NAICOM’S GUIDELINES FOR FOREIGN HEALTH INSURANCE PROVIDERS: KEY COMPLIANCE CONSIDERATIONS FOR INSURERS AND POLICYHOLDERS IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE & OLUWAYEMI IBIRINDE

Introduction

On 31 March 2026, the National Insurance Commission (“NAICOM”) issued the Guidelines for the Operation of Foreign or International Health Insurance Providers (the “Guidelines”) pursuant to the Nigerian Insurance Industry Reform Act, 2025 (“NIIRA 2025”). The Guidelines establish, for the first time, a comprehensive regulatory framework governing foreign or international private medical insurers and reinsurers (“IPMI-R Providers”) seeking to provide health insurance services to entities registered or individuals who are resident in Nigeria.

Historically, international health insurance products were commonly procured directly from offshore insurers by multinational corporations, expatriates and high-net-worth individuals without any comprehensive regulatory framework governing such activities in Nigeria. Industry reports estimated that this resulted in approximately US$2 billion in annual premium outflows, while limiting regulatory oversight and the participation of domestic insurers. The Guidelines seek to address these gaps by requiring foreign health insurers to obtain NAICOM’s approval before operating in Nigeria, establishing approved local partnerships and complying with specified consumer protection, reporting and governance obligations.

In this newsletter, we examine the key provisions of the Guidelines and highlight some of the legal and commercial considerations for insurers and policyholders.

Who Do the Guidelines Apply To?

The Guidelines apply to all International Private Medical Insurers or Reinsurers (IPMI-R Providers) seeking to transact, market, underwrite or otherwise engage in health insurance business emanating from Nigeria.

Specifically, they apply to:

  1. foreign health insurers and reinsurers offering products to entities registered in Nigeria;
  2. foreign providers offering health insurance to persons residing in Nigeria; and
  3. intermediaries and authorised representatives acting on behalf of foreign health insurers.

Accordingly, the regulatory focus is not the location of incorporation of the insurer but whether the health insurance business or clientele originates from Nigeria.

What are the Key Compliance Requirements?

  1. Prior NAICOM Approval

The most significant change introduced by the Guidelines is that no foreign health insurer may transact, market or underwrite health insurance business originating from Nigeria without obtaining the prior written approval of NAICOM.

Similarly, no Nigerian entity or individual may transfer health insurance risks to an IPMI-R Provider unless that provider has received NAICOM’s approval.

The Guidelines further provide that where NAICOM does not communicate its approval or rejection within ten (10) working days after receiving complete documentation, the application shall be deemed approved.

  1. Mandatory Local Partnership Model

Unlike the previous regulatory position, the Guidelines prohibit foreign insurers from directly issuing health insurance policies to Nigerian entities or persons residing in Nigeria except through an authorised representative domiciled in Nigeria.

Every approved IPMI-R Provider must adopt one of the following operational models:

  • Model 1: Domestic Insurer Partnership;
  • Model 2: Domestic Administrator or Intermediary Partnership; or
  • Model 3: Health Maintenance Organisation (HMO) Partnership.

These partnership models ensure that licensed Nigerian entities participate in premium administration, claims support, regulatory reporting and other operational functions.

To obtain approval, an IPMI-R Provider must submit comprehensive documentation including:

  1. evidence of incorporation in its home jurisdiction;
  2. proof of regulatory licensing in its home jurisdiction;
  3. detailed product descriptions;
  4. a business plan;
  5. premium worksheets;
  6. proposed Nigerian intermediaries;
  7. its preferred operational model; and
  8. any additional information requested by NAICOM.
  1. Consumer Protection Requirements

The Guidelines introduce several customer protection obligations designed to improve accountability and transparency.

Approved providers are required to:

  1. provide clear information regarding policy terms and exclusions;
  2. ensure products meet customers’ needs;
  3. establish effective complaints management procedures;
  4. include claims settlement procedures within policy documentation; and
  5. ensure complaints are handled fairly through their Nigerian representatives or intermediaries.

These obligations significantly strengthen the position of Nigerian policyholders.

  1. Reporting and Ongoing Regulatory Obligations

Approved providers are required to submit quarterly production returns to NAICOM and pay the prescribed Insurance Supervisory Service (ISS) Levy.

The Guidelines therefore establish continuing regulatory oversight rather than a one-time approval process.

Compliance Considerations

Pending further regulatory guidance, organisations that utilise international health insurance arrangements should consider the following.

a. Review Existing Insurance Arrangements

Multinational companies should determine whether their current international health insurance programmes involve IPMI-R Providers that have obtained, or intend to obtain, NAICOM approval.

b. Assess Existing Partnership Structures

Foreign insurers should evaluate whether their existing operating model aligns with one of the three partnership structures prescribed under the Guidelines and identify any restructuring that may be required.

c. Review Distribution and Intermediary Arrangements

Insurers, brokers, HMOs and third-party administrators should assess whether their contractual arrangements adequately reflect the roles and reporting obligations contemplated under the Guidelines.

d. Strengthen Compliance Frameworks

Organisations should establish internal governance procedures to monitor ongoing compliance with NAICOM’s approval requirements, reporting obligations and customer protection standards.

e. Review Existing Policies

The Guidelines permit policies issued before the effective date to continue until expiry. However, organisations should review renewal arrangements to ensure that future policies comply with the new regulatory framework.

Penalties for Non-Compliance

The Guidelines introduce significant sanctions for non-compliance.

  1. Any entity registered in Nigeria or person residing in Nigeria that transacts health insurance business with an unapproved IPMI-R Provider may be liable to a penalty of not less than the total premium involved.
  2. The Guidelines also required providers to regularise their operations within the prescribed ninety-day transitional period. Failure to satisfy the approval requirements may result in rejection of the application and suspension of the issuance of new policies and renewals.

Conclusion

With the Guidelines having taken effect on 31 March 2026, multinational employers, foreign insurers, HMOs, brokers and other intermediaries, should immediately prioritize assessing existing operational structures and contractual arrangements to ensure continued compliance with the new regulatory framework. Organisations that undertake this assessment proactively will be better positioned to navigate future regulatory developments while minimising compliance risks.

ONE AFRICA, ONE CLICK: WHAT THE AFCFTA DIGITAL TRADE PROTOCOL MEANS FOR AFRICA

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BY SEUN TIMI-KOLEOLU & EFE OKPARAVERO

Introduction

Last week, Lagos hosted the AfCFTA Digital Trade Forum 2026, bringing together policymakers, regulators, financial institutions, technology companies, legal practitioners, and other stakeholders from across Africa and beyond under the theme, “Digital Trade for a Connected African Market.”

