New CBN Measures on Diaspora Remittances: What They Mean for Market Participants

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BY ADERONKE ALEX-ADEDIPE AND PROMISE ITAH

Introduction

On March 24, 2026, the Central Bank of Nigeria (CBN) issued a circular on Measures to Further Deepen Diaspora Remittances and Compliance (the “Circular”). The Circular, which is effective from May 1, 2026, builds on the CBN’s revised guidelines for international money transfer services in Nigeria, and is aimed at enhancing  diaspora remittances, strengthening transparency, traceability, and effective monitoring of all remittance related transactions.

In this newsletter, we highlight the measures introduced by the CBN and assess their practical implications for participants.

What Are the New Measures?

The following measures have been prescribed by the CBN.

  1. Designated Naira Settlement Accounts: All transactions related to International Money Transfer Operators’ (IMTO) operations, including payments to beneficiaries and any settlements, must be processed through designated settlement accounts held with authorised dealer banks (ADBs or Banks). IMTOs may either open new accounts or use existing ones for this purpose and can maintain multiple naira settlement accounts based on their business needs. However, they are required to regularly provide the CBN with an updated list of these designated accounts through the Director of the Trade and Exchange Department.
  2. Account Funding Restrictions: The circular makes it clear that these settlement accounts can only receive money from remittances or foreign exchange transactions carried out by the IMTOs or their agents through authorized participants in the Nigerian Foreign Exchange Market (NFEM). This means that no other funds are allowed to be deposited into these accounts.
  3. Authorised Transfers to Other Market Participants and BDCs: To improve the flow of foreign exchange and support fair pricing, ADBs are permitted to process foreign currency transfers from IMTO settlement accounts to other ADBs and approved market participants, including licensed Bureau de Change (BDC) operators.
  4. Real-Time FX Pricing: IMTOs must set their remittance rates to reflect current market prices from Bloomberg’s BMatch platform rather than being set independently. By doing this, the CBN aims to ensure more accurate pricing, reduce information gaps between banks and IMTOs, and encourage greater use of the official FX market.
  5. Compliance and Record Keeping: In addition to complying with the above measures, all IMTOs (and ADBs) must strictly comply with anti‐money laundering and counter-terrorism financing rules. Detailed records of all remittance transactions (origins, amounts, beneficiaries, conversions, etc.) must also be kept for regulatory review and audit purposes.

 

What Are the Practical Implications?

The new measures may require certain operational changes. We have set out below, some key implications and action points for IMTOs, banks, BDCs and other stakeholders:

  1. IMTOs (Money Transfer Operators):

    In view of the above regulatory measures, IMTOs may require system upgrades and staff training and must also strengthen record-keeping and AML/KYC processes, maintaining detailed transaction logs for regulatory review.

  2. ADBs (Commercial Banks):

    ADBs should prepare for increased demand from IMTOs to open and manage multiple naira settlement accounts and streamline onboarding processes accordingly. Banks will also need to closely monitor these accounts to ensure they are used solely for remittance flows and comply with FX funding requirements, while supporting IMTOs in meeting AML/CFT obligations.

  3. BDCs:

    Since ADBs are permitted to process foreign currency transfers from IMTO settlement accounts, BDCs may engage ADBs and their IMTO partners to access this FX liquidity.

  4. General Market Effects:

    In general, the measures are expected to improve transparency by channeling remittance flows through the formal banking system, giving the CBN greater visibility into FX inflows. In the medium term, it is expected that this will reduce reliance on informal markets, support better rate alignment, and contribute to improved liquidity and stability in the FX market.

Conclusion

The CBN’s new measures on diaspora remittances are part of a series of significant steps toward formalising diaspora remittance flows and improving transparency in Nigeria’s foreign exchange market. By mandating designated settlement accounts, real-time pricing, and stricter compliance standards, the framework is expected to enhance liquidity, strengthen regulatory oversight, and reduce reliance on informal channels. While stakeholders will need to adjust their operations to meet the new requirements, the CBN expects that the reforms should, over time, support better price discovery and contribute to greater stability of the naira.

NIGERIA–UNITED KINGDOM STATE VISIT – LEGAL AND REGULATORY IMPLICATIONS FOR CROSS-BORDER INVESTMENT

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By Seun Timi-Koleolu and Eniola Sogbesan

Introduction

The recent State visit by President Bola Ahmed Tinubu to the United Kingdom on March 18, 2026 marks a significant moment in the evolution of Nigeria–UK relations, being the first such visit in nearly four decades. While the visit carried considerable diplomatic weight, its true import lies in the legal, regulatory, and commercial signals it sends to investors, and multinational operators engaged in cross-border transactions between both jurisdictions.

At the heart of this visit was the renewed commitment to the Enhanced Trade and Investment Partnership (ETIP). This cooperation framework is designed to facilitate dialogue, harmonize legal standards, and provide a secure environment for cross-border capital flow. For Nigerian businesses, the ETIP presents a new opportunity which demands a deep understanding of international trade law, intellectual property rights, and bilateral investment treaties.

This newsletter examines the practical legal and business implications of the visit, with a focus on investment structuring, regulatory alignment, emerging opportunities and how Nigerian businesses can strategically position to benefit.

Legal and Business Implications

  1. Renewed Bilateral Frameworks and Investor Confidence

A central takeaway from the visit is the renewed commitment to deepening economic cooperation under existing bilateral frameworks, particularly the ETIP. The  ETIP functions as a policy coordination framework facilitating regulatory dialogue, market access initiatives and investment promotion efforts.

