Stransact Blog

Blog

  • The Investments and Securities Act of 2025: A Significant Milestone in Nigeria’s Capital Market Development

    The Investments and Securities Act of 2025: A Significant Milestone in Nigeria’s Capital Market Development

    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 This Act which repealed the SEC Act of 1998 aimed to modernize the regulatory environment, granting SEC enhanced powers to oversee and regulate the capital market more effectively.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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

    1. 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.

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

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

    In 2025, cybersecurity is no longer just a line item for the IT department — it’s a central business issue that demands attention at the highest levels of leadership. As digital transformation accelerates, and with AI rapidly changing the threat landscape, cybersecurity has become one of the most pressing strategic risks facing modern organizations.

    Yet, in boardrooms across Nigeria and beyond, cybersecurity remains underrepresented. In fact, fewer than 20% of global corporate boards have a cybersecurity expert, according to a 2023 report by Gartner. Many board members still view cyber threats as technical issues — the domain of firewalls, antivirus software, and IT personnel — rather than what they truly are: existential threats to business continuity, brand trust, and shareholder value.

     

    The Nigerian Cybercrime Crisis

    The scale of financial losses due to cyberattacks in Nigeria is alarming. According to the Financial Institutions Training Centre (FITC), Nigerian banks lost a staggering ₦53.4 billion to cybercriminal activities in just the first nine months of 2024 — a 468% increase from ₦9.4 billion during the same period in 2023.

    Even more shocking, Q2 of 2024 alone accounted for ₦42.8 billion in losses, a meteoric rise from ₦468.4 million recorded in Q1. These figures underscore the growing sophistication and success of cybercriminal operations targeting financial institutions.

    And the impact goes beyond banking.

    According to Nigeria’s Federal Government, the country loses an estimated $250 billion annually to cybercrime — affecting sectors ranging from oil & gas and telecoms to healthcare, logistics, and retail. This is not just a tech issue. This is an economic crisis.

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

    The Problem You Know: Data Breaches and Compliance Chaos

    Executives are already familiar with the usual suspects:

    • Data breaches that compromise customer trust.
    • Compliance pressures from local and global regulations like NDPA, and GDPR.
    • Ransomware attacks that cripple operations and demand millions in cryptocurrency.
    • Third-party risks from vendors with poor security practices.

    What may not be as obvious is just how much these risks have evolved — and how unprepared many companies still are.

     

    The Problems You Might Not Know (Yet)

    1. AI-Powered Threats Are Redefining Risk

    Artificial intelligence is a double-edged sword. While organizations embrace AI for efficiency, cybercriminals are using the same tools to launch hyper-personalized phishing attacks, deepfake social engineering, and automated vulnerability scanning. The attack surface has expanded exponentially: cloud environments, APIs, third-party vendors, IoT devices, and remote teams all present new vulnerabilities.

    1. Cyberattacks Are Increasing in Frequency and Cost

    According to IBM’s 2023 Cost of a Data Breach Report:

    1. Cyber Insurance Is No Longer a Safety Net

    The surge in cyber incidents has made insurers more selective, with stricter conditions and higher premiums. Policies now require demonstrable cyber hygiene — meaning without proper governance, your claim could be denied.

    1. Board Accountability Is Increasing

    Regulators are no longer tolerating ignorance. In the U.S., the SEC has introduced rules mandating cyber risk disclosures. Locally, Nigerian regulators like the CBN, SEC, and NCC have issued industry-specific cybersecurity frameworks, and enforcement is intensifying.

    Boards and C-suites can no longer claim plausible deniability.

    Read More: Are You Losing Millions to Software You Don’t Even Own? Here’s What to Do Instead

    Why You Must Lead the Charge — Not Delegate It

    Cybersecurity is now a strategic risk. It requires governance, investment, and visibility at the top level. And most importantly, it requires proactiveness, not reactivity.

    Waiting for a breach to happen before taking cybersecurity seriously is like insuring a burning building.