The Forum underscored the growing momentum behind the AfCFTA Protocol on Digital Trade. This Protocol seeks to govern the cross-border exchange of goods, services and other tradeable items that are facilitated by digital platforms and technologies. For more information on this, see our article here.

In light of the discussions and developments emerging from the Lagos Forum, this is an opportune moment to revisit the Protocol, assess the progress made to date, and consider the practical steps African countries and businesses should take to prepare for its implementation.

Changes Since the Adoption of the Protocol by the African Union on 18 February 2024

The most significant development has been the adoption of eight supplementary Annexes on 16 February 2025, transforming the Protocol from a mere framework into a more operational instrument setting out detailed rules for implementation.

Three notable annexes include:

  1. Annex on Rules of Origin: The Rules of Origin (ROO) Annex was introduced to provide clarity on the ‘African origin requirements’ for digital products (mentioned in Article 5 of the Protocol) by introducing a two-tier test. Under these new rules, both the supplying enterprise or platform must be African-owned and operated, and the digital content itself must qualify as African content to enjoy preferential treatment under AfCFTA.
  2. Annex on Cross-Border Digital Payments: This Annex sets out practical measures (improving on Article 15 of the Protocol) to promote secure and efficient digital payment systems across the African market. Such measures include requirements and guidance on interoperable payment infrastructure; electronic know-your-customer (e-KYC) processes; open application programming interfaces (APIs); fraud prevention mechanisms; and regulatory cooperation on anti-money laundering and counter-terrorist financing (AML/CFT).
  3. Annex on Cross-Border Data Transfer: This Annex (mentioned in Article 20 of the Protocol) now creates an adequacy-based system for the free flow of data between countries engaging in digital trade. To fulfill the adequacy requirement, countries are required to maintain a domestic data protection framework which at a minimum meets the standards set out in Articles 5 to 14 of this Annex, such as Personal Data Protection by Design and Default; Data Minimisation; and Competent Data Protection Authorities etc.

Beyond the regulatory framework, there have been continent-wide initiatives such as:

  1. AfCFTA Digital Inclusion and Entrepreneurship Programme (ADIEP): Delivered in partnership with Google, ADIEP is reported to have trained more than 7,500 SMEs across 19 African countries through 25 cohorts between November 2025 and June 2026, equipping businesses with skills in artificial intelligence, cross-border e-commerce and cloud technologies.
  2. Pan-African Payment and Settlement System (PAPSS): PAPSS is expected to reduce the cost, complexity and settlement time of cross-border transactions, supporting one of the Protocol’s central objectives of seamless digital trade across Africa. For more on PAPSS, see here.
  3. Africa Digital Access and Public Infrastructure for Trade (ADAPT): An implementation initiative, launched in November 2025 by the AfCFTA Secretariat, ADAPT designated Nigeria, Kenya and Morocco as its pilot countries. This initiative focuses on strengthening digital public infrastructure through digital identity systems; payment integration; and the digitisation of trade documentation.

What This Means Commercially

Africa’s digital economy is projected to grow from approximately US$180 billion today to US$712 billion by 2050, hence the stakes are quite high. For businesses, the Protocol is expected to deliver:

  1. Greater market access: Harmonised rules will make it easier for businesses to reach customers across Africa without establishing a physical presence in every market, reducing regulatory fragmentation and expansion costs.
  2. Stronger compliance obligations: Businesses will need to enhance data governance, privacy frameworks and cross-border transfer arrangements as digital trade rules become more aligned across jurisdictions.
  3. Improved digital payments: Interoperable payment systems, supported by initiatives such as PAPSS, could reduce transaction costs and improve settlement efficiency, while requiring stronger AML/CFT/KYC compliance from financial institutions and Fintechs.

Ratification Status

Adoption is distinct from entry into force. Under Article 47 of the Protocol and Article 23 of the AfCFTA Agreement, the Protocol enters into force 30 days after the 22nd State Party deposits its instrument of ratification. That threshold has not yet been met, meaning the Protocol remains a framework for future implementation rather than an enforceable regime.

Nigeria has advanced its implementation efforts as a Co-Champion of the Protocol, with the Federal Executive Council approving Nigeria’s ratification on 6 November 2025.

The Protocol, however, does not yet have the force of law within Nigeria, as treaties require domestication by the National Assembly pursuant to Section 12 of the Constitution of the Federal Republic of Nigeria 1999 (as amended).

Recommendations

Going forward, we recommend the following:

A. State Parties should:

  1. Identify gaps or discrepancies between their domestic legal frameworks and the Protocol, take steps to align their laws with the provisions of the Protocol.
  2. Accelerate ratification of the Protocol and incorporate it into their domestic legal frameworks to ensure effective implementation.
  3. Promote regulatory cooperation with other State Parties by working towards greater harmonisation of digital trade regulations, particularly in areas such as data protection, cybersecurity, digital identity, electronic transactions and consumer protection.

B. Businesses should:

  1. Prepare ahead of the Protocol’s entry into force by monitoring ratification and regulatory developments,
  2. Review contracts and data governance practices to align them with the Protocol
  3. Strengthen cybersecurity, AML/CFT/KYC frameworks and digital payment capabilities to meet emerging cross-border digital trade requirements.

Conclusion

The AfCFTA Digital Trade Protocol represents a significant step towards building a better connected and competitive African digital economy. Whilst the Protocol is not yet operational, ongoing implementation initiatives signal a clear shift towards greater digital integration. Governments and businesses that begin preparations now will be better positioned to take advantage of the opportunities created by a single African digital market.

CBN’S DATA LOCALISATION DIRECTIVE – COMPLIANCE CONSIDERATIONS FOR PAYMENT SYSTEM PARTICIPANTS

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BY ADERONKE ALEX-ADEDIPE & PROMISE ITAH

Introduction

On June 15, 2026, the Central Bank of Nigeria (“CBN“) issued a Circular on Introduction of Market Structure Requirements, Data Localisation, Ultimate Beneficial Ownership Disclosure, and Systemic Oversight Measures in the Nigeria Payments System (the “Circular“). Among other regulatory reforms, the Circular introduces a significant data localisation requirement directing all financial institutions and participants facilitating payments within Nigeria—including banks, payment service providers, mobile money operators and other payment participants— (collectively “Payment System Participants”) to ensure that data generated in relation to payment transactions in Nigeria is stored and managed in Nigeria by January 1, 2027.

In this newsletter, we examine the scope of the CBN’s data localisation requirements, their interaction with existing data protection obligations, and some of the key legal, contractual and operational considerations which Payment System Participants should consider in preparation for compliance.

  1. Who does the Circular Apply to?
    The Circular applies to payment transaction data generated through Nigeria’s payments system. Although the Circular does not define the term “payment transaction data”, it intuitively includes information generated in connection with a payment transaction, including the payer’s and beneficiary’s payment details, transaction amounts, payment references, authentication records, settlement and routing information, transaction logs and other related technical data required to process, verify or record a payment.

