NEW REGULATORY GUIDELINES FOR ELECTRONIC INVOICING IN NIGERIA 2025 – IMPLICATION FOR FINTECHS AND ESG.

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BY SEUN TIMI-KOLEOLU AND ENIOLA SOGBESAN
Introduction

Across the world, governments and private sector innovators are accelerating the shift from paper-based and PDF invoices to secure, structured and fully digital invoicing systems. This transformation is a foundational step towards the reduction of carbon footprints in line with ESG goals, the promotion of a greener economy and improving financial interoperability in the global digital economy.

In Brazil, the Complementary Law Project No. 68, which mandates the use of e-invoices becomes effective from January 1, 2026 for all municipalities and the Federal District. Similarly, in the European Union (EU), the adoption of the e-Invoicing Directive 2014/55/EU in April 2014 and the “VAT in the Digital Age” (ViDA) in March 2025, signified the commencement of major changes in e-invoicing within the EU and globally. Effective from 2026, mandatory B2B e-invoicing will commence in countries such as France and Belgium, while intra-EU e-invoicing will become the standard by 2028.

Effective from September 1, 2025, Nigeria now joins this global movement with the enactment of National Regulatory Guidelines for Electronic Invoicing in Nigeria 2025 (the “Guidelines”) by the National Information Technology Development Agency (NITDA). The Guidelines are designed to advance a robust digital economy by promoting electronic governance, digital transformation and ensuring alignment with global standards, while upholding data security and safeguarding user privacy.

This newsletter explores the practical implications of the Guidelines for end users, business owners and the wider technology ecosystem.

1.     What is Electronic Invoicing?

Electronic invoicing, also known as e-invoicing, is the digital exchange of an invoice between a supplier and a buyer of a good or service. An e-invoice is an invoice issued, sent, and received in a structured way that makes it easy to process automatically and electronically. The Guidelines define it as a digital process that replaces paper invoices by enabling the structured exchange and processing of invoices, credit notes and debit notes between buyers and sellers through integrated electronic invoicing solutions.

2.     What is the scope of the Guidelines?

The Guidelines apply to the following entities:

a.     regulatory authorities seeking to implement or oversee e-invoicing systems e.g. Government Ministries, Agencies and Departments. (MDA’s);

b.     service providers, including Access Point Providers and System Integrators e.g. (Remita, InterSwitch, Etranzact etc.);

c.     any entity involved in the generation, transmission, processing, or utilization of e-invoices.

3.     Is there a licensing requirement for providers of e-invoicing services?

Yes, the Guidelines create two license categories – System Integrators and Access Point Providers.

4.     Who is a System Integrator?

System Integrators are entities that provide software or hardware solutions compliant with e-invoicing regulations and are capable of securely exchanging data via licensed Access Point Providers. These entities are required to ensure that all e-invoices issued by businesses are created in accordance with the approved e-invoice format set out in the Guidelines.

5.     Who is an Access Point Provider?

Access Point Providers are responsible for the secure transmission of electronic invoices. They serve as gateways that connect business e-invoicing systems with the government-mandated e-invoicing infrastructure. They provide the technology infrastructure that ensure the effective delivery of e-invoices to the government. e.g. Interswitch, e-tranzact etc.

6.     What are the requirements of obtaining a System Integrator license?

To obtain a System Integrator license, the following are required;

a.     a non-refundable application fee of One Million Naira (N1,000,000) or such other amount as NITDA may specify;

b.     submission of a duly completed accreditation form;

c.     minimum paid-up share capital of 10 Million Naira (N10,000,000) and evidence of registration with the Corporate Affairs Commission;

d.     the company’s objectives must include digital technology services;

e.     a minimum of one-third of the company’s shares must be held by Nigerians;

f.      evidence of compliance with the Nigeria Data Protection Act 2023;

g.     detailed operations, dispute resolution, whistle-blowing and other policies;

h.     evidence of organizational capacity and technical expertise to provide e-invoicing services and;

i.      a minimum of one director who must have five (5) years of professional experience in digital technology services and has not been declared bankrupt or convicted of fraud.

