Following the emergence of online betting, the Nigerian gambling industry has experienced extraordinary growth in the past few years. This also followed the legalization of some forms of gambling in the Nigerian Criminal Code Act, 1990. The industry has therefore continued to attract both local and international investors due to its huge potentials.

Gambling activities in Nigeria broadly include sports betting, lottery, gaming, casinos, lotto, etc. In order to legitimately operate any type of gambling activity in Nigeria, an operator must first obtain the appropriate licenses from the regulatory authorities. Using Lagos State as a case study, this article explains the regulatory requirements and processes involved in obtaining sports betting license in Lagos State.

Regulatory Framework

Previously, a sports betting company wishing to operate within Nigeria required both a federal license issued by the National Lottery Regulatory Commission (NLRC) and a state licence from the state in which it wishes to operate from. At the federal level, the NLRC, established under the National Lottery Act, 2005, served as the primary body overseeing gaming activities across the country. Concurrently, state governments regulated sports betting within their jurisdictions through their respective regulatory authorities. However, a recent landmark judgment in Lagos State Government & Ors v. Attorney General of Federation and Anor with suit number SC/1/2008 delivered by the Supreme Court of Nigeria in November 2024, has changed this position by nullifying the National Lottery Act, 2005 and declaring that the National Assembly lacks the jurisdiction to legislate on matters related to lotteries and games of chance, as such powers reside exclusively with state Houses of Assembly to legislate on lottery and gaming within their respective states. Thus, the import of the Supreme Court judgement is that the National Lottery Act, 2005 now applies only within the Federal Capital Territory (FCT) where the National Assembly has the legislative power to enact laws on lottery and gaming matters. Therefore, lottery and sports betting companies are now only required to obtain licenses solely from the state(s) in which they intend to operate.

In Lagos State, the regulatory body responsible for controlling and regulating sports betting activities is the Lagos State Lotteries and Gaming Authority (LSLGA). Sports betting companies must obtain the requisite license from LSLGA before commencing operations in the state.

With a large internet penetration and the rise of online betting, in practice, a sports betting company can obtain a license in one state and be accessible online in another state thereby avoiding the need to apply for licences in multiple states.

Requirements for Obtaining a Sports Betting License/Permit from Lagos State Lotteries and Gaming Authority (LSLGA):

As stated above, the regulatory body responsible for issuing sports betting license/permit in Lagos State is the Lagos State Lotteries and Gaming Authority (LSLGA). The requirements for obtaining a sports betting permit from the LSLGA include:

1. Company Incorporation: The first step towards obtaining a sports betting license from the LSLGA is the incorporation of a local company in Nigeria with the Corporate Affairs Commission (CAC) as mandated under the Companies and Allied Matters Act, 2020 (CAMA). This is a compulsory regulatory requirement for any company wishing to do any business in Nigeria.
2. Share Capital: The company must meet the minimum share capital requirement of N20,000,000.00 (Twenty Million Naira) as prescribed by the LSLGA. Please note however that the CAC now requires that any company with foreign participation must have a minimum share capital of N100,000,000 (One Hundred Million Naira). If the company being set up has foreign participation either by shareholding or directorship, the minimum share capital from a CAC point of view must therefore be N100,000,000. Also note that this amount is merely the minimum value of the company shares at the time of registration and the shares do not have to be fully paid up.
3. Financial and Technical Ability: The company must demonstrate the financial and technical ability to operate a sports betting business. The applicants must demonstrate financial stability and viability by submitting audited financial statements, proof of sufficient capital, and a detailed business plan. Regarding the technical ability, operators must invest in a robust technical infrastructure for their sports betting platform, including secure servers, data protection, and reliable payment processing systems. Compliance with international online security standards is also very essential.
4. Applicant companies cannot be wholly-owned by foreigners as Nigerians are required to hold at least fifteen percent (15%) of the shares in foreign-owned companies to fulfil local content requirement and promote local participation.
5. Payment of application and license/permit fees.

Procedures for Obtaining a Sports Betting License/Permit from LSLGA:

The procedure for obtaining a sports betting license from the LSLGA is divided into three stages as follows: the application stage, the approval in principle stage and the final or grant of license stage.

Application Stage:

At this stage, an application for a sports betting license/permit is to be submitted to LSLGA together with the following documents:

1. A letter of intent.
2. Evidence of payment of non-refundable application fee
3. Company incorporation documents issued by CAC (Certificate of Incorporation, status report showing details of directors, minimum share capital and registered address and MEMART).
4. Detailed business plan/proposal on the sports betting scheme which should provide information and documentation on the following:
   1. Business structure information such as address of the registered office, branches, outlets and planned locations, particulars, profile and relevant qualification(s) of directors and key personnel, Tax Clearance Certificate (“TCC”) of Director(s) in the last three (3) years, description of operations and management structure, a sports betting industry analysis that clearly demonstrates an understanding of the sports betting industry, marketing and distribution plans, address of planned location, branches and outlet(s). Please note that these must be lock-up shops – kiosks and mobile vendors are not allowed.
   2. Proposed sports betting operations including details of planned games, relevant sports activities, approximate odds to be used, Operator’s game rules and participants’ Code of Practice, Number and frequency of sports/games and prizes and price structure.
   3. Financial projections including management account, company’s bank statement of the preceding year to support financing plans, five years projected profit and loss account, balance sheet, cash flow analysis which should provide for the annual licence fee and monthly gaming tax, capital investments, etc.
   4. Hardware and software information including servers, routers, firewalls, operating systems and database application specification.
   5. General information on the architectural diagram clearly illustrating the technical operational flow, the proposed platform (whether self-host or cloud based) and the contact information of the hosting company if cloud based.
   6. Detailed information about the applicant’s bookmaker, betting sites and technical consultants, proposed technical topography including a schematic diagram clearly illustrating the technical operational flow.

