SAFEGUARDING NIGERIA’S CRITICAL NATIONAL INFORMATION INFRASTRUCTURE; REVIEW OF A NEW ORDER

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By Aderonke Alex-Adedipe and Hillary Okorotie

Introduction

The Federal Government of Nigeria has taken a significant step towards protecting the nation’s information security framework with the enactment of the Designation and Protection of Critical National Information Infrastructure Order (the “Order”), 2024. The Order was enacted pursuant to the Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015 (as amended) (the “Act”) .

As the Nigerian economy continues to grow, the reliability and security of critical infrastructure, such as power grids, financial networks, and healthcare systems, are increasingly central to national stability. In this newsletter we highlight some of the objectives and implications of the Order.

What is Critical National Information Infrastructure (CNII)?

Critical National Information Infrastructure (CNII) refers to interconnected systems; networks that are indispensable for the functioning of the nation’s economy, security, public health, and general safety. These information infrastructures are integral to ensuring seamless communication, data storage, and operational continuity in both private and public sectors. Examples of CNII include telecommunications networks, financial systems, transportation management systems, national power grids, national identity management system etc. Disruption to any of these systems can result in significant economic loss and distress.

What is the Objective of the Order?

The main objective of the Order is to establish a system that ensures the security and stability of CNII. First, it identifies computer systems, networks and communication infrastructures installed, deployed or operated in the following sectors; (i)power and energy sector;(ii) financial industry and insurance; (iii)  health; (iv) public administration;(v) national defence and security;(vi) education; (vii) information, communication, sciences and technology; (viii)  agriculture; (ix) safety and emergency services; (x)mines and steel; (xi) the industrial and manufacturing sector, among others, as CNII, recognizing their vital role in national development, security and stability of the economy. Additionally, the Order emphasizes the need to create unified strategies and measures to safeguard CNII, ensuring there are protective measures against threats.

What are the Notable Provisions of the Order?

The Office of the National Security Adviser (ONSA) is tasked with leading efforts to protect CNII by collaborating with relevant stakeholders to establish a Trusted Information Sharing Network (TISN) that would encourage the exchange of information across various sectors of the Nigerian economy. The Order also empowers the ONSA to conduct regular audits and inspections of CNII to ensure compliance with applicable laws, guidelines, and rules.

Additionally, the ONSA in collaboration with relevant CNII stakeholders is required to develop and implement a Critical National Information Infrastructure Protection Plan (CNIIPP) and other measures to prevent unauthorized access, theft, vandalism, destruction, and unlawful interference with the operation of CNII. This is to minimize risks and reduce incidents that could disrupt or compromise the functionality of this CNII.

Pursuant to the Act, individuals who commit offences against CNII, specifically, unauthorized access, tampering, or interference with CNII, shall upon conviction be liable to imprisonment for up to 10 years. Where such acts result in grievous bodily harm to individuals, the imprisonment terms extends up to 15 years. In cases where such offences lead to the loss of life, offenders are liable to life imprisonment.

Conclusion

Safeguarding Nigeria’s Critical National Information Infrastructure is crucial to the nation’s security, economy, and public welfare. For stakeholders in the relevant designated sectors, it is important to ensure compliance and adopt proactive cybersecurity measures that will safeguard critical systems in their relevant sectors.

Tech Businesses and AfCFTA: Regulatory Considerations for Digital Trade

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Seun Timi-Koleolu and Ebikeniye Best

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Introduction

In February 2024, the African Continental Free Trade Area (AfCFTA) Protocol on Digital Trade (the “Protocol”) was adopted. The Protocol seeks to govern the cross-border exchange of goods, services and other tradeable items that are facilitated by digital platforms and technologies. This includes everything from e-commerce and digital payments to software-as-a-service (SaaS) and cross-border data flow.

In this newsletter, we have highlighted some of the regulatory considerations for Nigerian tech businesses that wish to leverage on digital trade.

Key Regulatory Considerations
a. Data Protection and Privacy: As digital trade relies on cross-border data flow, a critical regulatory consideration is compliance with data protection laws and international best practices. The Protocol, particularly in Article 21, mandates government of signatory countries, to ensure that private companies adopt and publicly disclose their data protection and cybersecurity policies. The Protocol also states that signatory countries are to comply with the provisions of the Annex on Cross-Border Data Transfer once this is made available.