7.     What are the requirements of obtaining an Access Point Provider license?

To obtain an Access Point Provider license, the following are required;

a.     a non-refundable application fee of One Million Naira (N1,000,000) or such other amount as NITDA may specify;

b.     submission of a duly completed accreditation form;

c.     minimum paid-up share capital of 100 Million Naira (N100,000,000) and evidence of registration with the Corporate Affairs Commission;

d.     the company’s objectives must include digital technology services;

e.     a minimum of one-third of the company’s shares must be held by Nigerians;

f.      evidence of compliance with the Nigeria Data Protection Act 2023;

g.     detailed operations, dispute resolution, whistle-blowing and other policies;

h.     evidence of organizational capacity and technical expertise to provide e-invoicing services;

i.      a minimum viable product suitable for e-invoicing and;

j.       a minimum of one director who must have five (5) years of professional experience in digital technology services and has not been declared bankrupt or convicted of fraud.

8.     What is the duration of the license?

Upon the approval of NITDA, a provisional license which is valid for six (6) months will be issued. The applicant may apply for an extension of the provisional license for a further three (3) months. The final license which is issued by NITDA is valid for two (2) years and subject to renewal after compliance with all renewal requirements that may be issued by NITDA.

9.     What other technical requirements are required of a license holder?

a.     all Access Point Providers must guarantee a minimum up time of 99.9% per month;

b.     scheduled maintenance should be performed during off-peak hours, with not less than 48-hour advance notice to the end-user;

c.     all invoices should be processed and transmitted within 24 hours;

d.     any errors in processing should be resolved within 48 hours;

e.     all support requests should be acknowledged within 1 hour and resolved within 6 hours for critical issues, and within 24 hours for non-critical issues;

f.      dedicated support channels should be available 24 hours via email, phone and an online portal.

10.  How does this affect the licensing obligations of FinTech’s and other tech entities?

With the enactment of the Guidelines, all previously unlicensed FinTech’s, who offer e-invoicing services, are now required to be licensed. This may also apply to other FinTech’s licensed by the Central Bank of Nigeria.

11.  How does this affect the ESG obligations of businesses?
The Guidelines is playing a role in encouraging businesses to comply with ESG goals through the promotion of electronic invoicing and the reduction of paper usage by businesses.

With the integration of more environmentally sustainable business practices in their operations, businesses are able to reduce their carbon footprint and promote a greener economy.

Conclusion

The 2025 Electronic Invoicing Guidelines positions Nigeria alongside global economic leaders who are modernizing financial reporting and fulfilling their ESG obligations through structured digital invoicing frameworks. By embedding interoperability, data protection, and secure transmission channels within its regulatory framework, Nigeria is laying the foundation for a more transparent, efficient, and globally integrated business environment.

The Guidelines also signal a new era for the Nigerian technology ecosystem. As invoicing becomes connected to real-time payments, compliance automation, and data-driven financial services, opportunities will expand for licensed Access Point Providers, System Integrator and other technology service providers.

 

THE CBN’S DRAFT GUIDELINES ON ATM OPERATIONS: EMERGING COMPLIANCE AND REGULATORY TRENDS IN NIGERIA’S BANKING LANDSCAPE

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ADERONKE ALEX-ADEDIPE AND MARK IMONITIE
Introduction

The Central Bank of Nigeria (CBN) on Thursday, October 9 2025, issued draft guidelines for the operation of Automated Teller Machines (ATMs) in Nigeria (“Guidelines”).

In its circular to banks, other financial institutions and payment service providers, the CBN stated that the essence of the Guidelines is to review, improve and establish minimum standards for the deployment, operations and maintenance of ATMs. Therefore, improving access to ATM services in Nigeria, strengthening security protocols and enhancing consumer protection in line with global best practices.

In this newsletter, we examine some of the key provisions introduced by the Guidelines.

