It is becoming a practice for foreign companies desirous of maintaining a representative legal presence in Nigeria without intending to immediately carry on business in the country as subsidiaries of international businesses.

These representative offices are most common in the Banking and Finance sector where they serve important purposes of showcasing their brands and services of their parent companies overseas while serving as a conduit for channeling foreign capital to investment opportunities within Nigeria. 

This article will be focused on the topics of :-

– The components of the regulatory framework governing banking/finance representative offices in Nigeria.

– The permissible and non-permissible activities of representative offices in Nigeria.

– The licensing requirements for representative offices in Nigeria.

What are the components of the regulatory framework governing representative offices in Nigeria?

Representative offices in the Nigerian Banking and Finance sector are regulated by the Central Bank of Nigeria (CBN) Guidelines For the Regulation of Representative Offices of Foreign Banks in Nigeria. 

What is the approved definition of a representative office under the CBN Guidelines?

The Guidelines define a representative office as a liaison of a foreign bank licensed by the CBN with the aim of marketing the products and services of its foreign parent as well as serve as a liaison between its foreign payment and local banks, OFIs, private companies and the general public.

What are the permissible and non-permissible activities of Foreign Bank representative offices in Nigeria?

Permissible Activities

– Marketing products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.

– Research activities in Nigeria on behalf of its foreign parent.

– Connecting banks and OFIs to its foreign parent.

– Pursuing business opportunities for the foreign parent or affiliated institutions regarding the availability and/or syndication of foreign currency denominated loans.

Non–permissible Activities

– Provision of services designated in Nigeria as banking business.

– Provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered.

– Acceptance of orders on behalf of the foreign parent.

– Engaging in any financial transaction directly except as allowed under the guidelines.

What are the licensing requirements for setting up a representative office in Nigeria?

The requirements for setting up a licensed representative office in Nigeria are :-

The Approval-in-Principle stage

– A formal written application to the CBN.

– A “No objection/approval” letter from the home supervisory authority of the applicant company conveying consent for the establishment of the representative office. 

– The payment of an application fee of 5 Million Naira to the CBN.

– A board resolution supporting the parent company’s decision to invest in the equity shares of the proposed representative office.

– Evidence of name reservation with the Corporate Affairs Commission (CAC).

– An interview of the promoters of the representative office with the CBN along with a presentation by the promoters to the CBN. 

– A detailed business plan/feasibility report.

– A draft shareholders agreement except where the office is 100% owned by the foreign parent bank.

The Final Approval stage

Not later than 3 months after the AIP grant, the following should be submitted to the CBN :-

1. A written application to the CBN.

2. Evidence of payment of a non-refundable license fee of 10 Million Naira to the CBN.

3. A Certified True Copy of the representative office Certificate of Incorporation.

4. A Certified True Copy of the representative office MEMART (Memorandum Articles of Association).

5. Evidence of the office location of the representative office.

6. Names, addresses and CVs of the representative office management staff.

7. A schedule of changes, if any, in the board or shareholding of the representative office after the AIP grant.

This will then be followed by a pre-licensing physical inspection of the representative office.

One of the experiences you get from using LinkedIn — other than a feeling of torment or self-persecution that sometimes accompanies seeing success stories of individuals popping up on your feeds– is that you get to learn from and share thoughts with other brilliant minds on the platform. Yes, I get that regularly, and sometimes I get inspired to post my winnings too. Of course, LinkedIn is one of the go-to-places to jolt yourself up for growth; it’s a place of many great opportunities.

The other day, I latched onto an opinion piece on LinkedIn which caught my attention. The poster, a Nigerian-American lady, leads a company in the US and has many years of recruiting experience as I discovered in her profile.

In the post, the lady declares her newly developed insights in talent sourcing and people’s management, and she claims her philosophical compass was a management nugget by Jim Rohn – Never send your ducks to eagles’ school!

Jim Rohn has used this nugget to explain the Mystery of motivation, and how managers must always take cognisance of the Mystery in people’s management. However, how this generally applies in people’s management remains a case for subjective analysis. The lady made the following remarks based on her understanding of the analogy:

‘’This lesson has guided me in my hiring decision as an executive. You don’t train people to be the best at what they do. If you want the best, you hire the best and empower them to be the best.

‘’Some organisations hire ducks expecting them to become an eagle. They invest much in training and development, hoping to turn ducks into an eagle. A duck and an eagle differ in motivation, drive and attitude. These are qualities that you can’t reach’’ she said.

At my first assessment of the foregoing proposition, I could only think of heuristic and how this has influenced many recruitment decisions in corporate management.

To start with, how do you distinguish an eagle from a duck in the recruitment process? If you only work with certain values in mind, you may be dealing with a parrot or a dove or a crow or a chicken without even realizing this. In this article, it has been shown how incompetent leadership has been encouraged due to emphasis on traits such as confidence, overbearance, masculinity, self-promotion, impetuousness etc over empathy, humility and courteousness.

But of course, my rejoinder to the post was not based on that line of thought. I’d rather consider the subject from a structural functionalist perspective.

My point is this: I’d rather have fewer eagles than ducks, and as a leader, I shouldn’t be bothered about having to turn a duck to an eagle since both have their unique purposes to fulfil within the corporate system, one handling strategic decisions and the other dealing with the operational routines.

I believe an organisation that hopes to have steady growth as well as stability would endeavour to not make the mistake of having more eagles than ducks or solely eagles. I came to this realization a long time ago after observing the inclination of the eagles towards office politics compared to the ducks. My experience informed my second book, Moral Licensing Syndrome: How Your Category-Best Employees Can Endanger Your System.

Eagles are highly expensive to maintain, they rarely can be domesticated and they’d often find it condescending doing the routines which are best suited for the ducks. Also, due to their high competitiveness, eagles are more calculative, self-serving and fleeting, hence, their loyalty is seldom guaranteed.

The self-serving and fleeting proclivity of the eagle is further explained here by Dharmesh Arora, regional CEO of Asia Pacific at German manufacture Schaeffler having understood in the hard way  why it’s no use trying to keep a star-performer who’s already decided to move on.

On the other hand, the only way ducks compensate for their shortfall against the eagles is loyalty. Generally, ducks appear weak not because of a lack of talent but because of low self-esteem resulting from lack of self-awareness and poor exposure. When you train and motivate them enough, the result is often magical.