chido nwakanma - Afrikan Heroes

The Poison Pill in CAMA 2020 for Not-for-Profits Organisations

August 23, 2020

By Chido Nwakanma

There is significant verbiage but little illumination out there about the trending disputation concerning the provisions of the 2020 Companies and Allied Matters Act on not-for-profits. The petulant intervention of Bishop David Oyedepo of Living Faith Church brought anger rather than light and has inflamed the discourse. The consequence is that it has engaged combatants on either side of the Church versus the State debate rather than reasoned discussion to finetune or discard the legislation.

Section 839 Chapter 4 of CAMA 2020 borrows part of what exists in other jurisdictions to spell out stipulations for the management of civil society organisations. It grants powers without responsibility. The decision of the Charities Commission in England to penalise the Mountain of Fire and Miracles Ministries therein has suddenly become a justification for the inelegant Nigerian legislation. It is enough to state that while apples and oranges have the same shape and classification as fruits, they differ, nonetheless.

There is a loud hallelujah chorus for CAMA 2020. I share those sentiments in many areas. According to Banwo & Ighodalo Legal Practice, “CAMA 2020 is undeniably a progressive development in the Nigerian business and economic landscape and a big boost to the Ease-of-Doing-Business (EoDB) campaign of the Government. CAMA 2020 provides a robust framework for reforming identified onerous legal, regulatory and administrative bottlenecks which, for three decades, have made doing business in Nigeria substantially difficult (particularly for Micro, Small and Medium Enterprises (MSMEs)), and impeded investments into Nigeria.”
That ululation does not apply to Chapter Four of Section 839. First, we must pivot from the reductionist position that sees the section only in terms of the Church. Or the non-argument that secular authorities cannot regulate churches. Jesus Christ instituted the Church standard, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s” (Mark 12:17).
Section 839 covers the incorporated trustees of various nonprofits. These are associations “for the advancement of any religious, educational, literary, scientific, social, development, cultural, sporting or charitable purpose.” S839 of CAMA 2020 applies to the operations and activities of private secondary schools and universities, cultural associations, sports clubs, or the Umuode Development Association of my community. It also applies to various NGOs and other CSOs.

It would help to read Section 443-558 on the appointment of administrators for companies in distress alongside a reading of Section 839. Subsection 1 of 839 empowers the CAC to apply to the court, suspend the trustees of an association and replace them with an interim manager(s). Reason? “If It reasonably believes” that there has been misconduct or mismanagement, fraud, to protect the property of the association or in the public interest.
Compare this with S571 on winding up of a company. It would only happen if “(a) the company has by special resolution resolved that the company be wound up by the Court; (b) default is made in delivering the statutory report to the Commission or in holding the statutory meeting; (c) the number of members is reduced below two in the case of companies with more than one shareholder; (d) the company is unable to pay its debts; (e) the condition precedent to the operation of the company has ceased to exist, or (f) the Court is of the opinion that it is just and equitable that the company should be wound up.”
Did you notice the difference? CAMA 2020 states clear grounds for winding up of a company starting with the intent of the promoters through to compliance failures or indebtedness. Contrarily, the provisions for CSOs are ambiguous and include notably “if it (CAC) reasonably believes” that there has been fraud, misconduct, or mismanagement. In other words, if CAC suspects an organisation, it applies to the court to remove its trustees and take over its affairs. Just like that!
Moreover, there is no time limit to the running of affairs by the CAC-appointed and court-sanctioned managers. Then there is the nebulous “public interest” provision. What is that? What does public interest mean here, and who defines it?
Suspicion of the motive and intent of Section 839 stems from the nebulous grounds for the intervention of the CAC in the running of CSOs. The provisions are subject to varying interpretation. It comes against the backdrop of the poisoned chalice of mistrust that characterises Nigerian public affairs and governance in the Buhari Years. Only the paranoid survive, Andy Grove famously asserted concerning competition in the microchips market. Paranoia is excusable in Nigeria today.
S839 of CAMA 2020 sets a higher bar for CSOs than for even quoted companies. It is a bar that is, at times, invisible and other times unclear. If there is fraud or mismanagement in a company, the trustees would ordinarily involve the law such as invite the police, go to the court or seek arbitration. How is it the business of the CAC?
It becomes the business of CAC in the case of CSOs. That brings up the issue of public benefit and the story of the fine on MFM in the UK. The Charity Commission for England and Wales regulates charities in that jurisdiction. Charities are public benefit organisations run by their trustees for the benefit of the charity’s beneficiaries. “An organisation cannot be a charity if it is run in the interests of anyone beyond the charity, including private individuals and public bodies such as local authorities”.
The Charities Commission registers all charities. They enjoy grants-in-aid based on their registration. The charity law binds all charities, including those currently exempted from registration. They have an overriding duty to “act prudently and within the law” as in sound corporate governance. The Government intervenes based on the law and because it provides support and a cover for the charities to raise funds.There are various regulators. For instance, the Higher Education Funding Council for England (HEFCE) regulates universities as charities.
CAMA 2020 empowers CAC without giving it any responsibilities. CAC will do nothing for not-for-profits in the country but would have the power to take over their operations by appointing a manager to run their affairs on patently nebulous grounds.
In an example of lazy legislative drafting, CAMA 2020 borrows aspects of the law from other jurisdictions but fails to go the whole hog. There is no Charities Commission, or will the CAC set up one? S 17 demands plaintiffs to inform CAC in writing 30 days before filing a suit against it. Strange. Then in S19, it disallows freedom of association or action by 20 or more persons running a business unless they register it with CAC.
“No association, or partnership consisting of more than 20 persons shall be formed for the purpose of carrying on any business for profit or gain by the association, or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other enactments in force in Nigeria.”