In addition to the foregoing, Nigerian Tech businesses should comply with the Nigeria Data Protection Act, 2023 and create data protection policies that align with best practices on data usage and transfer.

b. Intellectual Property (IP) Rights: Another regulatory consideration for companies leveraging on digital trade, is the protection of their intellectual property and valuable digital assets such as innovative technology. As companies expand into cross-border markets with the AfCFTA framework, it is crucial to align with AfCFTA’s IP protocols which aims to harmonize IP laws across member states and provide clear guidelines for protecting digital goods and services.

In addition to the above, Nigerian Tech businesses should ensure that they protect their intellectual property rights in Nigeria and also proceed to protect their IP rights in other African countries where they trade.

By adhering to the above, businesses can reduce the risk of potential disputes over IP infringement, counterfeiting, or unauthorized use of digital products in different African markets. Protecting IP rights not only safeguards innovation of each company, but also strengthens its position in the competitive digital economy.

c. Consumer Protection: With the growth of e-commerce, compliance with consumer protection laws becomes critical. Accordingly, Article 27 of the Protocol requires all contracting parties to adopt and maintain consumer protection laws that prevent misleading, fraudulent or deceptive practices in digital trade. This means that Nigerian companies must focus on ensuring transparency, fair terms and secure payment systems to build trust and foster positive relationships with customers across borders. Nigerian businesses must therefore comply with the Federal Competition and Consumer Protection Act, 2018 as well as consumer protection laws of contracting parties to minimize the risk of legal disputes, protect consumers from harm and ensure fair business practices.

d. Rules of Origin: The Protocol states that businesses are to adopt an Annex on Rules of Origin once this is made available. The Rules of Origin under the AfCFTA is expected to help determine the origin of goods and services, including those from African-owned enterprises, digital platforms and contents.

e. Taxation and Tariffs: Key components of the AfCFTA are tariff liberalization and concessions, which are designed to reduce trade barriers and promote the free flow of goods and services across member states. Participating businesses must ensure that they meet their tax obligations and comply with the AfCFTA tariff modalities which outline the specific tariff reductions and exemptions for goods traded under the AfCFTA.

Conclusion
As highlighted in our previous newsletter, the Protocol offers businesses in African countries a unique opportunity to build an inclusive, sustainable, and prosperous trade ecosystem. In order for businesses to take advantage of the opportunities, it is important that the Annexes on Cross-Border Data Transfer and Rules of Origin amongst others are developed and made available.

FOREIGN CURRENCY DISCLOSURE, DEPOSIT, REPATRIATION, AND INVESTMENT SCHEME: CENTRAL BANK OF NIGERIA IMPLEMENTATION GUIDELINES

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By Aderonke Alex-Adedipe and Olawale Atanda

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Introduction

On November 5, 2024, the Central Bank of Nigeria (CBN) released its Implementation Guidelines on the Foreign Currency Disclosure, Repatriation, and Investment Scheme (the “Guidelines”). These Guidelines complement the Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme Guidelines, 2024 (the “Scheme”), issued by the Minister of Finance and Coordinating Minister of the Economy on April 8, 2024. The Scheme was introduced to operationalize Presidential Executive Order No. 15 (Modification Notice), aimed at facilitating the voluntary disclosure, deposit, and repatriation of foreign currencies held by Nigerians, whether within or outside the country.

The Guidelines outline the role of Commercial, Merchant, and Non-Interest Banks (“Banks”) in the Scheme. It details how foreign currencies are to be disclosed, deposited, repatriated, or invested.

In this article, we examine the key provisions of the Guidelines and their role in implementing the Scheme effectively.

 

1.Objectives of the Scheme    

The Scheme aims to enhance financial transparency by formalizing legitimate foreign currency assets held by Nigerians and legal residents. It provides a framework for the voluntary disclosure of internationally tradable foreign currency, whether held in cash or electronic form, onshore or offshore. Also, it establishes mechanisms for depositing disclosed foreign currency into participating financial institutions in Nigeria and repatriating offshore-held currency through approved channels. The Scheme seeks to promote investment in designated sectors and instruments, leveraging these disclosed assets to boost economic resilience, drive infrastructure development, and foster job creation.

 

2.Operation of the Scheme

2.1 Procedure for Application

To participate in the Scheme, applicants must provide Banks with required details, including their full name, Bank Verification Number (BVN), National Identification Number (for natural persons), or Tax Identification Number (for legal entities). Applicants must also disclose the amount of foreign currency they intend to deposit, details of their designated domiciliary account, and any additional information requested by the Bank.

