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AI REGULATION IN THE EU AND NIGERIA: AI WATERMARKING

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BY SEUN TIMI-KOLEOLU & OLUWAYEMI IBIRINDE

INTRODUCTION

On 2 August 2026, the transparency obligations under the European Union Artificial Intelligence Act (the “EU AI Act”) became applicable. These include requirements under Article 50 for certain AI-generated or manipulated content to be identifiable through machine-readable markings and, in specified circumstances, disclosed to users.

The effect of these developments’ cuts across global AI use and will also have implications for Nigerian businesses, particularly those using AI services provided by global technology companies or operating across borders. This is underscored by the participation of about 190 organisations, including major AI providers such as Anthropic, Google, Meta, Microsoft, Mistral and OpenAI, in the European Commission’s Code of Practice on Transparency of AI-Generated Content.

We therefore consider it important to highlight this development and its implication for Nigerian businesses, while examining Nigeria’s existing regulatory framework for AI use and the need for a more comprehensive AI governance framework.

WHAT ARE THE EFFECTS OF THE EU AI WATERMARKING REQUIREMENT?

The introduction of AI-generated content marking and disclosure requirements has several implications for businesses as follows:

  1. Cross-border Application: The EU AI Act applies to any AI tool or output used in the European Union, even for companies operating from outside the EU. Accordingly, Nigerian companies providing AI services or outputs for use in the EU may be subject to applicable transparency requirements, including the requirement to watermark AI-generated content.
  2. Dilution of Original Ownership: Users both inside and outside the EU using AI tools need to be aware that once original human ideas are fed into an AI system, the resulting output gets watermarked and may make it difficult for the creator to prove ownership of their underlying intellectual property or demonstrate that the core work was human authored
  3. Consumer protection and fraud prevention: It is expected that, with the use of AI watermarks, AI-generated content will be more readily identifiable, and therefore support the identification of deepfakes, impersonation, fraudulent content, and other forms of deception.

HOW IS AI REGULATED IN NIGERIA

Nigeria has no single comprehensive AI statute like the EU AI Act. AI-related obligations instead sit within existing laws and other AI governance structures as follows:

  1. Nigeria Data Protection Act (NDPA) Data protection:
    The key regulation in Nigeria governing the use of AI is the Nigeria Data Protection Act, 2023 (NDPA). While Nigeria has no comprehensive AI-specific law comparable to the EU AI Act, the NDPA regulates AI use where personal data is involved. This is particularly important where businesses use foreign AI providers, as these services may involve the processing or transfer of personal data outside Nigeria. Businesses should therefore assess their AI tools for compliance with the NDPA and applicable cross-border data protection requirements.It also clearly restricts and places safeguards around decisions made solely through automated processing where such decisions may have legal or similarly significant effects on individuals, reinforcing the need for appropriate human oversight and transparency.
  2. Federal Competition and Consumer Protection Act (FCCPA)
    Another regulation relevant to the use of AI in Nigeria is the Federal Competition and Consumer Protection Act, 2018 (FCCPA). The FCCPA sets clear consumer protection requirements that apply to AI-driven marketing, pricing, and other consumer-facing activities. It prohibits false, misleading, or deceptive representations and unfair contract terms. AI-generated content, recommendations and decisions must comply with these consumer protection standards.
  3. SEC Rules on Robo-Advisory Services
    Similarly, the SEC Rules on Robo-Advisory Services regulate the use of automated, algorithm-based tools to provide investment advice. The Rules require robo-advisers to identify and mitigate algorithmic bias and clearly disclose to clients how the technology works, including its assumptions, limitations and associated risks. Therefore, where AI is used to provide investment advice, compliance with these requirements is mandatory.
  4. Copyright Act, 2022
    The Copyright Act, 2022 protects original works created by human authors but does not expressly address AI-generated works or determine authorship where content is created by AI. Businesses using AI-generated content should therefore consider copyright ownership and infringement risks, particularly where AI tools generate or reproduce existing protected works.
  5. The National Artificial Intelligence Strategy
    The National Artificial Intelligence Strategy (NAIS) provides the policy foundation for responsible, ethical and inclusive AI adoption in Nigeria. While it does not create binding AI-specific obligations in the same manner as the EU AI Act, it provides a framework for the development of Nigeria’s AI governance and regulatory approach.
  6. The National Digital Economy and E-Governance Bill, 2025
    The National Digital Economy and E-Governance Bill, 2025, which is not yet law, proposes a more comprehensive framework for AI governance in Nigeria. It includes provisions on AI risk classification, monitoring of AI-related risks, accreditation of independent AI system auditors, inspections, audits and enforcement. If enacted, the Bill could significantly strengthen Nigeria’s regulatory framework for AI and move the country closer to a dedicated AI governance regime.Taken together, these instruments demonstrate that Nigeria currently regulates aspects of AI use through existing laws and emerging policy frameworks but does not yet have specific requirements for AI watermarking comparable to those under the EU AI Act.

CONCLUSION

The transparency requirements under the EU AI Act marks a significant shift towards more accountable and traceable AI use, with implications extending beyond the EU as global AI providers adapt their products and compliance practices to emerging regulatory standards. While Nigeria already has several laws and policy instruments that regulate aspects of AI use, it would benefit from a comprehensive AI governance framework that brings these obligations together, provides greater regulatory certainty and addresses AI-specific risks.

As the regulatory landscape evolves, it is important for businesses to take a proactive approach to AI compliance by applying appropriate human oversight and seeking professional advice when adopting or deploying AI technologies.