For investors, this represents a more predictable policy environment, which is critical in jurisdictions where regulatory uncertainty has been a concern. This is expected to drive incremental regulatory reforms and administrative alignment in both jurisdictions, particularly in sectors prioritized for UK–Nigeria collaboration such as infrastructure, finance, energy, and technology.

  1. Infrastructure Investment and Financing Structures

One of the most concrete outcomes of the State visit was the announcement of a £746 million investment by the UK in the Nigerian ports. Although the full transaction documentation is not yet public, the structure is likely to involve; Export Credit Agency (ECA) support, Sovereign or quasi-sovereign guarantees and Public–Private Partnership (PPP) frameworks.

  1. Regulatory Alignment and Market Access

The visit highlights a broader effort to reduce friction in cross-border trade and investment flows. While Nigeria and the UK operate fundamentally different regulatory systems, ongoing engagement within the ETIP framework may drive improved customs processes, greater transparency in licensing and approvals and enhanced cooperation between regulatory agencies

In the coming months, Nigeria businesses should closely monitor sector-specific regulatory developments, as reforms may be implemented through subordinate legislation, guidelines, or administrative action, rather than primary statutes.

  1. Dispute Resolution and Legal Risk Management

Cross-border investments inevitably raise questions around dispute resolution mechanisms. While the visit did not produce a new bilateral investment treaty, the strengthening of relations may encourage a greater reliance on international arbitration and more robust contractual protections against regulatory changes.

 

While Nigeria remains a signatory to key international arbitration conventions, and its courts have shown increasing willingness to uphold arbitral awards, enforcement timelines can still present challenges. Therefore, investors should prioritize carefully drafting the dispute resolution clauses in key cross-border transaction documentation.

 

Strategic Opportunities for Nigerian Businesses

While much focus is typically placed on inbound foreign investment, the outcomes of the State visit present significant opportunities for Nigerian businesses to actively participate and benefit from the ETIP. Some of these opportunities include;

  1. opportunities for Public Private Partnership projects and Infrastructure Value Chains;
  2. enhanced corporate governance and compliance standards;
  3. access to financing and investment partnerships;
  4. structuring for cross-border expansion and
  5. increased access to trade and export opportunities.

Conclusion

While the visit has set a strong diplomatic tone, the true test will lie not in policy articulation, but in execution—creating a critical window for investors and Nigerian businesses to position early and strategically under the ETIP.

For foreign investors and Nigerian businesses, the key takeaways are clear:

  1. a more structured and coordinated investment environment is emerging;
  2. infrastructure and trade-related sectors present immediate opportunities and
  3. legal and regulatory diligence remains critical to successful market entry and participation

Ultimately, Nigerian businesses that proactively align with these global standards, build strategic public-private partnerships, and position within emerging value chains will be best placed to capture value from this renewed bilateral engagement.

SAFE VS. CONVERTIBLE NOTES: NAVIGATING FINANCING OPTIONS IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE AND HILLARY OKOROTIE

Introduction

Financing is an important component of every company’s formation and growth. For early-stage companies, founders often face the important decision of selecting the investment model that best supports the company’s development. While there are several financing options available such as direct equity investments and debt financing, this newsletter focuses on Simple Agreements for Future Equity (SAFEs) and Convertible Notes.

Understanding the differences between SAFEs and Convertible Notes is essential for investors and founders seeking to balance risk and growth opportunities in early-stage financing.

 

Understanding a SAFE

Introduced by Y Combinator in 2013, a SAFE is a contractual instrument through which an investor provides funding in exchange for the right to receive equity at a later date and upon the occurrence of a specified triggering event. Under a SAFE, the investor’s return is realized when the company undergoes a liquidity-triggering event. These triggering events are usually defined in the agreement and may include events such as a merger, acquisition, an initial public offering (IPO), a change of control, etc.

SAFEs can be structured in several ways depending on the terms negotiated. The common structures include: (i) a discount, no valuation SAFE, where the investor converts their investment into equity at a discounted price compared to new investors in a future financing round; (ii) a valuation cap, no discount SAFE, which sets a maximum company valuation at which the investment will convert into equity; (iii) a valuation cap and discount SAFE, combining both protections for the investor; and (iv) a Most Favoured Nation (MFN) SAFE, which contains neither a discount nor a valuation cap but allows the investor to adopt more favourable terms offered to future SAFE investors. For more details, please read our newsletter here.

 

Understanding Convertible Notes

Convertible Notes represent a more traditional approach to early-stage financing. Structurally, they are debt instruments that convert into equity or repayment. When an investor provides funds through a Convertible Note, the company is technically borrowing money. The note includes a principal amount, an interest rate, and a maturity date. It is designed to convert into equity or repayment upon maturity.

This structure means that Convertible Notes begin as debt obligations but transform into ownership stakes when a qualifying financing event occurs. Interest accrued over time is usually added to the principal amount before conversion. The maturity date also introduces an additional layer of protection for investors to recoup their investments.

 

Distinction Between SAFEs and Convertible Notes

The most fundamental distinction between SAFEs and Convertible Notes lies in their classification. A SAFE is not a debt instrument, rather, it represents a contractual right for an investor to receive equity in the company in the future upon the occurrence of specified triggering events. As a result, a SAFE does not create an obligation for the company to repay the invested funds and does not accrue interest over time.