2.2. Deposit and Repatriation of Foreign Currency

Upon verifying compliance with the application requirements, the Bank will receive the foreign currency into the participant’s designated domiciliary account. The Bank must then submit a report to the CBN detailing the receipt of the funds.

2.3. Withdrawals and Termination of Investment

Banks are prohibited from imposing restrictions on withdrawals from a participant’s designated domiciliary account (except as otherwise provided in the Scheme)* or on the termination of investments made in Permissible Investment Sectors or Instruments** under the Scheme.

2.4 Conversion of Deposited Foreign Currency

Participants may convert part or all of the foreign currency in their designated domiciliary accounts into Naira at the prevailing exchange rate. Banks are to ensure that such conversions are properly disclosed and reported in their foreign exchange returns.

 

3.Responsibilities of Stakeholders

3.1 Responsibilities of Banks

Banks participating in the Scheme are required to open designated domiciliary accounts for customers, process applications in line with the Guidelines, and accept deposits of disclosed foreign currencies directly or through nominated entities. They must issue receipts acknowledging the country of origin for deposited funds within 24 hours and track participants’ investments in permissible instruments or sectors. Also, Banks must ensure compliance with relevant laws and maintain strict confidentiality of participants’ information in line with data protection laws.

3.2. Responsibilities of Participants

Participants must open designated domiciliary accounts for Scheme-related transactions and invest only in permissible sectors or instruments. They are required to confirm the legality of deposited funds, provide accurate and complete information, and consent to the sharing of relevant account data with the CBN and other legally authorized parties.

3.3.Responsibilities of the CBN

The CBN regulates Banks’ participation in the Scheme, collects monthly reports from them, and provides templates for transaction reporting. It also shares data with the Ministry of Finance on the operation of the Scheme at both industry and individual bank levels.

 

4.Treatment of Uninvested Funds

Banks may utilize uninvested foreign currencies deposited under the Scheme for trading purposes, provided the funds remain accessible to the participant whenever required. Interest on balances in designated domiciliary accounts will be paid in accordance with the provisions of the Guide to Charges by Banks and Other Financial Institutions in Nigeria.

 

5. Compliance with Anti-Money Laundering and Counter-Terrorism Regulations

Transactions under the Scheme are subject to the Money Laundering (Prevention & Prohibition) Act, 2022; Terrorism (Prevention and Prohibition) Act, 2022, and various CBN regulations, including AML/CFT/CPF regulations and Customer Due Diligence guidelines. These laws prohibit the introduction of funds derived from illegal or criminal activities into Nigeria’s financial system.

Banks participating in the Scheme must ensure compliance with all relevant AML/CFT/CPF regulations by:

i.Conducting comprehensive Customer Due Diligence (CDD) on applicants, including identifying the beneficial owners of the funds.

ii.Verifying the ownership of accounts receiving funds under the Scheme.

iii.Ensuring deposits via wire transfers comply with applicable regulatory requirements.

iv.Applying enhanced due diligence for funds repatriated from jurisdictions that do not meet Financial Action Task Force (FATF) Recommendations.

 

Conclusion

The Guidelines provide a structured framework to facilitate the inflow of foreign currency currently outside the Nigerian financial system. The goal is to promote local investment in key economic sectors and approved investment instruments. By aligning with relevant regulatory provisions, the Scheme aims to bolster economic resilience while preserving the integrity of the financial system in Nigeria.

 

Footnotes

*The Scheme requires participants to commit to retaining the disclosed and deposited foreign currency for a minimum period of five (5) years from the deposit date. Withdrawal is only permitted for investment in Permissible Investment Sectors or Instruments.

**Permissible Investment Sectors are those designated by the President to drive economic growth, infrastructure development, and job creation. Permissible Investment Instruments are foreign currency-denominated financial instruments issued under relevant executive orders or as determined by the President.

 

 

 

NIGERIA’S CREATIVE INDUSTRY: MONETIZING INTELLECTUAL PROPERTY RIGHTS AND THE CREATIVE ECONOMY DEVELOPMENT FUND (CEDF)

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Seun Timi-Koleolu and Hillary Okorotie

Nigeria’s Creative Industry: Monetizing Intellectual Property Rights and The Creative Economy Development Fund (CEDF)

Introduction

On October 24, 2024, the Federal Executive Council (FEC) approved a transformative initiative for Nigeria’s creative sector. This initiative includes two critical components: the Creative Economy Development Fund (CEDF) (the “Fund”) and the Intellectual Property (IP) Monetization Pilot (the “Pilot”). Together, these programs seek to address longstanding challenges faced by creatives in accessing financing and leveraging their intellectual property assets for greater economic value.

