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Anatomy of Nigerian Fintech Laws

We x-rayed the pre-conditions for a mobile money operators’ licence in this licencing regime series for financial technology companies under the CBN’s (Central Bank of Nigeria) New Licence Categorizations for the Nigerian Payment System (the “New Licence Categorizations 2020”).


The CBN’s Guidelines for Licensing and Regulation of Payments Service Holding Companies in Nigeria 2021 (the “PSHC Guidelines”) unbundled payments services in Nigeria which Mobile Money Operations (MMO) is part of.

Before the PSHC Guidelines, mobile money operators (“MMOs”) included switching and processing, and payment solutions services to their traditional services.

Now, the PSHC Guidelines allow MMOs who offer multiple payment system services across the value chains to set up a payment service holding company (“PSHC”) strictly under the PSHC Guidelines.

Indeed, the PSHC Guidelines did not nullify the licencing requirements for MMO. But the New Licence Categorizations 2020 spelled out the guidelines for setting up a PSHC.

The New Licence Categorizations 2020 streamlined permissible activities of MMOs and reaffirmed that only MMOs are allowed to hold customers’ funds.

May we add that with the entry of PSBs (payment service banks) in Nigeria’s payment services system, the categories of entities permitted to hold funds have increased: banks, PSBs, and MMOs.

The Business of an MMO

Under the New Licence Categorizations 2020, MMOs may carry on the business of e-money issuing, wallet (account) creation and management, pool account management, and activities of a super-agent.

A super-agent is involved in agent recruitment, management, and other activities specified in the Regulatory Framework for Licensing Super-Agents in Nigeria 2015, including:

  • Agents’ transaction volume and value
  • monitor effective compliance with set limits and establish other prudential measures in each case.

The Super-agent should own a platform capable of managing and monitoring the agents’ activities. Such platforms must not hold electronic money value.

MMOs’ Licencing

MMOs are a crucial participant in the non-bank led model of Nigeria’s mobile money system as envisaged under the Regulatory Framework of Mobile Money Services in Nigeria 2021 (the “Mobile money Framework 2021”) and Guidelines for Mobile Money Services in Nigeria 2021 (the “Mobile Money Guidelines 2021”).

CBN’s Approved New Licence Categorizations Requirements (consolidated) 2021 (the MMO Licencing Requirement 2021”) – on pages 5 to 7 – specifies the licencing regime of MMOs in Nigeria.

As stated in its Memorandum and Article of Association, a company whose business is mobile money services is eligible to apply to the CBN’s Director, Payments System Management Department for MMOs’ licence.

The proposed MMO company must have two billion Naira unimpaired shareholders’ funds and pay a refundable two billion Naira to CBN’s escrow account.

The CBN will refund the escrowed funds and any interests to the proposed MMO.

The following documents must accompany the request for MMOs’ licence:

  • Certificate of Incorporation
  • Memorandum & Articles of Association
  • Form CAC 1.1 together with proof of any changes to it
  • Three years tax Clearance Certificate and Taxpayer Identification Number (TIN)
  • Proposed MMO’s profile, detailing current business operations, if any.
  • Where applicable, the Structure of the PSCH or parent company.
  • Total number of employees, organogram, share structure, contact details, governance, leadership, and valid means of ID and BVN (bank verification number) of the board and management
  • Business plan and contingency and disaster recovery plan (business continuity plan); risk, software security, and data protection policies
  • Incidence response policy, physical security policy, and enterprise risk management framework
  • Dispute resolution framework, enforceable contracts with participating banks, merchants, telcos, and other relevant parties.

Board membership in the proposed MMOs must include an independent non-executive director.

Lastly, the proposed MMOs’ proof that they paid the CBN one hundred thousand Naira non-refundable application fee accompanies the application. If the application for MMOs’ licence is successful, one million Naira licencing fee is to be paid to the CBN.

An approval-in-principle (AIP) lasts for about six (6) months. Afterward, the CBN may issue the commercial licence, subject to renewal.

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