NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
2.2 Regulatory Regime Nigeria operates a three-tier federal system of government, with powers shared by the Consti - tution of the Federal Republic of Nigeria, 1999 (as amended) among the federal, state and local governments. The regulation of banking activi - ties falls within the federal government’s pur - view, and federal laws generally regulate most fintech companies’ operations. Furthermore, there is no specific regulatory regime focused on fintech companies in Nigeria – they are gen - erally subject to the regime applicable to other companies operating similar businesses/models in a particular sector. Payments This subsector is principally regulated by the Banks and Other Financial Institutions Act 2020 (BOFIA), supplemented by various guidelines issued by the CBN from time to time that apply to legacy players and fintech companies alike. Any fintech operating as a Payment Service Pro - vider (PSP) is required to incorporate a Nigerian entity and obtain a CBN licence to operate. Lending and Financing This subsector is also principally regulated by BOFIA – albeit supplemented by various guide - lines issued by the CBN from time to time that apply to legacy players and fintech companies alike, including relevant prudential guidelines. In order to hold deposits and engage in lending/ financing operations in Nigeria, fintech compa - nies require any of the following: • a commercial banking licence (national or regional); • a merchant banking licence; or • a specialised banking or MFB licence (nation - al or state or unit).
However, fintech companies that are not focused on holding deposits but want to provide lend - ing services across the country may procure a finance company licence from the CBN. Relat - edly, fintech companies not focused on holding deposits or providing lending services across the entire country may operate with a moneylender’s licence pursuant to the Money Lender laws of the relevant state(s) they operate in. The money lender’s licence application regime is less oner - ous than the other regimes – hence the attrac - tion for fintech companies. Yet another alterna - tive is for a fintech to partner with entities that hold the relevant lending licences and merely provide the technology platform through which the loans are advanced. The Federal Compe - tition and Consumer Protection Commission (FCCPC) added an additional layer of regulatory framework to the digital lending space in 2022 by requiring all digital money lenders to register with it in accordance with the FCCPC’s Regula - tory/Registration Framework and Guidelines for Digital Lending. Investech Entities engaged in the provision of investment services must register with the SEC as capital market operators. Much like personal finance applications, investech companies have also begun partnering with registered capital market operators to provide these services. Personal Finance In order to accept deposits from customers, fin - tech companies are required to obtain any of the banking licences identified under “lending” from the CBN. In practice, however, fintech com - panies offering personal finance applications in Nigeria typically operate through partnerships with established MFBs or other deposit money banks (DMBs). Fintech companies have also
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