    The Circular also appears to frame the localisation requirement by reference to payment transaction data generated within Nigeria, rather than the location in which the business is principally domiciled. On this basis, therefore any Payment System Participant processing payment transaction data generated within Nigeria may be expected to comply with this requirement, regardless of their country of domicile.

  1. What are the Key Compliance Requirements?

    a. Local Processing and Storage
    Payment System Participants must ensure that payment transaction data is both stored and managed within Nigeria. This extends beyond maintaining a local copy of data and requires that the primary processing environment, databases, backups and operational control remain on infrastructure located within Nigeria.

    The requirement for payment transaction data to be “managed” in Nigeria may also have implications for administrative activities such as access management, database administration, encryption key management and audit logging, particularly where these functions are performed through offshore infrastructure or personnel.

    b. Technology and Infrastructure
    The Circular is likely to require many Payment System Participants to review their technology infrastructure, particularly where payment services rely on foreign cloud service providers or systems hosted outside Nigeria. Given the requirement for payment transaction data generated within Nigeria to be stored and managed locally, organisations should assess whether their existing technology architecture involves the storage, processing or replication of payment transaction data outside Nigeria. Areas that may require review include:

    • cloud hosting arrangements and the location of servers;
    • disaster recovery and backup systems;
    • analytics and monitoring platforms that process payment data;
    • testing and development environments that use live or production payment data; and
    • third-party APIs and other technology integrations that may transfer payment data outside Nigeria.

Payment System Participants operating hybrid or multiple cloud environments should assess whether payment data is stored, replicated or processed outside Nigeria and, where necessary, implement appropriate technical or operational changes before the compliance deadline.

c. Vendor and Outsourcing Arrangements

Whilst it is commonplace for Payments System Participants to assign data processing and storage activities to third parties, the Circular does not appear to transfer the obligations from Payment System Participants to service providers in such instance. Accordingly, organisations should review their contractual arrangements with cloud service providers, payment processors, application programming interface (API) providers and other technology vendors to assess whether those arrangements support compliance with the localisation requirement. In particular, organisations should consider whether their contracts adequately address:

    • the requirements for payment data to be stored and managed within Nigeria;
    • restrictions on processing payment data outside Nigeria;
    • rights to conduct audits and facilitate regulatory inspections;
    • controls over the use of subcontractors that may have access to payment data;
    • obligations to promptly notify the Payment System Participant of any data breaches or incidents; and
    • termination rights where a vendor is unable to comply with the localisation requirements.
  1. How does the Circular Interact with the Nigeria Data Protection Act (NDPA)?

The Circular complements rather than replaces the NDPA. While the NDPA regulates the processing and international transfer of personal data through recognised transfer mechanisms and safeguards, the CBN Circular imposes an additional regulatory obligation applicable specifically to payment transaction data. Accordingly, compliance with the NDPA alone will not satisfy the CBN’s localisation requirements.

  1. Practical Compliance Steps

Pending any further guidance from the CBN, Payment System Participants should consider taking the following steps to prepare for implementation:

    1. conducting a comprehensive data mapping exercise to identify where payment data is stored, processed and transmitted;
    2. assessing existing cloud and infrastructure arrangements for localisation risks;
    3. reviewing third-party vendor relationships and contractual provisions;
    4. updating internal data governance, outsourcing and information security policies;
    5. establishing board and management oversight of the implementation programme; and
    6. maintaining adequate documentation to demonstrate compliance during regulatory inspections.

Conclusion

The CBN’s payment data localisation requirements represent a significant development in the regulation of Nigeria’s payments ecosystem. By requiring payment transaction data generated within Nigeria to be stored and managed in Nigeria, the Circular appears intended to strengthen regulatory oversight, enhance operational resilience and support the security of Nigeria’s payments infrastructure. For Payment System Participants, the immediate priority will be to assess whether existing technology infrastructure, data governance frameworks and third-party vendor arrangements are consistent with the new localisation requirement. Given the breadth of the obligation and the absence of detailed implementation guidance, organisations that begin assessing their compliance position ahead of the January 2027 implementation date will be better positioned to address any legal, operational or contractual gaps as further guidance emerges.

AN OVERVIEW OF THE CBN DRAFT GUIDELINES ON RING FENCING OF THE OPERATIONS OF ENTITIES: COMPLIANCE OBLIGATIONS FOR FINANCIAL INSTITUTIONS

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BY SEUN TIMI-KOLEOLU & HILLARY OKOROTIE

Introduction

The interconnectedness of financial institutions has created opportunities for operational efficiency. In many cases, financial institutions hold interests in one or more financial service providers. This structure, however, raises some regulatory concerns, including: commingling of consumer funds; and the risk that the financial failure of one entity may adversely impact other closely linked entities.

In response to these concerns, the Central Bank of Nigeria (CBN) on June 11, 2026 issued the Draft Guidelines on Ring-Fencing Operations of Closely Linked Entities in the Nigerian Financial System (the “Proposed Guidelines”). The Proposed Guidelines seek to establish a framework that ensures closely linked entities maintain sufficient independence. In this newsletter we share insights into some of the provisions and requirements of the Proposed Guidelines.

Notable Highlights of the Proposed Guidelines

  1. Enhancing Governance Oversight and Operational Independence

The Proposed Guidelines places emphasis on ensuring that closely linked entities maintain independence in their governance structures, operations, and risk management frameworks. Under the governance requirements, the Board of each closely linked entity is responsible for establishing measures to prevent excessive dependence on related entities. This includes implementing a ring-fencing policy and ensuring effective oversight by the Board Audit Committee of the entity. The Guidelines also limit the number of directors from an entity who may serve on the board of a closely linked entity to no more than twenty percent of the total board composition. In addition, the effectiveness of all implemented policies is to be assessed by an external auditor on an annual basis.

Beyond governance safeguards, the Proposed Guidelines introduce detailed ring-fencing obligations aimed at separating the legal, structural, and operational activities of closely linked entities. Each entity is expected to maintain its own governance, risk management systems, and internal controls, including a separate Board. Transactions between closely linked entities must be conducted on an arm’s length basis, properly documented, and structured in a manner that prevents the failure of one entity from affecting the solvency or critical operations of another.

Where entities rely on shared services within the group, such arrangements must be supported by formal service level agreements that clearly define responsibilities, pricing mechanisms, performance standards, and exit arrangements. Entities are also required to ensure that shared service structures do not compromise their ability to operate independently and prior approval is obtained from the CBN on such arrangements.

