Nigeria's integration with global economy turns up the heat for regulatory compliance
LAGOS, Nigeria, June 11, 2015/African Press Organization (APO)/ -- A growing focus on promoting sound corporate governance and enforcing regulatory compliance from the Nigerian government, paired with growing foreign investor interest in the country, is driving interest in enterprise business applications in Nigeria.
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That's according to Magnus Nmonwu, Regional Director for Sage West Africa (http://www.sage.com), who says that Nigeria's government and tax authorities are taking a tougher line on compliance than ever before. At the same time, Nigerian companies are finding themselves under pressure to improve financial reporting and corporate governance to address the demands of multinational business partners, investors, and customers.
Says Nmonwu: “Nigeria is becoming an increasingly important player on the global economic stage, and one consequence of that is we are seeing a bigger focus on compliance”. Government understands that a stable regulatory compliance framework is essential to attracting business investment and growing the economy, and there is also a concerted focus on growing the tax base.
“The consequence for enterprises is that they need to pay more attention than ever to getting their reporting standards, governance, and risk management up to international requirements. This is one factor behind the rapid growth in demand for Enterprise Resource Planning (ERP) solutions in Nigeria, across all sectors of business.” One of the most important recent developments is the adoption of International Financial Reporting Standards (IFRS) in Nigeria.
IFRS is a set of accounting standards that guide recognition, measurement and disclosure of business transactions in the financial statements. The Financial Reporting Council Act of 2011 gives effect to the adoption of these Standards by all Nigerian entities in accordance with the following conversion roadmap:
• Publicly listed and significant public interest entities - December 2012 (or accounting year end falling immediately after this date where December is not the accounting year-end)
• Other public interest entities - December 2013
• Small and medium scale entities - December 2014.
IFRS is important for Nigeria because it makes global comparison of financial statements for companies easier, says Nmonwu. It ensures transparency, reliable disclosure and a better quality of financial reporting, all of which give investors more confidence in the companies in which they are planning to invest.
“We're seeing many international companies looking to invest in Nigeria, and they want a clear view of the financial health of the companies they are evaluating as possible partners, customers or investors,” Nmonwu says. “They want to see financials reported using global standards. IFRS has already done a great deal to improve investor confidence in Nigeria.”
Nmonwu adds that Nigerian enterprises are investing in ERP solutions to cater for a newly demanding regulatory environment. Sage, for example, offers a range of compliant software packages that help businesses to produce the reports that IFRS requires from them.
The software makes it easier to capture data and information required for statutory reporting under IFRS. Companies that don't have automated software in place will find it difficult to keep track of their financials. “Our software is up to date with the latest relevant local laws and regulations in Nigeria to help businesses become and remain compliant,” Nmonwu says. “In addition to IFRS, our HR and payroll software is fully compliant with the demands of the federal and state tax authorities, for example. It simplifies calculating statutory deductions, filing employer annual statutory returns, such that it enables companies avoid the penalty charges due on late filing.”