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Nigeria

Beneficial Ownership Register (NG0006)

Overview

At-a-Glance

Action Plan: Nigeria National Action Plan 2017-2019

Action Plan Cycle: 2017

Status: Inactive

Institutions

Lead Institution: Corporate Affairs Commission (CAC)

Support Institution(s): Nigeria Extractive Industry Transparency Initiative (NEITI), Ministry of Petroleum Resources, Nigerian National Petroleum Corporation, Ministry of Mines and Steel, Independent Corrupt Practices and other Related Offences Commission (ICPC), Economic and Financial Crimes Commission (EFCC), Code of Conduct Bureau (CCB), Federal Inland Revenue Service (FIRS), CBN, Ministry of Foreign Affairs, Ministry of Justice, National Information Technology Development Agency, Office of the Accountant-General of the Federation, Office of the Auditor-General of the Federation. Public What You Pay (PWYP), African Centre for Leadership, Strategy & Development (Centre LSD), Digital Forensics, African Network for Economic and Environmental Justice (ANEEJ), PWYP, WANGONeT, CISLAC, Nigeria Security and Exchange Commission, NACCIMA, Connecting Lens Initiative, Society for Forensic Accounting and Fraud Prevention, BudgIT, Public and Private Development Centre, PGL, Professional Women Accountants of Nigeria, Micro, Small, Medium Enterprises Advocacy and Support Initiative, Association of National Accountants of Nigeria (ANAN), SFAFP, PROWAN

Policy Areas

Anti-Corruption, Beneficial Ownership, Capacity Building, Fiscal Openness, Private Sector, Publication of Budget/Fiscal Information

IRM Review

IRM Report: Nigeria Design Report 2017-2019

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Civic Participation , Technology

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Nigeria is committing to establishing a register that will make it possible to identify the natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.

IRM Midterm Status Summary

6. To establish a public central register of beneficial owners of companies

Language of the commitment as it appears in the action plan:

“Nigeria commits to establish a register that will make it possible to identify the natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.”

Milestones:

6.1. CAC to commence consultations, workshops and process of establishment of Register of Beneficial Ownership.

6.2. Capacity building on Beneficial Ownership for public officials, civil society and investigative journalists.

6.3. Establishment of Beneficial Register designed according to open data standards.

6.4. Regular update of the Register using innovative technology.

6.5. Dissemination of Information on Beneficial Ownership.

6.6. Establish clear rules on beneficial ownership, constitute coordinating committee with CAC and NEITI as lead organisations.

Start Date: January 2017 End Date: December 2019

Action plan is available here:

Context and Objectives

This commitment aims to enhance civic participation through access to beneficial ownership information via a register using open data standards.

In Nigeria, a lack of due diligence requirements relating to beneficial ownership has been linked to money laundering, drug trafficking, terrorism and corruption. [68] According to Kolawole Banwo (CISLAC), people use proxies and fronts to register companies and the legal owners are usually not those who control and benefit from the companies. There is a lot of political interference in economic and commercial decisions, and officials use their position to further enrich themselves through procurement processes or acquisition of assets and properties. [69] Banwo believes this information should be public, since what ensures transparency is public scrutiny. [70] Nigeria has an extended history of engagement with the Financial Action Task Force (FATF) [71] and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). This engagement has remedied some of the legal and institutional gaps relating to anti-money laundering and counter-financing of terrorism. [72]

But the law, as set out in the Companies and Allied Matters Act, Cap 59, 1990 (CAMA), does not provide for the systematic identification of beneficial owners, nor the establishment of a publicly-accessible beneficial ownership register. For example, section 94 of CAMA allows a public company to require a member of that company to disclose the capacity in which he holds company shares and if he holds them otherwise as a beneficial owner. Section 95 addresses the notification of substantial, not beneficial, ownership. These provisions reflect a concern with concentration and control, rather than with transparency and accountability. They have not prevented false fronts in the company register maintained by the Corporate Affairs Commission (CAC) [73] and allegations of grand corruption continue to surface. For example, in 2015, the media reported that 15 ex-governors who had won Senate seats in the country’s elections had misappropriated and laundered N 172 billion. [74] In 2016, the Panama Papers revealed that 106 Nigerians and firms owned companies and assets in offshore tax havens. [75]

In May 2016, President Buhari recognized the Nigerian Extractive Industries Transparency Initiative (NEITI) and their efforts to implement beneficial ownership disclosure in the extractive industries (the NEITI published its roadmap in this regard in December 2016, see Commitment 3) [76] and announced that a disclosure requirement would be extended to other sectors. [77]

Commitment 6 is relevant to three OGP values (access to information, civic participation and technology and innovation for transparency and accountability). A beneficial ownership register designed according to open data standards, along with the creation of clear rules and dissemination of information on beneficial ownership, should advance access to information and technology and innovation for transparency and accountability. Robust consultations and workshops on establishing the register would promote civic participation.

Overall, the commitment is specific enough to be verifiable, although Milestones 6.1, 6.2, and 6.5 lack important detail. Milestone 6.1 does not expressly state that consultation will occur with civil society, and the “capacity building” envisaged by Milestone 6.2 is vague. Milestone 6.5 does not specify how beneficial ownership information will be disseminated to the public, but this is important given the technical nature of the information. Milestone 6.4 could be more measurable by specifying how regularly the register would be updated.

