Time was when the seal on a product bearing a NAFDAC registration number was considered the ultimate seal of authentication. Nowadays, not only are substandard and adulterated products dragging the market share with genuine products, some of them now falsify the NAFDAC seal of approval – registration number.

The National Agency for Food and Drug Administration and Control (NAFDAC) recently advised consumers to beware of some products with fake registration numbers being sold in stores and outlets. The agency advised Nigerians to always examine a product thoroughly (particularly food, drugs, medical devices, or packaged water) before purchasing. Consumers are to look out for the manufacture and expiry date before consuming.

The agency’s Director of Public Affairs, Dr Jimoh Abubakar, while speaking during a recent interview said: “examine the content of the product, the seal of authority or the approved registration number from NAFDAC which is sacrosanct; NAFDAC registration number is not just a number, it is not plate number of a vehicle.

“The number is a rigorous scientific elaboration of a product through our laboratory analysis and through certain compendium references, and after all these by NAFDAC, a product will then be certified for safety, efficacy and wholesomeness”.

In summary, the registration number from NAFDAC is a confirmation to consumers that the product (content and processes) has been examined and is now certified fit for human consumption. The certification process ensures first that good manufacturing practice has been followed, in the right location and environment, and with the right contents, before the product can be labelled.

A recent experience

I purchased a multi-vitamin from an online store recently, and the product was delivered four days later. I was about to break the seal and consume when I noticed there was a slight difference in the name.

I  examined the packet closely and discovered that even though the product had been packaged in exactly the same orange-coloured package, the name was different and the details showed that it was manufactured somewhere in Lagos state (the expected product was supposed to be manufactured in the USA).

I wanted to return it outright but then I convinced myself on the need to patronise locally made brands as well if it could give me the same results. I typed the registration number into the NAFDAC verify page and this was the result; “Warning! This product is fake. – report product”.

The scourge of fake registration numbers

In as much as registration numbers are a key differentiator between approved and uncertified products, NAFDAC has admitted that there are fake registration numbers out in the market.

According to Abubakar, the agency is also on the lookout for perpetrators of this deceptive act, even as consumers have been urged to take an extra step in examining a product before consuming it.

He added that technology had made most things easier now and urged Nigerians to visit NAFDAC’s website to get more information about products.

He noted that some products are listed on the website, especially sachet water, as the agency’s staff strength is not enough to be everywhere or to police the country’s population.

“Public awareness and information are very cardinal for people to help themselves; NAFDAC leverages so much on public sensitisation. So, people must help themselves on the consumption of these products,” he said.

Harmful products alert!

Sometime in July, the agency sent out a public alert notifying consumers that the “Pure Tassie Organic Apple and Blackcurrant Juice originating from Australia” had been examined and considered unsafe for consumption, due to unacceptable level of patulin (a mycotoxin) which had exceeded the maximum limit in fruit juice.

The agency’s verdict had also been confirmed by the Centre for Food Safety (CFS) of Hong Kong’s Food and Environmental Hygiene Department, before the alert was sent out.

According to the notice, the level of patulin content in the juice is high enough to “induce liver, spleen and kidney damage”, and also toxic to the human immune system, causing nausea, gastrointestinal disturbance and vomiting.

In the alert, NAFDAC implored importers, distributors, retailers and consumers to immediately stop the importation, distribution, sale and consumption of the affected fruit juice, urging them to turn in all current stock of the product to the NAFDAC office, although no mention is made as to compensations for their losses.

A month before this, there was a similar alert from the agency about three cosmetic products namely “Sifu Kunyit Day Cream, Sifu Kunyit Night Cream and JJ Skincare Glowhite Night Cream”.

The products were confirmed by the agency to contain hydroquinone, tretinoin, betamethasone valerate and mercury, all of which are targeted at lightening the skin and changing the pigmentation.

Given the quantity used in these products, NAFDAC confirmed that they can cause damage to the kidney, get absorbed into the blood circulatory system and increase the risk of skin cancer along with other ailments.