Convertible Notes, by contrast, are debt instruments that are designed to convert into equity at a later stage. When funds are provided through a Convertible Note, the company owes the investor the capital sum until the note converts or is repaid. Prior to conversion, the investment typically accrues interest and is subject to a fixed maturity date. At maturity, the principal and any accrued interest may convert into equity depending on the terms of the agreement. These features generally provide investors with additional protection and leverage, while SAFEs tend to offer companies flexibility and no immediate financial obligations.

 

Conclusion

As Nigeria’s startup ecosystem continues to expand, founders and investors will increasingly encounter alternative financing instruments when raising capital. SAFEs and Convertible Notes both serve this purpose, providing an avenue through which companies can secure funding at the early stages of growth.

Choosing between the two often depends on the growth objectives of the company and the level of protection investors seek. Regardless of the structure adopted, obtaining professional legal advice and maintaining a clear understanding of the conversion mechanics are essential to ensuring that both founders and investors are adequately protected.

NIGERIA TRADE REGULATORY UPDATE: NATIONAL SINGLE WINDOW PLATFORM LAUNCH AND IMPORT RESTRICTIONS

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By Seun Timi-Koleolu and Omodele Fatodu

Introduction

Nigeria’s trade regulatory landscape has recently seen developments aimed at improving trade administration and strengthening import controls. In particular, the Federal Government has announced the launch of the National Single Window Platform (the “Platform”), a digital system designed to streamline import and export processes, while also announcing a ban on items prohibited from importation into Nigeria in 2026.

These developments form part of broader government efforts to modernise Nigeria’s trade infrastructure, enhance border control mechanisms, and promote local production.

1. National Single Window Platform

The Federal Government is set to launch the Platform on 27 March 2026 as a centralised electronic portal for the processing of trade-related documentation. The Platform is intended to allow importers and exporters to submit trade information through a single interface, which will then be automatically shared with the relevant government agencies for processing.

Nigeria has previously explored the introduction of a national single window system as part of broader trade facilitation reforms, with earlier initiatives dating back to the late 2000s. However, those efforts did not result in a fully integrated system. While aspects of Nigeria’s trade administration have been digitised through platforms such as the Nigeria Trade Portal, which provides information on import and export procedures and serves as an access point to certain trade related processes, regulatory approvals and trade documentation have historically been administered across multiple agency systems. For example, importers typically process a Form M (a mandatory import declaration form) through an authorised dealer bank, submit cargo documentation to the Nigeria Customs Service (“NCS”), and obtain product specific approvals or certifications from regulators such as the Standards Organisation of Nigeria (“SON”) and the National Agency for Food and Drug Administration and Control (“NAFDAC”).

The Platform is intended to address this fragmentation by enabling traders to submit trade data through a single electronic interface which can then be shared automatically among participating government agencies. It is expected to integrate several regulatory bodies within Nigeria’s trade ecosystem, including the NCS, SON, and NAFDAC. Through the Platform, traders will be able to submit documentation once, rather than interacting separately with multiple agencies. This approach is expected to reduce duplication of documentation requirements and facilitate greater coordination among regulatory authorities responsible for customs clearance, permits, and trade approvals.

Implementation of the Platform is expected to occur in phases. The initial rollout will focus on the online processing of import permits, electronic submission of cargo manifests, and a centralised risk management system. Subsequent phases are expected to incorporate additional trade processes, including export documentation and full system integration.

2. Federal Government Import Prohibition List

The Federal Government has also recently released a list of goods prohibited from being imported into Nigeria. The 2026 import prohibition list (the “Prohibition List”) covers a range of items across agricultural products, household goods, and manufactured items. By restricting the importation of certain products, the government aims to support domestic manufacturing capacity and reduce Nigeria’s reliance on imported consumer goods in specific sectors.

It is important to distinguish the Prohibition List from the foreign exchange restrictions previously imposed on certain imported goods which was lifted by the Central Bank of Nigeria (“CBN”) in October 2023. The Prohibition List imposes a ban on certain items into Nigeria while the former foreign exchange restrictions barred access to official foreign exchange for the importation of specified items.

Examples of items included in the Prohibition List include:

i. Frozen poultry products

ii. Used motor vehicles older than twelve years from the year of manufacture

iii. Spaghetti and noodles

iv. Fruit juice in retail packs

v. Bagged cement

vi.Certain pharmaceutical products such as paracetamol, chloroquine, and metronidazole

Importation of goods that fall within the prohibited categories is not permitted and can result in enforcement actions by customs authorities, including the immediate seizure and destruction of goods, legal action, and the imposition of applicable penalties.

Conclusion

Nigeria’s ongoing trade policy reforms reflect an effort to balance trade facilitation with regulatory oversight. The upcoming launch of the National Single Window Platform represents an important step toward modernising Nigeria’s trade administration through the digital integration of regulatory agencies.

For importers, exporters, and logistics operators, the Platform may improve the efficiency of documentation processes and potentially reduce administrative delays associated with multi-agency approvals. Over time, the system could contribute to more streamlined customs clearance procedures and improved transparency in trade administration.

At the same time, the updated import prohibition list serves as a mechanism for regulating imports and supporting domestic economic policy objectives. Businesses involved in international trade and distribution activities should ensure that internal compliance processes include verification of import eligibility under Nigerian customs regulations.

Entering Nigeria’s Venture Capital Market: Regulatory Clarity, Capital Thresholds, and Structuring Pathways for Investors

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By Aderonke Alex-Adedipe and Mark Imonitie

Introduction

Nigeria’s venture capital (VC) sector has evolved from an informal, relationship-based market into a structured ecosystem shaped by various laws and regulatory requirements including regulations provided by the Securities and Exchange Commission (SEC).