Due diligence will be conducted on every application to determine the suitability of the applicant for the license within a period of 10 to 15 working days. The applicant will also be required to make a presentation before the LSLGA to justify the grant of the license as part of the application process. Upon the satisfactory fulfilment of the requirements of the application stage and payment of the license fee, an Approval in Principle (AIP) will be granted.

Approval-in-Principle (AIP):

After a successful presentation and upon a satisfactory fulfilment of the pre-approval requirements, the applicant must pay a license fee currently N50,000,000.00 (Fifty Million Naira). Once this payment is made, the applicant is issued an Approval in Principle (AIP). An AIP serves as a temporary licence allowing the company to operate for a period not exceeding three (3) months (90 days) during which the company will be excused from paying tax.  The AIP is typically granted with specific conditions that must be met before the issuance of a final or substantive license.

Grant of License:

Upon the expiration of the AIP and the applicant’s fulfilment of all stipulated conditions set on the AIP, a final license is issued to the applicant. This license is valid for one (1) year from the date of issuance and is renewable annually for a fee currently N10,000,000.00 (Ten Million Naira).

Post-Licensing Obligations

Following the issuance of the license and commencement of operations, licensed operators are required to fulfill certain post-license obligations, including the remittance of a monthly gaming tax of 2.5% of their sales revenue to the regulatory body. Additionally, licenses must be renewed annually upon expiration to maintain operational compliance. There are also other tax obligations for e.g. income tax, Value Added Tax (VAT), company income tax, etc. that are payable by the company either to the state revenue authority or the Federal Inland Revenue Services. The licensed operators are also required to make the filings of their annual returns with the CAC to ensure their regulatory compliance.

Conclusion

With the rise of online betting, the Nigerian gaming industry has experienced extraordinary growth in recent years. Previously, sports betting was regulated at both the federal and state levels in Nigeria. However, a recent landmark Supreme Court judgment in November 2024 clarified that sports betting companies are now only required to obtain licenses exclusively from the states where they intend to operate as the licensing and regulatory powers and oversight of the NLRC is now limited only to the Federal Capital Territory. Upon obtaining the license, operators must comply with all post-license obligations, including remittance of fees to the regulatory body, renewal of license, payment of taxes, filing of annual returns with the CAC, etc.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Practical Tips on How to Obtain Sports Betting License in Lagos State, Nigeria first appeared on Goldsmiths Solicitors.

With Nigeria being a leading Fintech hub in Africa, we have in last few years witnessed a surge in online money lending service. The operation of money lending business in Nigeria is regulated by the Money Lenders Laws of the various states in Nigeria, the Federal Capital Territory (FCT) and the Federal Competition and Consumer Protection Commission (FCCPC). There are 36 states and a Federal Capital Territory (FCT) in Nigeria and an operator must obtain the money lenders license from the regulatory authority in the relevant state(s) in which they wish to operate or the FCT before commencing operations. It is important to note that where the money lending business is to be carried on in more than one state, a money lenders license must be obtained in each state in which the money lending business is to be carried on. It is a criminal offence to engage in the business of money lending without a money lenders license.

In Lagos State, the money lender’s license is granted by the Lagos State Ministry of Home Affairs. Using Lagos State as a case study, this article explains how to obtain the money lenders license in Lagos State and the digital money lenders registration with the FCCPC. The processes and procedures are similar in other states.

Requirements for Money Lenders License in Lagos State

The Lagos State Money Lenders Law is the principal law which regulates money lending in the state and the regulatory authority responsible for issuing licenses is the Lagos State Ministry of Home Affairs. Money lenders license can only be issued to corporate entities in Lagos state. Thus, any potential investor interested in money lending business is required to first incorporate a company in Nigeria.

The requirements for processing and obtaining a money lenders license in Lagos state are as follows:

1. Incorporation documents including company certificate of incorporation, Memorandum and Articles of Association, etc. of the applicant company issued by the Corporate Affairs Commission (CAC).
2. The minimum share capital of the applicant company is N20,000,000 (Twenty Million Naira). However, where the company has foreign participation, the minimum share capital requirement is N100,000,000 (One Hundred Million Naira).
3. Police Clearance Certificate of two directors of the applicant company.
4. Three (3) years Tax Clearance Certificate (TCC) for the company and for at least two (2) directors.
5. Reference letter from the applicant’s bankers in Nigeria.
6. Proof of payment of the application and processing fees.