  1. Safeguarding Customer Funds and Personal Data

The Proposed Guidelines introduce enhanced safeguards aimed at protecting customer funds and ensuring responsible management of customer information within closely linked entities. Entities are required to maintain clear separation between customer funds and group resources by prohibiting the use of customer funds for intra-group lending, securing group obligations, servicing debts, proprietary trading, or supporting the operational expenses of related entities. Entities are also expected to implement daily reconciliation processes to identify and resolve discrepancies in customer accounts within twenty-four hours.  In addition, entities are required to disclose material intra-group transactions in their audited financial statements and provide customers with access to relevant information regarding their accounts and transactions.

The Proposed Guidelines also introduce data governance obligations, requiring entities to adopt appropriate measures such as encryption, access controls, and periodic audits to preserve data integrity, confidentiality, and security. Where customer or operational data is transferred between closely linked entities, such transfers must be done with the explicit consent of the customer. General data processing including data transfer is required to be done in accordance with the Nigeria Data Protection Act.

  1. Protection of Consumers

To strengthen consumer protection, closely linked entities are required to ensure that the services offered by each entity within the group are clearly distinguishable to customers. Entities must avoid advertising, promoting, or providing services beyond the scope permitted under their respective operating licenses. In addition, complaint management processes are expected to operate independently within each entity to ensure that customer concerns are addressed without influence from related entities. Where services are delivered through or involve another closely linked entity, customers must be provided with clear and adequate disclosure to enable them understand the entity responsible for the service.

  1. Formation of a Non-operating Holding Company

Under the Proposed Guidelines, the CBN requires promoters of closely linked entities to incorporate a non-operating holding company, which will function as a primary investment vehicle. The holding company is to hold interests in the subsidiary entities without participating in their day-to-day operations. The holding company is expected to maintain a minimum capital requirement exceeding the combined minimum capital requirement of its subsidiaries by at least twenty percent. In addition, the holding company must hold controlling interests in at least two financial services providers. Where the group structure includes a commercial bank, merchant bank, or non-interest bank, the applicable CBN regulations governing financial holding companies will continue to apply. For further information on the CBN’s recent draft guidelines on financial holding companies, please refer to our previous newsletter.

Conclusion

In anticipation of the Guidelines, it is advisable that promoters of financial institutions operating closely linked entities begin to assess their existing governance and operational arrangements as follows:

  1. evaluate the composition of the board of each entity to ensure it aligns with the Guidelines;
  2. review intra-group transactions;
  3. ensure that each entity’s terms of service clearly state instances where services will be provided by affiliates;
  4. begin to consider setting up a non-operating holding company for the purpose of holding investments in linked entities in line with the requirement of the Guidelines; and
  5. ensure that each entity provides only services permitted under the scope of its regulatory license.

It is important for every financial institution to pay close attention to the Proposed Guidelines and other applicable regulatory requirements to mitigate compliance risks. Failure to comply may result in penalties, including the revocation of licenses and other sanctions, in accordance with the Banks and Other Financial Institutions Act and other extant regulations.

BEYOND LICENSING – CBN’S DRAFT GUIDELINES FOR FINANCIAL HOLDING COMPANIES IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE AND ENIOLA SOGBESAN

BEYOND LICENSING – CBN’S DRAFT GUIDELINES FOR FINANCIAL HOLDING COMPANIES IN NIGERIA.

Introduction

On 10 June 2026, the Central Bank of Nigeria (CBN) issued an Exposure Draft of the Revised Guidelines for Licensing and Regulating Financial Holding Companies (FHCs) in Nigeria (the “Draft Guidelines”). The Draft Guidelines is the first review of Nigeria’s financial holding company framework since the introduction of the Guidelines for the Licensing and Regulation of Financial Holding Companies in Nigeria 2014 (the “2014 Guidelines”).

The Draft Guidelines seek to:

  1. strengthen the financial resilience of holding companies;
  2. improve group-wide governance and oversight;
  3. clarify ownership and control requirements;
  4. enhance regulatory supervision of financial groups; and
  5. address concerns arising from shared service arrangements and complex group structures.

For existing FHCs, banking groups, investors, and prospective promoters, the Draft Guidelines signal a shift from a regime focused primarily on licensing to one that places greater emphasis on governance, capital adequacy, ownership accountability, and consolidated supervision.

Key Highlights of the Draft Guidelines

  1. Definition and StructureThe Draft Guidelines introduce a clear definition of what constitutes a FHC. Under the Draft Guidelines, a FHC is defined as a non-operating holding company that has two or more direct subsidiaries, one of which must be a bank. The Draft Guidelines further stipulate that a FHC may adopt either a Parent HoldCo or Intermediate HoldCo structure.Under the Parent HoldCo structure, a parent holding company holds direct equity investment in each Nigerian subsidiary, however under the Intermediate HoldCo structure, an intermediate holding company is incorporated for the purpose of holding equity investment in foreign subsidiaries. Accordingly, all existing FHCs are required to notify the CBN of their preferred structure within six (6) months of the effective date of the Guidelines. Also, once the preferred structure is approved by the CBN, such FHC must operate that structure for a minimum of 5 years before it may elect to reverse or alter the approved structure.

    The Draft Guidelines list individuals, non-bank corporate investors and banks [commercial, merchant and non-interest] as eligible promoters of FHCs. This clarification provides greater regulatory certainty for investors considering the use of a holding company structure to expand their presence within Nigeria’s financial services sector.

  1. Permissible and Non-Permissible Activities
    Under the Draft Guidelines, the following activities are permissible for FHCs. These activities include-
    1. holding equity investment in subsidiaries engaged in financial services;
    2. investment in government securities or placement with banks;
    3. with the prior approval of the CBN, raising bonds and debentures;
    4. subject to the prior approval of the CBN, borrowing internationally to capitalize any of its subsidiaries and;
    5. providing either by itself or through any subsidiary, shared services to the group members in respect of facilities, legal and ICT services and other services that may be prescribed by the CBN from time to time.