In this newsletter, we will discuss these initiatives and examine the potential benefits they present for creatives.

The Creative Economy Development Fund (CEDF)
The Fund is a product of collaboration among the Federal Ministry of Art, Culture, and the Creative Economy (FMACCE), and other relevant Ministries, Departments and Agencies, including the Nigerian Copyright Commission. The primary objective of the Fund is to introduce diverse financial instruments (including debt, quasi-equity, and equity) that are peculiar to the creative industry, thereby expanding access to financing within the industry. The Fund is designed to function as a Special Purpose Vehicle to give creatives access to funding, lower financial barriers, and encourage the maximal use of intellectual property assets.

Recognizing the financial value inherent in creative work, the Fund establishes a model that allows creatives use their intellectual property such as rights in music, films, artworks, or patents, as a form of security or collateral when applying for loans, investments or other financial support to fund their creative endeavors.

The Intellectual Property (IP) Monetization Pilot
The Pilot is the second component of the recent initiatives to support Nigeria’s creative industry. Developed in collaboration with the African Development Bank (AfDB) through its Investment in Digital and Creative Enterprise (iDICE) programme, the Pilot is an initiative designed to provide insights and practical experience that will inform the development of a National IP Monetization Framework which will eventually be integrated into the broader National IP Policy.

The Pilot will introduce and assess the suitability of various ways for creatives to monetize their IP, such as licensing, franchising, rights sales, the use of IP as collateral, and so on. As a pilot program, the goal is to identify what works effectively and gather insights to guide broader future policies and programs.

What Do These Initiatives Mean for Stakeholders in the Creative Industry?

The launch of the Fund and the Pilot represents a significant turning point for stakeholders in Nigeria’s creative industry.

i. Creatives: With the increased focus on monetizing IP and using IP as collateral, creatives must prioritize safeguarding their intellectual property. The ability to successfully leverage IP as a financial asset depends heavily on strong, enforceable rights that protect the value of creative works. As these initiatives unfold, the need for clear ownership, effective management, and protection of IP becomes more pressing than ever.

ii. Investors and Financial Institutions: For investors and financial institutions, these initiatives create an attractive new market segment where IP-backed investments are viable. The approach to using IP as collateral provides a level of security that has traditionally been absent in the industry. Additionally, with clearer pathways for monetizing IP and generating returns, investors are more likely to support creative projects.

iii. Industry Partners and Collaborators: Production houses, content distributors, marketing agencies, and other industry partners stand to benefit from an influx of creative works and projects fueled by the Fund and the Pilot.

iv. International Collaborators: The initiatives also open doors for international partners looking to collaborate with Nigerian creatives. With a structured IP monetization framework in place, foreign entities will have more confidence in entering partnerships that respect and protect IP rights. This can lead to co-productions, joint ventures, and cultural exchanges that improves Nigeria’s presence on the global stage and bring diverse revenue streams into the local industry.

Conclusion

Although, the Fund and the Pilot present promising opportunities, their full impact will require supportive policies, regulations, and a robust governance framework. Addressing these foundational needs will prevent potential drawbacks such as disputes in relation to IP valuation and the overall effective implementation of the initiative. Despite these concerns, the initiatives represent a significant step forward and lays a strong foundation for growth, innovation, and economic diversification in Nigeria’s creative industry.

AI ADOPTION IN NIGERIA: LEGAL CONSIDERATIONS FOR NIGERIAN BUSINESSES

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BY ADERONKE ALEX-ADEDIPE AND QASIM OGUNJIMI

AI ADOPTION IN NIGERIA LEGAL CONSIDERATIONS FOR NIGERIAN BUSINESSES

INTRODUCTION

As artificial intelligence (AI) continues to revolutionize industries worldwide, its adoption among Nigerian businesses is gaining significant momentum. In Nigeria, businesses across various sectors, including finance, healthcare, and digital services, are increasingly adopting AI technologies to improve operational efficiency, drive innovation, and gain a competitive edge in both local and global markets. While the benefits of AI adoption are vast and transformative, they also bring forth significant legal and governance challenges. The absence of comprehensive regulatory frameworks, concerns over data privacy and protection, and the need for ethical guidelines present challenges that Nigerian businesses must navigate carefully when adopting AI.
This newsletter highlights the legal considerations surrounding AI adoption; the importance of robust governance, accountability, and ethical practices for businesses in Nigeria and beyond.

