… May put minimum capital base at N20m
The Advertising Regulatory Council of Nigeria (ARCON) is currently in the process of reviewing the minimum capital requirement for advertising agencies in the country.
Presently, there is no regulation from the apex regulatory body on the capital requirement for advertising agency companies. What is obtainable is a licensing regime that has pre-qualification for practitioners which include getting qualified people to run the agency.
Last week, ARCON said there is an urgent need to review the capital structure and working capital requirement of the advertisement agencies in line with economic realities and capacity building programmes of ARCON.
ARCON through its Director General, Olalekan Fadolapo said it is currently in talk with the Heads of Advertising Sectoral Groups (HASG) and other relevant stakeholders on the minimum capital requirement for registration and license as an advertisement agency.
While some agencies operate with different minimum working capital, sources in the industry predict that ARCON may come with about N20m working capital for all registered advertising agencies.
This move, it is believed is being considered as a way to ensure that only serious and professional players are allowed to operate in the industry. According to the sources, ARCON believes that the new requirement will help to regulate the industry and ensure that consumers are protected from unethical and unprofessional practices.
In addition to the planned review of capital requirement, ARCON also issued other regulatory frameworks to reposition the nation’s advertising industry. This it believes in line with Federal Government policy of economic recovery, inclusive growth, development of local talents, and the government directive on the need to strengthen the Nigerian Advertising Industry regulatory framework and reverse the negative trajectories currently plaguing the industry.
The frameworks include a mandate to all advertising sectoral bodies to provide N1 billion indemnity professional insurance cover for their members respectively.
The sectoral groups include Experiential Marketers of Nigeria, EXMAN; Association of Advertising Agencies of Nigeria, AAAN; Outdoor Advertising Agencies of Nigeria, OAAN and Media Independent Practitioners of Nigeria, MIPAN.
Fadolapo, the Director General of ARCON said the insurance policy covers professional indemnity for members of their associations as part of the corporate license requirements. He said the full implementation of the corporate licence regime will take effect from April 1, 2024.
Another guideline is the implementation of the 45 days contract payment Threshold in the advertising industry. He said ARCON is collaborating with EFCC, NBC and other government agencies on the implementation of the 45 days credit threshold in the advertising industry.
According to him, any organisation that offered payment threshold outside 45 days credit policy will be tagged as economic saboteur of the Nigeria advertising industry. “Such organisation will be flagged and reported to other government agencies for further investigation and necessary punitive actions”.
“Globally, payment threshold is a policy in the advertising industry. Some stakeholders have been offering Nigerian media and other service providers 120 days payment circle, thereby impoverishing the Nigerian advertising industry. These same stakeholders prepay foreign media houses operating in Nigeria for media services”.
He said use of foreign models and voices are banned except where it is inevitable. ARCON will continue to insist on production of advertisements in Nigeria, stop the capital flight and development of other economies by some Nigerian organisations’ attitude of going out of the country to produce advertisements meant for our market.