CENTRAL BANK OF NIGERIA: MONETARY, CREDIT, FOREIGN TRADE AND EXCHANGE POLICY GUIDELINES (2024/2025)

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By Aderonke Alex-Adedipe and Olawale Atanda 

 

Introduction

The Central Bank of Nigeria (the “CBN”) recently issued its Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the fiscal years 2024 and 2025 (the “Policy Guidelines”) which outline the CBN’s objectives for the financial system and the regulations applicable to Banks and other Financial Institutions during this period. The Guidelines contain provisions on policy measures; foreign trade and exchange policy measures; consumer protection, among others.

In  this newsletter, we discuss the provisions relating to the payments system within the monetary and credit policy measures, as well as policy developments under foreign trade and exchange measures.

1. The Payments System
In line with its vision of creating a widely used and internationally recognized payments system, the CBN aims to enhance the credibility and security of the Payments System. To achieve this, the CBN will continue implementing the Payments System Vision (PSV) 2025 throughout the 2024/2025 fiscal years. The PSV focuses on promoting the safety and efficiency of the payments system, deepening financial inclusion, and increasing  competition among service providers. To achieve this, the following key areas will be addressed:

i. Security of the Payments System

The CBN will continue to ensure that all regulated entities conduct their operations in line with global payment industry standards. These include: Payment Application Data Security Standard (PA DSS); Payment Card Industry PIN Entry Device (PCI PED); Payment Card Industry Data Security Standard (PCI DSS); Triple Data Encryption Standard (Triple DES); Europay, MasterCard and Visa (EMV) Standards; and others as may be stipulated from time to time. Card schemes and financial institutions are to ensure that all cards produced and issued in Nigeria are chip-based to enhance safety. To this end, the CBN will continue to enforce its payment system guidelines.1

ii. Payment System Initiatives

The CBN will promote the regulatory sandbox program where Fintechs can test and innovate with new financial products and services. The CBN will also advance contactless payments that allow customers to make payments by tapping their card or mobile device on a contactless terminal. This includes the implementation of the Quick Response (QR) code system, which facilitates payments through the scanning of a barcode (QR Code) with a mobile device.

iii. eNaira

According to the CBN, the eNaira, which is the digital version of Nigeria’s fiat currency, offers several benefits, including faster and cheaper payments, increased financial inclusion, and reduced fraud.2

Key initiatives  to drive its adoption include the rollout of eNaira version 2.0, focusing on wholesale Central Bank Digital Currency (CBDC) to encourage the participation of deposit money banks and empower them to champion its adoption. Additional efforts involve implementing offline functionality and fostering greater collaboration with Federal and State Governments to expand its usage.

iv. Operation of the Bank Verification Number

The CBN will continue to ensure compliance with the requirements for customers to obtain Bank Verification Number (BVN) and National Identification Number (NIN) which provide unique identifiers to customers and improve Know-Your-Customer (KYC) documentation. All Tier 1 bank accounts and wallets for individuals are mandated to have BVN or NIN while Tier 2 and 3 accounts must be linked to the BVN and NIN of their users. 3

 

2. Policy Developments in Foreign Exchange Market

The following developments will apply in the foreign exchange market during the 2024-2025 fiscal period.

i. Pan-African Payments and Settlement System

The Pan-African Payments and Settlement System (PAPSS) facilitates payments within Africa by enabling settlement of cross-border payments in local currency at lower costs, thereby boosting intra-African trade. 4

In a July 2023 circular, the CBN provided further clarifications regarding PAPSS transactions settled using CBN foreign exchange. The key points are as follows:

a.PAPSS transactions must be trade-backed.

b.Payments will be made using the “Bills for Collection” method. 5

c.The transaction limit per customer is set at USD 20,000 per quarter.

d.Authorized Dealer Banks (ADB) have a limit of USD 200,000 per quarter.

e.Multiple applications by customers through different ADBs are not permitted.

f.ADBs must obtain CBN approval for USD cover before initiating payments on PAPSS.

