What is the single biggest legislative change on the horizon in the next 18 months?

The most recent significant legislative changes in Nigeria are the Petroleum Industry Act, 2021 (PIA) and the Companies and Allied Matters Act (CAMA 2020).

CAMA 2020 introduced several key innovations to Nigerian company law, the purpose of which is to attract foreign investment and increase the ease of doing business. Some of the key innovations under the law:

• allow for a single member / shareholder company;
• introduce the possibility to hold virtual Annual General Meetings (AGM);
• reduce fees in connection with the filing, registration or release of charges to 0.35% of the value of the charge; and
• introduce issued share capital.

From a doing business and foreign investor’s perspective, these innovations are significant. The introduction of a virtual AGM (which until now was not applicable under the previous regime) allows for flexibility in the holding and attendance of AGMs. Foreign investors resident outside of Nigeria need not worry about being physically present to attend an AGM as they can attend from anywhere in the world. Also, the reduction of filing fees (previously 1-2%) has significant cost saving benefits for investors.

As regards PIA, one of the recuring themes is to increase the ease of doing business in the oil and gas sector, while also attracting foreign investment. A key indicator of this is the introduction of a “deemed approval” regime, which is designed to promote certainty and transparency in the application for petroleum operations licenses. For example, where the Nigerian Upstream Regulatory Petroleum Commission makes a recommendation to the minister (who is the ultimate grantor) for the granting of petroleum licenses, applications will be deemed approved if the minister fails to communicate their decision within 90 days. There are similar provisions in the downstream sector, where deemed approval of the Nigerian Midstream and Downstream Petroleum Regulatory Authority is granted to applicants when it fails to communicate an approval (or rejection) of an application within the prescribed number of days.

Also, the fiscal incentives and host communities provisions are expected to ramp up investors’ confidence in the industry. One of the major risks of investing in petroleum operations is that of escalating conflicts in the host communities. In addressing this, the PIA has introduced a mechanism whereby host communities will only be paid from a designated fund (maintained by the companies carrying out petroleum operations) if there is no disruption (attributed to the host communities) to the activities of the investors. While serving as an incentive for host communities to protect the properties of investors, it also mitigates the risk of disruption of petroleum activities attributed to host communities.

With these incentives, it is envisaged that the PIA will affect the industry by boosting investors’ confidence, increasing the ease of doing business and attracting foreign investments to the oil and gas sector.

What do you expect the general business mood to be in your country in the next 18 months?

The general business mood in Nigeria is that of careful caution. This is possibly driven by recent volatility in the value of the Nigerian Naira against the US Dollar, high inflation, and the impending political movements ahead of the 2023 presidential elections. However, we expect that as Nigeria has seen positive growth since the COVID-19 downturn in 2020 and recent legislative changes such as the PIA and CAMA 2020, there will be an uptick in investor confidence in the coming months.

What is the current investment appetite in the region? Do you see this changing in 2022?

The current investment appetite in the region is that of caution. This may partly be explained by the impact of COVID-19, which reduced the inflow of foreign direct investments to African economies to very low levels. The reduction of crude oil prices (driven by low demand), inflation, political instability (in Mali and recently in Guinea), and escalating insecurity are also reasons for the low level of investment in the region.

Going beyond these factors, a more positive investment outlook can be expected in 2022. The distribution of vaccines, the pick-up of oil prices in the international market, passage of PIA in Nigeria, and the proposed Investment Protocol to the African Continental Free Trade Area Agreement (AfCFTA) which is set to anchor the continental investment framework in Africa, are expected to ramp up investors’ confidence in Nigeria and at the regional level.

In which sectors do you expect to see increased investment and/or financial movement in the next 18 months?

More investment in the oil and gas sector in Nigeria is expected, given the enactment of PIA and the magnitude of the proposed projects. For example, the federal government has proposed a plan to invest in rehabilitating refineries in Nigeria (USD1.5 billion in the Port-Harcourt and Warri petroleum refineries). There is also the ongoing development of the USD2.8 billion AKK Pipeline Project by the state oil company (NNPC).

Fintech is also a growth area, with Nigerian unicorns attracting international financing. This trend is expected to continue for the Nigerian fintech industry in the next 18 months.

Through reflation, the federal government intends to stimulate spending in the infrastructure and construction sector. In April 2021, the Minister of Transportation disclosed that the government intends to build four new rail lines across different parts of Nigeria. Two months later, the Vice President reportedly stated that the federal government would invest USD1 billion in three road projects. Given the above, more financial movements in the construction space can be expected.

The federal government has also proposed setting up a NGN15 trillion infrastructure fund in October 2021. It is expected that this fund will raise money from capital markets while investing the proceeds in critical projects such as roads, airports and rail lines. The expectation is that there will be increased investment in the construction space in the medium to long term.

Where do you see the key areas of growth or opportunity for businesses operating in your country?

A key area of growth is fintech. Others include the agriculture, aviation, health and construction sectors. This is premised on the fact that the Economic Recovery and Sustainability Plan of the federal government is looking to spend in excess of NGN2 trillion in these sectors.

What sectors have been most affected by COVID-19 and what have businesses in those sectors done to cope with these challenges or potentially benefit from opportunities arising?

According to the Economic Sustainability Plan, the sectors most affected by the pandemic are agriculture, health, manufacturing, aviation, construction, services and power. Through a combination of fiscal and monetary measures, the government has come up with several plans aimed at saving these sectors from contraction and job losses.

Businesses have made use of governmental intervention to mitigate the impact of the pandemic. For example, farmers have accessed the facilities under the Mass Agriculture Program (in excess of NGN634 billion) to improve agricultural outputs. Also, the National Agency for Food and Drugs Administration and Control has been mandated to reduce its registration fees by 80% and total waiver of administrative charges for products renewal. This is intended to benefit food and drug production companies.

Businesses in the affected sectors are also making temporary and time-bound restructuring of their tenor and loan terms with commercial banks. In addition, affected businesses are taking advantage of Central Bank of Nigeria’s (CBN) incentives to cope with the pandemic.

What is the most relevant regional or pan-African economic trend that you expect to see in the next 18 months?

The most relevant trend is the impact of the AfCFTA. It will create a single market for the member states of the African Union, while reducing tariffs on intra-African trade. Along with the AfCFTA is its Investment Protocol, which seeks to anchor the continental investment framework in Africa and increase in both intra- and extra-African foreign direct investment flows, market efficiency, economic integration, and the sustainable economic development and growth of the African host-states.

In terms of the legal services market, what growth are you seeing on the horizon in the next 18 months?

More growth in the renewables space, fintech, infrastructure developments, and the oil and gas industry. Most of the advisory work that clients are bringing in currently is debt and equity financing.