced technological solutions that provide transparency, efficiency, and scalability. Across industries, technology has proven to be the linchpin for driving operational excellence and reducing resource wastage. Multinationals and large private corporations, for instance, have turned to advanced payroll management systems to save billions annually by automating processes, integrating biometric verification, and enhancing reporting capabilities.

One such example is a robust platform like iPaysuite, which has been successfully adopted by private organisations and multinationals to address unique payroll challenges. Its advanced features—such as real-time employee validation, automated disbursements, and anomaly detection—have helped these organisations not only curb financial leakages but also optimise their workforce management processes. These solutions demonstrate how combining payroll systems with other critical technologies, such as biometric and data integration, can yield significant cost savings and improve accountability.

For Nigeria's public sector, the adoption of similar technologies could be transformative. By leveraging advanced solutions tailored to the specific needs of government payroll systems, the public sector can ensure:
•    Greater Transparency: Automated audits and real-time data visibility to curb discrepancies.
•    Operational Efficiency: Streamlined salary disbursement processes with minimal manual intervention.
•    Accountability: Tools for detecting and addressing anomalies before they result in significant financial losses.

Advanced payroll technologies have already proven their value in the private sector, setting a precedent for what’s possible. The same principles can be applied to the public sector, ensuring not just cost savings but also increased public trust in governance. As global best practices continue to evolve, it is imperative for Nigeria's leaders to align with solutions that drive long-term efficiency and financial prudence.

 

Read More: Balancing Energy Demands and Environmental Responsibility

 

Conclusion

The cost of inaction is significant. For every ghost worker discovered, the government saves an estimated ₦1 million annually. Scaling up the adoption of digital solutions could save trillions over time, freeing up resources that can be channeled into critical sectors like education, healthcare, and infrastructure.
When public funds are managed transparently and efficiently, confidence in governance improves, paving the way for sustainable growth. By leveraging advanced technologies, Nigeria can transition to a future where accountability and public trust are the norm, rather than the exception.

Addressing payroll fraud is not just a fiscal responsibility—it is a moral obligation to ensure taxpayer funds are used effectively for the greater public good. By embracing proven digital transformation strategies, the government can safeguard valuable resources, enhance public services, and build a lasting culture of transparency and accountability.
 

Nigeria boasts over 37 billion barrels of proven oil reserves and is one of Africa's largest oil producers. Nigeria's oil and gas industry remains vital to its economy, comprising around 90% of the country’s export revenue and 60% of government earnings.

Despite this, the sector grapples with significant challenges, from price volatility to regulatory shifts, which affect long-term stability and growth. For sustainable development, companies in Nigeria’s oil and gas sector need to adopt robust financial management strategies that can weather the industry's challenges.

This article explores strategic financial management tactics that can drive sustainable growth, positioning firms to stand on par with the best global players in the industry.

1.    Cost Management and Efficiency Optimization

In managing cost and ensuring efficiency, oil and gas companies can adopt:

Lean operations
Adopting lean management principles has been shown to reduce waste by up to 25%, according to a McKinsey report. This operational efficiency is crucial in a high-cost industry, where companies operating with lean strategies report, on average, a 10% increase in profitability.

Technology integration
Investing in advanced technologies, such as data analytics, automation, and artificial intelligence, can enhance operational efficiency. Technologies that improve exploration and production processes, reduce downtime, and enhance supply chain management can significantly lower operational costs. Automation technologies also enable firms to address skills shortages, a significant challenge in Nigeria's oil and gas industry.

 

Read More: Leveraging the Employee Compensation Act for Worker Safety in the Oil and Gas Industry

 

2.    Diversification of Investment

Practical means in which an energy company can diversify their investment portfolio includes:

Expanding into renewable energy
With global energy consumption increasingly favoring sustainability, Nigerian oil companies should invest in renewables like solar, wind, and biofuels. A diversified portfolio not only mitigates the risk of oil price volatility but also aligns with global sustainability goals. The global renewable energy market is projected to grow at a compound annual growth rate (CAGR) of 8.4% through 2030, making this a strategic move for companies aiming to be future-ready (Statista, 2023).

