PROJECT TITLE: Strengthening Regulatory Framework and Enabling Environment for a More Accountable and Transparent Civil Society in Nigeria.
Launch Theme: Understanding the Nigerian Regulatory Frameworks; Trends and Realities
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To officially kick-start implementation, a project launch themed “Understanding Nonprofit Regulatory Frameworks; Trends and Realities” was organised in Abuja on Monday, November 4, 2019. The seventy-two (72) CSO representatives who participated in the launch gave insights into the how best to address conversations around civil society regulations, compliance and the need to popularize a self-regulatory mechanism that is responsive to the needs of the sector and can be effectively implemented in line with global best practices.
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The welcome address summarized the objectives of the project and gave insights into the aim of organizing the project launch especially at a time when issues of Nonprofit regulations have gained prominence in the last four years at the Nigerian National Assembly and how best civic actors can begin to address conversations around regulations.
The project launch served as an official commencement of project activities, provided a platform for participants to gain insights into what to expect in the coming months and the Network’s expectations towards their participations especially during consultations.
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“Democracy is the cornerstone of any developed nation and so for any nation to thrive, democracy cannot be taken for granted”, in her remarks, Ms. Olalu noted that the European Union in its partnerships with different nations across the globe has always held dear the importance of democratic rule and the need to ensure that it is strengthened.
She identified the importance of a vibrant civil society sector as a key component of responsive democracy highlighting the role of Nigerian CSOs in pushing for key legislations, advocating for the passage of dynamic and progressive policies, leadership of interventions in the areas of health, economy, peace and security with the support of the European Union.
She noted that the role of the European Union in Nigeria has therefore been to identify ways of strengthening the work environment of CSOs to encourage efficiency, collaboration and dynamism in their work. For CSOs to sufficiently carry out its work as watchdog for government and hold them accountable on developmental outcomes, she stressed the urgent need for CSOs to maintain accountability and transparency in their own processes especially given the sheer size of the sector and an absence of a unifying standard of operation by which the sector can be guided by. This she noted encourages coordination and better outcomes in government-CSO engagements. She therefore called for renewed discussions among CSOs on matters relating to a minimum standard of operations which the sector can agree to be guided by and identified with.
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BACKGROUND TO NONPROFIT REGULATIONS IN NIGERIA: CHIDINMA OKPARA, PROJECT OFFICER, NNNGO.
“The nonprofit sector like any other sector is bounded by rules and regulations that guide the way organisations within the sector are expected to work and the Nigerian Nonprofit sector has for years operated under various regulations of which we would take a brief look into” Ms. Okpara identified the role of the Corporate Affairs Commission (CAC) as the organisation in charge of registering Nigerian Nonprofits. She explained the role of the Companies and Allied Matters Act (CAMA) established in 1990, paying attention especially to Part C which deals Incorporation of Trustees, in reference to Nonprofit organisations. The CAC was established under CAMA and given the mandate to supervise registration, coordination and dissolution of Nigerian Nonprofit organisations of which it has done till date. She gave a detailed description of the what compliance with CAC’s requirements would entail for CSOs, including registration and reporting obligations to allow smooth coordination.
She also identified the role of the National Planning Commission in registering, monitoring and coordinating international Non-governmental organisations in Nigeria, the Special Control Unit Against Money Laundering (SCUML), formed under the Ministry of Trade and Investment and charged to monitor and regulate the operations of Designated Nonfinancial Institutions in Nigeria such as Nigerian Nonprofits. She also stressed the importance of the role of SCUML in ensuring Nonprofits’ compliance to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) laws.
Nigerian Nonprofits have a responsibility to pay tax only when their organisations are used for profit-making. The Federal Inland Revenue Service recognizes Nonprofit organisations, registered under the CAC as being tax exempt and therefore only requires tax payment on employees of such organisations who earn salaries.
The Financial Reporting Council (FRC) is charged with ensuring timely financial reporting of nonprofits; duly audited financial accounts are submitted to the council annually to inform planning and coordination. As a base, she linked these existing regulations within the Nigerian Nonprofit sector as a response to the sector’s high level of vulnerability to risks of money laundering and terrorism financing as identified during the National Risk Assessment conducted in 2016 by The Financial Action Task Force (FATF), in its 40 Recommendations then earmarked Recommendation 8 to address issues of money laundering and terrorism financing in the sector.