g.ADBs may maintain a USD settlement account with the PAPSS settlement bank for transactions where CBN cannot provide foreign exchange. 6

ii. Mechanisms for Bureau De Change Operations in Nigeria

To improve efficiency in the operations of the Bureau De Change (BDC) segment of the Foreign Exchange Market, the CBN recently introduced, the following:

a. Maintenance of a permissible limit of -2.5 per cent to +2.5 per cent of the Nigerian Foreign Exchange Market window weighted average rate of the previous day, being the spread on buying and selling by BDC operators; and

b. Mandatory rendition of daily and monthly returns by BDC operators on the Financial Institution Forex (FIFX) rendition system. 7

iii. Electronic Certificate of Capital Importation

To enhance transparency and efficient processing of investment flows into Nigeria, the CBN integrated the electronic Certificate of Capital Importation (eCCI) application with the Society for Worldwide Interbank Financial Telecommunication (SWIFT) database. The aim  is to verify all inflows before an eCCI is issued. 8

iv. Payout option in Naira for Receipt of Proceeds of Diaspora Remittances

In a move to further liberalize the payouts of diaspora remittances, the CBN introduced Naira payments in July 2023, in addition to USD and eNaira. This allows recipients of diaspora remittances to choose between receiving their funds in USD, Naira, or eNaira from licensed International Money Transfer Operators. Naira payments will be based on the Investors and Exporters (I&E) Window exchange rate applicable on the day of the transaction.

 

Conclusion

The Policy Guidelines reflect a commitment to enhancing the payments system, fostering financial inclusion, and improving the efficiency of foreign trade transactions. The outlined initiatives, from advancing the eNaira to streamlining cross-border payments through PAPSS, demonstrate the CBN’s intention to promote a more secure, inclusive, and globally competitive financial landscape.

For more on the Policy Guidelines, please visit https://pavestoneslegal.com/newsletters/ to read our analysis of CBN circulars and regulations issued over the past several years.

 

 

Footnotes

  1. Some of the many guidelines the CBN will continue to enforce include the New License Categorization for the Nigerian Payments System; Framework for Regulatory Sandbox Operations; Framework for Quick Response (QR) Payments in Nigeria; Circular on Issuance of Regulatory Framework for Open Banking; Regulatory Framework for Mobile Money Services in Nigeria, amongst others.
  2. Please see our article on eNaira here – https://pavestoneslegal.com/enaira-the-future-of-digital-currency-in-nigeria/
  3. Please see our article on the BVN Framework here – https://pavestoneslegal.com/regulatory-update-the-revised-regulatory-framework-for-bank-verification-number-bvn-operations-in-nigeria/
  4. Please see our article on the PAPSS here – https://pavestoneslegal.com/5815-2/
  5. This means that the payment is processed through banks, where the seller’s bank sends the shipping documents to the buyer’s bank, and the buyer pays when the goods are delivered.
  6. If the CBN cannot provide foreign currency for a particular transaction, banks (ADBs) can use their own USD accounts with PAPSS to settle these transactions directly, instead of waiting for the CBN to provide the funds.
  7. Please see our article on this here – https://pavestoneslegal.com/regulatory-update-central-bank-of-nigerias-operational-mechanism-for-bureau-de-change-operations-in-nigeria-a-note-to-bdcs/
  8. Please see our article on eCCI here – https://pavestoneslegal.com/doing-business-in-nigeria-the-relevance-of-the-certificate-of-capital-importation-to-foreign-investors-in-nigeria/

 

 

Licensing Requirements for Banks and Other Financial Institutions in Nigeria

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By Seun Timi-Koleolu and Ebikeniye Best

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Introduction

The financial sector in Nigeria is comprised of banks and other financial institutions. These entities are primarily regulated by the Central Bank of Nigeria (CBN) to ensure the security, stability and transparency of the financial system.

To guide companies wishing to operate in the financial services sector in Nigeria, we have set out in this newsletter, a table summarizing the licenses issued by the CBN and the requirements for obtaining them.

A. BANKS

Three major banking licenses are granted to banks upon meeting the specified requirements. These are:

S/N NAME OF LICENSE ACTIVITIES THE LICENSE PERMIT LICENSING REQUIREMENTS FEE AND CAPITAL REQUIREMENTS
1. Commercial Banking License Taking deposits and maintaining accounts; retail banking services; foreign exchange and related services; providing treasury management and custodial services; acting as a settlement bank, etc.

 

 ·         A formal application to the Director of Banking Supervision at the CBN.

 

·         A feasibility report/business plan providing information on ownership, management, operations, and finances.

 

·         A list of the shareholders, directors, and principal officers of the banks and their particulars.

 

·         Details of the bank’s corporate structure, branch expansion plans, IT systems, and employee training.

 

·         The bank’s Memorandum and Articles of Association.

 

·         Evidence of location of head office/branch building.

 

·         Copies of letters of offer and acceptance of employment in respect of the management team.