1.     REGISTRATION OF INDEPENDENT ATM DEPLOYERS (IADs)

Under the existing framework, Independent ATM Deployers (IADs) simply operate in partnership with banks and other financial institutions without the need for registration.

Under the Guidelines however, the registration of IADs with the CBN before deployment or operation of an ATM at any location in Nigeria is a mandatory requirement.

IADs are non-bank entities, licensed or registered by the Central Bank to install, own, and maintain ATMs, in various locations such as retail stores, shopping malls or underserved areas, subject to entering into agreement(s) with banks or card schemes for settlement and cash provisioning.

As part of the requirements for licensing and registration, IADs are to provide the CBN with their corporate profile, technical and operational capacity, evidence of partnership agreement with a bank for cash provisioning, and evidence of compliance with extant payment systems regulations.

2.     ATM TECHNOLOGY STANDARDS AND SPECIFICATIONS

According to the Guidelines, ATM systems shall have audit trail and logs capabilities, which are detailed enough to facilitate investigations, reconciliation and dispute resolution.

The Guidelines also maintain the existing regulatory standards for payment cards. It provides that all ATM deployers/acquirers shall comply with Payment Card Industry Data Security Standards (PCI DSS), developed and administered by the Payment Card Industry Security Standards Council, an independent body in the United States of America (USA).

Furthermore, card readers shall be identified by a symbol that represents the card; the direction in which the card should be inserted into the reader; and all ATMs shall accept cards horizontally with the chip upwards and to the right.

The Guidelines provides that at least 2% of ATMs deployed by each acquirer shall have tactile graphic symbols for the benefit of visually impaired ATM users. The locations of such ATMs are to be visibly publicized on the corporate website of the ATM acquirer.

3.     ATM DENSITY AND EXPANSION TARGETS

The Guidelines establish requirements for the deployment of ATMs by banks and IADs, particularly in respect of the location and density of ATM deployment.

Specifically, the Guidelines impose a requirement on card issuers to deploy at least 1 ATM for every 5,000 payment cards issued.  The Guidelines also establish a three-year timeline for full compliance with the staggered targets. To achieve this, the following incremental milestones should be met: 30% by end of 2026, 60% by end of 2027; and 100% by end of year 2028.

This development is intended to address ATM density and geographical distribution challenges, which often result in long queues and difficulties accessing cash, especially in underserved locations.

Ultimately, the requirement aims to revive and strengthen ATM infrastructure, ensure reasonable proximity of ATMs to users, maintain cash availability at all times, and enhance overall consumer access and operational efficiency in the payment network.

4.     MONTHLY RETURNS

Unlike the Electronic Payment regulations, the Guidelines introduce a deadline for filing monthly returns. ATM operators must submit their monthly returns by the 5th day of the following month. This compliance requirement enables effective monitoring of ATM transaction volumes by the CBN and enhances the efficiency of the ATM payment network.

Conclusion

The introduction of the Guidelines represents a significant step forward by the CBN in streamlining and improving the framework for the operation of ATMs in Nigeria.

If enacted and implemented, it will enhance financial inclusion, fortify operational integrity, advance consumer protection, and align Nigeria’s payment infrastructure with internationally recognized best practices.

Stakeholders are encouraged to seize the opportunity presented by the Central Bank of Nigeria to submit comments and feedback for the enhancement of the Guidelines before October 31, 2025.

The New Capital Gains Tax Regime in Nigeria: Key Considerations for Foreign Investors

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SEUN TIMI-KOLEOLU AND OMODELE FATODU

Introduction

Globally, jurisdictions such as Mauritius, Singapore, and the United Arab Emirates have built reputations as investor friendly hubs by maintaining transparent, predictable, and business-friendly tax systems. These environments offer clarity, reduce uncertainty, and provide incentives that make capital deployment more efficient.