However, FHCs are prohibited from engaging in the following activities –

    1. investing in entities not involved in financial services;
    2. pledging its shares in any subsidiary as collateral for any purpose;
    3. establishing, divesting or closing any subsidiary without the prior approval of CBN;
    4. interfacing with any customers of its subsidiaries and;
    5. bearing the expense of any of its subsidiaries.
  1. Corporate Governance Requirements
    In addition to the provisions of the Corporate Governance Guidelines for Financial Holding Companies in Nigeria, the Draft Guidelines introduce additional corporate governance rules for FHC’s.Some of these additional corporate governance are –
    1. subsidiaries of FHCs are prohibited from acquiring shares in the FHC and/or other subsidiaries of the FHC;
    2. Nominee companies that are subsidiaries of the FHC are prevented from investing client funds in the FHC or any other subsidiary;
    3. where a FHC loses control in the only or all Nigerian banking subsidiaries for a period that exceeds six (6) consecutive months, its license shall be revoked;
    4. where a FHC that has only two (2) subsidiaries loses control in either subsidiary for a period that exceeds six (6) consecutive months, its license shall be revoked;
    5. No employee of a FHC shall be appointed as a non-executive director in the FHC or any other subsidiary; and
    6. interlocking directorship within a FHC is limited to a maximum of one other company.More importantly, the Corporate Governance rules of the Draft Guidelines are required to be read in conjunction with the Nigerian Code of Corporate Governance 2018, Corporate Governance Guidelines for Financial Holding Companies in Nigeria and where applicable the SEC’s Code of Corporate Governance for Public Companies and Listed Entities in Nigeria.
  1. Intra-Group Transactions, Prudential Requirements & AML/CFT Compliance
    The Draft Guidelines make extensive provisions for intra-group transactions. More specifically, FHCs are prohibited from interfering in the daily operations of their subsidiaries and all transactions with their subsidiaries must be strictly on an arm’s length basis. In particular, the Draft Guidelines expressly prohibit the practice where board members of a subsidiary attend board meetings of the FHC and vice versa.All FHCs are required to maintain a minimum regulatory capital which shall exceed the sum of the minimum regulatory capital of its subsidiaries by at least 20%. In determining what constitutes minimum regulatory capital, the Draft Guidelines provide that only the paid up capital shall be recognized. Additionally, excess capital in one subsidiary shall not be computed to make up for a shortfall in the share capital of another subsidiary.Furthermore, the Draft Guidelines require all FHC’s to comply with all AML/CFT/CPF regulations and to appoint a compliance officer who shall not be below the grade of a senior management staff responsible for filing the required returns with the CBN.

What Should Financial Holding Companies Be Doing Now?

Although the Draft Guidelines remain in draft form, affected institutions should begin evaluating the potential implications of the proposed framework.

Key considerations include:

    1. assessing compliance with the proposed ownership thresholds;
    2. reviewing group structures and foreign subsidiary arrangements;
    3. evaluating shared service models and related documentation;
    4. assessing capital adequacy and funding arrangements;
    5. reviewing governance frameworks and board oversight mechanisms; and
    6. identifying areas that may require regulatory engagement or restructuring.

Conclusion

The Draft Guidelines appears to be more than a routine update of the 2014 Guidelines. It reflects a broader regulatory shift towards stronger governance, clearer ownership structures, enhanced prudential safeguards, and more effective consolidated supervision of financial groups. For financial holding companies and banking groups, the message is clear: regulatory expectations are evolving beyond licensing and corporate structure requirements only.

The practical implication of the Draft Guidelines is that financial holding companies must begin to reassess their governance frameworks, group structures, risk management systems, and compliance functions to ensure alignment with the heightened regulatory standards. As the Central Bank of Nigeria continues to strengthen its supervisory oversight of financial conglomerates, early preparation and strategic compliance will be critical to achieving long-term sustainability and regulatory success.

KEY REGULATORY UPDATE IN NIGERIA: THE CBN FOREIGN EXCHANGE MANUAL 2026

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BY SEUN TIMI-KOLEOLU & OLUWAYEMI IBIRINDE

Introduction

On June 1, 2026, the Central Bank of Nigeria (CBN) implemented the Fourth Edition of the Foreign Exchange Manual (the “2026 Manual”), replacing the Foreign Exchange Manual 2018 (the “2018 Manual”). The 2026 Manual introduces significant changes to currency and trade rules and consolidates various foreign exchange policies and directives into a single framework governing foreign exchange transactions in Nigeria. While the 2026 Manual introduces measures intended to improve access to foreign exchange and facilitate cross-border transactions, it also strengthens regulatory oversight and significantly increases the consequences of non-compliance.

In this newsletter, we highlight some of the key changes introduced by the 2026 Manual and their implications for financial institutions and other stakeholders.

Key Operational Adjustment

Increased Flexibility for Trade and Foreign Exchange Transactions

  1. Import and Export
    Under the 2018 Manual, importers were generally permitted to make advance payments of up to 15% of the Free on Board (FOB) value of physical imports. However, under the New Manual the permissible advance payment threshold for physical imports has been increased to 30% of the Free on Board (FOB) value of the goods. This adjustment provides importers with greater flexibility in negotiating payment terms with foreign suppliers and may reduce procurement challenges associated with international trade transactions.Also, to incentivize international trade and reduce processing hassles, the New Manual mandates that the processing of Form NXP for exporters shall now be entirely free of charge.  These measures are expected to simplify access to foreign currency held in domiciliary accounts and reduce administrative blockages associated with remittance transactions.
  2. Tuition Remittances
    Under the 2018 Manual, International tuition fee remittances were restricted to USD 15,000 per semester, capped at two semesters per year. However, the 2026 Manual raises this threshold to USD25,000 per semester. This provision provides greater clarity regarding the amount that may be accessed through official channels for educational expenses.

  3. Domiciliary Account Holders
    Also, the 2026 Manual removes the Form A requirement for outward remittances for holders of self funded domiciliary accounts.

    Similarly, Domiciliary account holders may now initiate direct telegraphic transfers of up to USD10,000 per day without triggering exhaustive trade documentation.

Export Proceeds and Inbound Remittances

The 2026 Manual provides that all exporters shall ensure that export proceeds are repatriated and credited to their export domiciliary account in the bank where the NXP was established, within 180 days from the Bill of Lading date for oil and gas exports and 90 days for non-oil exports. Failure to adhere to this timeline imposes a penalty of 1% of the amount involved.

Furthermore, the Manual provides that inbound foreign currency transfers shall be paid to beneficiaries in Naira or such other currency as may be determined by the CBN from time to time.

It further provides that cash withdrawals relating to inbound transfers shall not exceed the Naira equivalent of USD200, while amounts above this threshold must be paid through a bank account.

Revised Travel Allowance Framework

CBN previously prohibited cash payments of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) under its 2024 cashless directive. However, Under the 2026 Manual, 25% of the PTA and BTA may now be disbursed in physical foreign currency cash while the remaining 75% must be disbursed through electronic channels such as debit or credit cards. This policy shift aims to balance the digital payment objectives of the apex bank with the practical cash liquidity demands faced by international travelers.

Domestic Transactions and Naira Denomination Requirements

The 2026 Manual reaffirms the requirement that transactions involving goods and services exchanged between Nigerian entities must generally be denominated and settled in Naira.

However, exemptions continue to apply to certain sectors and transactions, including specified activities within the oil and gas, maritime, aviation and free trade zone sectors.