    As a top executive, your role includes:

    • Championing a cyber-aware culture from the top down.
    • Mandating regular cyber risk assessments and scenario planning.
    • Integrating cybersecurity into enterprise risk management (ERM) frameworks.
    • Ensuring cybersecurity metrics and KPIs are part of board reporting.
    • Investing in zero-trust architecture, AI threat detection, and third-party risk oversight.

     

    The Way Forward: From Awareness to Agility

    To stay ahead, boards and executive teams must:

    Elevate cybersecurity to board-level oversight

    Establish a board subcommittee or appoint a cybersecurity liaison to ensure visibility.

    Adopt a cybersecurity maturity model

    Use internationally recognized frameworks like NIST, CIS Controls, or ISO 27001 to assess gaps and improve posture.

    Invest in people and capabilities

    Cyber resilience is not just about tech — it’s about people. Train employees, hire CISOs, and build incident response plans that are tested regularly.

    Anticipate tomorrow’s threats

    With generative AI and quantum computing on the horizon, boards must work with their tech leaders to anticipate and prepare for next-generation risks.

    Partner with trusted advisors

    Engage with professional services firms like Stransact, with global capabilities and local insight, to assess, design, and implement enterprise-wide cyber strategies.

    Cybersecurity is Everyone’s Business — But It Starts with You

    The cyber risk landscape is expanding faster than many boards can keep up with. From AI-driven scams to geopolitical cyber warfare, the threats are diverse, sophisticated, and ever-evolving.

    You wouldn’t leave financial controls to chance. You wouldn’t ignore operational risk. So why treat cybersecurity as anything less than a core strategic concern?

    Proactive leadership from the top is the only way to build cyber resilience, maintain stakeholder trust, and secure the future of your enterprise.

    Cybersecurity is no longer an IT issue. It’s a boardroom issue. And it’s your move

     

    Let’s Talk Strategy

    If you’re ready to assess your current cybersecurity maturity or elevate your board’s awareness, Stransact can help. Reach out to us at [email protected] to schedule a board-level cyber risk consultation.

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

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

    Financial mismanagement in NGOs is more than just an internal issue—it has real-world consequences. A 2023 report by the International NGO Accountability Taskforce revealed that 65% of donor funding disputes stem from poor financial transparency, leading to funding losses exceeding $1.2 billion annually.

    Additionally, non-compliance with international audit standards has led to regulatory fines and legal sanctions, crippling many organizations.

    The takeaway? Poor financial oversight can cost NGOs their credibility, funding, and, ultimately, their mission impact.

    In our nearly two decades of advising NGOs, we’ve seen firsthand how robust financial governance can transform organizations from struggling entities to models of accountability and efficiency. This article outlines essential strategies that top decision-makers must implement to audit-proof their organizations and ensure long-term sustainability.

    Why Financial Transparency is Non-Negotiable for NGOs

    NGOs operate in a high-stakes financial ecosystem where accountability is paramount. Unlike private enterprises, NGOs depend heavily on external funding, making financial transparency a make-or-break factor for survival. Strong financial governance achieves the following:

    Read More: Risk-Based Auditing for Nigerian Non-Profit Organisations: Enhancing Accountability and Effectiveness

    The Four Pillars of Financial Transparency

    To establish bulletproof financial governance, NGOs must focus on three critical areas:

    Understanding Audit Scope and Requirements

    Audit preparation begins with a thorough understanding of the type of audit your organization is subject to:

    • Public sector audits include financial, compliance, and performance audits, each with distinct objectives.
    • Nonprofits handling donor-restricted funds must comply with financial statement audits, Single Audits (for U.S. federal funding recipients), and specific grantor-mandated audits.
    • International NGOs may need to comply with multi-jurisdictional standards such as IFRS, IPSAS, or local statutory reporting frameworks.

