Consumer debt relief in Nigeria : a comparative analysis

Abstract

Nigeria arguably has one of the largest economies in Africa and boasts of a high level of economic activity. This is in part attributable to a large population of 160 million, with most being youths (65%). It would be expected that due to the high level of economic activity, there would be a workable and practical system for indebted consumers to obtain debt relief. Paradoxically, Nigeria boasts of a bankruptcy practice system that is comatose and non-existent. Laws regulating bankruptcy in Nigeria have been in existence in Nigeria since 1979 and are entrenched in the Bankruptcy Act. However, the nation is yet to record a successful case of bankruptcy through the available legal channels. A plethora of problems are responsible for the dire state of insolvency practice in Nigeria. These problems include the present legislative frame work, problems of obsolete laws, judicial attitudes, problems of enforcement, challenge of overburdened courts, to mention but a few. The Bankruptcy Act provides for bankruptcy proceedings as a major debt relief measure available to a consumer debtor and composition and re-arrangement as alternative debt relief measures to bankruptcy. These debt relief measures are said to be cumbersome in nature as the Bankruptcy Act provides that debt must first be judicially established in a separate proceeding before bankruptcy proceedings can be instituted against a debtor. Also, the Bankruptcy Act does not provide for adequate debt relief measures for consumer debtors. For instance, in New Zealand, England and Wales, there is a debt relief measure for debtor’s that do not have assets or income that is the No Income No Assets (NINA) debtors. Provision for this category of debtors is not available in Nigeria. This work is a comparative study of consumer debt relief measures in South Africa, Denmark and New Zealand and is intended to highlight the strengths of these systems so that Nigeria can learn from them and fashion out a better debt relief system from the findings made. This work seeks to make recommendations and propose reforms for a better debt relief system principally through the amendment of the present Bankruptcy Act. Also that the Nigerian system must provide for a comprehensive and unified bankruptcy legislation that makes provision for non-judicial and viable alternative debt relief measures other than bankruptcy proceedings. This would give a consumer debtor the opportunity to choose the most appropriate procedure that would grant relief from indebtedness. These non-judicial procedures would also help solve the problem of over burdening of the courts, enhance speedy adjudication of bankruptcy matters and make debt relief measures available to a consumer debtor at little or no cost. Furthermore, the work also incorporates recommendations from the International Association of Restructuring, Insolvency and Bankruptcy Professionals (INSOL International) Consumer Debt Report and the World Bank report on ―The treatment of the insolvency of natural persons‖. These recommendations propose policy guidelines for insolvency reforms in nations of the world and gives practical suggestions on how to make these procedures less cumbersome and readily available for debtors.