As local and international VCs provide capital to high-growth businesses, VC firms must adeptly navigate Nigeria’s dynamic regulatory landscape which governs capital raising, fund structuring, portfolio management, and exits.

In this newsletter, we examine some key aspects of the SEC regulations for VC firms in Nigeria, highlighting recent registration and compliance amendments essential to the operations of VC firms amid evolving capital requirements.

SEC’s Registration Requirements

The SEC registration threshold for full registration of VC funds was raised from ₦1 billion to ₦5 billion in April, 2025. Consequently, while VCs with a target fund size of ₦5 billion or less are exempt from full registration, they are required to file governing documents and obtain a “no objection” certificate from the SEC.

Additionally, the SEC’s 2025 Ease of Doing Business guide mandates smaller funds to provide a notarized compliance checklist duly executed by the boards of both the fund manager and sponsor, containing various details including, the investment policy and objectives of the funds, profile of the Fund Manager and its experience, material risks of investing in the fund, duration of the fund and provisions for extension of the fund.

By reducing the registration threshold, the SEC aims to reduce the regulatory burden on smaller funds.

For funds above the ₦5 billion threshold, the documentation requirements include the information memorandum, partnership agreements amongst many others.

Minimum Capital Updates

The SEC in its circular of January 16 2026, raised the minimum share capital for VC fund managers from twenty million naira (N20,000,000) to two hundred million naira (N200,000,000). Existing fund managers of VCs, are required to increase their share capital to meet the minimum requirement of N200,000,000 on or before June 30, 2027.

The primary goal of the increase in the capital requirement is to enhance market stability, protect investors, and align regulations with global standards by ensuring that only VC managers with sufficient capital to handle operational risks are licensed to operate, thereby deterring unqualified entrants.

Practical Compliance Touchpoints for VC Firms

In practice, VC firms in Nigeria need to navigate both fund‑level regulation and deal‑level compliance. Some practical touchpoints include:

  • Fund formation: VC firms are advised to critically select an appropriate vehicle (Limited Partnership, Limited Liability Partnership or company), and ensure that its agreements are robust and align with SEC rules on the operations of VC funds.
  • Licensing and filings: VC firms are required to determine whether the manager or adviser requires SEC registration, whether the fund must register or only submit documents for “no‑objection”.  They are also required to keep up with exposure drafts and guidance notes released by the SEC from time to time, in respect of their operations.
  • Investor protection and disclosures: VC firms are to ensure that they adhere to valuation policies, fee and expense disclosures, and conflict‑of‑interest management in their operations.
  • Exit planning: In exit planning, VC investors must carefully consider initial public offerings, secondary sales, or buybacks within Nigeria’s corporate, securities, and tax frameworks, alongside exchange control regulations applicable to foreign investors, to secure optimal returns on their investments.

Conclusion

The recent amendments to the SEC rules and regulatory framework for venture capital firms mark a coming‑of‑age moment for Nigeria’s VC ecosystem, signaling a more mature, transparent and investor‑friendly environment for capital formation. For VC firms, smart legal and regulatory planning is no longer just a compliance chore, it has become a strategic edge that builds trust and unlocks opportunities.

Foreign Exchange Controls in Nigeria: Updated Rules for BDCs

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BY SEUN TIMI-KOLEOLU AND PROMISE ITAH

Introduction

On February 10, 2026, the Central Bank of Nigeria (CBN) issued a circular on Participation of Licenced Bureau De Change in the Nigerian Foreign Exchange Market (NFEM) (the “Circular”) allowing licensed Bureau de Change (BDC) to operate as intermediaries in the NFEM (the official foreign exchange market). This represents a significant policy shift, as BDCs had been excluded from accessing foreign exchange (FX) through official channels since July 2021 due to practices deemed to have contributed to exchange rate instability.

The Circular builds on the 2024 regulatory reforms, which strengthened capital requirements, licensing standards, reporting obligations, and compliance expectations for BDCs. According to CBN, the decision to re-admit BDCs aims to improve FX liquidity and ensure that legitimate end users can access foreign exchange more reliably.

In this newsletter, we highlight the key rules for BDC participation in the foreign exchange market and their practical implications.

What Are the New Rules for BDC Participation?

Under the Circular, licensed BDCs may participate in the NFEM, subject to the following requirements.

a. Weekly FX Purchase Limit: To manage liquidity and prevent excessive exposure, each licensed BDC may purchase up to $150,000 per week from any authorized-dealer bank. All purchases must be conducted at the prevailing market rate, with no preferential pricing arrangements.

b. Mandatory Resale Timeline and Position Restrictions (NFEM-Sourced FX): Any FX acquired under this scheme must be sold or used within 24 hours. BDCs cannot hold NFEM-sourced FX in their accounts beyond this period, and any unused balances must be returned to the market the next day. This rule prevents speculative hoarding and ensures that FX flows efficiently to end-users.

c. Settlement and Payment Structure: All FX transactions must be processed through bank accounts at licensed financial institutions. BDCs cannot route FX through third parties or non-customer intermediaries. Cash settlement is permitted, but it is strictly limited to no more than 25% of the transaction value, with the remainder required to pass through the banking system. This ensures that FX flows are traceable and transparent.

d. Compliance and Regulatory Oversight: In addition to operational limits, BDCs remain subject to enhanced compliance obligations:

i. Authorised dealers must perform full Know Your Customer (KYC) and due diligence on any BDC client before selling FX.

ii. Licensed BDCs are required to submit timely electronic reports of their transactions to the CBN and comply fully with all Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) rules.

iii. Anonymous transactions or round-tripping (buying FX at official rates and reselling it elsewhere for profit rather than for legitimate use) are strictly prohibited.

