Eye on Emerging Markets -Udo Udoma & Belo-Osagie’s Nigerian Industry Update

Eye on Emerging Markets | Q1 2023

Udo Udoma & Belo-Osagie’s Nigerian Industry Update

Energy: Electric Power and Renewables Written by Adeola Sunmola and Godson Iwuozo On March 17, 2023, Nigeria’s President assented to a constitutional amendment that confers individual states with the power - previously restricted to areas outside the national grid - to generate, distribute, and transmit electricity to national grid areas falling within each state’s geographical boundaries. Coming hot on the heels of the Nigeria Energy Transition Plan and the recent Nigerian Renewable Energy Roadmap, which respectively outline multi-pronged strategies for limiting climate change impact, achieving net zero, and analysing renewable energy utilisation, these sectoral initiatives are expected to catalyse socio-economic development. Post-elections, we expect these significant developments to boost investor and lender appetite for renewable energy projects and position the sector for unprecedented exponential growth if supported by appropriate fiscal incentivisation and the resolution of current FX illiquidity challenges. Energy: Oil & Gas Written by Folake Elias-Adebowale and Aide Omo-Eboh Analysts predict a positive outlook for oil and gas, building on trends of increased onshore volume recovery, drilling activity, and shallow water projects that help offset production dips and security concerns. The Petroleum Industry Act and various regulations implementing it prescribe significant governance framework clarifications, structural changes, licences, administrative processes, and incentives. The new NNPC Limited is making strong plays to acquire significant assets as IOCs seek to divest onshore assets to refocus strategies offshore. Following the successful disposal of 57 marginal fields, other post-election opportunities are expected to arise from downstream gas deregulation, gas policy implementation, gas infrastructure incentives, bid rounds to commercialise flare gas and the recent announcement of an upcoming deep offshore mini-bid round for 7 offshore blocks. Dealmaking: Private Equity, Venture Capital, and M&A Written by Folake Elias-Adebowale and Toluwalope Adedokun A post-Covid recovery proliferation of 320 reported Nigerian venture capital, private equity, and M&A deals in 2022 (with 196 of 320 involving startups and 80 FinTechs) - illustrates the investment trajectories that we expect to continue in 2023, particularly in the financial services, technology, consumer discretionary, industrials, health, and agricultural sectors. They will be buoyed by various reforms, including the Startups Act, the Business Facilitation(Miscellaneous Provisions) Act 2023 (which amends 21 business laws to facilitate ease of doing business and best practices); the Pension Commission’s Operational Framework for Co-Investment by Pension Funds Administrators, consumer protection for digital lending, SEC rules regulating digital and virtual assets, and new money laundering legislation. Notwithstanding strong macroeconomic tailwinds and fiscal pressures, there is optimism that post-elections, dealmaking and investment trends will resume their upward trajectory. Tax Written by Lolade Ososami and Itoro Etim With challenging macroeconomics and external debt, revenue generation will continue to remain a primary focus for the Nigerian government, fuelled by an all-time annual revenue collection record exceeding NGN10.1 trillion (approximately $22 billion) in 2022: boosted by increased fiscal regulation and technological optimisations in tax administration processes. The Finance Bill 2022 is expected to be enacted. It introduces new tax regimes for gas flaring, lottery, and gaming businesses, capital gains tax on digital assets and cryptocurrency disposals, and withdrawal of certain investment tax incentives. From an International perspective , Nigeria has not signed the OECD Pillars 1 & 2 Statement but is expected to make concerted efforts to implement the BEPS 1.0 agenda for transfer pricing and indirect taxes on digital products and services.

Written by Folake Elias-Adebowale, Adeola Sunmola, Lolade Ososami, Festus Onyia, Michael Ugah, Godson Iwuozo, Aidelohi Omo Eboh, Toluwalope Adedokun, Itoro Etim and Oluwatobi Akintayo

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Lolade Ososami Partner, Nigeria E: Lolade.Ososami@uubo.org T: +234 1 2774920

Festus Onyia Partner, Nigeria T: +234 1 2774920

Adeola Sunmola Partner, Nigeria T: +234 1 2774920

Folake Elias-Adebowale Partner, Nigeria E: Folake.Adebowale@uubo.org T: +234 1 2774920

Michael Ugah Senior Associate, Nigeria T: +234 1 2774920

Toluwalope Adedokun Associate, Nigeria

Godson Iwuozo Associate, Nigeria T: +234 1 2774920

Itoro Etim Associate, Nigeria T: +234 1 2774920

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Mining Written by Lolade Ososami and Oluwatobi Akintayo The Nigerian government’s projected revenue for the mining sector is about NGN3.46 billion (approximately $75,15,708,200) in the wake of the recent launch of the Electronic Mining Cadastre System (eMC+) to facilitate end-to-end real-time online mineral title administration from application to submission, fee payment, and issuance of certificates and the World Bank’s launching of the Mineral Sector Support for Economic Diversification Project (MinDiver) to improve available information infrastructure, strengthen relevant government institutions, and foster domestic investment in the sector. Post-elections, increased activities in the industry,particularly relating to gold, lithium, iron ore, and other strategic minerals, are anticipated. Arbitration Written by Festus Onyia and Michael Ugah Following the 2023 General Elections in Nigeria aggrieved candidates are approaching election tribunals and courts to seek redress, which may delay the resolution of regular commercial and other disputes due to judicial adjournments and other delays that prioritise timebound electoral matters. A side effect of this is that to avoid such delays, disputants may resort to arbitration and other ADR mechanisms.

Oluwatobi Akintayo Associate, Nigeria T: +234 1 2774920

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Post-elections, increased activities in the industry, particularly relating to gold, lithium, iron ore, and other strategic minerals, are anticipated.

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Following the successful disposal of 57 marginal fields, other post-election opportunities are expected to arise from downstream gas deregulation, gas policy implementation, gas infrastructure incentives...

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