CAMA 1990 listed lawyers, accountants, and company secretaries as those who can handle company registration. CAMA 2020 regresses from professions to individuals. S 705 of CAMA 2020 brings in a private body, BRIPAN, and vests it with the sole right for the practice of insolvency in Nigeria.
S 839 is just one of many poisonous provisions in the new CAMA that necessitate a re-think of the entire law. It speaks to deleterious sloppiness or malice aforethought. Was there stakeholder engagement at all as should be the norm? There is a need to review the law.

Chido Nwakanma is of the Lagos Business School.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

The Swagger of Failure

December 20, 2019

Chido Nwakanma, Pan African University,Lagos

THE PUBLIC SPHERE with Chido Nwakanma

When an institution such as the World Bank warns about the trajectory of an economy, all stakeholders must show interest and critical attention. According to that important bastion of global economics, Nigeria risks becoming the home of not just the majority of poor people but 25% of the global poor. In other words, where we worried about 98million poor, we should be thinking of about 200m persons struggling to live.

Their prognosis came with a caveat. Nigeria must find a way to boost employment and economic growth to prevent this sad scenario from playing out. Precisely, Nigeria must remove the many restrictions on the free operations of market forces in the economy and stop the rush to an economy controlled and run by the state.

The World Bank wants Nigeria to remove trade restrictions, stabilise economic policies and increase domestic revenue. They also advise as they always do, the removal of fuel subsidies and lending by the Central Bank to specific areas.
Nigeria’s current situation would help to understand the gravity of the prognosis of the World Bank. Projections are that the economy would expand by 2.1 per cent in 2020 and 2021. It seems weak but manageable until you place it against the population growth figure of 2.6 per cent for the same period. In other words, the economy will be growing behind the numbers we need to feed our growing population.

The other challenge is the enormous debt the federal government has accumulated in the last four years. It is the highest rate of debt growth in the history of not only Nigeria but other countries not at war. We are so much in debt it is now worse than the massive debt overhang the 15 years of military rule post-Shagari left us.
The real threat though is the fact of a government revelling in the swagger of failure. There is an arrogance to the pursuit of wrong policies and programmes by the Federal Government. They despise counsel and contrary opinion to the paths they choose even as the results show those paths to be incorrect.

As the indices point south, the government walks with a swagger claiming fantastic results that do not reflect in the lives of citizens. They quarrel with the figures. Or generate their own statistics as manifested in two successive ministers of agriculture. While Audu Ogbeh claimed our alleged rice revolution had shut mills in Thailand, his successor believes there is no poverty in the land that has now become the poverty capital of the world.

At inception, the Federal Government by acts of omission and commission quickly led the economy into a recession that the country had not seen in three decades. The Federal Government then started s game with the economy: multiple exchange rates that allowed significant arbitrage and freeloading; selective bans on items or denial of access to official foreign exchange and more. What followed was the blame game. Rather than tackle the challenges of governing, it spent three years blaming the past government while doing worse things.

Take the matter of fuel subsidy. A government that swore it would not tolerate it, quickly embraced subsidy more than ever before. The figures for fuel subsidy are the worst we have ever had. And it is continuing in that direction.