The Circular further reinforces that BDCs must operate within the broader Regulatory and Supervisory Guidelines for Bureau de Change Operations in Nigeria 2024.

What Are the Practical Implications?

a. For BDC operators:

i. Immediate Turnaround: BDCs must find buyers immediately or face the administrative burden of selling funds back to the NFEM within 24 hours;

ii. Strategic Forecasting: To avoid the inconvenience and potential losses involved in returning unused funds, BDCs must accurately forecast customer demand before purchasing their weekly $150,000 limit;

iii. Digital Accountability: The new framework emphasizes a “digital footprint,” requiring BDCs to integrate their IT systems with the CBN for real-time monitoring and reporting.

b. For the market and the public:

i. Easier access: The participation of BDCs in the official exchange market is expected to make it easier for the average person (travelers, students etc.) to obtain FX. Since BDCs are widely accessible to these users and are required to sell NFEM-sourced FX within 24 hours, supply of FX is expected to circulate more quickly to end users.

ii. Price stability: By prohibiting the hoarding of FX, the rules are expected to help reduce the extreme price jumps often seen in the parallel market.

Conclusion

The reintegration of licensed BDCs into Nigeria’s FX market provides a transparent and reliable channel for accessing foreign exchange. For businesses, it is likely to enhance predictability and reduce reliance on informal sources, while for BDCs, it reinforces the need to operate strictly within the established regulatory framework. The CBN expects that, when properly implemented, this structure will promote smoother FX flows, support effective business planning, and contribute to overall market stability.

 

For further information on any of the issues covered in this newsletter, please contact us at info@pavestoneslegal.com. At Pavestones, we deliver quality and innovative legal support across diverse industries, helping businesses operate in compliance with applicable laws and regulations to drive sustainable business growth.

THE 2026 CBN FINTECH REPORT; DEFINING THE FUTURE OF FINTECH IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE AND ENIOLA SOGBESAN

Introduction

The publication of the Fintech Report (the “Report”) by the Central Bank of Nigeria on February 2, 2026 represents a significant milestone in Nigeria’s fintech regulatory landscape. It is the first sector-wide review after the release of the Payment Systems Vision 2025 in 2022. The Report signifies a shift towards more coordinated regulation, simplified licensing processes and deeper institutional engagement with the fintech ecosystem. In summary, the Report reinforces CBN’s intention to balance innovation with stability of the financial system and market confidence.

Key Report Insights

Based on engagement with the fintech ecosystem, the Report identified several key challenges that will guide policy development and regulatory priorities going forward. These include:

  1. Persistent infrastructure gaps
  2. Increased regulatory compliance costs
  3. Longer time-to-market due to compliance bottlenecks
  4. Increased use of artificial intelligence in driving real-time payments
  5. Split perception of regulatory framework(s).

Based on the key insights obtained from engagement with the fintech ecosystem, the Report identified three (3) top-level objectives that will guide Nigeria’s fintech policy framework –

  1. Enable innovation-friendly regulation
  2. Advance financial inclusion through digital infrastructure
  3. Strengthen system integrity and reputation

These objectives will serve as the foundation of the proposed CBN reforms for the fintech ecosystem. These reforms are timely, given that notwithstanding the sustained expansion of Nigeria’s fintech ecosystem, operators continue to grapple with practical regulatory challenges—ranging from unclear compliance obligations, extended approval timelines, limited inter-agency coordination and a lack of clear oversight of emerging areas.

Policy Priority Initiatives

Following stakeholder feedback and guided by the three (3) top-level objectives, the Report outlines ten (10) priority areas that will guide CBN policy formulation for the ecosystem. These priority areas are –

  1. Launch a Standing Fintech Engagement Forum – This forum will serve as a dedicated, institutionalized platform for engagement between regulators and operators. To complement this forum, the CBN will support the establishment of a Self-Regulatory Organisation (SRO) within the fintech ecosystem, building on the progress of existing bodies, like FintechNGR.
  1. Operationalize a Single Regulatory Window – Establish a digital portal to coordinate licensing and supervisory processes across regulatory bodies. While the Report recognizes that a fully integrated system might be ambitious, this step would help streamline compliance frameworks and improve time-to-market timelines for regulated entities.
  1. Expand Regulatory Sandbox and Innovation Pilots – The expansion of the regulatory sandbox to support experimentation in emerging areas like artificial intelligence, cross-border payments etc. This will also include the expansion of the sandbox to a broader range of institutions such as MFB’s, PSBs, and Telco’s in pilot schemes. 
  1. Creation of an Industry-Government Digital Trust Charter – The Charter will serve as a shared framework between regulators and service providers. It will define areas such as responsible innovation, data governance, cybersecurity standards and consumer protection. The Charter may take the form of a voluntary code of conduct or may be embedded within licensing frameworks.
  1. Expansion of Digital Banking Licenses to Support Inclusive Financial Services – The CBN will assess how a dedicated digital banking framework could enable new market entrants to safely offer credit and savings services, subject to appropriate safeguards. To avoid conflicts with existing PSBs and MFB’s frameworks, the framework could create a consolidated digital banking license, rather than introducing an entirely new license category.
  1. Accelerate Open Banking Implementation -The Report emphasizes the timely rollout of Nigeria’s open banking protocols, including technical standards, governance structures, and dispute resolution mechanisms.
  1. Expansion of access to Digital Identity Infrastructure – Under this initiative, the CBN will work with relevant authorities to reduce barriers to affordable, API-based digital identity verification for regulated entities. This is designed to reduce onboarding friction and support more inclusive access to credit and other services.
  1. Strengthen Data Sharing and Credit Infrastructure – The CBN will review data-sharing rules and pricing models to support interoperability and reduce the cost of access to credit reference systems for fintechs and non-bank financial institutions.
  1. Advance Regional Regulatory Harmonization – The Report encourages CBN to engage with regional central banks and economic blocs such as ECOWAS to pilot the mutual recognition of licenses or establish regional sandbox programs.
  1. Position Nigeria as a Hub for Responsible AI in Finance – The Report further encourages the CBN to adopt a ‘test-then-codify’ approach, where learnings from the regulatory sandbox are converted into formal rulebooks / regulations.