The Procedure for Obtaining Money Lender’s License in Lagos State

The procedure for obtaining the money lenders license in Lagos State is initiated with an application to the Chief Magistrate of the Magistrates Court within the magisterial district where the lending company is located and ends with the issuance of a money lenders license to the applicant. The procedure for obtaining the license is highlighted below:

1. An application in the prescribed form is made to the Chief Magistrate of the Magisterial District where the applicant company is located.
2. The Chief Magistrate issues a Money Lenders Certificate (Form B) and a letter addressed to the Permanent Secretary of the Lagos State Ministry of Home Affairs to the applicant company confirming due diligence of the applicant company and recommending the issuance of a money lenders license.
3. An application is made to the Nigerian Police for the issuance of Police Clearance Certificates for two directors of the applicant company.
4. A formal application is made to the Lagos State Ministry of Home Affairs for money lender’s license accompanied with the following documents:
5. Form B and the Letter of Recommendation issued by the Chief Magistrate.
6. Incorporation documents of the applicant company.
7. Three years Tax Clearance Certificate (TCC) of the applicant company and of at least two directors.
8. Police Clearance Certificates for two directors of the applicant company.
9. A reference letter from a commercial bank being the bankers of the applicant company in Nigeria.
10. Proof of payment of the application and processing fees.
11. A physical inspection of the applicant company’s place of business will be carried out by the Lagos State Ministry of Home Affairs upon submission of the application.
12. A Money Lenders License is issued to the applicant company by the Lagos State Ministry of Home Affairs where it is satisfied that all the statutory requirements have been met and the applicant company is considered fit and proper to act as a money lender.

Validity and Renewal of Money Lender’s License in Lagos State

Money lenders license is valid in Lagos State for a period of one year and therefore subject to renewal every subsequent year. To process the renewal of the license, the licensed operator is required to obtain a new Money Lenders Certificate (Form B) from the Chief Magistrate accompanied with the expired license, updated tax clearance certificate and evidence of payment of the renewal fee. Upon being satisfied that the requirements continue to be met, a renewed license is issued.

Registration with the Federal Competition and Consumer Protection Commission (FCCPC)

In 2022, the Federal Competition and Consumer Protection Commission (FCCPC) issued the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (“the Guidelines”). The Guidelines require digital money lenders to register with the FCCPC before the commencement of business operations. The process of registering with the FCCPC is summarized as follows:

1. The digital money lender is to obtain an Audit Trust Mark from the Nigerian Data Protection Commission.
2. Obtain a compliance Audit Report and Privacy Impact Assessment Report from a duly registered Data Protection Compliance Organisation (DPCO).
3. Obtain and complete the requisite digital money lender’s registration form from the FCCPC. The completed form is to be accompanied with some documents which include:
4. Incorporation documents of the applicant.
5. The company’s terms of use and privacy policy
6. The company’s code of conduct
7. Brief description of the business and details of its groups, subsidiaries and affiliates.
8. Evidence of feedback and complaint resolution mechanism
9. Evidence of payment of the registration fee
10. Obtain and complete the requisite declaration form from FCCPC.

The application is to be submitted to the FCCPC together with the required documents. In practice, the FCCPC allows some flexibility in the registration process by allowing applicants to begin the digital money lender’s registration process while waiting for the Audit Trust Mark and the Compliance Report and Privacy Impact Assessment Report.

Failure to register with the FCCPC may lead to the permanent blacklisting of the digital money lender’s business and the removal of its digital apps from online platforms such as Google Play Store and Apple Store, etc. which will make the money lender unable to transact its business in Nigeria.

Conclusion

With the growth of FinTechs in Nigeria, there has been tremendous growth in the Nigerian online money lending space in the last few years. The business of money lending is regulated in Nigeria by the state governments, the FCT and the FCCPC. An operator is required to obtain a money lenders license in any of the 36 states of Nigeria in which it wishes to carry on business. Individual licenses must be obtained in every state in which an operator seeks to do business. Any company desirous of providing money lending services through any digital platform is required to register with the FCCPC before commencing business in Nigeria failing which its business and digital apps could be permanently blacklisted.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post How to Obtain Money Lenders License in Lagos State, Nigeria first appeared on Goldsmiths Solicitors.

This article highlights the requirements, processes and practical considerations to consider when registering imported products with NAFDAC in Nigeria.

Requirements for the Registration of Imported Products with NAFDAC

The requirements for the registration of imported products with NAFDAC will usually include the following:

A. Power of Attorney or Contract Manufacturing Agreement: A power of Attorney is required to authorize a local agent to act on behalf of the foreign manufacturer of the products. The Power of Attorney must be signed by either the Managing Director, General Manager, Chairman or President of the manufacturing company and it should also state the names of the products to be registered. If the foreign manufacturer does not wish to use a local agent, it may set up its own local company in Nigeria in order to register its products in its name, in which case, a Contract Manufacturing Agreement required.

B. Certificate of Manufacture and Free Sale: This is a document that provides evidence that the manufacturer is licensed to manufacture the products in its country of origin and the sale of the products does not contravene the laws of the manufacturer’s own country. It is issued by the relevant health or regulatory authority in the country of manufacture.

C. Comprehensive Certificate of Analysis: The Certificate of Analysis is issued by a quality control laboratory that has evaluated the products to be registered. It must state the brand name and batch number of the products and must also be signed by the laboratory analyst who evaluated the products in the country of manufacture.

D. Certificate of Incorporation: An applicant is expected to submit evidence of company incorporation with the Nigerian Corporate Affairs Commission (CAC). There are two approaches that may be adopted here. The first approach is that a local agent may be engaged and as such the local agent submits its company information and documents to NAFDAC for the product registration. The second approach is that the applicant may incorporate its own local company in Nigeria for the purpose of registering its imported products with NAFDAC.