Civil society stakeholders are of the view that the commitment will have a transformative impact. [78] Nigeria should achieve beneficial ownership reforms given President Buhari’s political support, alongside the institutional and technical capacity of the CAC, the Bureau of Public Procurement, and the Central Bank of Nigeria. [79] However, although Milestone 6.6 mentions the need for “clear rules” on beneficial ownership, failure to mention legislative reforms, specifically of the CAMA, lowers the commitment’s potential impact to “moderate.”

Next Steps

This commitment covers a critical policy area for the country. Future commitments in this area could include:

  • A specific timeline and strategy for legislative reform; this is instrumental to realize the ambition of this policy area. A clear analysis of gaps in the current legal framework would be helpful to identify the adjustments needed to enable beneficial ownership reforms in Nigeria;
  • Consider articulating a strategy for public agency coordination and engagement, particularly relevant agencies like the CAC, BPP, and Central Bank of Nigeria. Their involvement and collaboration are key to deliver implementation in this policy aim; and
  • Set concrete targets to update the register and promote the register’s use.
[68] Inter-Governmental Action Group Against Money Laundering in West Africa, Mutual Evaluation Report: Anti-Money Laundering and Combating the Financing of Terrorism: Nigeria (7 May 2008), 9, https://www.giaba.org/media/f/99_giab--rapport-annuel-ang-ok-1-.pdf.
[69] Kolawole Banwo (CISLAC), interview by IRM researcher, 27 Feb. 2019.
[70] Id.
[71] A.G. Abubakar (Dir. Compliance, Corporate Affairs Commission), interview by IRM researcher, 14 Nov. 2018
[72] See Ehi Eric Esoimeme, “The Nigerian Money Laundering (Prevention and Prohibition) Bill, 2016: A critical appraisal” Journal of Money Laundering Control 20 no. 1 (2016).
[73] Abubakar, interview.
[74] Punch “N172bn fraud cases against ex-governors turned senators” (MaDailyGist.ng, 16 May 2015), https://madailygist.ng/2015/n172bn-fraud-cases-against-ex-governors-turned-senators-a-must-read/.
[75] Nicholas Ibekwe “#Panama Papers: Nigeria agrees to expose beneficial owners of companies” (Premium Times 12 May 2016), https://www.premiumtimesng.com/news/headlines/203324-panamapapers-nigeria-agrees-expose-beneficial-owners-companies.html.
[76] NEITI, Roadmap on the Implementation of Beneficial Ownership disclosure in Nigeria (Dec. 2016), https://eiti.org/files/documents/neiti-bor-281216.pdf.
[77] Ibekwe.
[78] Banwo; Edwin Ikhuredia (One Campagin), interview by IRM researcher, 28 Feb. 2019.
[79] Africa Network for Environment and Economic Justice “Is beneficial ownership transparency possible in Nigeria?” (11 Jul. 2017), http://www.aneej.org/beneficial-ownership-transparency-possible-nigeria/.

Commitments

  1. Participatory Budgeting

    NG0015, 2019, Anti-Corruption

  2. Implement Open Contracting and the Open Contracting Data Standard

    NG0016, 2019, Access to Information

  3. Transparent Tax Revenue Reporting

    NG0017, 2019, Legislation & Regulation

  4. Open Contracting and Licensing in Extractives

    NG0018, 2019, Access to Information

  5. Implement EITI Standard

    NG0019, 2019, Anti-Corruption

  6. Establish Beneficial Ownership Registry

    NG0020, 2019, Access to Information

  7. Strengthen Asset Recovery Legislation

    NG0021, 2019, Anti-Corruption

  8. Implement National Anti-Corruption Strategy

    NG0022, 2019, Anti-Corruption

  9. Improve Compliance with Freedom of Information Act with Focus on Records Management

    NG0023, 2019, Access to Information

  10. Improved Compliance with Mandatory Publication Provisions Requirement (FOIA)

    NG0024, 2019, Access to Information

  11. Implement Permanent Dialogue Mechanism

    NG0025, 2019, Dispute Resolution & Legal Assistance

  12. Aggregate Citizens' Feedback on Programs

    NG0026, 2019, E-Government

  13. Freedom of Association, Assembly, and Expression

    NG0027, 2019, Civic Space

  14. Enhance Participation of the Vulnerable

    NG0028, 2019, Capacity Building

  15. Implement New Computer Program in 6 Government Ministries to Improve Service Delivery

    NG0029, 2019, Capacity Building

  16. Legal Instrument to Strengthen SERVICOM

    NG0030, 2019, Legislation & Regulation

  17. Citizen Participation in Budget Cycle

    NG0001, 2017, Access to Information

  18. Open Contracting

    NG0002, 2017, Access to Information

  19. Extractive Sector Transparency

    NG0003, 2017, Access to Information

  20. Tax Reporting Standards

    NG0004, 2017, Fiscal Openness

  21. World Bank Doing Business Index

    NG0005, 2017, Infrastructure & Transport

  22. Beneficial Ownership Register

    NG0006, 2017, Anti-Corruption

  23. Anti-Corruption Informationi Sharing

    NG0007, 2017, Anti-Corruption

  24. Asset Recovery Legislation

    NG0008, 2017, Capacity Building

  25. Anti-Corruption Activity Coordination

    NG0009, 2017, Anti-Corruption

  26. FOIA Compliance for Annual Reporting

    NG0010, 2017, Access to Information

  27. FOIA Compliance for Disclosure

    NG0011, 2017, Access to Information

  28. Permanent Dialogue Mechanism

    NG0012, 2017, Fiscal Openness

  29. Joint Governmnet-Civil Society Legislation Review

    NG0013, 2017, Fiscal Openness

  30. Technology-Based Citizens' Feedback

    NG0014, 2017, E-Government

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