Nigeria’s recent tax laws, namely the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Act, and the Joint Revenue Board Act, particularly the changes to the Capital Gains Tax (CGT) regime have been positioned as a step towards a fairer and more integrated tax framework that supports reinvestment.

Understanding Capital Gains Tax Reforms

CGT is a tax charged on the profit made from the sale of a chargeable asset, such as shares, real estate, or other investments.

CGT in Nigeria is currently charged at a flat rate of 10% on all chargeable assets, regardless of the taxpayer’s income level.

Under the new system, which takes effect from 1 January 2026:

  • CGT will now be a progressive tax, tied to a taxpayer’s income tax rate
  • The applicable rate will range from 0% – 30%, depending on total income (or profits in the case of a Company).
  • Individuals who earn N800,000 or less annually will be exempt from tax on their gains.

Key Reliefs of the New CGT Regime

The reform also provides for reliefs that make it more balanced and investment friendly:

  • Exemption thresholds – Individuals whose annual proceeds from asset sales do not exceed ₦150 million where the gains are under ₦10 million, will be exempt.
  • Institutional investors – Pension funds and other institutional investors remain exempt as well, preserving the depth and stability of the long-term investment capital in the market.
  • Reinvestment relief – Investors who reinvest proceeds from the sale of shares into Nigerian companies will not be subject to CGT on those gains.
  • Company restructuring – Companies undergoing reorganization, mergers, or restructurings will be exempt from CGT on those transactions.

These measures are designed to deepen the domestic capital market and encourage reinvestment rather than capital flight. They also protect small investors while ensuring that the system remains progressive and consistent with international best practice.

What This Means for Foreign Investors

For foreign investors, the reform presents both opportunities and adjustments. By linking CGT to income tax rates, Nigeria now offers a more transparent and globally familiar tax structure. The exemptions for reinvested proceeds may create an incentive for capital retention and local market participation. For long-term or strategic investors, this may present opportunities to optimise post-tax returns through reinvestment in productive sectors.

Foreign investors from countries that have double taxation agreements (DTAs) with Nigeria, such as the United Kingdom and the Netherlands, can generally offset the CGT paid in Nigeria against taxes due in their home country, thereby avoiding double taxation. However, investors from jurisdictions without DTAs may not enjoy the same reliefs and could face higher tax costs.

From a practical standpoint, investors may need to review reinvestment options to take advantage of exemptions. While long-term investors may benefit from reinvestment incentives, short-term or speculative investors may face higher CGT liabilities under the new system.

Conclusion

Nigeria’s capital gains tax reform represents a shift towards a more modern and integrated tax framework that seeks to retain capital locally and reinforce the domestic market. However, predictable foreign exchange policies, regulatory efficiency, and ease of repatriation remain critical for sustaining investor confidence.

For foreign investors, understanding these changes and aligning investment strategies accordingly will be key to maximising investment opportunities in Nigeria. Foreign and domestic investors alike are therefore advised to seek professional tax guidance to understand how the new rules affect their specific structures and transactions.

To read more on the latest Tax reform laws, please see our newsletter here and here.

REGULATORY UPDATE: KEY LEGAL AND COMPLIANCE CHANGES IN THE CBN GUIDELINES FOR THE OPERATIONS OF AGENT BANKING IN NIGERIA

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ADERONKE ALEX-ADEDIPE AND MARK IMONITIE

Introduction

The Central Bank of Nigeria (CBN) on Monday, October 6 2025, issued new operational guidelines for Agent Banking in Nigeria. The purpose of the Guidelines is to strengthen and secure the enabling environment for providing financial services to the underbanked regions in the country.

The Guidelines also aim to consolidate all existing policies related to Agent Banking and Agent Banking relationships into a single comprehensive set of rules that addresses emerging issues within the ecosystem. Accordingly, the Guidelines supersede all previous CBN guidelines on Agent Banking.

In this newsletter, we examine some of the key provisions introduced by the Guidelines which affect Agency Banking operations in Nigeria.