E. Evidence of Trademark Registration: Trademark registration certificate or acceptance letter issued by the trademark office showing that an application has been made to register the trademark in in Nigeria in the name of the manufacturer.

F. Letter of Invitation for Good Manufacturing Practice: The manufacturer is required to write a letter of invitation addressed to NAFDAC, inviting its officials to visit and inspect the factory of the manufacturer abroad.

G. Labels/artworks: A print out of the label and artwork for the product to be registered is required. There must be a provision for NAFDAC registration number on the label and there must also be provisions for batch number, date of manufacture and expiry date together with other usage and storage instructions.

Product Registration Processes

The imported product registration processes usually involve the application, import permit, laboratory analysis, factory inspection and approval stages.

1. Application

NAFDAC Application form for the product registration is to be obtained and completed with the required information relating to the applicant and the product to be registered. Upon completing the application form, an application letter for the registration of the imported product on the applicant’s letterhead is addressed to NAFDAC. The application letter is to be submitted with the required documents outlined above together with the completed NAFDAC application form.

2. Import Permit

When an application has been successfully submitted and all supporting documents reviewed, an import permit is issued by NAFDAC for the importation of the samples of the product The imported of the sample is to enable NAFDAC conduct laboratory analysis on the products as outlined below. The import permit is usually valid for a period of 12 months. NAFDAC would usually specify how many samples they require.

3. Laboratory Analysis

The imported samples are submitted to NAFDAC laboratory for evaluation. The submission of the samples is accompanied with payment receipt of the official application and processing fee, certificate of analysis and a copy of the import permit. The laboratory analysis may not be successful if the outcome of NAFDAC analysis shows that there are any discrepancies in the information contained in the certificate of analysis. Where this happens, NAFDAC may issue a query for compliance directive. The compliance may involve importing new samples of the products together with an updated certificate of analysis of the products and resubmitting it for a fresh laboratory analysis. This will inevitably affect the times lines for approval discussed below.

4. Factory Inspection

Further to the letter invitation for Good Manufacturing Practice (GMP) and the payment of the required GMP fees, NAFDAC would usually visit the manufacturing facility in the country of origin to inspect it for Good Manufacturing Practice. In practice this visit does not always take place but the fee is still required to be paid.

5. Approval

The application for imported product registration is approved where NAFDAC is satisfied with the documentations provided, the samples provided and the Good Manufacturing Practice of the manufacturer in the country of origin. Upon the approval of the product, notice of registration is issued to the applicant. A unique NAFDAC registration number is also issued to the manufacturer. The registration is valid for 5 years from the date of registration and has to be renewed thereafter for another period of 5 years.

Product Registration Timelines

Depending on the product to be registered, the timelines for registration of imported products could vary between a period of 90 days or 120 days. The timeline is usually 90 days for food products and 120 days for drugs. In practice this is not always possible and registrations have been known to take longer than this due to a combination of factors.

Practical Considerations

In practice, it is not always possible to obtain registration in the timeline stated above. One of the reasons of this is the issuance of compliance directives by NAFDAC. Once a compliance directive is issued by NAFDAC, the clock stops ticking and time begins to count afresh from the period of when the compliance is remedied.  It is immaterial whether or not the compliance was done the same day or a within reasonable period thereafter.

Another possible cause of delay is that upon the submission of samples to NAFDAC, you would have to visit NAFDAC offices several times in person in order to obtain the result of the laboratory analysis as this is not usually communicated by email.

A further factor that may affect the registration is that during the application, the form together with all supporting documents are required to be uploaded online as part of the NAFDAC application process. In practice however, you are also required to submit the hard copies of these documents to NAFDAC offices.

An applicant that decides to register his own local company for the purpose of submitting an application to NAFDAC will have to company with other law relating to company registration in Nigeria including the requirement of obtaining tax registration with the Federal Inland Revenue Services (FIRS) and ensuring that the company is profiled on Taxpro-max for the purpose of validating the company’s profile with NAFDAC. In our experience, this usually takes some time to achieve and may further extend the registration time beyond the timeline provided by NAFDAC for product registration. The company is also required to file its annual returns to the CAC and file its monthly VAT returns whether or not it is trading.

Strike action by NAFDAC officials may sometimes also affect the timelines for the registration of a product with NAFDAC. We have experienced strike action from NAFDAC officials in the past which led to delayed product registration especially at the laboratory analysis stage.

In order to mitigate against most of these factors, it is advisable to ensure that from the outset, you have all your documents, samples, etc. ready and thoroughly reviewed before any application is made. It is also very important to promptly respond to any queries raised by NAFDAC so as to minimize the time between compliance and approval.

Conclusion

NAFDAC is the regulatory agency responsible for the registration of imported food, drugs, cosmetic products and medical devices. The application for imported product registration is made to NAFDAC with the supporting documents and the payment of official fees. NAFDAC approves the application for the product registration upon being satisfied with the applicant’s documentations and Good Manufacturing Practice. In practice however, it is not always possible to register a product within the time frame published by NAFDAC due to a variety of factors which are mostly internal.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

The post Practical Considerations on Registering Imported Products with National Agency for Food and Drugs Administration and Control (NAFDAC) first appeared on Goldsmiths Solicitors.