Actionable Framework

To implement these policy priorities, the Report proposed the development of the following frameworks/digital portals:

  1. Regulatory Engagement Platform (REP)
  2. Smart Licensing and Supervisory Gateway (SLSG)
  3. Open Finance Lab (OFL)
  4. Fintech Trust and Safety Charter (FTSC)
  5. Fintech Credit Guarantee Window (FCGW)

Implementation

As set out in the Report, the proposed policy reforms are to be implemented in phases as follows:

Phase 1: Immediate Priorities (0–3 months)

  1. Establish Fintech Engagement Forum under CBN leadership.
  2. Issue implementation roadmap for Open Banking and initiate industry sensitization.
  3. Begin technical scoping for Single Regulatory Window and Smart Licensing Gateway.
  4. Coordinate cross-agency review of PSB lending restrictions and digital ID access

Phase 2: Near-Term Reforms (3–9 months)

  1. Launch pilot cohort for Regulatory Sandbox 2.0 including AI and RegTech use cases.
  1. Operationalize Fintech Credit Guarantee Window in collaboration with DFIs.
  1. Issue guidance on data portability and consumer protection under Open Finance.
  1. Initiate bilateral consultations on regulatory passporting (Ghana, Kenya, Senegal).

Phase 3: Institutionalization and Scale (9–18 months)

  1. Formalise Fintech Advisory Council to oversee implementation and course correction.
  2. Launch Regulatory Engagement Platform and public calendar of consultations.
  3. Embed supervisory analytics and early-warning tools through SupTech pilots.
  4. Participate in ECOWAS and AU regulatory alignment fora to shape continental norms.

Conclusion

With the Report indicating a shift towards a more organized and collaborative regulatory regime, these proposed reforms are designed to achieve the overarching top-level objectives of the CBN. However, the effective implementation of the proposed reforms will rely on the sustained engagement between regulators and the fintech ecosystem, strengthened supervisory capacity and effective alignment with regional and development partners.

For fintech service providers, the immediate priority is to gradually align internal operational frameworks with anticipated regulatory tools particularly around licensing, supervisory reporting, digital identity, and cross-border operations. If implemented correctly, these reforms will consolidate Nigeria’s position in the fintech ecosystem as a continental pacesetter while balancing innovation with systemic integrity and regulatory compliance.

THE NIGERIA CARBON MARKET FRAMEWORK 2025: AN OVERVIEW

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BY SEUN TIMI-KOLEOLU AND HILLARY OKOROTIE

Introduction

In 2025, Nigeria took a significant step in advancing its climate action agenda with the signing of the Nigeria Carbon Market Framework (the “Framework”). Recently on January 14, 2026, the Framework was officially approved at the Abu Dhabi Sustainability Week. The Framework sets the foundation for Nigeria’s participation in global and domestic carbon markets and provides a clear regulatory framework structure for the engagement in carbon trading within Nigeria.

The  Framework guides the development, governance, and operationalization of carbon market activities in Nigeria. It provides a structured pathway for Nigeria’s participation in both international and domestic carbon markets, in line with the Climate Change Act 2021 and Article 6 of the Paris Agreement. At its core, the Framework establishes the institutional, regulatory, and market architecture required to support the authorization, trading, investment and oversight of carbon market in Nigeria. It sets out Nigeria’s approach to engaging with voluntary carbon markets, international cooperative mechanisms, and future carbon pricing instruments.

In this newsletter, we will be providing an overview of some of the objectives of the Framework.

  1. Alignment with Global Climate Commitments

This Framework is aligned with Nigeria’s international climate obligations, particularly its commitments under the Paris Agreement and its Nationally Determined Contributions (NDCs) which outlines the country’s action plan towards the reduction of greenhouse gas emissions. NDC targets an economy-wide carbon emissions reduction by 2035. In this regard, the Framework identifies priority mitigation sectors, including energy (covering electricity generation and the oil and gas sector), transport, waste and wastewater management, industrial processes and product use, as well as agriculture, forestry, and other land use.

The NDCs are intended to serve as implementation instruments that translate Nigeria’s climate commitments into measurable and verifiable actions across these priority sectors. In operationalizing Nigeria’s NDCs, the Framework supports the country’s transition from its current emissions trajectory to an economy-wide, absolute emissions reduction pathway. 

