In this Regulatory Roundup for 2024, we reflect on a year where Nigeria’s business environment experienced significant regulatory and legal developments across key sectors, including financial services, data protection, competition, and consumer protection. This review provides a high-level evaluation of key regulations and regulatory activities of 2024 and highlights critical considerations for businesses undertaking a general enterprise-wide compliance review or planning for anticipated changes.
CBN’s revised guidelines for Bureau de Change (BDC) operations
In May 2024, the Central Bank of Nigeria (CBN) revised the guidelines for Bureau de Change (BDC) operations in Nigeria, with the stated objective of enhancing transparency, promoting operational efficiency, and strengthening the regulatory framework for BDC operations. The guidelines introduce key provisions that include stricter licensing requirements and tiered governance standards, exclusion of PSPs, PSBs, MMOs, and IMTOs from owning BDCs, and restriction of BDCs to serve only as cash-out points for inbound remittances, prohibiting outbound currency transfers. The reforms promote collaboration among BDCs, fintechs, and commercial banks while addressing market volatility and enhancing compliance.
Banking sector recapitalisation and consolidation
On 28 March 2024, the Central Bank of Nigeria announced a review of the minimum capital requirements for commercial, merchant, and non-interest banks in Nigeria, setting varying thresholds based on license types. This recapitalisation drive in response to macroeconomic pressures aims to strengthen the banking sector’s stability and growth in uncertain economic times. While short-term discomfort is expected, the increased capital buffers will enhance banks’ ability to expand their portfolios by acquiring diverse and higher-risk assets.
The rise of fintechs and increased regulatory oversight
The continuing expansion of Nigeria’s unicorn fintech companies, such as Moniepoint and OPay, has drawn increased regulatory oversight with a particular focus on enhancing Know-Your-Customer (KYC) compliance processes. On April 29, 2024, the CBN imposed a two-month suspension on customer onboarding for several prominent companies, including Moniepoint, OPay, Kuda Bank, and Palmpay, due to identified deficiencies in the KYC processes. The CBN now requires more stringent identity verification and due diligence measures for their customers. The CBN’s posture in 2024 marks a shift from light-touch regulation as fintech risks arise.
New payment terminal service aggregator and updated POS transactions guidelines
On September 11, 2024, the CBN issued a circular directing PSPs to route all Point of Sale (POS) transactions through a licensed Payment Terminal Service Aggregator (PTSA). The CBN granted a PTSA license to Unified Payment Services Limited, making it the second PTSA currently held by NIBSS. This move is intended to reduce reliance on a single aggregator, mitigate systematic risks, and foster innovation and competition in the payment system and ultimately lower transaction costs for consumers.
SEC’s Accelerated Regulatory Incubation Programme (ARIP)
The SEC launched the Accelerated Regulatory Incubation Framework (ARIP) to facilitate the onboarding of Virtual Asset Service Providers (VASPs) and digital investment service providers. The framework aims to promote regulatory clarity, market integrity, and investor protection and ensures compliance with anti-money laundering (AML), counter-terrorism financing (CTF), and counter-proliferation financing (CPF) regulations.
Read also: Navigating compliance considerations for minority stake acquisitions in Nigeria
The deduction of tax at source (Withholding) regulations, 2024
The Minister of Finance issued the Deduction of Tax at Source (Withholding) Regulations, 2024, which simplifies the tax deduction process by reducing rates for low-margin sectors and providing exemptions for small businesses and manufacturers. WHT deductions occur at the time of payment or when the liability is recognised, and the remittance timelines have been set for the federal and state authorities. Both corporate and individual taxpayers must update their accounting systems with the new rates, verify vendors’ TINs, and ensure timely remittance of WHT to the tax authorities.
FCCPC’s regulatory investigations and penalties
In 2024, the FCCPC imposed significant penalties for the violations of the Nigeria Data Protection Act (NDPA) and the Federal Competition and Consumer Protection Act (FCCPA). WhatsApp LLC and Meta Platforms Incorporated were fined $220 million for discriminatory practices against Nigerian data subjects, and Coca-Cola Nigeria Limited and Nigeria Bottling Company were fined for misleading branding and deceptive marketing related to Coke Less Sugar. Both companies are challenging the fines on appeals before the Competition and Consumer Protection Tribunal, which will clarify the FCCPC’s regulatory authority and jurisdiction.
Increased enforcement of data protection regulations
The NDPC has intensified enforcement activities in 2024, collecting a total of N400 million in remediation fees for data breaches. In August 2024, Fidelity Bank Plc was fined N555,800,000 for the violation of the NDPA. The FCCPC fined Meta $220 million for unauthorised data appropriation and exploitative privacy policies. Based on these trends observed in 2024, there is an expectation of continued enforcement of data protection with stronger inter-agency collaboration to address breaches and overlapping regulatory areas.
Registration of data controllers/processors of major importance
On February 14, 2024, the NDPC issued a Guidance Notice mandating data controllers and processors of major importance to register with the NDPC by June 30, 2024. The NDPC categorises data controllers and processors of major importance into three levels—Major Data Processing-Ultra High Level (MDP-UHL), Major Data Processing-Extra High Level (MDP-EHL), and Major Data Processing-Ordinary High Level (MDP-OHL)—with varying registration fees, reflecting factors like data sensitivity and the capability to manage cross-border data flows.
Introduction of Expatriate Employment Levy (EEL)
On February 27, 2024, the Federal Government of Nigeria launched the Expatriate Employment Levy (EEL) Handbook, requiring employers of expatriates to pay an annual levy of $15,000 for directors and $10,000 for those in other roles. The EEL requires every eligible expatriate to present an EEL card upon entry and exit from Nigeria. The levy was temporarily suspended in March 2024 for further consultations, and its future depends on the outcome of a pending court case.
Concluding remark and general outlook for 2025
In 2024, Nigeria’s regulatory environment experienced key developments, particularly in financial services, data protection, competition, and consumer protection, which have been areas of considerably stimulating regulatory activities for some years. 2025 is expected to witness heightened regulatory activity, with many of the initiatives discussed in 2024 likely to be fully operationalised.
The evolving trend of applying proportionate banking regulation to digital banks by the CBN may become more evident in 2025, with increased scrutiny of fintech operations. Furthermore, the competition and consumer protection sector is set for defining judicial decisions that will clarify the FCCPC’s regulatory jurisdiction and provide guidance for businesses in navigating broad competition and consumer protection regulations and their specific industry regulation.
Furthermore, the NDPC’s sanctions and FCCPC’s investigations demonstrate increased attention to data privacy as a consumer protection objective. For businesses, staying informed and adapting to these changes is essential for compliance planning.
Contributors:
Abimbola Ojenike, Oluwadamilola Omotosho and Adefolarin Ojolowo working with Slingstone LP, Lagos.
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