A Payment Solution Service Providers (PSSP) licence is a financial licence within the payments system which is issued by the Central Bank of Nigeria (CBN). A PSSP licence authorizes the licensee to provide and operate payment processing gateway and portals, solution/application development, and merchant service aggregation and collections services. A  PSSP license does not provide the authorization to hold customers’ funds or create and issue wallets. PSSPs are predominantly Financial Technology (FinTech) companies that enable  and facilitate  online and offline payments solutions which include collections, check-out, biller aggregation and payout services.

The CBN is the regulatory authority that issues PSSP licenses in Nigeria. The CBN also provides constant regulatory oversight over the activities of PSSP licensees in Nigeria.

Who can Apply for a PSSP Licence in Nigeria

Only a company that is duly registered with the Corporate Affairs Commission (CAC) in Nigeria and also meets the minimum share capital requirements and other regulatory requirements of the CBN can apply for a PSSP licence in Nigeria.

The Process of Obtaining a PSSP Licence from the CBN in Nigeria

A PSSP licence is processed in two stages viz:

• Approval-in-Principle (AIP): This is the preliminary stage of obtaining a PSSP license. During this stage, an application is to be made to the CBN for the grant of the license and they are expected to give an Approval-in-Principle or reject the application. Where an AIP is given, it is only valid for a period of six months. The AIP does not authorize the applicant to commence operation but only allows the applicant to take steps towards obtaining the final licence.
• Final Licence: The applicant is required to consolidate the AIP stage by taking steps to ensure its readiness for commencement of operation, notifying the CBN of its readiness to commence operation, by paying and applying for final licence. Upon the grant of the final licence, the applicant can commence its operations.

The process of obtaining a PSSP licence from the AIP stage to the final licence stage involves the following:

1. Write an application letter for a PSSP license which is addressed to the Director, Payments Systems Management Department of the CBN.
2. The application letter is accompanied with the required documents which include:

• Certificate of incorporation of the company with the Corporate Affairs Commission (CAC), with a share capital of N100,000,000 (One Hundred Million Naira)
• Memorandum and Articles of Association of the company
• Form CAC 2A (Return of Allotment of shares)
• Form CAC 7A (Particulars of Directors)
• Tax Clearance Certificate (TCC) and Tax Identification Number (TIN) of the Company
• Company’s profile
• Details of ownership
• Board structure
• Business plan
• Information Technology policy
• Dispute resolution framework
• Necessary certifications such as Payment Card Industry Data Security Standard (PCIDSS), Payment Terminal Service Aggregator (PTSA), etc.
• Evidence of payment of the non-refundable application fee of N100,000 (One Hundred Thousand Naira).
• Evidence of the deposit of the refundable minimum capital of N100,000,000 (One Hundred Million Naira). This is required to be made in full (one lump sum) and in the name of the applicant.

3. The CBN assesses the application for the PSSP licence and the accompanying documents and if it is satisfied with the application, it proceeds to grant an Approval-in-Principle.

4. Upon obtaining AIP from the CBN, the applicant then makes payment of the licence fee of N1,000,000 (One Million Naira) to the CBN designated account and proceeds to apply for a final licence within six months of obtaining AIP.

5. The CBN inspects the registered place of business of the applicant company and its readiness to commence operation and proceeds to issue the final licence if it is satisfied with the outcome of its inspection.

Validity and Renewal of PSSP Licence

PSSP licence validity period is as determined by the CBN and renewable if the operations of the PSSP licensee is satisfactory to the CBN. Recently, CBN renewed Cellulant’s PSSP licence and this shows the satisfaction of the CBN with the services of the company in providing payment solutions in Nigeria. Thus, the renewal of a PSSP licence by the CBN is a vote of confidence on the operation of a PSSP licensee.

Conclusion

A Payment Solution Service Providers (PSSP) licence is an important licence within the Nigerian payment systems which enables the provision of financial services such as the operation of payment processing gateway and portals which is utilized by merchants to accept debit or credit card purchases from customers. A PSSP licensee provides both online and offline payment solutions. A PSSP licence is obtainable from the CBN by submitting an application to the CBN and paying the required application and license fees within the stipulated timelines.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post How to Obtain a Payment Solution Service Providers Licence in Nigeria first appeared on Goldsmiths Solicitors.

2022 has been an incredibly busy and exciting year in the Nigerian legal and regulatory environment. There were major and far-reaching changes ushered in by the regulatory authorities particularly the Central Bank of Nigeria (CBN). There were also major developments relating to Banking and Finance, Competition and Consumer Protection, Startups, Capital Markets, Insolvency, etc. In this article, we have highlighted some of the major legal, regulatory, and judicial changes that occurred in 2022. This article is divided into four parts representing four quarters of the year. In each quarter, we deal with all the major legal changes that occurred therein.

