Corporate Governance in Nigeria: A 2024 Review and 2025 Outlook

Welcome to the inaugural edition of Sophia from Governance, a new quarterly newsletter series on corporate governance. In this series, one of our top consultants will share key insights, trends, and updates shaping the corporate governance landscape in Nigeria and beyond. We aim to keep you informed and ahead of the curve, each edition will offer a deep dive into major developments and actionable strategies for businesses striving for compliance and sustainability.

The year 2024 marked significant advancements in corporate governance in Nigeria, with new regulations and guidelines shaping compliance and governance practices across industries. From advisory measures promoting best practices to obligatory rules enforcing penalties for non-compliance, the regulatory landscape underscored the importance of robust governance frameworks. As corporate entities globally prioritize adherence to laws and regulations, staying informed about applicable governance standards has become indispensable.

This publication reviews the regulatory developments in Nigeria in 2024 and highlights key trends expected to influence corporate governance in 2025.

Key Corporate Governance Regulations in Nigeria: 2024 Overview

2024 witnessed the introduction and amendment of several laws, bills, and guidelines aimed at enhancing corporate governance in Nigeria. Below are some of the most notable developments:

1. The National Digital Economy and E- Governance Bill, 2024:
   This is a Bill for an Act to enable the growth of Digital Economy and digital governance in Nigeria by improving the certainty of digital transactions, digital service delivery, and matters related. The bill when enacted would provide a legal framework to support international digital trade and investments using digital means driving innovation and governance.

2. Expatriate Employment Levy:
   In February 2024 the Federal Government presented the Expatriate Employment Levy Handbook (“handbook”), which introduced the expatriate employment levy ("levy”). The levy is applicable to the private sector industries that utilise foreign workforce or rely on expatriate labour mandating them to pay US$10,000 for non-director expatriates and US$15,000 for director expatriates annually.

However, concerns were raised about the provisions of the handbook and in March 2024, the federal Government Announced the Suspension of The Implementation of The Levy.

3. The Deduction of Tax at Source (Withholding) Regulations 2024 (The Regulations):
   The regulations enacted in June 2024 set out the rules for deduction of tax from payments to taxable persons under the Capital Gains Tax Act (CGTA), Companies Income Tax Act (CITA), Petroleum Profits Tax Act (PPTA), and Personal Income Tax Act (PITA) in respect of specified transactions. The regulations seek to achieve WHT deductions from source and introduced the tax deduction receipts and claim for WHT credits. Furthermore, in September 2024, the withholding tax (WHT) on director fees in Nigeria increased to 15% for residents and 20% for non-residents.

4. SME Corporate Governance Guidelines, 2024:
   Micro, Small and Medium-sized Enterprises (“MSMEs”) represent 84% of the national employment quota and 48% of Nigeria’s GDP thus the need to establish these guidelines and improve Nigeria’s business environment. The Guidelines has six (6) sections setting out eleven (11) principles of corporate governance for MSMEs. This is important for MSMEs to view corporate governance as a journey, with the Guidelines providing a roadmap of the areas in which entities should seek to develop as they grow.

5. Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria (the new 2024 Guidelines/ the new Guidelines):
   This Guideline issued by the CBN pursuant to Section 56 of the Banks and Other Financial Institutions Act (2020) seeks to closely monitor the FX by infusing more elaborate corporate governance measures and IT integration for BDC operators in Nigeria. Some of the key developments of the new Guidelines include the introduction of two categories of licenses, recapitalization for the new tiers of license holders, revised permissible/non-permissible scope of activities and the procedure for the application/grant of license.

In terms of corporate Governance, the new Guidelines introduced the requirement of an Independent Non-executive Director (INED), separation of the office of an Executive Director (ED) from the Chief Executive Officer (CEO), increase in the number of directors to a minimum of five (5) and maximum of seven (7) for Tier 1 BDCs, and a minimum of three (3) and maximum of five (5) for Tier 2 BDCs as well as enacting that no Board of Director of a BDC shall comprise of only one gender.

‍Emerging Trends for Corporate Governance in Nigeria: 2025 Outlook

Building on the regulatory developments of 2024, the following trends are expected to shape corporate governance in Nigeria in 2025:

1. Stricter Governance Monitoring:
   Regulators such as the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), the National Pension Commission (“PENCOM”), and the NAICOM are expected to intensify oversight.

In 2024, the CBN dissolved the Board of Union Bank, Polaris Bank, and Keystone Bank which was stated to be necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of Banks and Other Financial Institutions Act, 2020. This of course sets precedence for entities operating within their purview and other regulators highlighted above who run the risk of penalties for corporate governance issues. Companies should proactively address governance risks to avoid penalties.

2. Increased Employment of Artificial Intelligence (AI) in Corporate Governance and Board Management:
   Technology has already made its way into many boardrooms and AI is slowly being employed likewise to enhance corporate operations. This is used for Minute taking, enhancing board portals, reviewing financial data for better decision making as well as board selection. In reaction, the Federal Ministry of Communication, Innovation and Digital Economy (FMCIDE) in August 2024 announced the first Nigeria’s National AI Strategy (NAIS) to harness the transformative power of AI through responsible, ethical and inclusive innovation.

3. Flexible Corporate Structures:
   The current governance structure is more fluid and flexible, which allows for shorter board meetings, faster decision-making process and overall, a more agile board. This fluidity relates to the use of virtual platforms for meetings and communication. In 2025, this trend is likely to continue aided by innovation, technology and the changing dynamics of board demographic structures. Which, however, emphasizes the need for better data securities measures to be put in place by companies to ensure the protection of corporate secrets and other related information.

4. Focus on Sustainability Measures:
   Sustainability reporting gained traction in 2024, with entities like the Financial Reporting Council of Nigeria and CBN championing the cause. This drive for sustainability was greatly emphasized both for private and public sector companies in filing and reporting.

In 2025, companies can expect increased focus on financial statements and board evaluations to ensure adherence to sustainability goals.

Why Corporate Governance Matters?

‍‍Corporate governance ensures that organizations operate ethically and efficiently, balancing the interests of stakeholders while driving business growth. Compliance with governance principles is fundamental to sound decision-making and risk management. For Nigerian businesses, embracing governance practices aligned with global standards positions them for success in a competitive and evolving market.

‍In Conclusion

‍Corporate governance in Nigeria is a journey of continuous improvement. The regulatory developments of 2024 and the anticipated trends for 2025 highlight the importance of proactive governance strategies. As businesses strive for profitability and customer satisfaction, maintaining an up-to-date and optimized governance structure is not just a requirement but a competitive advantage. Staying ahead in this dynamic landscape will require commitment, adaptability, and a forward-thinking approach to compliance and innovation.

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For more insights into corporate governance trends and strategies, subscribe to our updates and stay informed about the latest developments shaping Nigeria’s business environment. You can also reach out to us via email: info@thestructurehq.com

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