Introduction
Nigeria is one of the major players in the financial services industry and has consistently experienced rapid growth in the financial technology ("Fintech") subsector. This has necessitated the development of regulation of the growing sub-sector.
The year 2022 was an eventful year for the Fintech space in Nigeria, and various regulators released legislation and operational guidelines to provide security and protection for consumers who continuously embrace innovation in the ecosystem.
In this article, we highlight some salient regulations issued in 2022 in connection with the Nigerian fintech terrain.
Highlights
1. Cryptocurrency: The Securities and Exchange Commission ("SEC") issued rules to regulate companies doing crypto-related businesses in Nigeria. This regulation is applicable to companies which issue, trade, and facilitate the exchange, transfer, or sale of digital assets. The regulation of cryptocurrency in Nigeria has been long overdue owing to the growing acceptance of cryptocurrency in Nigeria. We, however, anticipate SEC's implementation of the Rules and the reception of its implementation. In addition, we anticipate that the implementation of the Rules will provide clarity on how the CBN intends to approach cryptocurrency in the immediate future1.
2. Open Banking: In May 2022, the CBN published a draft Operational Guidelines for Open Banking in Nigeria (the "Proposed Guidelines") pursuant to the Framework for Open Banking issued by the CBN in 2021. The Proposed Guidelines provide guidance to participants of the open banking ecosystem (i.e organizations that possess customers' data which may be exchanged with other entities to provide innovative financial services within Nigeria). Fintechs that provide services leveraging application programme interfaces (i.e APIs) are to ensure that they execute a data access agreement with the service users 2.
3. Contactless Payments: The CBN issued an Exposure Draft of the Guidelines for Contactless Payments in Nigeria ("Draft Guidelines"). The Draft Guidelines sets out a framework for contactless payments transactions in Nigeria and stipulates the minimum standards to be set by stakeholders. It also specifies the roles and responsibilities of stakeholders involved in contactless payments in Nigeria. Stakeholders in contactless payments transactions as highlighted by the Draft Guidelines include: acquirers; issuers; payment schemes; switching companies; Payment Terminal Service Providers; Payment Terminal Service Aggregators amongst others3.
4. Digital Lending: The Federal Competition and Consumer Protection Commission (FCCPC) issued a compliance guide for digital lenders. This framework stipulated the requirement of registration of digital lenders with the FCCPC to enable such companies carry on business as digital lenders. We believe this is the first of many directives by the FCCPC in a bid to regulate the digital lending space4.
5. Fundraising for Startups: In December 2022, SEC approved the Nigerian Exchange Limited's (the "Exchange") proposed Rules for Listing on the Technology Board of Nigerian Exchange Limited ("Rules"). The Rules create a platform for technology companies to raise capital. Through this medium, technology companies in Nigeria can raise capital from qualified institutional investors, retail investors, and high-net-worth investors by listing their securities (such as shares) on the Exchange[5].
6. Data Protection: The Nigeria Data Protection Bureau ("NDPB") in 2022 replaced the National Information Technology Development Agency (NITDA) as the apex regulatory data protection body in Nigeria. The NDPB in October issued a compliance notice to data controllers and processors with a deadline for January 20, 2023, to be included on the NDPB's whitelist. The notice requires data processors and controllers to develop and implement a privacy policy that is consistent with the NDPR; undergo an audit of their data protection practices; designate one or two persons as its data protection contacts to the NDPB, who will be trained on data protection, amongst other requirements[6].
CONCLUSION
The regulations issued in 2022 indicate that Nigeria's relevant regulators are willing to accommodate new technologies and are keen on ensuring these technologies are met with adequate guidelines for their operations. We look forward to the innovations and interesting developments 2023 has to offer, and the approach of regulators to the demand of these innovations in the Fintech ecosystem.
Footnotes
1. Please read our article on digital asset regulation here.
2. Please read more about the Proposed Guidelines here.
3. Please read our article here.
5. Read more about it in our article here
6. Read more about it in our article here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