1.     AGENT EXCLUSIVITY

The Guidelines significantly changes the Agent Banking framework in Nigeria. Previously, Agents could operate across multiple platforms managed by various Principals—such as banks, microfinance institutions, payment service banks, or mobile money operators—to serve customers. Under the new Guidelines, Agents must now be exclusively tied to a single Principal.

In essence, an Agent can no longer provide services for multiple licensed deposit-taking financial institutions authorized to engage Agents. Additionally, Agents may belong to only one Super Agent’s network at the same time.

To formalize Agency relationships, Principals are required to enter into an Agreement with their Agents, which must, at a minimum, include terms on: duration; authorized services; applicable fees and charges; use of dedicated Agent accounts for all transactions; Agent remuneration; breach instances and penalties; business hours and geographic location; obligations of both parties; AML/CFT/CPF and KYC compliance requirements; confidentiality and non-disclosure; limitation of liability; dispute resolution; amendments; opt-in/opt-out rights; termination; and force majeure provisions.

According to the CBN, implementation of agent exclusivity will take effect from April 1, 2026.

2.     DEDICATED AGENT ACCOUNTS

As a measure for transaction oversight, the Guidelines mandate Agents to conduct all Agent Banking transactions exclusively through a dedicated account or wallet assigned by a Principal. Furthermore, Principals are responsible for ensuring that payment terminals used by Agents are connected solely to this dedicated Agent account or wallet.

Conducting any transaction outside the designated account will be deemed a violation of the Guidelines, with the Agent personally liable for any resulting fraud or illegal activity.

Principals are authorized to terminate the Agent Banking agreement with any Agent who breaches the provisions of the Guidelines and such Agents may also be blacklisted by the CBN or placed on a watchlist.

3.     OPERATIONAL AND TRANSACTIONAL LIMITS

The Guidelines establish additional operational and transaction limits for Agent Banking services, requiring Principals to ensure that these limits comply with the maximum regulatory thresholds set forth in the Guidelines.

Specifically, the Guidelines set a daily cash-in deposit limit of N100,000 and a weekly limit of N500,000. For cash-out withdrawals, Agents are restricted to a maximum of N100,000 daily and N500,000 weekly. Additionally, the Guidelines impose daily and weekly limits of N100,000 for utility and service bill payments.

Prior to the Guidelines, transaction limits only applied to withdrawals, and Principals were allowed to determine the limits for cash-in deposits and utility bill payments.

4.     LOCATION AND LIST OF AGENTS

Under the Guidelines, the physical address or location of an Agent’s business operations must be mutually agreed upon by the Principal and the Agent. Principals are required to publish an updated list of all their Agents and their respective locations on their websites.

Agents must provide their Principals with at least thirty (30) days’ prior notice, or any other period agreed upon in the Agent Banking Agreement, before relocating or shutting down operations. Furthermore, Agents are obliged to display a visible notice of their intention to relocate or shutdown at their business premises throughout the notice period to inform their customers and Principals before relocating. Principals are mandated to report to CBN the relocation or closure of Agent’s location.

As part of measures to prevent Agents from operating at multiple locations, the Guidelines require every PoS terminal to process real-time transactions and be geo-fenced to the Agent’s registered location. Devices used by Agents cannot be moved or shared without formal approval from Principals and the location of Agents is restricted.

The implementation of the provisions in the Guidelines on agent location shall be with effect from April 1, 2026.

5.     MANDATORY TRAINING FOR AGENTS

The Guidelines require Principals and Super Agents to ensure that their Agents complete training before onboarding. This training must, at a minimum, cover (i) Agent responsibilities and obligations, (ii) KYC regulations and customer registration requirements, (iii) transaction processes, (iv) prohibition of transactions on behalf of customers, (v) consumer protection laws and consequences of non-compliance, (vi) diversity and inclusion principles and their application, as well as basic financial literacy for both customers and Agents, amongst others.

This training requirement is commendable, as it ensures Agents remain well-informed of their legal and compliance obligations. However, the mandate on Principals increases their compliance responsibilities, which may lead to higher operational costs.