1^st Quarter (January – March 2022)

A remarkable feature of the first quarter was the issuance of regulations/guidelines by the CBN. Within this period, the Electoral Act 2022 was also signed into law by the President. The new Electoral Act introduced important changes to the conduct of elections Nigeria. Below are some of the highlights of the 1^st quarter:

• The Central Bank of Nigeria (CBN) Guidelines on the Introduction of E-evaluator, e-invoicing for Import and Export in Nigeria. Although the Guidelines were issued in January, it became operative on 1 February 2022 and requires the submission of an electronic invoice authenticated by the Authorised Dealer Bank for all import and export operations. The electronic invoice replaces the usual hardcopy final invoice.
• On 11 January 2022, President Muhammadu Buhari approved the establishment of the Nigerian Diaspora Investment Trust Fund, a private sector investment window for Nigerians in the diaspora to support direct investments in the country.
• On 18 January 2022, the Lagos State Government introduced the Consolidated Informal Transport Sector Levy to harmonize the taxes paid by transporters to the state government.
• On 26 January 2022, the Federal High Court in the case of Attorney General of Rivers State v. Attorney General of Federation and 3 Others, invalidated deductions by the Federal Government from the Federation Account for funding the Nigeria Police Trust Fund.
• The Central Bank of Nigeria Operating Guidelines for RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme. This is a programme designed and introduced by the CBN to incentivize exporters in the non-oil export sector with the goal of raising $200 billion in FX over the course of the next three years.
• The Central Bank of Nigeria Guidelines for Regulation and Supervision of Credit Guarantee Companies in Nigeria. The Guidelines seeks to ensure a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to be able to access credit at low interest rates from banks and financial institutions. The requirements for obtaining a license and also the activities which are permitted and not permitted by the license are contained in the Guidelines.
• On 7 February 2022, the Lagos State Governor signed the Lagos State Real Estate Regulatory Authority Bill into Law. The law introduced significant changes to the real estate landscape in Lagos State by mandating the registration of real estate practitioners.
• Electoral Act (Amendment) Act 2022 (the Electoral Act). The new Electoral Act was signed into law on 25 February 2022 by President Muhammadu Buhari. The Electoral Act empowers the Independent National Electoral Commission (INEC) to transmit election results electronically. Section 84 (12) of the Act, prohibits appointees of government, government officials from holding office while vying or contesting at party primaries.
• On 4 March 2022, the CAC stated in a circular that schools and other institutions would no longer be registrable as business names. This means they can now only be registered as a company pursuant to the Companies and Allied Markets Act 2020.
• On 23 March 2022, the Nigerian Communications Commission (NCC) issued the License Framework for the Establishment of Mobile Virtual Network Operators in Nigeria.

2^nd Quarter (April – June 2022)

This quarter witnessed a high level of enactment of laws and the issuance of regulations by the regulatory authorities. Importantly, three laws were passed to deal with the issues of corruption and terrorism in Nigeria. One of these laws (Money Laundering [Prevention and Prohibition] Act 2022) prompted the issuance of a guidelines by the CBN to bring its AML/CFT regulations in compliance with the requirements of the new law. The Securities and Exchange Commission (SEC) also issued a guideline to regulate digital and virtual assets. Below are some of the highlights of the 2^nd quarter:

• On 6 April 2022, the President signed Executive Order 11 which mandates government to institutionalize maintenance of public buildings. The National Biotechnology Development Agency Act, 2022 was also signed on the same day. The law provides the legal framework for the established agency to carry out research and create public awareness in biotechnology to encourage private sector participation.
• On 24 April 2022, the Corporate Affairs Commission announced the approval of the Insolvency Regulations 2022 by the Minister of Industry, Trade and Development. The regulations govern insolvency proceedings under the Companies and Allied Matters Act 2020.
• On 12 May 2022, the President signed the Money Laundering (Prevention and Prohibition) Act, 2022, the Proceeds of Crime (Recovery and Management) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022.
• The Central Bank of Nigeria Exposure Draft Guidelines for Open Banking in Nigeria. These Guidelines are aimed at enhancing competition and innovation in the banking system. It established the principles for data sharing across the banking and the payments system and broadened the range of financial products and services available to bank customers.
• The Central Bank of Nigeria Guidelines for the Registration and Operation of Bank Neutral Cash Hubs (BNCH) in Nigeria. The Guidelines are aimed at  reducing the risks and cost borne in the course of cash management and to also enhance cash management efficiency. The registration of a BNCH is to be undertaken in two stages of obtaining CBN Approval-in-Principle and final approval. The BNCH are to be licensed to take deposit and disburse high volume cash on behalf of financial institutions but cannot carry out lending activities, receive or disburse foreign currency or sub-contract their operation.
• Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments by the Central Bank of Nigeria. These Guidelines replaced the 2012 Guidelines and were issued to regulate the issuance of non-interest instruments by Non-Interest Financial Institutions (NIFIs) while also stipulating the requirements and terms of operation for NIFIs.
• The Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022. The CBN issued the Regulations to bring its regulations on anti-money laundering and combatting the financing of terrorism to be in compliance with the Money Laundering (Prevention and Prohibition) Act, 2022 and safeguard the financial institutions from being used for financial crimes.
• The Securities and Exchange Commission issued the Rules on the Issuance, Offering Platforms and Custody of Digital Assets. The Rules were issued by SEC on 13 May 2022 and provide for the issuance of digital assets, registration requirements for Digital Assets Offering Platforms (DAOPS) and Digital Assets Custodians (DAC) among others.
• On 25 May 2022, the Federal High Court in the case of Femi Davies v. National Broadcasting Commission, nullified the National Broadcasting Code (6^th Edition) through which the National Broadcasting Commission (NBC) sought to regulate the practice of advertising in Nigeria. The court held that it was beyond the power of the NBC to regulate advertisement.