Apart from harm caused to the user of products containing mercury, NAFDAC confirmed that mercury can disrupt the brain development of unborn children when consumed by nursing mothers, and also inhibit brain development of young children.

This time around, the products originated from Malaysia and had been imported into Nigeria. Deducing from the notice, one can see that the product had already been banned by the Malaysian Ministry of Health before ever it was imported to Nigeria.

In April, it was a World Health Organisation (WHO) alert on falsified Chloroquine products in circulation in Africa, all originating from three African Countries are Cameroon, Democratic Republic of Congo and Niger.

Why would people buy banned products?

A trader who spoke to Nairametrics confirmed that it is possible for such products to still be imported despite being banned. Tolani, who manages a warehouse where she sells consumables (snacks and drinks ) in wholesale quantities affirmed that when supplies are being made, the suppliers sometimes introduce new products at ridiculously lower prices.

“Some of these brand names that we know are very expensive and their price continues to increase without regulation. So, sometimes when we make to buy new stocks, the supplier can show us a new and similar product that is even less than half the price of the popular brands we know, so we buy them as well.

“They are all imported products, and people like to try out foreign products so we know for sure that they will buy it from us,” she explained.

She added that there was no way to confirm at such times whether or not the product was original, imitated, safe or harmful since the traders are no experts.

“They are foreign products, and I believe that if they passed through customs officers and entered the market, then they should have been checked there” she added for emphasis.

Any synergy between NCS and NAFDAC

Consuming harmful products is bad enough, but exchanging hard-earned money for things that could be detrimental to one’s health is even worse.

NAFDAC already has to combat imitated or harmful drugs produced locally. Doing same for imported products means they have even more on their plate to deal with. The Nigerian Customs Service (NCS) is responsible for manning the borders of the country and monitoring what goes in or out, and if unsafe products still find their way into the country, it means that there are gaps that need to be sealed.

Tweets on the NCS twitter handle shows that much of the organisation’s activities have been centred around the impounding of smuggled bags of rice, kegs of vegetable oil, cartons of spaghetti/macaroni, bags of foreign sugar, cartons of soap, bales of textile materials, parcels of India hemp, NPK fertilisers and vehicles among others.

There is a striking absence of activities around the importation of fake or harmful drugs or other consumables, and all the focus has been on the more lucrative items contained in the import prohibition list such as frozen or live poultry, refined vegetable oils, cocoa butter, bagged cement, etc.

Even though pharmaceutical and consumable items make up 5 out of the 25 item list, it would appear that the list has not been updated recently in line with the recent public alerts from NAFDAC.

Clearly, consumers will have to take precautions themselves as NAFDAC has advised because the agencies appear to be overwhelmed with the amount of criminal work going on in the space. Thankfully, some products now include a sealed number on the packet which the consumer is meant to text to the unique code and confirm the authenticity. Unfortunately, consumers are often in a hurry and not many are patient enough to wait for the confirmation message.

From creams to drinks, foods, drugs and other things that are used in or on the body, an extra minute for verification might just be the deciding factor at the end of the day.

The Companies and Allied Matters Act, 2020 (“the Act”), repeals and replaces the extant Companies and Allied Matters Act of 1990. The new CAMA, now seen as Nigeria’s most significant business legislation in three decades, introduces new provisions that promote the ease of doing business whilst reducing regulatory hurdles and also bringing the provisions in tangent with the technological realities of the 21st century. This is expected to ultimately promote investments, create more jobs, and promote a friendly business climate in Nigeria.

Some of the provisions of the amended bill and how it will affect businesses are explained below:

Provision of single-member/shareholder companies

S.18 (2) of the new CAMA now makes it possible to establish a private company with only one (1) member or shareholder. This is good news for growing startups and young entrepreneurs because it has totally resolved business registration bottlenecks.  A lot of businesses have been forced into unnecessary partnerships because prior to the new CAMA, to legally own a business in Nigeria, you needed to provide at least two or more people as co-owners of the business.