Going back to the 1984 playbooks, the Government recently then shut the western border. The goal of the protectionist move is to enable the protection of local production of rice while curbing criminality. Note, however, the selective application of the border closure.

A significant challenge for the Nigerian economy is the confusion and mixed signals of running command-economy style policies against a market economy in practice. There is a critical mismatch between policy and practice in the Nigerian economy. An excellent example of that confusion is the increasing incursion into the field of play by the Central Bank of Nigeria. It is now going beyond development financing and regulation to regulating itself as an enterprise player in agriculture.

Will Nigeria listen to the World Bank? If the history of our relationship with such bodies is any guide, the bet is that the Federal Government will ignore the bank and respond with a salvo of accusations instead. How do they dare to call out the Government on its direction? The FG knows what is best for Nigeria; we do not even believe the figures that they share about our economy! Pride goeth before a fall, the aphorism of old holds.

Chido Nwakanma is of the Pan African University,Lagos.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Deploying The Neighbour Principle post-xenophobia attacks

September 14, 2019

By Chido Nwakanma

One of the fallouts of the retribution attacks on South African-owned businesses in Nigeria is an opportunity for greater collaboration and engagement between the Nigerian Police Force and citizens in affected communities to track and contain the looters. The Police would have to drive the engagement for optimal returns to all stakeholders. It is the opportunity for Nigerians to act as one in the matter of crime detection and containment.
The opportunity is the application of the Neighbour Principle. The Neighbour Principle draws from English Law and stipulates that each person should take care to look out for his neighbour and ensure not to cause injury to her. It is a significant pillar of insurance practice.

The heist committed by looters against various shops in malls with Shoprite Stores as anchor tenants is a threat not only to the affected shop owners but to consumers of goods and services stolen from those shops. More people are at risk than is apparent. Make no mistake about it. Thieves used the opportunity of the mob to rob.
They will now attempt to sell off those items in the market. The Nigerian Police has rendered the first public service by warning potential customers against patronising items offered at ridiculously low prices. They need to do more.

The Police should open a register in the stations or District Offices closest to each of the affected shops. Shop owners should collaborate with the Nigerian Police. They would offer a detailed inventory of their stolen stocks such as they would do to their insurance companies. That inventory would include tracking identifiers such as registration or license numbers, product and device IDs for laptops, certificate numbers for Iphones and things like IMEI numbers for every other type of phones. Watches, electronics and most such items have serial numbers.

Citizens have a role to play in collaboration with the Nigerian Police. Blow the whistle communally if someone suddenly has an unexplained device purchase. Look closely and check with the Police if you buy an item at prices that are not congruent with existing market rates.
The Shoprite Heist happened at a time of moral crisis for Nigeria. Recently, the FBI drew up a list of 77 persons wanted for fraud in the United States. Some of those already identified are persons who often made a show of their new money to the applause of many. No one could account for their cash or its source.

Moreover, a central pillar of the allegations by the South Africans is the claim that Nigerians in their country are at the vanguard of criminality in the illicit drug trade and others. Nigerians counter and say, while there may be some criminals, they do not describe our country.

Our country had communal values against theft, unexplained wealth and inventory in homes and on persons. Societies work through collaboration. As an old radio jingle stated, “armed robber no be spirit”. They live in the community.
In a shop at the Sangotedo neighbourhood in the week of the heist, the shop attendant, his friends and his madam were discussing the incident. Their consensus was that those who got the items were “lucky”. I hushed them, pointing out that it was thievery. No, they claimed. They claimed that security personnel including soldiers, allegedly allowed or encouraged the crowd to move in. I said it was untrue and impossible. Even if it were so, the security personnel do not own the shops. We all know right and wrong.

Suddenly Madam Shop Owner agreed. She said her husband took umbrage with her when she regretted to his hearing not being on hand to participate in the bazaar. He condemned the notion.
Citizens are confused as to what moral values to uphold. We must collectively as a society proclaim and defend the correct norms to eliminate that confusion for the average citizen.

Reclaiming the moral virtues of Nigeria would be central and contributory to any effort to reposition our reputation. No amount of news releases or press conferences would make a dent. Actions provide the basis for narratives and repeated narratives establish a reputation. Once the activities of Nigerians change, the stories would change.

Everywhere law enforcement works with citizens to uphold the laws. Laws draw on the moral codes of society. Ultimately, the police can only do so much as citizens empower them to do based on shared values.

The very professional team of the Nigeria Police Communications Division would drive this effort through public service messages that link the public interest with the role of the police. Do the right thing. Do it right.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.