3^rd Quarter (July – September 2022)

The regulatory authorities in the banking and finance sector, particularly the CBN, were very active in issuing one form of guidelines or the other. The Federal Competition and Consumer Protection Commission (FCCPC) issued a guideline to regulate the activities of digital money lenders after a series of predatory practices by many digital money lenders. There was also a judgement of the Court of Appeal which re-affirmed the power of the Federal Inland Revenue Service to collect VAT from hoteliers. Below are some of the highlights of the 3^rd quarter:

• The Central Bank of Nigeria Review of the Industry Quick Response (QR) Code Presentment Options. The review was done by the CBN to enhance the flexibility offered by the use of QR codes in payments. The review provides that the implementation of the QR code for payments shall be based on either merchant-presented or consumer-presented modes.
• The Central Bank of Nigeria Exposure Draft on the Digital Financial Services Awareness Guidelines. This was developed to address gaps in consumer knowledge and practices with Digital Financial Services (DFS). The Guidelines provides for a set of principles and expectations for financial service providers to integrate in the provision of DFS to ensure consumer understanding, good treatment and positive outcomes.
• On 1 July 2022, the Court of Appeal set aside the judgement of the Federal High Court in the case of The Registered Trustees of Hotel Owners and Managers Association of Lagos v. Attorney General of Lagos State which invalidated the powers of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) from hoteliers and held that the collection of the tax is in the purview of the state government. The Court of Appeal has now held that it is the FIRS that has the authority to collect VAT. See Federal Inland Revenue Service v. The Registered Trustees of Hotel Owners and Managers Association of Lagos.
• Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022. The regulations were issued by the FCCPC on 18 August 2022 to provide the FCCPC’s approach to regulating the digital lending space and makes provisions for the requirements for approval/registration to carry out the business of digital lending in Nigeria. Thus, by this Framework and Guidelines, institutions engaged in digital lending activities are to be registered with the FCCPC.
• The Revised Handbook on Expatriate Quota Administration 2022 (the Revised Handbook). On 31 August 2022, the Federal Ministry of Interior announced the issuance of the Revised Handbook. The Handbook increased the minimum share capital requirement of a company wishing to apply for business permit from N10,000,000 to N100,000,000. It also reduced the lifespan of Expatriate Quotas (EQs) from ten to seven years. However, the provisions of the Handbook are yet to be operational.
• The Advertising Regulatory Council of Nigeria (ARCON) banned the use of foreign voice-over artists and models on any advertisement which targets the Nigerian advertising space. The ban took effect on 1 October 2022.

4^th Quarter (October – December 2022)

The Nigeria Startup Act was enacted during this quarter, and it represents a remarkable achievement towards incentivizing startups in Nigeria through the incentives and programmes dedicated to spur the growth of startups in Nigeria. A sport policy was also developed and approved with the motive to position the sport sector to generate revenue while standardizing it. The CBN was also active with the issuance of several guidelines and regulations to regulate players in the Nigerian financial services sector. Below are some of the highlights of the 4^th quarter:

• Exposure Draft Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria. The Guidelines stipulate how a representative office of foreign banks can be licensed in Nigeria. It enumerates the activities they can validly engage in in Nigeria such as marketing the products and services of their foreign parent or affiliate and states that they cannot engage directly in any financial transaction.
• Exposure Draft Guidelines on Contactless Payments in Nigeria. The Guidelines provide the minimum standards and requirements for the operation of contactless payments and specified the roles of stakeholders such as acquirers, issues, payment schemes, merchants, etc.
• Nigeria Startup Act 2022. On 19 October 2022, the Nigeria Startup Act, 2022 was signed into law. The law aims to provide an enabling environment for the establishment, development, and operation of startups in Nigeria and to position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
• National Sports Industry Policy (NSIP) 2022 – 2026. On 2 November 2022, the Federal Executive Council (FEC) approved the National Sports Industry Policy (NSIP) 2022 – 2026. The policy contains provisions on governance regulations, infrastructure development plans, incentives for private investors, etc. aimed at standardizing the Nigerian sport sector and thereby generating revenue.
• CBN Naira Redesign Policy – Revised Cash Withdrawal Limits. Citing the need to combat fraud, corruption, terrorism and to ensure that most of the money in circulation are within the banking vault, the CBN issued the policy document on 6 December 2022 to reduce the daily and weekly cash withdrawal limit and also to introduce certain requirements for withdrawing across the counter beyond the set limit at the rate of 5% fee for individuals and 10% for corporate organizations. The revision of the cash withdrawal limits was done by the CBN pursuant to the recent redesign of the Nigerian currency i.e. N200, N500 and N1,000 notes. Coming less than three months before the next general elections in Nigeria, this policy has received a lot of resistance from the political class.

Conclusion

2022 has been a remarkable year in the Nigerian legal and regulatory space and saw the enactment of the Start Up Act, the redesign of the Naira and the introduction of far-reaching regulations especially by CBN aimed and tackling corruption, fraud and financial crimes.

We use this opportunity to wish all our clients a very Merry Christmas and best wishes for the New Year 2023. Thank you all for your support.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Goldsmiths Solicitors – Legal Recap for the Year 2022 first appeared on Goldsmiths Solicitors.

On 28 March 2022, the Central Bank of Nigeria (CBN) issued the Guidelines for the Regulation and Supervision of Credit Guarantee Companies (CGCs) in Nigeria. The Guidelines are expected to create a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to access credit at low interest rates from banks and financial institutions. The Guidelines also stipulate the activities that CGCs are permitted to undertake while outlining the non-permissible activities, application process for obtaining Approval-in-Principle and final licence as well as the corporate governance structure of CGCs.