Regulatory Compliance and Enforcement

The New Manual introduces a high-stakes environment for Authorized Dealer Banks (ADBs) and corporate entities:

  1. Financial Sanctions: Banks processing transactions without adequate documentation face a ₦100 million flat fine, plus ₦10 million per affected transaction.
  2. Export Penalties: A 1% penalty applies to exporters failing to repatriate proceeds within the mandatory 90 days (non-oil) or 180 days (oil/gas) windows.
  3. Strict Documentation: The CBN has codified the use of the Electronic Certificate of Capital Importation (eCCI). Capital must be registered within 24–48 hours of inflow; failure to do so may permanently compromise the legal standing of the investment.
  4. Domestic Denominations: All domestic transactions must be priced and settled in Naira. Exemptions are strictly limited to specific sectors, including Oil & Gas, Maritime, Aviation, and businesses within Free Trade Zones.

Conclusion

The 2026 Foreign Exchange Manual represents an important development in Nigeria’s foreign exchange regulatory framework.

On one hand, the Manual provides businesses and individuals with greater flexibility through higher import payment thresholds, increased tuition remittance limits, simplified domiciliary account operations, and reduced export transaction costs. On the other hand, it introduces a more stringent compliance environment characterised by enhanced documentation requirements, stronger reporting obligations, and substantial penalties for non-compliance.

Accordingly, all stakeholders involved should undertake a comprehensive review of their foreign exchange policies, documentation procedures, transaction monitoring systems, and internal controls to ensure alignment with the new framework. Given the scale of the sanctions introduced by the Manual, compliance failures may no longer be viewed as routine administrative lapses but as material regulatory risks with potentially significant financial and operational consequences.

As implementation of the Manual progresses, we expect that further regulatory guidance will be put in place to provide additional clarity on the application of the 2026 Manual provisions.

Key Changes at a Glance

Area 2018 Manual 2026 Manual
Advance Import Payments 15% of FOB Value 30% of FOB Value
PTA/BTA Disbursement More restrictive cash framework 75% Electronic / 25% Cash
Tuition Fee Remittances Lower limits Up to USD 25,000 per Semester
Domiciliary Account Remittances Form A Required Form A Removed
Form NXP Processing Processing Fees Applicable Free of Charge
Documentation Violations Lower sanctions ₦100m + ₦10m per affected transaction
Export Proceeds Repatriation Existing obligations 1% penalty for non-compliance
Inbound Money Transfers Less detailed framework Enhanced payment and withdrawal restrictions

 

CBN CASH POOLING REFORM: IMPACT ON FOREIGN INVESTMENT AND THE OIL AND GAS SECTOR IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE & PROMISE ITAH

Introduction

On 25 March 2026, the Central Bank of Nigeria (CBN) issued a circular on Removal of Cash Pooling Requirements for International Oil Companies (the “Circular”) removing the restrictions previously imposed on the repatriation of export proceeds by International Oil Companies (IOCs). Under the new framework, IOCs may now repatriate up to 100% of their export earnings immediately, reversing the 2024 “50/50 Rule”, which required a portion of export proceeds to remain in Nigeria for a specified period before repatriation.

In this newsletter, we briefly examine the background to the policy, the recent changes introduced by the CBN, some key documentation required by banks, and the implications for companies operating in Nigeria’s oil and gas sector.

  1. What is “Cash Pooling”?

    Cash pooling is a treasury arrangement used by multinational groups to manage the cash balances of their subsidiaries on a consolidated basis. Rather than leaving excess funds idle in separate accounts, the group centralises those funds and deploys them where they are most needed. This improves liquidity management within the group, enhances operational efficiency, and reduces reliance on external financing.

  1. The 2024 Policy Shift: The 50/50 Rule

    Before February 2024, IOCs operating in Nigeria could generally repatriate their US dollar export proceeds offshore, subject to local content requirements. However, due to foreign exchange liquidity pressures in early 2024, the CBN introduced restrictions permitting only 50% of export proceeds eligible for repatriation to be transferred immediately (or sold in the local foreign exchange market), while the remaining 50% had to be retained in Nigeria for at least 90 days.

    These measures were designed to increase foreign exchange liquidity and support stability in Nigeria’s foreign exchange market.

  1. The 2026 Circular: Restoration of Full Repatriation Rights

    As part of its efforts to further deepen and liberalise the Nigerian foreign exchange market, the CBN, through the Circular, removed the restrictions introduced in 2024. As a result, IOCs may now repatriate up to 100% of their export proceeds immediately upon receipt, subject to compliance with applicable documentation and reporting requirements. The previous 90-day retention requirement has been abolished, allowing companies greater flexibility in managing their export earnings and global treasury operations.

  1. Required Documentation
    Although the repatriation restrictions have been removed, Authorised Dealer Banks (ADBs) remain responsible for ensuring that all transactions are properly documented and reported to the CBN.

    Key documents required for processing repatriation requests may include:

  1. Evidence of export: Bills of lading, commercial invoices, and other documents evidencing the quantity, quality, and value of the exported crude oil.
  2. Clean Certificate of Inspection (CCI): Documentation issued by the relevant inspection authority confirming the quality and volume of the shipment.
  3. Evidence of foreign exchange inflow: Bank statements or confirmations showing that the export proceeds have been received into the IOC’s domiciliary account in Nigeria.
  4. Cash pooling agreement: The executed agreement between the Nigerian subsidiary and its parent company setting out the terms of the group’s cash pooling arrangement.

    These requirements are intended to promote transparency and ensure regulatory oversight of cross-border fund transfers.

  1. Key Market Impact:

    The policy change is expected to have important implications for Nigeria’s oil and gas sector.

  1. Foreign Investment

    The removal of the repatriation restrictions is expected to enhance investor confidence by assuring foreign investors and lenders that export proceeds can be accessed and transferred without delay. This may improve the attractiveness of Nigeria as a destination for upstream oil and gas investment, particularly for capital-intensive projects such as deepwater developments.

    In addition, the revised framework simplifies treasury operations for IOCs by eliminating the administrative burden associated with the previous 90-day retention requirement.

  2. Domestic Market Considerations

    The policy may also influence foreign exchange flows within the domestic market. While a greater proportion of export proceeds may now be transferred offshore immediately, the CBN appears to have concluded that prevailing market conditions can accommodate the change without undermining foreign exchange liquidity.

    The continued documentation and reporting obligations imposed on ADBs are expected to support regulatory oversight and help maintain market transparency.

Conclusion

The removal of the cash pooling repatriation restrictions marks a shift in Nigeria’s foreign exchange policy for the oil and gas sector. By restoring immediate access to export proceeds, the CBN has provided IOCs with greater flexibility in managing liquidity and participating in global cash pooling arrangements. For Authorised Dealer Banks, the focus shifts from monitoring retention periods to ensuring compliance with documentation and reporting requirements. Overall, the CBN expects the revised framework to strengthen investor confidence and support a more efficient and competitive foreign exchange market.