Introduction of Statement of Compliance

Section 40 (1): There is the introduction of Statement of Compliance (SOC) signed by an Applicant (or agent), without the need for a Lawyer or Notary Public to attest to Declaration of Compliance (DOC). SOC is a requirement of the law that indicates that the applicant has complied with the registration and requirements.

Replacement of Authorized Share Capital with Minimum Share Capital

Section 27: This section replaces ‘Authorized Share Capital’ with ‘Minimum Share Capital’. This implies that the promoter(s) of a business is not required to pay for or allocate shares that are not needed at the specific time of incorporation.

Procurement of a Common Seal is no longer a mandatory requirement

The procurement of a Common Seal is no longer a mandatory requirement according to S.98 of the new CAMA. With the amended bill, companies can now authenticate documents by other means other than a common seal. This means you don’t need to stamp seals on documents anymore. The world is digital so who needs those seals.

Provision for electronic filing, electronic share transfer and e-meetings for private companies

The new CAMA makes provision for electronic filing, electronic share transfer and e-meetings for private companies. You can now register your business from anywhere in the country via the e-registration portal. The new CAMA also provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company. This will facilitate participation at such meetings from any location within and outside the shores of the country, at minimal costs.

Exemption from appointing Auditors

Small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting to audit the financial records of the company. S. 402 of the new CAMA provides for the exemption in relation to the audit of accounts in respect of a financial year.

Exemption from the appointment of company secretary

The appointment of a Company Secretary is now optional for private companies. According to S. 330 (1) of the new CAMA, the appointment of a company secretary is only mandatory for public companies.

Creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs)

The new Act, introduces Limited Liability Partnerships and Limited Partnerships, which combines flexibility and tax status of a partnership with the status of limited liability for members of a company. This implies that Startups are not stuck with the option of setting up a Company, but also enjoy the benefits of partnership which a partnership agreement (including vesting agreement, and founders agreements) beyond the regular Articles and Memorandum of Association, whilst still protecting their personal assets from being sold in claims for debts, liability, or creditors.

Reduction of Filing Fees for Registration of Charges

Under Section 223 (12) of the new Act, filing fees for Registration of Charges payable to the CAC (Corporate Affairs Commission) has been reduced to 0.35% of the value of the charge. This is expected to lead to up to 65% reduction in the associated cost payable under the regime

Merger of Incorporated Trustees

The new Act extends merger beyond LLCs to Incorporated Trustees. Section 849 implies that two or more NGOs, social entrepreneurs with different registered organizations, with similar goals can merge to form one (1) single organization.

Disclosure of persons with significant control in companies

Section 119 emphasizes transparency in terms of control in a company. It requires that persons with significant control in a company disclose its shareholding to other shareholders. For example, anyone who has person(s) holding shares on their behalf as trustees or proxies, whilst being shareholders themselves in same company, are expected to disclose such relationship for transparency.

Restriction on Multiple Directorship in Public Companies

S.307 (1) of the Act prohibits a person from being a director in more than five (5) public companies at a time.

Business Rescue provisions for Insolvent Companies

The new Act introduces a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent. Provisions were made with respect to Company Voluntary Arrangements (S.434 to S.442), Administration (S.443 to S.549) and Netting (S.718 to S.721).

Enhancement of Minority Shareholder Protection and Engagement

1. 265 (6) restricts firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company.

The Act certainly, is one of the biggest business reform bills which impacts the Nigerian business sphere. The amendments to the Act would have the overall effect of making Nigeria’s metrics of doing business more fit for today’s technological realities, encourage young investors to register companies, increase the influx of foreign investment and re-energize the private sector as the engine of growth in Nigeria.

The last has definitely not been heard of the economic impact of COVID-19, despite the seeming normalcy that is beginning to return to the economy post lockdown. The Nigerian banking industry, which has consistently been the most profitable single sector traded on the NSE and accounts for over 50% of investors’ stock traded daily, may be set for hard times ahead notwithstanding their 2020 Q1 profits and their best efforts to adapt to the new normal.