    Developing Robust Internal Control Systems

    Strong internal controls mitigate risks associated with fraud, fund misuse, and financial inefficiencies. NGOs must implement:

    • Segregation of Duties: No single individual should have control over financial transactions end-to-end.
    • Multi-Tiered Approvals: Large expenditures must require approvals from multiple levels of leadership.
    • Fund Management Protocols: Clear documentation of donor-restricted funds to prevent misallocation.
    • Conflict of Interest Policies: Board members and senior leaders must disclose financial interests and recuse themselves from related decision-making.
    • Advanced NGOs leverage cloud-based ERP solutions (e.g., NetSuite, Microsoft Dynamics) to automate financial controls, ensuring real-time oversight and reducing human error.

    Creating a Comprehensive Audit Preparation Plan

    Being proactive about audit readiness significantly reduces stress and improves compliance. NGOs should:

    • Establish a detailed audit timeline—starting six months before the audit—to prepare key documentation.
    • Ensure financial statements undergo pre-audit internal reviews to identify inconsistencies.
    • Train staff on audit expectations to streamline responses to auditor inquiries.
    • Conduct regular internal audits before external audits to flag and correct discrepancies early.

    Ethical Conduct & Whistleblowing

    • Implement a code of ethics and a confidential whistleblowing mechanism.
    • Protect whistleblowers from retaliation.

    Ethical conduct builds a strong organizational culture.

    Practical Steps to Strengthen Transparency

    Beyond compliance and audit readiness, NGOs should take the following transparency measures:

    • Publish Annual Financial Reports: Make financial records easily accessible on the organization’s website, including funding sources, expenditures, assets, and liabilities.
    • Subject Financial Reports to Independent Audits: Engage reputable external auditors and publicly disclose audit findings.
    • Disclose Executive Compensation: Provide transparent reporting on the salaries of top leadership.
    • Implement a Whistleblower Policy: Establish anonymous channels for reporting financial irregularities and ensure prompt investigation and action.
    • Comply with Local Regulatory Requirements: NGOs must register and obtain necessary approvals in all jurisdictions of operation.

    The Role of Expert Advisory in Strengthening NGO Financial Governance

    Over the years, we have partnered with both local and international NGOs to strengthen their financial management frameworks. Our work has focused on ensuring compliance with local and international regulatory requirements, improving internal controls, and helping NGOs maintain donor confidence while staying resilient in their mission.

    By implementing tailored financial strategies, NGOs have successfully enhanced operational efficiency and accountability, positioning themselves as trustworthy entities in the sector.

    Read More: AI Adoption: Redefining Efficiency and Innovation in Your Business

    Conclusion: The Path to Financial Integrity

    In an era where financial scrutiny is at an all-time high, NGOs cannot afford to overlook financial transparency. The risk of donor mistrust, legal consequences, and operational inefficiencies is too great.

    However, by adopting strong audit frameworks, internal controls, and compliance strategies, NGOs can transform audits from stressful obligations into valuable opportunities for improvement.

    We encourage all NGOs to prioritise financial transparency and implement these best practices.

    For NGOs looking to enhance financial transparency and compliance, expert guidance is key. If you have any questions or need further insights on financial best practices, feel free to contact us via [email protected]—we are always available to help organisations navigate financial complexities and build a foundation of trust and accountability.

  • Are You Losing Millions to Software You Don’t Even Own? Here’s What to Do Instead

    Are You Losing Millions to Software You Don’t Even Own? Here’s What to Do Instead

    For many large enterprises, off-the-shelf software seems like the most convenient choice—fast to deploy, pre-packaged features, and a vendor taking care of updates.

    But here’s the reality: you’re paying a premium for something you don’t own.

    Every year, businesses spend millions on recurring licensing fees, mandatory upgrades, and hidden costs associated with software that wasn’t designed for them. Even worse, your business-critical operations are dependent on third-party platforms—which can change policies, raise prices, or even shut down, leaving you stranded.

    So the real question is: how much is your software really costing you? And more importantly, what can you do about it?

    The Hidden Cost of Off-the-Shelf Software

    You’re Paying for Features You Don’t Need

    Most enterprise software solutions bundle features into expensive plans—forcing you to pay for tools that your business may never use.

