ENFORCING YOUR INTELLECTUAL PROPERTY RIGHTS IN NIGERIA AND GLOBALLY

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BY SEUN TIMI-KOLEOLU AND HILLARY OKOROTIE

Enforcing Your Intellectual Property Rights in Nigeria and Globally

Introduction

In our previous newsletters, we explored the fundamentals of protecting your intellectual property (IP) rights, such as identifying protectable assets to navigating registration procedures. Protecting your IP right however does not end with registration. Once your IP rights are legally recognized, understanding how to enforce your rights, preventing unauthorized use of your IP, and safeguarding your brand value are equally important. Global brands such as Louis Vuitton and Dior, demonstrate the importance of this by constantly enforcing and protecting their trademark and designs from counterfeiting and misuse across multiple jurisdiction.

As African businesses and creatives continue to expand their reach globally, it is important that businesses pay attention to protecting the goodwill in their brands and maximize the investment value of their IP . In this newsletter, we will provide you with some guidance on how IP rights can be enforced in Nigeria and the importance of protecting IP globally.

Addressing Infringement: Opposing Similar Names and Passing Off

One of the most common challenges faced by IP owners is the unauthorized use of similar brand names, trademarks, taglines or other identifiers that may confuse and misdirect consumers. Hence addressing infringement involves taking action against unauthorized use of your IP that could harm your brand. This includes opposing the registration or use of similar names, trademarks, or designs that may confuse customers or damage your brand credibility. For example, in cases where a third party applies to register a similar name or symbol, swift action, such as filing an opposition with the appropriate registry, is vital to prevent approval.

To achieve this, you should ensure that you continuously monitor publication of trademarks that are undergoing registration or filings, this will allow you raise oppositions if any.  For instance, in Nigeria, the Trademark Registry publishes journals listing newly registered trademarks,  and permits opposition by the public. Engaging a lawyer to monitor these publications will ensure timely action against similar marks. Similarly, in the United States, regular checks of the United States Patent and Trademark Office (USPTO) filings can help identify and challenge conflicting applications promptly.

Where infringement occurs in the form of “passing off” which involves another business using your brand’s goodwill to deceive customers, actions such as issuing a cease and desist letter or a civil action to assert your rights may be necessary.

Utilizing Non-Disclosure Agreements (NDAs)

While external threats to IP are common, internal risks should not be overlooked. Employees, contractors, or partners often have access to proprietary data, trade secrets, or innovative concepts. To address this risk, it is important to integrate NDAs into your business processes as a standard practice before sharing sensitive information with consultants or employees. An NDA would provide the duration of confidentiality obligations, jurisdiction of enforcement, and penalties in the event of an infringement. In the event of a breach, it is important to take immediate action by investigating the violation, assessing the impact on your business or brand, and enforcing the terms of the NDA through formal dispute resolution or litigation if necessary. By taking these steps, you can mitigate internal risks and ensure the IP rights remain protected.

Enforcing Your IP Internationally: Scaling Your Protection with Your Brand

As businesses expand into global markets, protecting IP rights becomes a critical task. Without adequate protection, your IP may become vulnerable to unauthorised use in other jurisdictions. It is important to register your IP in each country where you plan to functionally operate your business. This is essential because IP protections are territorial, for instance, IP rights granted in Nigeria do not automatically extend to other countries. When your IP is protected in various jurisdictions, you not only gain the right to restrict third parties from using it, you are also able to monetize it.

Conclusion

While registration is a critical first step in protecting IP, enforcing your rights ensures that your creativity, and business investments are shielded from exploitation both locally and internationally.

Whether tackling infringement, safeguarding sensitive information, or scaling your organisation  to new markets, understanding these principles are vital to staying ahead in today’s competitive landscape.

For more information on intellectual property, you can refer to our previous newsletters below.

  1. https://pavestoneslegal.com/requirements-and-procedure-for-registration-of-trademarks-in-nigeria/
  2. https://pavestoneslegal.com/intellectual-property-licensing-in-nigeria/
  3. https://pavestoneslegal.com/registering-patents-in-nigeria/

SETTING UP A CRYPTOCURRENCY BUSINESS IN NIGERIA

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ADERONKE ALEX-ADEDIPE AND OLAWALE ATANDA

Setting Up a Cryptocurrency Company in Nigeria

Introduction

The adoption of Cryptocurrency has gained significant traction in Nigeria over the years, serving as a store of value to hedge against inflation and as an investment tool for increasing wealth. It has also become a medium for international transfers, where individuals send cryptocurrency to family members in Nigeria who in turn convert it to local currency.

