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Anatomy of Nigerian Fintech Laws

In addition to the super-agent licence requirements, we commented on the role of a super-agent in Nigeria’s agency banking sector in this licencing regime series.

What is Super Agency Banking?

A super-agent under the CBN’s (Central Bank of Nigeria) Guidelines for the regulation of agent banking and agent banking relationships in Nigeria 2013 (the “Agency Banking Regulation”) is an agent and a third-party services provider.

The Agency Banking Regulation describes a super-agent as an agent contracted by the principal, who may sub-contract other agents in a network while retaining overall responsibility for the agency relationship.

Principal in Nigeria’s agency banking is a financial institution (FI) under BOFIA 2020 (Banking and Other Financial Institutions Act). The agency banking model may be bank-led or non-bank-led (model).

As a crucial stakeholder in agency banking, the super-agent acts as an agent and a third-party services provider to the FI or principals.

In our view, the success of the agency banking sector depends on how well the super-agency business develops in Nigeria.

Agency banking promotion or campaigns, agent recruitment, KYC-related services, periodic KYC issues, and agent handling are services central to the super-agent.

In our view, the absence of a national agent-bankers’ centralized database stems from the ineffectiveness of the super-agency model in Nigeria’s agency banking sector.

Yet, nearly all licenced super-agents in Nigeria would prefer to own and operate an agency banking application – a matter that the CBN tacitly approves.

Who may apply for a super-agent licence?

According to the Approved New Licence Categorizations Requirements (consolidated) 2021, a corporate entity registered by the CAC (Corporate Affairs Commission), whose Memorandum and Article of Association spells its business as super agency banking, may apply to the Director, Payments System Management Department of the CBN.

The entity seeking to apply should have:

  • A fifty million Naira unimpaired shareholders’ fund; and
  • deposit a refundable fifty million Naira in CBN’s designated escrow.

Specifically, the CBN invests the escrowed fund in treasury bills, subject to the availability of treasury instruments, and interests and actual deposits are refundable.

Supporting Documents

The supporting documents that accompany the application for the super-agent’s licence are:

  • incorporation documents
  • three-year TCC (tax clearance certificate), where applicable, and the company’s TIN (taxpayer identification number)
  • the company’s profile showing shareholding, current businesses and operation, organogram, number of employees, and functional contact addresses that include electronic addresses
  • detailed board Structure – one Independent Non-Executive Director is required – and each of the directors and management’s BVN, professional bio, valid proof of identity
  • business plan showing a current line of business, where applicable, features of the scheme, securities features, five years financial projections and proposed schedule of charges
  • profit sharing arrangement and diagrammatic illustration of transaction flows
  • IT policies such:
    • information Ownership/Disclosure/Loss
    • backup and restore
    • network security
    • encryption and confidential data
    • password, and third-party connection
    • incidence response
    • physical security
  • privacy, data protection, agents’ criteria, competency and integrity test, risk management, internal control, operational procedures and any other policy and procedures relevant to the management of an agent banking arrangement.
  • outline of the shared agent network strategy including current and potential engagements (minimum of fifty agents on application date), geographical spread and benefits to be derived.
  • executed SLAs (Service Level Agreements) with sub-agents and FIs
  • KYC procedures and AML/CFT compliance, fraud detection plan and standard of care
  • consumer protection policy and process for board approval
  • PTSA’s (payment terminal service aggregator) of Payment Terminal Application Certification
  • enterprise risk management and dispute resolution framework
  • contingency and disaster recovery plan (business continuity plan)

Validity of Super-Agent Licence

An AIP (approval-in-principle) for a super-agent licence is alive for six months, while the life cycle of the commercial licence is renewable if the super-agent performs satisfactorily.

Licencing Fee

The entity must pay to the CBN one hundred thousand Naira non-refundable application fee. Should the application be approved, a one million Naira licence fee is payable to the CBN.

At this point, the fifty million refundable (escrowed) fund, together with interest, is returned to the super-agent. In any case, it is refundable even if the application for super-agent licence is unsuccessful.

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