Legal Considerations for AI Adoption
To effectively navigate the legal aspects of AI adoption, Nigerian businesses should consider these major factors;

1. Regulatory Compliance:

Despite the absence of specific AI regulations, various existing laws may indirectly influence AI deployment and use in Nigeria. Some of the provisions of these regulations are analysed below;

Data Protection: For example, the Nigerian Data Protection Act (NDPA) provides that a data subject shall not be subject to a decision based solely on automated processing of personal data except where there is human intervention, and the logic of the decision made is capable of being contested. The implication of this provision is that entities using AI to process personal data must ensure human oversight in their process. Additionally, the Nigeria Data Protection Commission (NDPC) has also issued a draft General Application and Implementation Directive (GAID), which requires data controllers or processors using emerging technologies, including AI, for personal data processing to consider the NDPA, public policy, and other regulatory instruments. When using emerging technologies, the GAID requires data controllers and processors pay particular attention to the various rights of data subjects and the implementation of privacy by design.

Consumer Protection: Similarly, the Federal Competition and Consumer Protection Act (FCCPA), which aims to prevent unfair trading practices and protect consumers, applies to businesses using AI in marketing or customer interactions. For instance, businesses employing AI-driven targeted marketing strategies must ensure that the algorithms do not engage in deceptive practices that mislead consumers about product features, pricing, or availability. Additionally, AI systems that automate customer service interactions must be designed to treat all customers equitably. If an AI system inadvertently discriminates against certain groups—whether through biased training data or algorithmic errors—it could lead to unfair treatment of consumers, violating the principles of the FCCPA. Thus, businesses must implement measures to identify and rectify biases within their AI systems to ensure compliance with FCCPA.

Digital Advisory: The Securities and Exchange Commission (SEC) Rules on Robo-Advisory Services (the “SEC Rules”) seeks to regulate digital advisory services- i.e the provision of investment advice using automated, algorithm-based tools which are client-facing, with little or no human adviser interaction in the advisory process. These rules mandate that Robo-Advisors (i.e a person who provides digital advisory services) implement measures to mitigate bias in their algorithms and ensure that clients are fully informed about the assumptions, limitations, and risks associated with the AI technologies used in providing advisory services.

In summary, while specific AI regulations are still forthcoming, businesses must comply with the NDPA, FCCPA and other applicable laws when developing and deploying AI technologies. Engaging legal counsel to navigate these complexities can significantly help in ensuring compliance and responsible AI adoption.

2. Contractual Framework: When integrating AI technologies into their system, businesses must establish clear contractual framework to govern their relationship with AI developers or service providers. This framework is essential for mitigating risks and protecting the interests of all parties involved. Some of the key components of the contracts include defining liability for any malfunctions or errors, and specifying ownership rights regarding data, algorithms, and any outputs generated by the AI systems. Additionally, businesses should outline performance expectations in service level agreements (SLAs), covering aspects such as accuracy, reliability, and compliance with applicable regulations.

3. Governance Framework: Implementing a comprehensive governance framework is essential for organizations adopting AI technologies, as it establishes the structures and processes needed to manage risks and ensure compliance with applicable laws and international best practices. This framework should include policies that outline the responsible use of AI, and processes to regularly evaluate the functionality and effectiveness of AI systems. Another component of this governance framework involves conducting regular risk assessments to identify vulnerabilities within AI systems and evaluate the potential impact of such vulnerabilities vis-a-vis compliance requirements.

4. Transparency and Explainability: Transparency is a fundamental principle that organizations must prioritize when adopting AI technologies, particularly as these systems increasingly influence decision-making processes. Businesses must ensure that their operations involving AI are clear and understandable to stakeholders, including consumers, regulators, and employees. For example, under the SEC Rules, Robo Advisers are required to disclose, in writing, to their clients; assumptions, limitations, and risks of the algorithms; circumstances under which the Robo Adviser may override the algorithms or temporarily halt the Robo Advisory Service; and any material adjustments to the algorithms

Conclusion
In conclusion, as Nigerian businesses increasingly embrace AI technologies, understanding the associated legal considerations is crucial for successful adoption. With focus on the legal considerations explored in this newsletter, businesses may leverage the benefits of AI while maintaining regulatory compliance, upholding ethical standards and safeguarding their reputations.