 

This newsletter provides a general overview of recent policy changes for informational purposes and does not constitute formal legal or financial advice. Because CBN guidelines can evolve, we recommend consulting a qualified professional regarding how these updates specifically apply to your business operations.

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.

DECODING THE NCC’S DRAFT BUSINESS RULES FOR MOBILE VIRTUAL NETWORK OPERATORS IN NIGERIA

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BY SEUN TIMI-KOLEOLU AND HILLARY OKOROTIE

Introduction

The Nigerian Communications Commission (“NCC”) recently published the Draft Business Rules for Mobile Virtual Network Operators in Nigeria (the “Draft Rules”), aimed at establishing a comprehensive regulatory framework for the operation of Mobile Virtual Network Operators (“MVNOs”) in Nigeria. The Draft Rules aim to promote transparency in the relationships between MVNOs, Host Network Operators (“HNOs”), and service delivery. The Draft Rules outline key operational obligations, compliance requirements and standards intended to guide the conduct of MVNOs within the Nigerian telecommunications sector.

In this newsletter, we share insights into the impact of the Draft Rules on the operations of MVNOs.

Onboarding and Integration of MVNOs

The Draft Rules establish a structured onboarding and integration framework aimed at minimizing delays in the negotiation, onboarding, and integration processes between MVNOs and HNOs. Under the Draft Rules, every HNO is required to maintain an approved Reference Onboarding Information Pack containing key information and requirements relevant to prospective MVNO partnerships. Upon receiving a request from a licensed MVNO, the HNO is required to acknowledge receipt within ten days and, within twenty days of receiving the required documentation from the MVNO, confirm its readiness to proceed together with an indicative implementation timeline. Where an HNO declines a hosting request, it is required to provide the MVNO and the NCC with a rationale for the refusal within the same twenty days period.

Furthermore, upon confirmation of readiness to proceed, the parties are required to commence negotiations and establish a joint onboarding working group within ten days to oversee implementation. The Draft Rules also prohibit HNOs from unjustifiably and indefinitely delaying the onboarding process. The Rules further provide that commercial and technical agreements relating to onboarding and integration must be concluded within one hundred and twenty days from the date of the formal hosting request.

Commercial Agreements between MVNOs and HNOs

Under the Draft Rules, parties are required to submit any executed commercial agreement relating to MVNO services to the NCC within fourteen days of execution, or within such timeline as may be prescribed by the NCC. In addition, the Draft Rules also impose ongoing obligation to notify the NCC in respect of amendments to existing agreements. Specifically, where parties make changes relating to pricing, onboarding models, numbering arrangements, interconnection architecture, SIM ownership, eSIM enablement, customer migration or termination rights, the NCC must be notified within thirty days of executing such amendments and prior to the implementation of the changes.

The Draft Rules further require that commercial agreements clearly identify the party responsible for key operational obligations, including Know Your Customer (“KYC”) verification, activation approvals, subscriber complaint management, and other compliance responsibilities relating to eSIM services.

Furthermore, existing commercial agreements between MVNOs and HNOs are required to be reviewed in line with the provisions of the Draft Rules within thirty days from the commencement date of the Draft Rules. This transitional period is intended to ensure that existing MVNO operations and contractual arrangements are aligned with the regulatory requirements introduced by the NCC.

The Dispute Resolution Framework Under the Draft Rules

The Draft Rules also introduce a structured dispute resolution mechanism aimed at preventing prolonged commercial and technical disagreements between MVNOs and HNOs. Under the Draft Rules, every commercial agreement must contain a clearly defined escalation ladder, for example technical disputes affecting onboarding of users or service continuity must first be escalated between designated technical leads within five days, while unresolved commercial disputes are to be escalated to executive representatives within ten days.

Where parties are unable to resolve the dispute, either party may refer the matter to the NCC. Importantly, the Rules prohibit retaliatory measures pending the duration of any dispute such as disruption of the service.

Consumer Protection and Quality of Service Obligations

The Draft Rules prohibit HNOs from unfairly limiting or restricting MVNO network traffic, this is aimed at ensuring fair treatment and quality service delivery for MVNO subscribers operating on host networks.

In addition, MVNOs are required to maintain transparent tariff structures, accessible customer complaint channels and effective dispute resolution mechanisms. The Draft Rules also place primary responsibility for subscriber relationships and customer care obligations on MVNOs, notwithstanding their reliance on HNO infrastructure. In delivering their services, MVNOs are further required to comply with the consumer protection standards and regulatory requirements prescribed by the NCC.

Conclusion

The Draft Rules seek to address some of the challenges that affect MVNO operations, particularly onboarding delays, infrastructure access, commercial uncertainty, disputes over operational responsibilities and other operational aspects of MVNOs. When finalized, these Rules will represent a significant step towards establishing a more structured and transparent framework for MVNO operations in Nigeria.

An aspect of the Draft Rules that can be improved upon is with respect to the regulation of quality of service and traffic management. We recommend that the NCC includes detailed guidelines to monitor the quality of service provided by HNOs and traffic management practices with a view to promoting fair treatment of all MVNOs.

For further details on MVNO licensing framework and the various tiers of MVNO licences, please refer to our previous newsletter.

NIGERIA CAPITAL MARKET REGULATORY UPDATE: SEC MANDATES REGISTRATION OF COLLATERAL MANAGEMENT COMPANIES, WAREHOUSE OPERATORS AND WAREHOUSES

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BY ADERONKE ALEX-ADEDIPE & OMODELE FATODU

On 11 May 2026, the Securities and Exchange Commission (the “Commission”) issued a circular clarifying the registration requirements applicable to certain capital market operators.

The Circular applies to entities involved in the storage, management and facilitation of commodities used in structured trade financing or warehouse receipt arrangements. In particular:

  • Collateral Management Companies (“CMCs”);
  • Warehouse Operators; and
  • Warehouses linked to commodity exchanges or electronic warehouse receipt systems.

Although these categories of operators were already recognised and regulated under the SEC Rules on Commodity Exchanges and Trading Platforms; Warehouse Receipt Systems; and Collateral Management and Warehousing Operations, the Circular appears intended to reinforce compliance with the existing registration regime and clarify that entities operating under informal, transitional or unregistered arrangements are not exempt from regulatory requirements.

The Commission notes that entities currently carrying on any of the relevant activities under such informal or transitional arrangements are also required to apply for registration. Accordingly, the Commission has directed all existing and prospective entities within the scope of the Circular to submit complete registration applications within 90 days from the date of the Circular (the “Registration Deadline”).

The SEC further clarified that compliance will only be recognised upon submission of a complete application within the Registration Deadline. Consequently, incomplete applications, or failure to respond to requests for additional information within the stipulated timelines, will not satisfy the registration requirement.