Despite its popularity, cryptocurrency usage has not been without challenges. In this newsletter, we examine the regulation of cryptocurrency in Nigeria and outline the steps businesses must take to operate within the country in compliance with existing regulations.

Crypto Regulation in Nigeria

In 2021, the Central Bank of Nigeria (CBN) issued a directive instructing banks to cease facilitating payments for cryptocurrency exchanges and to close the accounts of individuals and entities transacting in or operating crypto exchanges. According to the CBN, this directive aimed to mitigate the risks of money laundering and terrorism financing associated with cryptocurrency transactions.

In December 2023, the CBN partially reversed its stance by issuing the Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (the “Guidelines”).*
These Guidelines permitted cryptocurrency trading companies—such as crypto exchanges, crypto wallets, and digital currency creators—to open bank accounts, provided they met specific conditions, including obtaining a license from the Securities and Exchange Commission (SEC).’

At present, the SEC is the primary regulatory body overseeing cryptocurrency and othe  digital assets in Nigeria. The Guidelines followed the SEC’s release of Rules on the issuance and custody of Digital Assets in May 2022. These Rules established the framework for the registration and operation of Virtual Asset Service Providers (VASPs) which include crypto companies.**

In June 2024, the SEC introduced the framework on the Accelerated Regulatory Incubation Program (ARIP), which expedited the registration process for VASPs.*** Following the release of the framework, the SEC announced in August 2024 that it had granted licenses to two crypto exchanges.

These developments demonstrate that cryptocurrency companies can operate in Nigeria, provided they comply with the applicable regulatory requirements.

Steps to Consider when Setting Up a Crypto Company

1. CAC Registration
Crypto companies must be registered with the Corporate Affairs Commission (CAC) as a preliminary requirement to operate in Nigeria. Companies must be incorporated with a minimum paid-up share capital of NGN 500 million.

2. SEC Registration
To operate a crypto company in Nigeria, such a company must be registered by the SEC. As of the time of this publication, registration is conducted through the ARIP program. Interested parties must submit an expression of interest to the SEC, followed by a detailed application comprising documents such as an operational plan, business model, company documents, and other requirements specified in the SEC Rules.

Upon approval, the SEC will issue an Approval in Principle, allowing the entity to operate as a regulated crypto entity. It is important to note certain requirements, including the need for crypto companies to be incorporated and have a physical office in Nigeria. Also, the Chief Executive Officer or Managing Director must be resident in Nigeria.

3. Capital Importation and Bank Accounts
Where funding for the crypto company is sourced from outside Nigeria, it must be brought in through authorized dealers (i.e., commercial banks). A Certificate of Capital Importation (CCI) is important, as it enables investors to repatriate capital, dividends, and profits earned from the company at the official foreign exchange market rates in a freely convertible currency, subject to applicable taxes.

Crypto companies can also open accounts in commercial banks for settlement purposes. It should be noted that such accounts will not bear interest, and companies are not permitted to withdraw funds in cash. Withdrawals are limited to transfers to other bank accounts or the use of a manager’s cheque.

4. Immigration Considerations

If a crypto company employs foreign staff, it must obtain an Expatriate Quota from the Ministry of Interior. This quota permits the employment of foreigners within the company. Also, the company must secure a Combined Expatriate Residence Permit and Aliens Card (CERPAC) from the Immigration Service. This allows expatriate staff to live and work in Nigeria. A CERPAC is mandatory if the MD/CEO is a foreigner, as the SEC requires this
individual to reside in Nigeria.

5. Intellectual Property (IP) Registration
It is crucial for crypto companies to protect their intellectual property (IP) by registering it in Nigeria. This may include registering their brand name with Nigeria’s trademarks registry or patenting blockchain technology that powers their crypto assets or inventions that complement the use of crypto. It is important that IP is protected as it not only forms part of a company’s assets but also enhances its valuation and goodwill.