 

·         Such other information, documents and reports as the CBN may, from time to time specify.

 ·         Non-refundable application fee of ₦500,000.

 

·         Licensing fee of N5 million

 

·         Minimum share capital: International Operators – ₦500 Billion; National Operators – ₦200 Billion; Regional Operators – ₦50 Billion.

 

The minimum share capital is to be placed in an escrow account at the CBN during the registration process.

 

 

 

 
2. Merchant Banking License Taking deposits from corporate clients above ₦100 million; providing finance and credit facilities to non-retail customers; dealing in foreign exchange and providing related services; acting as an issuing house and underwriting securities; debt factoring, treasury management, and custodial services; fixed income trading and proprietary investments services

 

 ·         A formal application to the Governor of the CBN.

 

·         Feasibility report/business plan addressing the bank’s projected activities, management, and projected revenues.

 

·         Details of the bank’s organizational structure, branch network, IT systems, and staff training.

 

·         Memorandum and Articles of Association.

 

·         Evidence of location of head office/branch building.

 

·         Copies of letters of offer and acceptance of employment in respect of the management team.

 

·         Such other information, documents and reports as the CBN may, from time to time specify.

 ·         Non-refundable application fee of ₦500,000.

 

·         Licensing fee of ₦5 million.

 

·         Minimum share capital of ₦50 billion to be placed in escrow at the CBN.

 

 

 

 
3. Specialised Banking License Providing financial services for certain sectors or segments of the population. ·         A formal application to the Director of Banking Supervision at the CBN.

 

·         Feasibility report/business plan that discusses ownership, management, operations, finances, etc.

 

·         Details of the bank’s corporate structure, branch expansion plans, IT systems, and staff training.

 

·         Memorandum and Articles of Association.

 

·         Evidence of location of head office/branch building.

 

·         Copies of letters of offer and acceptance of employment in respect of the management team.

 

·         Such other information, documents and reports as the CBN may, from time to time specify.

 ·         Non-refundable ₦500,000 application fee.

 

·         Licensing fee of ₦5 million

Minimum share capital:

 

·         Non-Interest Bank (Regional) – ₦10 Billion

·         Non-Interest Bank (National) – ₦20 Billion

·         Primary Mortgage Institution – ₦ 5Billion

 

This is to be placed in escrow at the CBN.

 

 

 

 

 

B. OTHER FINANCIAL INSTITUTIONS

The table below contains the requirements for licenses issued to Microfinance Banks, Finance Houses, and Payment Service Providers. These licences are commonly used by FinTechs to provide services.

S/N NAME OF LICENSE ACTIVITIES THE LICENSE PERMIT LICENSING REQUIREMENTS FEE AND CAPITAL REQUIREMENTS
1. MFB License Acceptance of deposit, provision of microloans, provision of credit to customers, issuance of debentures, provision of banking activities to customers (limited to domestic remittance of funds), etc.

 

 ·          A feasibility report/business plan.

 

·         Details of the bank’s corporate structure, branch expansion plans, IT systems, and staff training.

 

·         Memorandum and Articles of Association.

 

·         Evidence of payment of non-refundable licensing fee to the Central Bank of Nigeria.

 

·         Corporate documents.

 

·         Evidence of the location of the Head Office (rented or owned).

 

·         Schedule of changes, if any, in the Board, Management and Shareholding after the grant of AIP.

 

·         Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, and telecommunications, to perform the bank’s operations and meet CBN and other regulatory requirements, etc.

 Non-refundable application fee of:

 

·         Unit MFBs: ₦50,000

·         State MFBs: ₦100,000

·         National MFBs: ₦250,000

 

 

Minimum share capital:

 

·         Tier 1 Unit – ₦200 million

·         Tier 2 Unit – ₦50 million

·         State MFB – ₦1 billion

·         National MFB – ₦5 billion

This is to be placed in escrow at the CBN.

 

Licensing fee of:

·         Unit MFB -₦250,000

·         State MFB – ₦500,000

·         National MFB – ₦1 million

 
2. Finance House License Providing consumer loans, funds management, asset finance, project finance, local and international trade finance, debt factoring, debt securitization, debt administration, financial consultancy, loan syndication, warehouse receipt finance, covered bonds and issuing vouchers, coupons, cards and token stamps. ·         A formal application to the Governor of the CBN.

 

·         A feasibility report/business plan.

 

·         A copy of the draft memorandum and articles of association of the finance company.

 

·         A copy of the letter of intent to subscribe to the company signed by each subscriber.

