COVID-19: Legal and Regulatory Impact Series, Nigeria

  • As of 07 May, Nigeria has confirmed 3,145  cases of Coronavirus COVID-19 and reported 103 deaths. The federal and state governments have taken proactive steps to curtail the spread of coronavirus throughout the country. These have included the ordering of a total lockdown in major states and cities similar to that in force in European countries. The country also closed its international airports and land borders in March.

    These containment measures have caused unprecedented disruption to commercial and business activities in Nigeria. In many instances, this will have disrupted the ability of counterparties to fulfil their contractual obligations. A number of businesses will now be looking at whether their suppliers and commercial partners can continue to perform their contractual obligations. They will also be questioning the ability of contractors to claim that a force majeure event has occurred. With no force majeure clause embedded in Nigerian Law, parties will be bound by the provisions in the contract they have signed. And legal departments will have to pay close attention to contractual small print. Even if “pandemic” has been listed under force majeure – businesses must also prove that the event has had a necessary causative impact and companies operating in Nigeria should not assume that the clause will apply.

    More generally, despite the easing of the lockdown in Abuja and Lagos, businesses should expect last month’s total lockdown of government agencies, including the National Agency for Food and Drug Administration and Control (NAFDAC), Standards Organisation of Nigeria (SON) and the Corporate Affairs Commission (CAC), to have an ongoing impact. Most agencies in Nigeria do not provide for online filing, and in the majority of cases, businesses are required to provide documents in person. As such, businesses seeking to use any government-offices during this period – including for immigration and trade-mark registration purposes - should expect significant delays in many services and the continued suspension of others.

    COVID-19 will also have far-reaching consequences for the accessibility of justice and alternative forms of dispute resolution in Nigeria. Due to infrastructural challenges, Nigeria is unlikely to adopt technology to conduct hearings online – meaning that many proceedings will be suspended. Ongoing travel restrictions will also hamper international arbitration proceedings over the coming months.

    The pandemic has wrought an international economic shock, which has seen demand for oil – Nigeria’s main export and source of government revenue – fall to 25-year lows. Falling oil prices will continue to adversely affect Nigeria. The Central Bank has issued a directive suspending the sale of currency to all licensed dealers – confirming an official shortage of foreign currency. The Naira has weakened to 450 per dollar in the unofficial market. Before the pandemic it was as low as 360 per dollar, where it has traded at for the last 3 years. The availability of currency will be a significant issue for many businesses who will need to look at how they can repatriate profits and earnings in the coming months.  It will also have serious consequences for businesses who need to pay for raw materials outside of the country.

    The International Monetary Fund (IMF) forecasts that Nigeria will return to recession as the economy contracts by 3.4% this year and will only make a weak recovery of 2.4% in 2021.

    As part of its commitment to support businesses operating across Africa – in April, Afriwise hosted a series of country-focused COVID-19 legal and regulatory webinars. To hear more about our guidance for businesses in Nigeria during this period, including for issues related to insurance, tax and insolvency, please listen to the full webinar here.

    These legal and regulatory insights have been provided by Afriwise's top Nigerian legal partners and experts, including: ÁELEX, Udo Udoma & Belo-Osagie, Goldsmiths Solicitors and Africa Risk Consulting.

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