6. Registration with the National Office for Technology Acquisition and
Promotion (NOTAP)
NOTAP is the government agency responsible for regulating technology transfer agreements between Nigerian companies and foreign entities. If a crypto company engages with a foreign entity (including a foreign parent company, if applicable) to transfer technology—such as licenses to patents, trademarks, inventions, or technical,
management, or consulting services—the agreement must be registered with NOTAP. NOTAP ensures that technology transfer agreements are fair and contribute to local content development. Crypto companies must register these agreements within 30 days of their effective date. Registration enables the company to make payments to foreign entities through the official foreign exchange market under a technology contract.

Conclusion
Setting up a cryptocurrency business in Nigeria requires navigating a complex regulatory framework. By complying with SEC rules and meeting other regulatory requirements, crypto companies can establish a solid foundation for operating in Nigeria. Adhering to guidelines relevant to their operations not only ensures legal compliance but also builds trust with stakeholders and will help foster long-term growth in Nigeria’s evolving crypto
market.

Footnotes

1. Please see our article on the CBN’s Guidelines for the operation of bank accounts for
VASPs here – https://pavestoneslegal.com/regulatory-update-central-bank-of-nigeriaguidelines-
on-operation-of-bank-accounts-for-virtual-assets-service-providers/

2. Please see our article on the regulation of VASPs in Nigeria –
https://pavestoneslegal.com/regulatory-update-regulation-of-virtual-assets-serviceproviders-
in-nigeria/

3. Please see our article on the ARIP Program here – https://pavestoneslegal.com/insightsinto-
the-sec-accelerated-regulatory-incubation-program-framework/

ANTI-MONEY LAUNDERING REGULATION IN NIGERIA – RECENT UPDATES

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Seun Timi-Koleolu and Promise Itah

ANTI-MONEY LAUNDERING REGULATION IN NIGERIA – RECENT UPDATES

INTRODUCTION

On the 13th of December 2024, the Nigeria Financial Intelligence Unit (“NFIU”) issued Guidelines for the Identification, Verification and Reporting of Suspicious Transactions Related to Money Laundering, Financing of Terrorism and Proliferation of Weapons of Mass Destruction (ML/FT/PF) for Financial Institutions (the “Guidelines”).

The purpose of the Guidelines is to assist financial institutions in the generation and filing of quality Suspicious Transaction Reports (STRs) to enhance the control measures within these institutions. The Guidelines are to be read in conjunction with the NFIU Guidance on Preparing a Complete Suspicious Transaction/Activity Report and other related guidelines.

In this newsletter we share highlights from the Guidelines.

HIGHLIGHT OF THE GUIDELINES

1. Who does the Guidelines affect? All financial institutions including Banks, Fintechs, Bureau De Change, Virtual Asset Service Providers, Discount Houses, Insurance Institutions, Debt Factorisation and Conversion Firms.

2. How is a Suspicious Transaction to be identified? To determine if a transaction is suspicious, a Reporting Entity must screen transaction alert; and assess the facts and context of the transaction against the initial indicators that raised suspicion.

Additional Information to consider in determining a suspicious transaction includes whether the transaction can be connected to a usually high-risk jurisdiction.

3. What reports are to be filed? A Suspicious Transaction Report is to be filed within 24 hours from when a transaction is termed suspicious after a thorough review has been conducted by the Reporting Entity. The period of conducting the thorough review should not exceed 72 hours from the time of the transaction.

4. What documents are to accompany an STR filing: The following documents and details should accompany an STR filing:
• Customer identification documents: e.g a copy of a valid identity document; proof of address; copy of the beneficial owner’s identity document (if applicable); copy of the legal representative’s identity document (if applicable).
• Transaction records; and
• A documentation that states the kind of offence the suspicious transaction relates.

5. What further information should be provided? The Guidelines prescribe certain information to be contained in the narration of an STR. Some of these include details of the alert(s) that triggered the investigation, along with all previous alerts or STR filing history on the subject (if any); detailed account of remedial actions taken by the Reporting Entity to address the risk identified around the transaction.
The Guidelines are not exhaustive and are to be read alongside other related guidelines such as the NFIU Guidance on Preparing a Complete Suspicious Transaction/Activity Report.

6. Will Financial Institutions be penalised for non-compliance? Yes, financial Institutions that fail to comply with the reporting requirements will be penalised in accordance with the provisions of existing Anti-Money Laundering laws. The penalties range from fines to revocation of licence and/or imprisonment.

CONCLUSION
The Guidelines aim to improve the quality of STRs filed by Reporting Entities in Nigeria. Adherence to these Guidelines is expected to reduce the volume of STR filings and minimize alleged customer harassment over transactions flagged by monitoring systems. Over time, it is expected to result in more efficient use of resources in battling money laundering and generally improve the anti-money laundering system in Nigeria.