6.     ENHANCED ELIGIBILITY AND DUE DILIGENCE REQUIREMENTS

The Guidelines also enhance the appointment requirements for both individual and non-individual Agents, mandating the provision of detailed information to the Principal, including;

  • Name, residential address, sex, age, local government area (LGA), and state
  • Physical business address, postal address, and telephone numbers
  • Evidence of available funds to support Agency operations
  • Bank Verification Number (BVN) and National Identity Number (NIN) for individual Agents; and
  • Disclosure and evidence of termination of any previous Agent banking relationships for the prospective Agent and designated employees.

For non-individual Agents, additional documentation includes:

  • Certificate of incorporation or business name registration with the Corporate Affairs Commission (CAC);
  • Names of designated employees;
  • Three (3) years of Tax Clearance Certificates and Tax Identification Number (TIN); and
  • BVNs of promoters, directors, and signatories to the Agent’s bank accounts.

Principals or Super Agents must conduct thorough due diligence before appointing or onboarding Agents. This due diligence must, at minimum, comprehensively verify:

  • The background and professional suitability of the Agent or business operations for non-individual Agents, including promoters, directors, partners, and management;
  • Credit history from credit bureaus or other sources;
  • Criminal records related to fraud or dishonesty;
  • Sources of funds;
  • Business address or location submitted by the Agent; and
  • Any prior relationships with the Principal that may adversely affect the Agent Banking relationship.

Conclusion

The CBN Guidelines for Agent Banking Operations represents a significant step forward in strengthening the integrity, security, and efficiency of Agent Banking in Nigeria.

By introducing stricter eligibility criteria, enhanced due diligence, robust transaction limits, and comprehensive training requirements, these regulations seek to protect consumers, promote financial inclusion, and build trust in the Agent Banking ecosystem.

Financial Institutions and Agents alike must prioritize compliance to fully realize these benefits while mitigating against operational risks. As Nigeria’s Agent Banking sector evolves, adherence to the Guidelines will be essential for sustainable growth, transparency and confidence among all stakeholders in the digital financial services landscape.

IP BACKED FINANCING: LEVERAGING INTELLECTUAL PROPERTY FOR INCOME GENERATION AND AS COLLATERAL

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SEUN TIMI-KOLEOLU AND HILLARY OKOROTIE

INTRODUCTION

Intellectual property (IP) assets such as trademarks, copyrights, or patents form a critical part of a company’s overall assets. Categorized as intangible assets, IP assets play a key role in defining a business’ competitive advantage, brand value and investment value amongst others. Traditionally, lenders have preferred tangible assets as collateral for financing because of their ascertainable value. However, with the ever-evolving economic landscape and the increasing importance of knowledge-based industries, there is a growing need to recognize and further leverage the value of IP assets as viable collateral.

IP-backed financing offers businesses such as startups, innovation-driven companies and creatives, the opportunity to access liquidity from their intangible assets without divesting ownership. By using patents, trademarks, copyrights, or even trade secrets as security, companies and individuals may access credit facilities.

In this newsletter, we will explore how businesses can leverage their IP assets as security for financing and key factors that should be considered in such transactions.

Three ways Businesses can Leverage their IP Asset

1. IP-Backed Financing (Loans & Collateralization)

IP is increasingly recognized as a valuable business asset that can be leveraged to access financing. It can be used as collateral to secure loan facilities. IP-backed loans enable businesses including startups and SMEs secure capital without diluting equity or divesting ownership. For instance, a technology company with patented technology or products may negotiate loan terms or leverage its IP by pledging its portfolio. This not only provides liquidity but also compels companies to properly register and protect their IP.

The Nigeria Startup Act also recognizes intellectual property (IP) as collateral. In addition, the Federal Ministry of Art, Culture, and the Creative Economy is working on establishing the Creative Economy Development Fund and the Intellectual Property Monetization Pilot. These initiatives aim to provide creatives with opportunities to leverage their IP as collateral, attract investment, and access broader financing options. You can read further here.