 

·         A copy of the list of proposed shareholders in tabular form showing their business addresses and the names and addresses of their bankers.

 

·         A signed and dated curriculum vitae of the proposed shareholders of the finance company.

 

·         A copy of the draft manual of operations such as the enterprise management framework.

 

·         Corporate documents.

 

·         Shareholders’ register and a copy of share certificate issued to the shareholders.

·         A copy of the audited statement of affairs.

 

·         Copies of letters of offer and acceptance of employment in respect of the management team.

 

·         A letter of undertaking to comply with all the rules and regulations guiding the operations of companies.

 

·         Evidence of registration with the Finance Company’s association umbrella body.

 ·         Non-refundable application fee of ₦100,000.

 

·         Deposit of a minimum share capital of ₦100 million to the CBN.

 

·         Licensing fee of ₦250,000
3. Switching and Processing License

 

 Switching; card processing; transaction clearing; settlement agents; and all activities permitted for Payment Solution Services (in 5 below). ·         Corporate documents.

 

·         Tax Clearance Certificate (TCC) for 3 years (if applicable) and Taxpayers’ Identification Number (TIN) of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details and profile.

 

·         Bank Verification Number (BVN), Curriculum Vitae (CV) and means of identification (ID) for the directors and top management (including one independent non-executive director, chairman and managing director).

 

·         Business plan and product deployment methodology.

 

·         Requisite policies and framework.

 

·         Signed agreements with sub-agents, financial institutions and business parties.

 

·         Evidence of payment card security certification and other relevant payment terminal certification.

 

 ·         Non-refundable application fee of ₦100,000

 

·         Payment of the refundable sum of ₦2 billion in escrow to CBN

 

·         Licensing fee of ₦1million to be paid before the issuance of the final license.

 
4. Mobile Money Operator License

 

 E-money issuing; mobile wallet creation and management; pool account management; and all activities permitted for Super-Agent (in 8 below). ·         Corporate documents.

 

·         TCC for three years (if applicable) and TIN of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details and profile.

 

·         BVN, CV and means of ID of the directors and top management (including one independent non-executive director, chairman and managing director).

 

·         Business plan.

 

·         Requisite policies and framework.

 

·         Project deployment time.

 

·         Signed agreements with its partners.

 

 ·         Non-refundable application fee of N100,000.

 

·         Payment of the refundable sum of N2 billion in escrow to CBN

 

·         Licensing fee of ₦1,000,000 to be paid before the issuance of the final license.

 
5. Payment Solution Services (PSS) License

 

 It includes all the activities permitted for Payment Solution Service Providers (PSSP) (in 7 below); Payment Terminal Service Providers (PTSP) (in 4 below); and Super Agents (in 6 below).

Companies seeking to obtain the PSS license will have to select any one or combination of the following licenses: PSSP; PTSP; and Super-Agent.

 ·         Corporate documents.

 

·         TCC for three years (if applicable) and TIN of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details and profile.

 

·         BVN, CV and means of ID of the directors and top management (including one independent non-executive director, chairman and managing director).

 

·         Requisite policies and framework.

 

·         Signed agreements with its sub-agents, financial institutions, and partners.

 

·         Minimum of 50 agents.

 

·         Evidence of payment card security certification and other relevant payment terminal certification.

 

·         Project deployment methodology.

 

 ·         Non-refundable application fee of ₦100,000.

 

·         Payment of the refundable sum of up to ₦250 million (depending on which of the licenses the company wishes to obtain) in escrow to the CBN.

 

·         Licensing fee of ₦1,000,000 to be paid before the issuance of the final license.

 
6. Payment Terminal Service Provider (PTSP) License

 

 POS Terminal deployment and services and POS terminal ownership. ·         Corporate documents.

 

·         Tax Clearance Certificate (TCC) of three years (if applicable) and TIN of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details, profile and business plan.

 

·         BVN, CV and means of ID of the directors and top management (including one independent non-executive director, chairman and managing director).

 

·         Requisite policies and framework.

 

·         Project deployment methodology.

 

 ·         Non-refundable application fee of ₦100,000.

 

·         Payment of the refundable sum of ₦100 million in escrow to the CBN.

 

·         Licensing fee of ₦1,000,000 to be paid before the issuance of the final license.

 
7. Payment Solution Service Provider (PSSP) License

 

 Payment processing gateway; payment solution development; and merchant service aggregation and collection. ·         Corporate documents.