REGULATORY UPDATE: REVIEW OF THE LAGOS STATE ELECTRICITY LAW (2024)

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ADERONKE ALEX-ADEDIPE AND EBIKENIYE BEST

REGULATORY UPDATE: REVIEW OF THE LAGOS STATE ELECTRICITY LAW (2024)

Introduction

In furtherance of the provisions of the Electricity Act, 2023, on December 3, 2024, the Lagos State Government passed the Lagos State Electricity Bill, 2024 into law (the “Law”). This new Law repeals the Electric Power Sector Reform Law (2018) and establishes a comprehensive regulatory framework for the Lagos Electricity Market (the “Market”).

In this newsletter, we identify some of the key provisions of the Law and their possible impact on the Market.

1. What is the main objective of the Law?

The Law seeks to create a regulated electricity market in Lagos State, ensuring the availability of reliable and universal electricity access to residents. The Law also aims to promote the use of renewable energy and sustainability; facilitate investment and innovation in the Market, etc.

2. How is the Market regulated?

Under the provisions of the Law, the Lagos State Ministry of Energy and Mineral Resources (the “Ministry”) is responsible for several key functions related to the Market established by the Law. The Ministry’s responsibilities include (i) supporting the sustainable development of the electricity sector in Lagos State, (ii) ensuring the growth and viability of the Market, (iii) securing the State’s electricity infrastructure, (iv) promoting investment and development in the electricity sector, and (v) safeguarding the independence of the Commission, among others.

Additionally, the Ministry, in collaboration with the Commission and other relevant stakeholders, is tasked with developing and publishing the first edition of the Lagos State Integrated Electricity Policy and Strategic Implementation Plan (the “Plan”) within six (6) months of the Law’s commencement. Each edition of the Plan will have a duration of ten (10) years and will be subject to a review every five (5) years.

3. Who regulates the Market?

The Law establishes the Lagos State Electricity Regulatory Commission (the “Commission”), which is composed of three (3) executive members and two (2) non-executive members. The Commission is tasked with issuing directives on matters related to the electricity sector in Lagos State, provided that these directives align with the provisions of the Plan. The Commission is also responsible for regulating the conduct of market participants, overseeing all operations within the Market, issuing licenses, and preventing the abuse of market power, amongst other duties.

Additionally, the Commission is required to prepare a detailed Electricity Market Report including but not limited to – the activities of the licensees and other market participants, the implementation of renewable energy and energy efficiency, and the extent to which the Market has operated and developed. Further to this, licensees are required to deliver to the Commission relevant data and information that they are obliged to keep for confidentiality purposes.

4. What are the licensing requirements under the Law?

Entities wishing to engage in electricity-related activities must obtain a license from the Commission. Such activities include, (but are not limited to), generation, transmission, distribution, supply, and system operation. However, activities with a production or carrying capacity below 1MW are exempt from the licensing requirement.

In addition, the Law mandates that licensed activities must adhere to approved tariff methodologies, which are subject to periodic reviews to account for changes in the Market. This ensures that tariffs remain consistent with evolving market conditions and regulatory needs. The Commission is authorized to approve negotiated agreements between licensees and specific consumer groups, provided these transactions align with the overall tariff framework. This flexibility allows for customized solutions while maintaining regulatory control.

The Law also enforces penalties for non-compliance, including fines starting at N1,000,000 and custodial sentences of up to six months. In cases of continued non-compliance, an additional fine of N20,000 per day of default may be imposed. Furthermore, it specifies that holding a license from any other body for the relevant regulated activity will not serve as a valid defense for non-compliance.

5.What are the types of licenses under the Law?

Under the Law, several types of licenses are outlined, each governing specific activities within the electricity sector. Some of these licenses are set out below.

Generation License: A generation license is required for entities generating electricity within the State. It authorizes the holder to construct, operate, and maintain power generation plants with a capacity exceeding 1 MW, sell electricity, and connect to transmission or distribution systems. However, a license is not necessary for establishing a captive generation plant. Generation licensees must ensure operational efficiency, promote renewable energy, and comply with safety and environmental regulations.