    • Need custom reporting? That’s an extra fee.
    • Need specific compliance settings? Upgrade to a premium plan.
    • Need more user licenses? Your costs just doubled.

    Over time, these unnecessary expenses drain your budget without adding real value to your business.

    Example: Schneider Electric consolidated multiple third-party software tools into a custom-built platform, saving millions in unnecessary licensing fees.

    You’re Locked into Expensive Subscription Fees Forever

    At first, subscription software seems affordable—until you realize you’re renting a tool you’ll never own.

    With each passing year, the cost keeps rising, and since the software isn’t yours, you have no control over pricing, policy changes, or service shutdowns.

    Example: HSBC, operating across multiple continents, built its own custom risk management platform instead of relying on third-party software—cutting millions in recurring subscription costs.

    💡 What’s the alternative? A custom software solution means you invest once, own the platform outright, and eliminate unpredictable annual fees.

    You Have No Control Over Compliance & Security Risks

    For multinational enterprises, compliance is non-negotiable. Payroll regulations, data protection laws, and industry compliance constantly evolve, but third-party software providers are slow to adapt.

    • Data stored externally means you’re at the mercy of their security standards.
    • Regulatory non-compliance can lead to penalties if the software doesn’t meet local laws.
    • Vendor lock-in prevents flexibility if you need to adjust your software to new legal requirements.

    Example: Maersk, the world’s largest shipping company, suffered a massive cyberattack that crippled its supply chain. The lesson? Enterprises with full control over their systems recover faster and protect their data more effectively.

    💡 What’s the alternative? Custom software ensures full compliance, enhanced security, and total data ownership.

    You’re Stuck with Software That Won’t Scale With You

    As enterprises grow, so do their operational complexities. But off-the-shelf software isn’t designed for long-term scalability.

    • Want to expand functionality? You’ll need third-party add-ons.
    • Need custom integrations? Good luck making them work seamlessly.
    • Trying to adjust workflows? You’ll have to work around software limitations.

    Example: Airbus, a global aerospace leader, abandoned generic ERP solutions in favor of a custom-built enterprise system that scaled seamlessly across its manufacturing and supply chain operations.

    💡 What’s the alternative? Custom software is built to grow with your business, not against it.

    Case Study: How a Multinational Saved Millions with Custom Payroll Software

    A leading manufacturing multinational in Nigeria was spending millions annually on third-party payroll software, facing:

    • High licensing fees
    • Security risks from external data storage
    • Compliance gaps with evolving Nigerian tax laws
    • Inflexible payroll structures

    By switching to a custom-built payroll solution, they eliminated recurring costs, enhanced security, ensured full compliance, and optimized efficiency.

    The result? Millions saved annually and a payroll system built for their needs.

    🔗 See the full transformation— CLICK HERE

    What Should Enterprises Do Instead? Take Back Control.

    The real cost of software isn’t just in the licensing fees—it’s in the lack of control, security, and scalability.

    Here’s what enterprises should consider:

    ✅ Audit your current software costs—Are you paying for features you don’t need?
    ✅ Assess compliance risks—Are you meeting local and global regulations?
    ✅ Evaluate long-term scalability—Will your current software grow with your business?
    ✅ Compare costs—Are your subscription fees higher than the cost of owning a custom solution?

    Many global enterprises have already made the shift. The question is: will you?

    Custom Software is an Investment, Not an Expense

    For enterprises handling large-scale operations, payroll, finance, supply chain management, and compliance-heavy processes, off-the-shelf software will never be enough.

    With Stransact’s technology services, you get:
    🔹 Tailored software built for your business needs
    🔹 Cost-effective alternatives to overpriced third-party tools
    🔹 Full compliance with industry and regional regulations
    🔹 Long-term savings by eliminating unnecessary subscriptions

    Are you ready to stop losing millions on software you don’t own? Let’s discuss how a custom solution can cut costs, improve compliance, and give you total control.

     

  • 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