APCON Reforms May Stall Foreign Investments | Independent Newspapers Limited
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APCON Reforms May Stall Foreign Investments

Posted: Feb 26, 2016 at 7:23 am   /   by   /   comments (0)

Olamide Bakare, Lagos

With the Advertising Practice Reform embarked upon by the Lolu Akinwunmi led Advertising Practitioners Council of Nigeria (APCON) now in full force, the marketing communication business may have suffered a big blow as foreign partners and agencies continue to sever relationship with Nigerian agencies.

This is despite the readiness of government to open its doors to foreign direct investments (FDI).

As at the last count, no less than eight established agencies that were affiliated to top rated global agencies have severed their links, fingering the reforms.

Quadrant Company, Prima Garnet Ogilvy, SO&U Saatchi and Saatchi, Starcomm Media, C& F, Insight Grey, DDB LAGOS, LTC/JWT, and Rosabel Leo Burnett have so far dropped their foreign affiliation or partnership toga.

APCON had insisted that no foreign agency in Nigeria should have more than 25 percent stake in any Nigerian agency, a development that seems to have generated heated debate among practitioners.

Besides, part of the law also stipulates that no agency should be allowed to have more than two foreign staff in its employ.

Lanre Adisa, Chief Executive Officer, Noah’s Ark, who spoke to Independent on phone, stated that it was important the reform was reviewed in line with current realities in the global advertising environment.

Faulting the provision that stipulates only 25 percent shareholding for foreigners that want to play in Nigeria’s advertising space, Adisa said urgent step must be taken to raise the stake to 49 percent for foreigners so as to promote healthy rivalry.

Adisa, who argued that the industry is now in the era of competition, faulted the council for dictating to foreign partners. To him, it is better to have policy that creates collaboration between local agencies and their foreign counterpart.

According to Adisa, who runs one of the fastest growing advertising agencies in Nigeria, it was better for the council to create a level playing field for everyone in the market. He believes with relaxed rules foreign investors would be attracted to the market.

On issuance of licence to foreign agencies before they could practice, Adisa described the policy as good but lamented the failure of APCON to implement it. He said that many foreign agencies still enter the advertising market in Nigeria without licence.

An analyst decried the APCON reform as unhealthy, stressing that the law if allowed to remain could jeopardize business growth and hinder development in the industry.

Kelechi Nwosu, President of Association of Advertising Agencies of Nigeria, said the action taken by APCON was in order, stressing that government has a big role to protect its own in whatever circumstance hence the need for the reform.

“Are you saying the only way to allow competition is to allow foreign agency to buy agencies. Is that the only way to compete? The reform is not just about ownership. It has a licensing regime that says that if you are going to practice in this country, you have to go through a process and get a licence. I think the major issue should be why do we have people who are not registered with AAAN working for government at all levels?” Nwosu queried.

“We are unhappy that government is allowing people to work for them or allowing unregistered agencies to work for them. When you come to talk about competition, it is almost like you are in primary school, you want to be able to grow and you say they should allow people who are post graduate students to come here to compete. This market is small, it is tender and developing, and you are saying let’s open it up with everybody. All the major advertising agencies have their affiliate in Nigeria and are already here competing.

“Do you know that some of these agencies take business here to execute in South Africa and Brazil. That for me is illegal because where is government capturing the tax from that one. Where is VAT? Who is monitoring that? Nobody does that. I am surprised when people talk about unfair competition. I wish to have that debate with them to understand what they mean by unfair competition.”

Mr. Bunmi Onabolu, former President of Association of Advertising Agencies of Nigeria (AAAN), said APCON position is in sync with what obtained in developed markets, noting that there was nothing strange in the rule prescribed by it.

“As far as the issue of incursion is concerned, many people have come to raise it with APCON. I believe a lot of people have a lot of misunderstanding about the APCON reform. As you are aware, the government policy of free trade allows for participation in this market. But be that as it may, I believe there is nothing wrong in setting the ground rule for engagements.

“This is something that every country does and this is where lots of people misunderstand the APCON rules. In fact, there is everything wrong in not setting the ground for engagement because what it means is that it becomes a jungle for anyone to do what they like. No one can enter into the UK and do what they like. So, all what APCON did is to set the rules. Anyone who wants to play must be ready to abide by the rules. I don’t see the ground rules shutting out anybody or making it difficult for anyone to practice”, Onabolu reckoned.