Transmission License: The transmission license allows entities to construct, operate, and maintain transmission systems. Transmission licensees are prohibited from engaging in electricity trading. The Law also stipulates that any ancillary revenue generated from non-transmission activities must be used to reduce wheeling charges, ultimately benefiting consumers.

Trading License: Trading licenses are introduced for entities involved in the bulk purchase of electricity. The licensees can purchase electricity from generation entities, including those outside the State, and resell it to distribution companies or bulk consumers. This flexibility improves the security and stability of electricity supply.

Conclusion

The Law establishes a comprehensive regulatory framework aimed at fostering a reliable, sustainable, and innovative electricity market in the State. Stakeholders, including electricity providers, investors, and consumers, must adapt to the new licensing requirements, adhere to tariff regulations, and prioritize renewable energy initiatives. By ensuring compliance with these provisions and staying informed about regulatory updates, stakeholders can contribute to the growth and stability of the electricity market while minimizing risks and taking advantage of new opportunities.

 

 

REGULATORY UPDATE: CBN REVISED GUIDELINES FOR NIGERIA’S FOREIGN EXCHANGE MARKET

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Seun Timi-Koleolu and Qasim Ogunjimi

REGULATORY UPDATE CBN REVISED GUIDELINES FOR NIGERIA’S FOREIGN EXCHANGE MARKET

In the bid to establish a more transparent and efficient framework for managing foreign exchange (FX) in Nigeria, the Central Bank of Nigeria (CBN) recently introduced revised guidelines for the Nigerian Foreign Exchange Market (NFEM) (“Guidelines”). These updates aim to address longstanding issues such as fragmented pricing, limited access to FX, and inefficiencies in the FX market operations.

In this newsletter, we will examine the highlights of the Guidelines and their implications for stakeholders.

Key Highlights of the Guidelines

  1. Authorized Dealers and Bureau de Change (BDC) Operators: One of the key provisions of the Guidelines is to reemphasize the prohibition of foreign exchange transactions involving unlicensed intermediaries. Under the Guidelines, authorized dealers (e.g. commercial banks, international money transfer operators) are tasked with facilitating FX transactions for individuals and businesses, conducting due diligence, and adhering to all applicable laws and guidelines. They are also required to provide convenient digital channels for market access and ensure transparent pricing practices.Unlike the previous guidelines, licensed Bureau de Change (BDC) Operators are now permitted to buy FX directly from authorized dealers to meet customer needs. However, this is subject to a monthly cap set by the CBN. This inclusion is to improve retail access to FX
  2. Electronic Foreign Exchange Matching System (EFEMS): Developing on the unification of all FX market windows, the Guidelines introduced the Electronic Foreign Exchange Matching System (EFEMS). The EFEMS is a centralized platform for pricing and executing FX transactions. To ensure transparency and consistency across the FX market, the Guidelines provide that all FX transactions are to be priced through EFEMS and prohibits the negotiations of FX rates outside the FX market. Additionally, through this system, FX markets statistics including daily transaction rates of all qualifying transactions on NFEM will be publicly available to guide market participants on the CBN website. The EFEMS is the centerpiece of the Guidelines as it not only improves the efficiency of the market but also ensures transparency and consistent pricing.
  3. Interbank Trading: The interbank FX market is another important component of the new system. The Guidelines permits the trading of FX in the interbank market between authorised dealers. This is, however, subject to set credit limits as presented by the CBN circular on the Implementation of the Bloomberg BMATCiH for Foreign Exchange Trading issued November 25, 2024. Furthermore, designated market makers are mandated to provide daily two-way quotes to improve liquidity and market efficiency. Additionally, CEOs and compliance officers of authorized dealers must annually attest to compliance with the Nigerian FX Code.
  4. Reporting and Compliance: Real-time reporting is now a mandatory requirement for all FX transactions. The Guideline requires authorized dealers to report transactions to the CBN within 10 minutes of execution, including those conducted via EFEMS, telephone, or chat-based platforms. BDC operators and other participants are also required to submit daily activity reports using digital platforms, reinforcing the CBN’s commitment to monitoring and transparency.

Conclusion

The Central Bank of Nigeria’s revised guidelines for the Nigerian Foreign Exchange Market is a strategic step towards a more transparent, efficient, and inclusive FX ecosystem. For businesses, investors, and individuals, these updates present new opportunities for growth and engagement in the FX market. However, they also require stakeholders to align with stricter compliance standards and adopt best practices to remain competitive

 

 

 

 

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.