She identified House Bill 585, Non-Governmental Organizations Regulatory Commission (Establishment) Bill, 2016 and controversies surrounding the proposed bill as an important background to discussions around civil society regulations in Nigeria stressing the urgent need for the development of strong self-regulatory mechanisms within the sector keeping in mind government’s ongoing concern of illegitimacy within the sector. These mechanisms would ensure that all stakeholders work in line with acceptable standards and global best practices.
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To better explicate issues surrounding Nonprofit organisations, Oyebisi delved into characteristics of Nonprofit organisations, that to be considered a Non-Governmental Organisation, (NGO), an organisation must have; an internal organisational structure and meaningful organisational boundaries, a functioning board that provides oversight functions, a meaningful degree of permanence, be voluntary, must be self-governing and have complete autonomy from government control. He stated that “a nonprofit may own assets, incur liabilities and engage in business but must bear full responsibilities for the economic risks and rewards of such operations”.
Presenting the outcome of a Nonprofit Self-Assessment Tool conducted on 324 Nonprofit organisations from across 36 states, validated by 72 Nonprofit leaders in Nigeria, which reviewed Nonprofits’ governance strategy and structure, human resources and administration, project management, monitoring and evaluation, reporting and financial management, Oyebisi noted that the analysis revealed that majority of nonprofits do not meet the mark for best practices ratings in any of the areas listed in the survey. He set discussions based on the implication of this analysis for the Nigerian civil society and policies guiding its operations.
He further situated conversations around the capability of Nigerian Nonprofits to comply with the Part C of the Companies and Allied Matters Act (CAMA) especially in the wake of an addition of 12 more clauses in a bid to encourage transparency and reduce duplication of efforts within the sector.
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PLENARY CONVERSATIONS ON NONPROFIT REGULATION AND SELF-REGULATION: All participants.
This session captured discussions by all participants who gave insights into the realities of nonprofit especially while interacting with regulatory bodies and government agencies. Conversations majorly were along the following areas;
Registration/Legitimacy of Nonprofits
Participants noted that even though the Nigerian constitution only recognizes registration with the Corporate Affairs Commission for an organisation to be recognized as an NGO, occasions have arisen in recent times where NGOs have been mandated to register with ministries that oversee issues around what these organisations work on. Some participants also noted that in some situations, nonprofits have been asked to pay some fees for this registration in order to be identified by the ministry.
This leads to questions around whether or not ministries have the jurisdiction to indeed register nonprofit organisations and if NGOs who fail to register with said ministries could be backlisted especially when it involves issues of the charitable work that NGOs do.
Discussions around regulations stemmed from the need to ensure that the Nigerian Nonprofit sector does not become overregulated and stifled. Participants acknowledged the failing of Nonprofit organisations in not tightening compliance to important regulations especially around issues of annual reporting and necessary certificates but identified that this prevalent issue underlines the need for sensitization of all stakeholders on the regulations that guide the sector and their daily applications. They noted that many NGOs across the country are ignorant of the regulations and therefore find compliance challenging.
Participants identified that the Nigerian Nonprofit sector currently has regulatory agencies that it constitutionally works with and reports to, therefore, “revisiting the NGO Bill should not come up in conversations at the National Assembly or any of the state Assemblies”, noted one of the participants.
Support/Funding for Nonprofits
Another issue of importance is the need to ensure that NGOs are presented with the capacity to remain self-sufficient and sustainable. While some participants inquired as to the role of government in supporting NGOs, many others countered the notion by stating that this would only compromise the ability of NGOs to serve as watchdog for the activities of government. However, it is important that foreign organisations who fund projects through the Federal Government begin to include CSOs as part of the monitoring team. Participants noted that this would imply that CSOs be involved in discussion of developmental funds provided the country but organisations like World bank or the United Nations and equipped with the capacity to adequately monitor.
Issues relating to agencies/orgnaisations who request for stringent reporting and in some cases, covert recommendations for percentages from NGOs implementing projects were also raised by participants with some noting that this could only be curbed if and when a code of conduct is developed for the sector and by the sector. This code of conduct, as noted by participants should be one that all stakeholders agree upon and subscribe to make it binding as this will improve transparency and also protect NGOs from being left vulnerable to risks of money laundering.
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- A nonprofit Code of Conduct should be developed by the sector, for the sector and approved by the Government as a guide for the operations of the Nigerian NGOs.
- The process of developing the code of conduct can be led by the Nigeria Network of NGOs with support from prominent Nigerian Nonprofits and in consultation with a representative number of Nonprofits in Nigeria.
- The sector does not require more statutory regulations; rather existing ones should be strengthened in a way that enables Nonprofits’ operational environment.