NIGERIA Trends and Developments Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
The recapitalisation environment may also compress transaction timelines, particularly where institutions seek to meet regulatory deadlines. As a result, buyers must conduct accelerated diligence while still satisfy - ing regulatory expectations. Beyond banking, recapitalisation requirements have also impacted other sectors. The enactment of the Nigerian Insurance Industry Reform Act 2025 (“NIIRA 2025”) introduced a comprehensive overhaul of the insurance sector’s capital framework and formally embedded a risk-based capital regime. Under NIIRA 2025, minimum capital requirements were significantly increased as follows: • NGN10 billion for life insurance companies • NGN15 billion for non-life insurers • NGN25 billion for composite insurers • NGN35 billion for reinsurance companies Operators were granted a 12-month compliance win - dow from the commencement of the Act, with a final compliance deadline of 30 July 2026. The Act also strengthens the supervisory and enforcement pow - ers of the National Insurance Commission (NAICOM), including authority to require recapitalisation plans, approve restructuring arrangements and impose reso - lution measures for non-compliance. The introduction of risk-based capital assessment means capital adequacy is no longer solely meas - ured by nominal capital. Insurers’ exposure profiles, underwriting risks and asset concentration now directly influence their capital expectations. This has shifted M&A discussions from simple capital aggre - gation towards strategic portfolio balancing. Smaller insurers that may struggle to meet the new thresholds may explore consolidation, while larger operators may consider acquisitions as a route to scale, distribution expansion and risk diversification. Similarly, the National Pension Commission (Pen- Com) introduced mandatory recapitalisation for Pen - sion Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) under its September 2025 circu - lars. PFAs must maintain a minimum capital base of NGN20 billion, with additional capital linked to assets
under management exceeding NGN500 billion, while PFCs are required to maintain NGN25 billion plus a surcharge based on assets under custody. The extended compliance deadline is 30 June 2027, and PenCom has made it clear that non-compliance will result in licence revocation. This regulatory develop - ment is expected to encourage consolidation among smaller operators and may create M&A opportunities for well-capitalised firms seeking to expand market share in the pension sector. Across banking, insurance and pensions, these recap - italisation requirements have a direct bearing on deal activity. They incentivise mergers and acquisitions to meet regulatory thresholds, encourage strategic equity injections, and inform valuations by embedding compliance obligations into transaction structuring. Investors and acquirers must consider these capital requirements early in the transaction life-cycle, as fail - ure to comply post-transaction could jeopardise the business operations and impact shareholder returns. Data protection and digital compliance In March 2025, the Nigeria Data Protection Com - mission (NDPC) issued the General Application and Implementation Directive (GAID) under the Nigeria Data Protection Act 2023. Effective from 19 Septem - ber 2025, the GAID replaced the 2019 Data Protection Regulation and introduced a more robust compliance framework for companies handling personal data, including extraterritorial application for entities pro - cessing Nigerian citizens’ data abroad. Key requirements include a tiered registration sys - tem for data controllers and processors, mandatory appointment of Data Protection Officers for major operators, and stricter obligations for cross-border data transfers. For M&A transactions, these changes mean that acquiring companies must evaluate the target’s data governance practices, cross-border transfer arrangements, and historical compliance with NDPC directives. Non-compliance could lead to fines, operational restrictions or reputational risk post- acquisition, making data protection due diligence a critical component of deal planning and integration strategies.
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