2. IP Licensing

Licensing of IP is an effective way to leverage IP and generate income from the IP. Companies can grant rights to a licensee through structured agreements that create royalties for the business. Such licensing may either be exclusive or non-exclusive.  An exclusive license gives the licensee the sole right to use an invention or other existing IP, while a non-exclusive license allows multiple licensees the use of the IP. While IP in this case is not used as collateral for a loan, the IP is able to generate financing and cash flow that would accrue to the business.

3. IP Commercial Exploitation via Franchising & Joint Ventures

Franchising and joint ventures enable businesses to leverage their IP for scalable growth. Franchising allows a business to license its brand, systems and IP assets to a franchisee in exchange for a fee or royalties. While joint ventures allow companies to pool resources and expertise, including value in the IP assets of the business for the purpose of achieving project goals and expansion plans. By partnering with others, businesses can expand into new markets and share financial risks. For instance, a company with patented technology can collaborate with a manufacturing partner to expand into new markets while sharing the financial burden of the expansion.

Key Factors to Consider

While the use of IP as collateral presents exciting opportunities, businesses must be mindful of several critical factors before using its IP as collateral. Unlike tangible assets, IP assets come with unique complexities. For lenders, the concern is enforceability and realizable value; for businesses, the challenge is retaining ownership. The following factors are central to determining the use of IP.

  1. Maintaining an IP Portfolio: It is important for businesses to maintain a portfolio of their IP assets, this will include trademark rights, copyrights, patent rights, design rights and trade secrets. The portfolio should comprise of the title document, evidence of registration of ownership and duration of the rights. It is equally important to monitor expiration of these IP rights as rights can elapse if not renewed upon expiration. For practical steps on protecting your IP, read our newsletter on enforcing your intellectual property rights.
  2. Valuation of IP: Determining the fair market value of an IP asset is often complex, as its worth may depend on factors such as brand recognition, market share, licensing potential, and enforceability. Unlike tangible assets, there is no universally fixed method for valuing IP, and its intangible nature makes it difficult to measure its exact value with accuracy. In valuing IP assets Parties may rely on various approaches, including income potential, or the goodwill associated with the asset, such as the reputation and consumer loyalty tied to a trademark to arrive at a reasonable valuation. It is also necessary to engage an independent valuator to properly assess and establish the fair value of the IP.
  3. Duration and Lifecycle of IP Rights: The lifespan of an IP asset directly impacts its financing potential. Businesses and individuals must carefully consider the period of enforceability of the IP when offering it as collateral, ensuring that it aligns with the terms of the financing arrangement. For example, patents typically last 20 years from the filing date, after which protection expires. Copyright protection extends for the author’s lifetime while trademarks are valid for a period of 7 years from the date of initial registration and is renewable upon expiration. It is therefore essential to ensure that the duration of protection corresponds with the period of an IP-backed loan, lease, or royalty assignment, and to take proactive steps such as renewing rights where necessary to preserve the value of the asset.
  4. Due Diligence: Prior to accepting an IP asset as collateral in a financing transaction, financiers should undertake proper due diligence to confirm the ownership of the IP asset. This process will assess whether the IP asset is owned by the party offering it, whether it has already been pledged as collateral in another transaction, and whether there are any existing or pending litigation proceedings that could affect its enforceability amongst others.

Conclusion

IP-backed financing is gradually redefining the financing landscape for startups and creative businesses in Nigeria. With the recognition of IP as collateral under the Nigeria Startup Act, the introduction of the Creative Economy Development Fund, and the Intellectual Property Monetization Pilot by the Federal Ministry of Art, Culture, and the Creative Economy, businesses and creatives will have more options for deriving value from their IP assets. To gain value from their IP assets, it is advisible that businesses build strong IP portfolios, value their IP assets, and take steps to highlight their value to financiers and investors.