 

·         Tax Clearance Certificate (TCC) of three years (if applicable) and TIN of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details, profile and business plan.

 

·         BVN, CV and means of ID of directors and top management (including one non-executive director, chairman, managing director).

 

·         Signed agreements with its partners.

 

·         Requisite policies and framework.

 

·         Evidence of payment card security certification and other relevant payment terminal certification.

 ·         Non-refundable application fee of N100,000.

 

·         Payment of the refundable sum of ₦100 million in escrow to the CBN.

 

·         Licensing fee of ₦1 million to be paid before the issuance of the final license.

 
8. Super-Agent License Conducting certain banking activities such as cash deposit and withdrawal; bill payments; local fund transfer; balance enquiry etc. ·         Corporate documents.

 

·         TCC for three years (if applicable) and TIN of the company.

 

·         Details of ownership and holding company structure (if applicable).

 

·         Company details, profile and business plan.

 

·         BVN, CV and means of ID of the directors and top management (including one independent non-executive director, chairman and managing director).

 

·         Minimum of 50 agents.

 

·         Reference letter from a financial institution and signed agreement with the sub-agents, financial institution, and business partners.

 

·         Must have existed for over 12 months.

 

·         Requisite policies and framework.

 

·         Payment Terminal Service Aggregator of Payment Terminal Application Certification.

 ·         Non-refundable application fee of N100,000.

 

·         Payment of the refundable sum of ₦50 million in escrow to the CBN.

 

·         Licensing fee of ₦1 million to be paid before the issuance of the final license

 

 

Conclusion

Please note that the information above is not exhaustive and is focused on the primary regulator of the financial services sector, CBN.  Also, note that there are other regulators empowered to monitor the activities of companies in this sector to a certain extent.

For a more comprehensive understanding of the regulatory requirements for this sector, interested companies should liaise with legal advisers. Please see our previous newsletters for more information on the financial services sector.

 

https://pavestoneslegal.com/regulatory-requirement-for-fintech-in-nigeria-cbn-licenses/

https://pavestoneslegal.com/establishing-a-finance-company-in-nigeria/

https://pavestoneslegal.com/regulatory-update-review-of-the-minimum-capital-requirement-for-banks-by-the-central-bank-of-nigeria/

https://pavestoneslegal.com/key-regulatory-considerations-for-operating-a-money-lending-business-in-nigeria/

 

HARNESSING DIGITISATION TO ENHANCE TRADE IN AFRICA- A REVIEW OF THE AFRICAN CONTINENTAL FREE TRADE AREA PROTOCOL ON DIGITAL TRADE

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By Aderonke Alex-Adedipe and  Sharon Okpo

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INTRODUCTION

The effect of digitization over the last decade has been widespread, and cuts across various aspects of daily life and by implication, the global economy. This has resulted in digital trade and e-commerce, which has greatly influenced and changed the concept of trade in many ways, both on a local/small scale and at an international/large scale. Digital trade has facilitated multinational value chains; blurred the pre-existing boundaries between the sale and delivery of goods and services and forced a realignment of legal and regulatory structures to capture the benefits of this digital economy.

It is in light of this prevailing reality that the African Continental Free Trade Area (AfCFTA) developed the AfCFTA Protocol on Digital Trade (the “Protocol”/ “AfCFTA Protocol”) to support and enable the acceleration of technology-driven innovation and commerce in Africa. This is particularly of importance to multinational companies in the technology space, whose operations cut across several jurisdictions in Africa.

In this newsletter, we highlight some salient provisions of the Protocol and the opportunities which the Protocol presents to businesses.

WHAT IS DIGITAL TRADE?

Digital Trade has been defined by the Organization for Economic Cooperation and Development (OECD) as encompassing “digitally enabled transactions of trade in goods and services that can either be digitally or physically delivered, and that, involve consumers, firms, and governments”. It is essentially commerce enabled by electronic means and covers both trade in goods and services.

The AfCFTA Protocol defines digital trade as “digitally enabled transactions of trade in goods and services that can either be digitally or physically delivered and that involves natural and juristic persons”.

THE AFCFTA PROTOCOL

Some of the objectives of AfCFTA as enshrined in the Agreement for the Establishment of the African Continental Free Trade Area include (i) the creation of a “single market for goods, services, facilitated by the movement of persons to deepen the economic integration of the African continent and in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063” and (ii) the creation of “a liberalized market for goods and services through successive rounds of negotiations.