From the shutting down of the economy for months to the closing of borders and business offices of banks, here are the 3 major ways in which COVID-19 will affect the 2020 profits of Nigeria’s Lenders:

• Increase in impairment and bad loans

Impairments are an additional financial cost to the lender resulting from the reduction in the creditworthiness of the borrower while bad loans are literally loans that have gone… Bad (you guessed that). Whereas bad loans are to be written off completely by the lender, impairments are deductions that should reflect in financials of the lender pending when the loans become active.

In the wake of the pandemic, the CBN took proactive measures to ensure that Banks are protected from ruinous impairments by approving the request of the Lenders to restructure loans in their books allowing more time for debtors to pay.

Notwithstanding this initiative, loans (especially in the retail space) would most likely end up being written off as unemployment rates soar and the economy slowly recovers from the effects of the pandemic. Education, aviation, and the oil and gas sector do not seem on the path of recovery yet, and their delay would most likely cost lenders with sizable exposures in their respective industries.

• FX scarcity and Liquidity squeeze

These two sides of the same coin are causing painful gut-wrenching groans to be heard in the Banking sector, especially amongst lower-tiered Banks.

The oil price crash coupled with border closures have worsened Nigeria’s FX deficit and caused the CBN to employ unconventional means and policies to stabilize the Naira, even after a long-awaited devaluation.

Banks who are unable to meet the FX needs of their customers rush “cap in hand” to the CBN to get FX intervention for their corporate customers for whom the exorbitant parallel market rate is not an option. Instead of getting their requests met, their positions are debited and added to their CRR forcing them to reduce their FX demands and leave their customers dissatisfied. While this may lead to loss of deposit from these customers taking their businesses elsewhere, the major issue the Banks have with this discretionary CRR, is the foregone earnings that their extra CRR would have earned in the money market or through commercial loans.

Over N2trillion has been arbitrarily debited from Nigerian lenders since April in tranches of N1.4trillion, N300billion and N459.7billion causing some banks to have CRR in excess of the 27.5% agreed upon by the CBN Monetary Policy Committee in January 0f 2020.

The depreciating Naira is also inimical to Banks with FX denominated bonds, and is expected to impact their bottom line.

• The macro economy and unfair competition

The relationship between Banks and the economy is complex. They are the gauge through which the pulse of the economy is felt, and the channel through which its life force can be restored. At no time is this complex relationship more evident than during severe economic strain, such as this pandemic. It is at this time that the Banks experience unfair competition from their regulators who are forced to provide direct, and cheaper funding to the economy sacrificing short term profitability of the Banks for long term sustainability of the economy.

In the wake of the pandemic, the CBN has provided series of intervention funds, ranging from the N50b household support, to the Agric fund, CIFI and MSME support funds at single interest rates, lower than the commercial Banks can afford.

Although the commercial Banks are listed as PFI (Performing Financial Institutions) for most of these funds, the commissions they stand to earn are in no way comparable to what it would have been had they been the direct lenders at commercial rates. This arrangement would definitely impact their creation of new risk assets and the accompanying income that would have found its way to their annual profit.

It’s not all gloom though, Bankers who chose to speak off-record claimed that the lockdown played a key role in increasing enrolments on their online platforms and the timing of the nationwide cashless policy was a “masterstroke” in ensuring that customers bought into e-channel transactions on which the Banks would earn fees and commissions. They claim that the pandemic also offered some Banks a rare opportunity to prune their operations cost without alarming their customers, as they were able to shut down not too profitable branches in some locations and redeploy their staff accordingly.

A top Treasury official in one of the new generations Banks who sought anonymity said that Banks who have earned income in FX prior to the pandemic would enjoy revaluation profit, but was quick to add that this little margin would not offset their loss of income from Letters of credit not done due to border closures, nor will it write off the rate decline in risk-free investments of Banks buying Government Bonds.

With increased cost for operational branches due to adaptability to COVID-19 protocols amongst other things, it remains to be seen how Nigerian Banks would fare in this remarkable year. Their H1 results should give more insight.