TBY talks to Theophilus I. Emuwa, Partner of LEX, on the legislative changes to be expected over the coming year, the likelihood of further reform in specific sectors, and the roles and remits of ECOWAS.

Theophilus I. Emuwa
Theophilus I. Emuwa is Partner of LEX. He is widely acknowledged as one of Nigeria’s leading tax practitioners and regularly advises on income and petroleum profits tax issues, corporate structures, shareholder rights, and other corporate governance issues for Nigerian companies. He holds both law and engineering qualifications. He is a Fellow of the Chartered Institute of Taxation Nigeria (CITN) and until recently was the Chairperson, Taxation Committee, Section on Business Law of the Nigerian Bar Association.

What legal and regulatory changes are we likely to see in Nigeria over the medium term?

Governments at both the federal and the state levels have been grappling with reviving an economy that is in recession. The focus has, therefore, been on administrative changes that are likely to enhance revenue generation or encourage investment in local production of goods so as to reduce the pressure on the nation's foreign reserves. Tax rates have not changed but the federal government has taken to interpreting existing legislation more broadly. For example, the Central Bank has interpreted the law on stamp duty so as to claim the power to levy a tax of NGN50 on many banking transactions. Banks successfully challenged this in court but the decision is pending appeal with the Supreme Court. In the meantime, this tax is still being collected and has generated such revenue that the government will find it difficult to surrender this "power." Another example: the federal government has mooted the idea of a tax on telephone calls, SMS, and data services but enabling legislation is yet to be passed. The federal government has maintained its prohibition on the import of items that it feels can be produced locally. It has also gone further to prohibit imports of certain items through land borders in order to discourage smuggling.

Which sectors would be subject to the most important changes?

It is difficult to say that any one sector is more important than another. Infrastructure such as roads and power is an enabler of manufacturing, amongst other things. But that does not make education and health less important. The government's greater challenge has to do with implementing its programs. Many programs that look good on paper have failed to be completed. One exception, however, is the effort to increase local agricultural production. There has been a slow but steady increase in production over the last few years.

How does Nigeria's legal system compare to those in the ECOWAS region?

ECOWAS is a regional grouping of 15 West African countries established in 1975. The member countries operate different legal systems. The countries may be divided into Francophone and Anglophone countries. The Francophone countries operate the civil law system while the Anglophone countries, to which Nigeria belongs, operate the common law system. There are differences between common and civil legal tenets and these lie in the actual source of law in each system. The common law system depends largely on case law, i.e., interpreting customary practices and statutes, as a source of law, thereby allowing judges to proactively contribute to the development of the laws by giving interpretation that represents current commercial practices and realities. For consistency, courts abide by precedents set by higher courts examining the same issue with similar facts. In civil law systems, on the other hand, codes and statutes are designed to cover all eventualities and judges have the limited role of applying the law to the case in hand. In this system, past judgments are no more than loose guides.

Freedom of contract is extensive in common law countries; for example, very little or no provisions are implied in contracts by law; civil law countries on the other hand have model contracts with provisions based in the law. The decisions of judges have a binding effect in common law countries, even though such precedents may in some cases be appealed up to the highest court. However, in civil law countries, only the judicial decisions of administrative and constitutional courts are binding outside the original case. In most cases, therefore, the concept of precedent—past cases determining the outcome of future ones—is not used.