  1. Facilitation of a Voluntary Carbon Market

One of the objectives of the Framework is to facilitate the development of a voluntary carbon market as a pathway to unlocking Nigeria’s carbon credit potential. In this regard, Nigeria seeks to establish a system that enables private individuals, entities, and other relevant stakeholders to trade in carbon credits outside the regulatory framework of mandatory carbon pricing instruments. However, in facilitating trade in the voluntary carbon market, stakeholders intending to participate will be required to adhere to recognized international standards. These include the Verified Carbon Standard (VCS), Gold Standard, and the Climate, Community & Biodiversity (CCB) Standards. Participants must also comply with applicable local laws and regulations, including conducting the necessary Environmental Impact Assessments (EIAs) required for environmental projects, among other regulatory obligations. In addition, participants are expected to adhere to industry best practices, with the objective of reducing greenhouse gas emissions and delivering positive social and environmental impacts on host communities. 

  1. Strengthening Climate Regulatory Governance

For the purpose of strengthening climate governance in Nigeria, the Framework provides for a Carbon Market Activation Policy. The objectives of this policy include the establishment of guidelines and procedures to enhance initiatives aimed at reducing Nigeria’s greenhouse gas emissions while simultaneously promoting sustainable development. Along with the Carbon Market Activation Policy, the Climate Change Act provides for the development of Carbon Market Regulations(the “Regulations”). While the Regulations are yet to be enancted, they are designed to govern the carbon market and provide flexibility for carbon-related transactions.  The Regulations will define the market mechanisms to be adopted by the Government for promoting and engaging in the voluntary carbon market. It will also set out rules for carbon project development, clarify the regulatory institutions responsible for the administration and oversight of the carbon market, and provide a framework for the implementation of Nigeria’s obligations under the Paris Agreement, among other provisions.

Conclusion

The Framework marks a pivotal moment in Nigeria’s climate governance journey. By providing a coherent policy and regulatory foundation for carbon market participation, the Framework emphasis Nigeria’s readiness to engage competitively in global carbon markets. If successfully implemented, the Framework has the potential to position the country as a leading carbon market hub in Africa.

 

To read more on Nigeria’s Carbon Market, please see our newsletters below.

  1. https://pavestoneslegal.com/regulatory-framework-and-investment-opportunities-for-clean-energy-projects-in-nigeria/
  2. https://pavestoneslegal.com/regulatory-update-nigerias-carbon-market-approach/
  3. https://pavestoneslegal.com/carbon-credits-in-nigeria-road-to-implementation/
  4. https://pavestoneslegal.com/energy-transition-in-nigeria-including-key-terms-relating-to-the-carbon-credit-market/

HIGHER CAPITAL THRESHOLDS AND NEW VASP LICENCES: KEY TAKEAWAYS FROM THE NIGERIAN SECURITIES AND EXCHANGE COMMISSION’S JANUARY 2026 CIRCULAR

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BY ADERONKE ALEX-ADEDIPE AND OMODELE FATODU

Introduction

In January 2026, the Nigerian Securities and Exchange Commission (the “Commission”)  issued a circular that significantly increased the minimum capital requirements for Capital Market Operators (CMOs). The Commission has highlighted that these changes are intended to strengthen market resilience, protect investors, ensure capital adequacy reflects the risks of market activities, and confirm that regulated entities have sufficient financial capacity to meet their obligations sustainably.

Key Changes to Capital Requirements

The revised capital requirements introduce substantial increases across most operator categories. The circular further states that the Commission will issue further detailed guidance to capital market operators on compliance and capital verification processes.  In addition, the Commission has also introduced several new Virtual Asset Service Provider (VASP) license categories, reflecting the growing prominence of digital finance and fintech activities in Nigeria’s capital markets. The newly introduced categories are:

  1. Ancillary Virtual Asset Service Providers (AVASPs)
  2. Digital Assets Intermediaries (DAIs)
  3. Digital Assets Platform Operators (DAPOs); and
  4. Real‑World Assets Tokenization and Offering Platforms (RATOPs).

The formal inclusion of these new VASP license categories classes highlights an area where further regulatory clarity will be required. The circular does not expressly identify the types of activities that fall within each of the newly introduced VASP categories. In practice, this indicates that the Commission is likely to issue further directives, guidelines, and compliance requirements to clarify the scope, licensing thresholds, and compliance obligations applicable to operators who fall within these new categories. To provide a clear view of the changes, we have summarised some capital market operator license categories alongside the newly introduced VASP license categories in the table below:

OPERATOR CATEGORY PREVIOUS MINIMUM CAPITAL  NEW MINIMUM CAPITAL % INCREASE
Brokers (client execution) N200m N600m 200%
Dealers (proprietary trading) N100m N1bn 900%
Broker-Dealers N300m N2bn 567%
Full-Scope Portfolio Mangers N150m N5bn 3,233%
Limited-Scope Portfolio Managers N150m N2bn 1,233%
Robo-Advisers N10m N100m 900%
Ancillary Virtual Asset Providers New N300m New
Digital Assets Intermediaries New N500m New
Digital Asset Platform Operators New N500m New
Real-World Assets Tokenisation Platforms New N1bn New

Implications for Market Operators

The substantial increases in minimum capital requirements carry significant implications for market operators. Operators will need to review and potentially adjust their capital structures, raise additional funds where necessary, and explore partnerships or restructuring strategies to meet the new thresholds. Non-compliance could result in suspension or withdrawal of registration, making proactive planning essential. The Commission has provided an 17-month transitional period, giving operators until June 30, 2027, to comply with the new thresholds.

Conclusion

The Commission’s 2026 capital requirement revision is a significant development for Nigeria’s capital markets. Operators must assess their capital adequacy and compliance strategies, not only to meet higher capital thresholds, but also to prepare for potential upcoming directives relating to the newly introduced VASP categories.