Geographic diversification
Investing in multiple geographic regions can help spread risk. Nigerian oil and gas firms should consider exploring opportunities in other oil-producing countries or regions with less regulatory risk. This geographic diversification can enhance revenue stability and provide new growth avenues.

3.    Strategic Financial Planning

Companies in the oil and gas industry can employ the following strategies in financial planning:

Robust budgeting practices
Effective budgeting practices are essential for financial sustainability. Companies should adopt zero-based budgeting, which allocates resources based on current needs rather than historical expenditures. This approach encourages efficient resource use and helps prioritize strategic initiatives.

Scenario planning
With oil prices ranging from $50 to $120 per barrel in the past decade, scenario planning helps companies model various price scenarios. Using this approach, firms can make informed financial decisions to weather price fluctuations

 

Read more: Accounting for VAT in Manufacturing Industry: Cashflow and Compliance Challenges

 

4.    Strengthening Capital Structure

Maintaining a very strong capital structure can be done using the following:

Optimal debt-equity ratio
Companies should strive for a debt-equity ratio that reduces capital costs while allowing for financial flexibility. With historically low-interest rates, companies can leverage debt financing to fund growth initiatives.

Attracting foreign investment
Nigeria's oil and gas industry can benefit from foreign direct investment (FDI). To attract FDI, companies must demonstrate financial stability, compliance with regulations, and a commitment to corporate governance. Establishing joint ventures with international firms can also provide access to capital and advanced technologies. 

As of 2024, the Nigerian oil and gas sector continues to attract significant foreign direct investment (FDI). Recent reports indicate that the sector secured approximately $3.5 billion in FDI in 2024. This investment is driven by joint ventures with international companies and ongoing efforts to enhance the sector’s infrastructure.

5.    Risk Management Strategies

Oil and gas companies can employ the following in managing their exposure to risks:

Hedging against price volatility
Given the cyclical nature of oil prices, companies should implement hedging strategies to protect against price fluctuations. Financial instruments such as futures contracts, options, and swaps can help stabilize revenues and ensure financial predictability.

Regulatory compliance
Staying compliant with local and international regulations reduces the risk of penalties and operational disruptions. Companies should invest in compliance programs and engage with regulatory bodies to stay informed about changes in legislation.

 

Read More: Balancing Energy Demands and Environmental Responsibility

 

6.    Environmental Sustainability and Corporate Social Responsibility

This is another key aspect in fostering sustainable growth. Oil and gas companies should engage in:

Sustainable practices
Incorporating environmental sustainability into financial management is critical. Companies should invest in technologies and practices that reduce their environmental impact, such as flaring reduction initiatives and carbon capture and storage. Flaring costs the Nigerian economy $2.5 billion annually, and reducing flaring can significantly cut environmental and operational costs

Community engagement
Investing in local communities through corporate social responsibility (CSR) initiatives can enhance a company's reputation and build strong relationships. Engaging with communities can lead to a more favorable operating environment and reduced opposition to oil and gas projects.

7.    Talent Management and Development

Oil and gas companies should promote:

Training and capacity Building
The success of financial management strategies relies heavily on the workforce's capability. Investing in training and capacity building ensures that employees are equipped with the necessary skills to navigate the complexities of the oil and gas industry.

Retention strategies
To maintain a competitive edge, companies must implement strategies to retain top talent. Offering competitive compensation, career development opportunities, and a positive work environment can significantly reduce turnover and enhance organizational performance.

 

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

 

Conclusion

Nigeria's oil and gas sector brims with potential but faces an array of complex challenges that demand strategic financial management. From optimizing operations to managing risks and prioritizing sustainability, success in this sector requires informed decision-making and meticulous execution.

At Stransact, we have partnered with leading players in the oil and gas industry, leveraging our deep expertise in assurance, audit, and consulting to support their growth and operational excellence. Our experience allows us to provide tailored insights and solutions that address the unique dynamics of this sector, helping companies navigate uncertainties while unlocking value.

As the industry evolves, businesses must align their strategies with global standards and local realities. Whether you're looking to strengthen your capital structure, enhance compliance, or implement robust risk management frameworks, a trusted advisor with a proven track record in the oil and gas space can be the key to driving long-term success.