In recent years, financial technology (fintech) has rapidly expanded worldwide, forcing traditional financial institutions to evolve in response to this innovative manner of conducting business in the financial industry. Today, we continue to witness the significant impact of fintech on global markets, as it reshapes the financial landscape. Looking ahead, the evolution of fintech promises to further challenge and transform existing frameworks, requiring continuous adaptation and regulatory foresight. In 2023, the IBA Banking & Financial Law Committee launched an extensive research project aimed at dissecting and understanding the diverse legal frameworks that govern fintech around the globe. This original study covered 39 countries, providing a comprehensive overview of how different jurisdictions are navigating the complexities of fintech regulation.
Udo Udoma & Belo-Osagie's Banking and Finance, Capital Markets, and Fintech Partners, Yinka Edu and Joseph Odianosen Eimunjeze, contributed to the second edition of the International Bar Association's special project, Fintech: How is the World Shaping the Financial Innovation Industry? (2024), conducted by the IBA Banking & Finance Law Committee.
Their contribution, featured on pages 34 to 42, provides an overview of the fintech legal framework in Nigeria, covering topics such as Payments, Blockchain, Data Protection, Open Banking, and startup laws and programs.
Fintech Regulatory Framework: A Summary of the Most Relevant Laws and Regulations Concerning Fintech and Financial Innovation
Depending on the nature of their business, fintech operators in Nigeria are subject to different laws and regulated by various institutions. Such laws include the Companies and Allied Matters Act 2020 (CAMA), the Central Bank of Nigeria Act 2007 (CBN Act), the Banks and Other Financial Institutions Act 2020 (BOFIA), moneylenders laws applicable in the various states in Nigeria, and regulations, guidelines and circulars issued pursuant to these laws.
The Central Bank of Nigeria (CBN) is the principal regulator of the Nigerian fintech space. The CBN derives its powers from the CBN Act and the BOFIA. BOFIA requires that any entity carrying on the business as a financial institution must obtain a licence from the CBN.
Regarding moneylending, any entity not licensed by the CBN, but which wishes to carry on the business of moneylending is required to obtain a moneylender’s licence from the state government in the state in which it intends to carry on its business.
Lastly, every entity wishing to do business in Nigeria is required to be incorporated with the companies’ registry and comply with the requirements of CAMA. For fintech companies, CAMA prescribes the minimum requirements for incorporation, share capital, operations, management, meetings, directors, shareholding and other related matters.
There are other laws which apply to fintech companies in varying degrees not discussed in this update. We have set out below a summary of some of the most important regulations with respect to f intech and financial innovation in Nigeria.
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Read the full publication at Udo Udoma & Belo-Osagie