In view of this Circular, we have set out below a brief overview of the registration and minimum capital requirements applicable to CMCs and Warehouse Operators:

S/N Capital Market Operator Registration Documents Minimum Capital
1. Collateral Management Companies
  • Duly completed SEC Forms 2, 2D and 3
  • Minimum of three sponsored individuals, including a Managing Director and Compliance Officer;
  • Certificate of Incorporation, Memorandum and Articles of Association, and CAC Status Report;
  • Company profile, organisational structure and details of principal officers;
  • Evidence of payment for shares allotted to shareholders;
  • Evidence of financial and technical capacity to carry out collateral management functions;
  • Latest audited accounts or statement of affairs; and
  • Valid fidelity insurance bond covering at least 20% of the minimum paid-up capital.
 Tier 1 (Local/Regional Operators) – ₦200,000,000

Tier 2 (National/International Reach) – ₦500,000,000

 
2. Warehouse Operators
  • Duly completed SEC Forms 2, 2D and 3;
  • Minimum of three sponsored individuals, including a Managing Director and Compliance Officer;
  • Certificate of Incorporation, Memorandum and Articles of Association, and CAC Status Report;
  • Evidence of adequate storage facilities and appropriate security arrangements;
  • Evidence of requisite weighing and quality control equipment;
  • Evidence of comprehensive insurance coverage for facilities, equipment and commodities;
  • Evidence of suitable operational infrastructure, including loading and unloading systems;
  • Standard Operating Procedures (SOPs) for warehousing operations;
  • Latest audited accounts or statement of affairs; and
  • Valid fidelity insurance bond covering at least 20% of the applicable minimum capital requirement.
 ₦500,000,000

 

Conclusion

The Circular reflects the Commission’s intention to strengthen regulatory oversight, transparency and accountability within the commodities trading and warehouse receipt ecosystem. By requiring all relevant operators to formally register, the Commission is likely seeking to ensure that only entities with adequate operational capacity, governance structures and financial standing participate in the market and remain subject to direct regulatory supervision.

Accordingly, entities operating within this sector should assess whether their activities fall within the scope of the Circular and take immediate steps to commence or regularise their registration with the Commission where applicable.

KEY REGULATORY UPDATE IN THE POWER SECTOR: NERC MINI-GRID REGULATIONS 2026

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BY SEUN TIMI-KOLEOLU AND MARK IMONITIE

Introduction

On 10 April 2026, the Nigerian Electricity Regulatory Commission (NERC) published updated Mini-Grid Regulations to accelerate electricity access for communities that are unserved or underserved by the national grid.

The Mini‑Grid Regulations 2026 (“New Regulations”) replaces the Mini-Grid Regulations 2023 (“Previous Regulations”) and align with recent power-sector reforms.

In this newsletter, we examine some of the key changes introduced by the New Regulations.

  1. Expanded Capacity Threshold

The Previous Regulations permitted for a maximum capacity of 1 MW, because the technology and market for mini-grids at the time was nascent in Nigeria.  The New Regulations now allow for the provision of mini-grids at a higher capacity of up to 5 MW for isolated mini-grids and 10 MW for interconnected mini-grids.

Gleaning from the provisions of the regulations, isolated mini-grids may be described as mini-grids which operate independently from the distribution network and are well suited for designated unserved areas. On the other hand, interconnected mini-grids are linked to the distribution network and suitable for commercial purposes.

With increased capacity, mini-grid providers can now supply power for commercial uses, such as cold storage, agro-processing, and small-scale manufacturing. This aligns with national programmes such as the Distributed Access through Renewable Energy Scale‑up (DARES) and other electrification initiatives.

  1. Transparent and Defined Administrative Processes

The New Regulations more clarity to administrative processes than what existed under the Previous Regulations. The Regulations provide that systems below 100 kilowatts (kW) may be registered with NERC, while systems above 100 kW require a permit from NERC. The New Regulations provide that applications for permit must be processed by NERC within 30 business days.

  1. Improved Monitoring and Reporting Framework

The New Regulations require operators to file annual reports for systems below 1MW and quarterly reports for systems above 1MW. This capacity‑based differentiation ensures that oversight by NERC is proportionate, and greater scrutiny is applied to larger, higher‑value projects.

The New Regulations provide that all mini‑grid and interconnected mini‑grid developers must submit mandatory milestone reports throughout a project lifecycle. Milestones include: financial close; procurement of major equipment; start of site works; completion of construction; commissioning; energization; and and entry into commercial operation.

In addition, by the New Regulations, NERC is empowered to standardize reporting datasets and tailor approval requirements to project type, installed capacity, interconnection status, and market relevance. NERC may also publish aggregated sector data on permits, registrations, project progress, and operational performance.

These measures introduced by the New Regulations strengthen transparency, compliance monitoring, and creates a foundation for data‑driven electrification planning. With enhanced monitoring, evaluation, and public reporting, regulators, policymakers, and investors will have clearer visibility into sector performance, thereby enabling better and more informed decisions.

  1. Risk-based Environmental Compliance Framework

The New Regulations adopt a practical, risk‑based approach to environmental compliance for mini‑grid projects. For solar and battery‑supported systems up to 10 MW, developers need to only complete environmental screening and prepare an Environmental and Social Management Plan (ESMP) rather than a full Environmental and Social Impact Assessment (ESIA). Projects with greater potential impact such as hydro, biomass, thermal generation, or developments in environmentally sensitive areas remain subject to a full ESIA.

Operators are required to comply with all applicable environmental laws and the New Regulations empower NERC to suspend or revoke permits for non‑compliance.

This differentiation in compliance requirement, addresses barriers such as high cost, long timelines, and procedural complexity which have hitherto hindered entry for developers serving rural and underserved communities. By simplifying requirements for low‑risk projects, the New Regulations reduce upfront transaction costs, shorten development timelines, and remove a major bottleneck to project delivery.

  1. Clear Dispute Resolution Mechanism

The New Regulations establish a defined, time‑bound dispute resolution pathway, replacing the vague wording in the Previous Regulations that left parties without a clear process for dispute resolution.

Under the New Regulations, parties must first seek resolution through negotiation within 30 days (extendable by mutual agreement). If negotiation fails, disputes are referred to the regulator for final adjudication. This structured sequence introduced by the New Regulations, promotes timely, predictable, and enforceable dispute resolution.

Conclusion

The New Regulations mark a pivotal shift whereby mini-grids are no longer seen as peripheral infrastructure but as being central to Nigeria’s electrification goals. By making mini-grids more scalable, bankable, and integrated, the New Regulations pave the way for a more resilient electricity market that can tackle both access gaps and ongoing supply challenges.