The Agreement establishing the AfCFTA provides for a Protocol on Trade in Goods, with the main objective of creating a liberalized market for trade in goods through the progressive elimination of tariff and non-tariff barriers. It also provides for a Protocol on Trade in Services, which seeks to create a single liberalized market for trade in services by establishing measures to enhance the competitiveness of services.

In February 2024, the AfCFTA Protocol on Digital Trade was adopted. The Protocol seeks to support the actualization of the above-mentioned objectives of the AfCFTA by creating harmonized rules that will facilitate digital trade for sustainable and inclusive socio-economic development and digital transformation in Africa.

Provisions of the AfCFTA Protocol

The provisions of the Protocol which seek to facilitate digital trade among member states, and create a trustworthy digital ecosystem for business and consumers, are summarized as follows:

  1. E-Commerce Market Access: The protocol makes provisions that ensure that digital products and services are accessible to member states without unnecessary restrictions. It mandates that there shall be no discriminatory treatment of digital products and services to prevent unfair trade/competition practices against foreign digital providers. It also prohibits the imposition of customs duties on electronic transactions, including digital content, software and other online products.
  2. Limitation of Data Localization and Cross-Border Data Flow: The protocol limits the imposition of data localization measures, which require data to be stored within the country of origin. The aim is to prevent barriers that could hinder the digital trade flow. Data localization may however be permitted when there are strong justifications related to national security and public policy. Flowing from this, the Protocol encourages the free movement of data across borders through electronic means, provided that the purpose for such transfer is to conduct digital trade.
  3. Data Governance: the Protocol encourages member states to adopt and enforce privacy protection measures in line with international standards, to ensure the protection of personal data during digital transactions. This will help build trust among consumers and businesses alike. The Protocol also urges member states to adopt data innovation, and measures to ensure cybersecurity and combat cybercrimes within their jurisdictions.
  4. Regulatory Cooperation: The Protocol encourages regulatory cooperation and harmonization among member states to reduce regulatory barriers and ensure consistency in digital trade regulations.
  5. Development of Digital Infrastructure: the Protocol requires member states to facilitate digital trade through measures such as allowing electronic trust services (such as e-signatures, e-seals, and e-time stamps), adopting and maintaining digital identity regimes for both natural and juristic persons, promoting digital payments and settlement systems, etc. It also provides for the continuous development of this digital infrastructure to enhance universal access to support participation in digital trade, such as providing consumers with access to the internet.
  6. Digital Inclusion: the Protocol also seeks to facilitate digital trade inclusion and urges member states to facilitate the inclusion of women, youth, indigenous persons, rural and local communities, persons with disabilities, and other underrepresented groups in digital trade. Member states are required to ensure that MSMEs participate in digital trade by adopting measures such as rendering technical assistance, capacity building, and collaboration in every area relating to digital trade.

OPPORTUNITIES PRESENTED BY THE AfCFTA PROTOCOL

Some of the opportunities presented by the Protocol include:

    1. Widened Market Access: With the introduction of the Protocol, businesses can access a larger market across Africa, without the regular barriers associated with cross-border transactions, especially with the elimination of custom duties on electronic transactions and other regulatory obstacles.
    2. Improved Data Flow and Connectivity: the introduction of unrestricted cross-border data flows, which are essential for cloud computing, data analytics and digital communication is of advantage to businesses. This allows businesses to operate more efficiently by using centralized data storage and processing. For one, following the implementation of the Protocol, this may address some issues businesses face with respect to transfer of data to third parties as provided under the Nigerian Data Protection Act.
    3. Enhanced Innovation and Technology Integration: with lesser restrictions on data and digital products, businesses have more opportunities to innovate and integrate technologies across borders.
    4. Regulatory Consistency: as the Protocol encourages regulatory alignment among member states, businesses may no longer have to deal with complex regulations as they apply to different trade jurisdictions. There is more consistency, and a more predictable business environment, making it easier for businesses to plan and invest.
    5. Increased Collaboration: businesses can now explore new partnerships and collaborations across the continent and leverage on shared digital resources and infrastructure.

CONCLUSION

The Protocol presents great opportunities for African countries to establish an inclusive, sustainable and beneficial trade ecosystem. It will help in harnessing the transformative power of technology for economic development. Nigeria is also realigning its regulatory structures to provide for a more sustainable digital trade ecosystem The promulgation of the Digital Economy Bill is one of Nigeria’s strategies at adopting the Protocol, promising for a better digital trade ecosystem for businesses in Nigeria.