 

 

RECAPITALIZATION IN THE NIGERIAN BANKING SECTOR: LEGAL CONSIDERATIONS AND STRATEGIC OPTIONS

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BY SEUN TIMI-KOLEOLU AND MARK IMONITIE

Introduction

The CBN in its March 28, 2024 circular announced an upward review of the minimum capital requirements for banks in Nigeria, mandating banks to raise their minimum paid-up capital by March 31, 2026 as follows: ₦500 billion for international commercial banks; ₦200 billion for national commercial banks; ₦50 billion for regional commercial banks; ₦50 billion for national merchant banks; ₦20 billion for national non-interest banks; and ₦10 billion for regional non-interest banks.

As the CBN deadline approaches, this newsletter following our newsletter earlier written on the subject of recapitalization, outlines the options available to banks yet to meet the CBN’s recapitalization requirements and key legal considerations.

 

  1. Legal Considerations

The process of recapitalization requires strict compliance with the provisions of the law; the procedures set out by the CBN, and other applicable regulatory authorities.

Below are some legal considerations for banks seeking to recapitalize.

i. Conduct legal due diligence and Anti-Money Laundering screening

Banks seeking to recapitalize are required to conduct due diligence and effective anti-money laundering screening/checks on prospective investors, to mitigate the risk of injecting capital from fraudulent sources into the bank. Measures for due diligence include know your customer, customer due diligence and suspicious transactions monitoring. The CBN is empowered to enforce strict enforcement of checks for all prospective and significant shareholders as well as directors and senior management staff of banks.

ii. Obtain corporate approvals

Banks are required to obtain board and shareholders’ approval, ensuring alignment with the Banks and Other Financial Institutions Act (BOFIA) 2020 as amended and good corporate governance practices, for sustainable compliance. The resolutions approving the recapitalization among other documents, will be provided to CBN and SEC in the request for approval for recapitalization.

iii. Obtain regulatory approvals

A bank seeking to recapitalize is required to submit a detailed application to CBN and the Securities and Exchange Commission (SEC) containing the means by which the bank will meet the recapitalization target. Documents to be provided to the CBN and SEC for approval include, written request for approval, board resolution, shareholders resolution, prospectus, etc.

iv. Preparation and execution of transaction documents

Depending on the choice method of recapitalization which the bank will apply, transaction documents will to be prepared and executed, after due negotiation by relevant parties. For example, if the bank seeks to recapitalize through an acquisition, documents such as share sale and purchase agreement, non-disclosure agreement etc. will be prepared and executed by the relevant parties.

v. Filing necessary post transaction documents

Upon completion of the transaction, banks will be required to file necessary post-issuance returns to the CBN and SEC. Also, the bank’s record with the Corporate Affairs Commission (CAC) will need to be updated.

 

B. Strategic Options

In the CBN’s circular, the CBN prescribes the following options as available to Nigerian banks seeking recapitalization:

  • Public Offers
  • Rights Issue
  • Private Placements
  • Mergers and Acquisitions
  • Upgrade or downgrade of license authorization

i. Public Offers

For the purpose of bank recapitalization, a public offer involves issuing new shares or securities to the general public through stock exchanges or regulated markets to raise required capital.

This process enables larger investor participation to meet capital adequacy thresholds and provide large-scale funding.

ii. Rights Issue

This refers to the method of recapitalization where a bank offers existing shareholders the right (but not the obligation) to purchase additional new shares. By the use of rights issue, the bank will be able to raise additional capital while minimizing ownership dilution for existing shareholders.

iii. Private Placements

Private placement refers to a method of recapitalization where the bank raises capital by directly selling its shares to a select group of pre-identified investors like institutions or high-net-worth individuals and bypassing public markets.

This approach enables quick funding, offers confidentiality, lower costs, and regulatory exemptions compared to public offerings, making it suitable for mandatory recapitalization.

iv. Mergers and Acquisitions (M&As)

For bank recapitalization, M&A involves undercapitalized banks merging with or being acquired by stronger banks to consolidate capital base, assets, and operations, thereby meeting the minimum share capital set by the CBN.

Mergers create a unified entity with enhanced scale and stability, while acquisitions allow financially robust banks to absorb others, thereby boosting combined equity without new share issuance. An example of the use of this strategy for recapitalization is the concluded merger between Union Bank of Nigeria and Titan Trust Bank, with Union Bank of Nigeria being the surviving entity.

v. Upgrade or downgrade of license authorization

This refers to adjusting a bank’s operational category—such as from national to regional or vice versa—under CBN guidelines to align with the new minimum capital requirements.

An upgrade expands scope and requires higher capital for broader operations, while a downgrade scales back activities to a lower-threshold license, avoiding full recapitalization costs.

 

CONCLUSION

As the March 2026, deadline for recapitalization looms, Nigerian banks stand at a pivotal crossroad where strategic action today would secure tomorrow’s dominance.

Rights issues, mergers, and compliant capital raises provide banks with a launchpad for expansion and economic impact.

Banks yet to recapitalize are therefore required to prioritize legal diligence under CBN/SEC guidelines and mitigate dilution risks pursuant to the provisions of the Companies and Allied Matters Act 2020.

The recapitalization wave is expected to reshape Nigeria’s financial landscape, and provide a pathway for enduring growth and stability in Nigeria’s banking sector.

 

About us:

Pavestones is a full-service legal practice, registered with the Securities and Exchange Commission as a Capital Market Solicitor. Pavestones deliver quality and innovative legal support across diverse industries, helping clients operate in compliance with applicable laws and regulations to drive sustainable business growth.