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Anatomy of Nigerian Fintech Laws

The effectiveness of key stakeholders is crucial to upscaling Nigeria’s FinTech sector in a way comparable to global standards.

In this 2-part commentary, we aim to review the functional roles of each stakeholder in the financial technology sector.

Concise Summary

Stakeholders in Nigeria’s FinTech sector include:

  • CBN (Central Bank of Nigeria)
  • Consumer
  • Nigeria Central Switch and NIBSS (Nigerian Inter-Bank Settlement System)
  • Switching Companies
  • MMO (mobile money operators) and PSB (payment service Banks)
  • State Ministry of Commerce & Industry
  • NCC (Nigerian Communication Commission)
  • SEC (Security and Exchange Commission)
  • NAICOM (National Insurance Commission)
  • PENCOM (Pension Commission)
  • Regulators of Cooperatives
  • PSSP (Payment System Service Providers)
  • Special Tribunal for the Enforcement and Recovery of Eligible Loans
  • The Federal High Court

We agree with the Mickensy report that “the full potential of fintech in Nigeria remains untapped. But a youthful population, a focused regulatory drive to increase financial inclusion, and accelerating digital adoption due to COVID-19 create conditions for a thriving sector. If stakeholders take quick and decisive action, they can strategically protect gains and accelerate growth in the sector, even in difficult economic times”.

Financial literacy is an epidemic that the CBN is inclined to eradicate as it seeks the cooperation of all stakeholders in the Nigerian FinTech sector.


Banking and Other Financial Institution Act (BOFIA) 2022 permits the CBN to perform any of its functions, duties, and powers under the law through any person. Such persons require written authorization and need not be CBN officers or employees.

A consistent refrain in all CBN’s regulations, directives, circulars, or frameworks in Nigeria’s FinTech sector is the exercise of its mandate to “promote a sound financial system” or to “promote and facilitate the development of efficient and effective systems” amongst others functions or powers.

The CBN is the regulator of mainstream financial technology and regulates nearly all financial technology infrastructure in Nigeria.

The FCCPA (federal competition and consumer protection act 2018) designates the CBN, that is, the consumer protection department of the CBN, as a sector-specific regulator.

Nigeria Central Switch (NCS) and NIBSS

Switching means a system that captures electronic financial transactions (EFT) from touch-points, applies rules, determines destinations, delivers the financial trades, and gives appropriate feedback.

NCS is an organization mandated to provide a single point of access, interconnectivity, and interoperability amongst payment service providers in Nigeria.

NCS is established further to the NIBSS’ (Nigeria Inter-Bank Settlement System) mandate to act as the Automated Clearing House (ACH), Payment Terminal Service Aggregator (PTSA), and Nigeria Central Switch (NCS) for Nigeria.

Switching and processing infrastructures are capital intensive. Most microfinance banks (Mfbs) and MMOs do not own payment processing infrastructures in Nigeria.

MFBs leverage commercial banks and some microfinance banks’ infrastructures like Kuda’s payment processing infrastructures.

NCS is responsible for the interoperability between the various players in the financial system.

Interoperability involves the ability of the various players, such as DMB (deposit money banks), MMOs, non-banking financial institutions, payment terminal providers, card acquirers, government institutions, and the customers, to send, receive and process funds, documents, and other instruments electronically through a common channel.

Guidelines on Switching forbid NCS from competing with any Payment Card Industry Scheme, Operator, or Service Provider within the Nigerian FinTech space.

Every PSSP, MMO, or switching and processing FinTech must route its payment through the NCS – for all inter-bank or interoperable transactions.

NCS and other Switching service providers are very dear to any successful fintech operations in Nigeria.

The Consumer

The CBN’s exposure draft on the Digital Financial Services Awareness Guidelines July 2022 (the “DFS Awareness Guidelines 2022”) defined a consumer distinctively from a customer.

DFS Awareness Guidelines 2022, when it becomes part of fintech subsidiary legislation in Nigeria, will distinguish a financial services customer from a consumer.

A consumer is a person or entity that uses, has used, or is a potential user of products or services of an institution.

At the same time, a customer refers to a person that has a relationship because of benefiting from financial products or services offered by a financial institution.

Indeed, the financial consumer or customer is king in Nigeria. Over ten legislations seek to protect the consumer or customer in Nigeria.

We examined the emergent trends in Nigerian financial consumer protection on ResearchGate.

It is true that “if stakeholders take quick and decisive action, they can strategically protect gains and accelerate growth in the sector…”.

These quick actions should promote consumers’ confidence through an accessible and timely complaints redress measure.

Switching and Processing Companies

Switching and processing companies are the brides of every FinTech company in Nigeria.

The New Licencing Categorization for the Nigeria Payment System 2020 (the “2020 Licencing Categorization”) should be read conformingly with other regulations of the CBN and, more specifically, the Guidelines on Transactions Switching in Nigeria, 2016.

Permissible activities for a switching and processing company under the 2020 Licencing Categorization include:

  • Switching and card processing
  • Transaction clearing and settlement agent services
  • Non-banking acquiring services
  • All super-agent, PTSP (payment terminal service provider), and PSSP (payment system service providers’ activities

Switching and processing activities are the doorway to the NCS.

MMO (mobile money operators) and PSB (payment service Banks)

An MMO is permitted to operate e-money, issuing, wallet creation and management, pool account management, and super-agent activities.

PSB accepts deposits from individuals and small businesses, payments and remittances, and sells foreign currencies realized from inbound cross-border personal remittances to authorized foreign exchange dealers.

Its activities include issuing an ATM (debit and pre-paid) card on its name, wallet, financial advisory services, and investing in FGN and CBN securities.

State Ministry of Commerce & Industry

Respective ministries of commerce & industry in States in Nigeria regulate certain microlending entities not supervised by the CBN.

That is, fintech micro-lenders who ride on a money lending licence issued by a Government of a State.

Beyond issuing the licence and seeming high compliance costs, we are unaware of clear regulations respecting consumer protection and the business structure of digital fintech lenders in this space.

Proper regulation of non-bank digital micro-lenders ensure that fintech-micro-lenders that ride on money lending licence remain properly geared and capitalized.

The state ministry of commerce & industry or any other agency that regulate money lending licenced operator across the States in Nigeria are rarely consumer-centered.

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