The post Overview of the Central Bank of Nigeria (CBN) Guidelines for the Regulation and Supervision of Credit Guarantee Companies in Nigeria first appeared on Goldsmiths Solicitors.

Definition of Credit Guarantee Companies

According to the Guidelines, a CGC is an institution licensed by the CBN with the primary objective of providing guarantees to banks and other lending financial institutions against the risk of default by obligors.

An example of a Credit Guarantee Company in Nigeria providing guarantees for MSMEs to access credit is Impact Credit Guarantee Limited.

Objectives of the Credit Guarantee Scheme

The objectives of the scheme include the following:

1. Improve access to credit for MSMEs
2. Reduce credit risk in lending by providing guarantees to PFIs
3. Stimulate lower interest rates on loans
4. Promote flexible collateral requirements
5. Encourage new business formation, development and expansion
6. Foster sustainable and inclusive growth
7. Improve risk management in the financial sector.

Powers and Duties of the Central Bank of Nigeria

The Central bank of Nigeria shall have regulatory and supervisory powers and duties over CGCs in addition to the following:

1. Grant and revoke licence.
2. Determine minimum capital requirements.
3. Approve the appointment of board members and senior management staff.
4. Remove board members and senior management staff.
5. Approve the appointment of external auditors.

Permissible Activities

The activities which CGCs may legally engage in include:

1. Provide guarantee for risk assets.
2. Render advisory services for financial and business development.
3. Invest surplus funds in government securities.
4. Maintain and operate various types of accounts with banks in Nigeria.
5. Engage in the recovery of guaranteed sum from defaulting borrowers post claims payment.
6. Other activities as may be prescribed by CBN from time to time.

Non-permissible Activities

The non-permissible activities for CGCs include the following:

1. Provision of guarantee to entities outside Nigeria.
2. Provision of credit to customers.
3. Acceptance of demand, savings and time deposits or any other deposits.
4. Management of pension funds or schemes.
5. Foreign exchange, commodity and equity trading.
6. All forms of trading in derivatives and swaps, etc.

Licensing Procedure and Requirements

The application for licence is made by the promoters of the CGC and addressed to the Governor of CBN. The application for licence shall be processed in two stages namely: Approval-in Principle and final licence.

Requirements for Approval-in-Principle

The requirements for obtaining Approval-in-Principle for CGC include:

1. Apply to the Governor of the CBN in writing together with the following:
2. A non-refundable application fee of N100,000.
3. Evidence of the deposit of the specified minimum capital requirement of N10,000,000,000 into a CBN designated account.
4. Evidence of capital contribution made by each shareholder.
5. Evidence of name reservation with Corporate Affairs Commission.
6. Detailed business plan or feasibility report.
7. Draft copy of the Memorandum and Articles of Association of the company.
8. Shareholders agreement.
9. Detailed manuals and policies.
10. Upon receipt of the application and satisfactory documentation, the CBN shall verify the capital contributions of the promoters of the CGC.
11. Where CBN is satisfied with capital contribution of the promoters, it shall issue Approval-in-Principle to the promoters of the CGC.
12. The CBN shall communicate its decision to the promoters within 90 days of the receipt of the application.
13. The proposed CGC shall not register or incorporate its name with Corporate Affairs Commission until an Approval-in-Principle has been obtained from the CBN.

Requirements for Final Licence

Not later than six months after obtaining the Approval-in-Principle from CBN, the promoters of a proposed CGC shall submit an application for the grant of final licence. The application shall be accompanied with the following:

1. Non-refundable licensing fee of N1,000,000 (One Million Naira)
2. Certified True Copy (CTC) of certificate of incorporation of the CGC.
3. CTC of the Memorandum and Articles of Association.
4. CTC of CAC form 1.1.
5. Evidence of payment of stamp duties.
6. Internal control policy.
7. Business continuity plan, etc.

However, before the final licence is granted, CBN shall inspect the premises and facilities of the proposed CGC.

Corporate Governance Structure for CGCs

The board is to be responsible for the affairs of the CGC and its performance. The board shall be made up of both executive and non-executive directors whose number is to be more than executive directors’. The board is to be composed of 5 members minimum and 7 members at the maximum. It should be noted that the appointment of the members of the board is subject to CBN’s approval.

There shall be the positions of a Managing Director and Chief Executive Officer. The two positions are not to be merged but to be occupied by different individuals.

The board is to be appraised annually by an independent consultant on aspects of board’s structure, composition, responsibilities and performance.

Sources of Funds of CGCs

CGCs can access funds from any source approved by CBN. These sources include:

1. Paid-up share capital.
2. General reserves.
3. Long-term loans from international organisations and sponsors.
4. Funds from development partners.
5. Loans from governmental bodies.
6. Preference shares.
7. Bonds.
8. Grants and donations from sources approved by the CBN, etc.

Compliance, Sanctions, and Revocation of Licence

CGCs are required to comply with all laws, rules and regulations. One of the directives is for CGCs to be prudent and not to guarantee more than 75% of the credit provided to any MSME. Where the CGC fails to comply, it shall be met with administrative sanctions. The sanction could be suspension of its operation, monetary penalties, prohibition from declaring dividends, or revocation of licence, etc.

The licence of a CGC may also be revoked where it is insolvent, misuses the licence or ceases operation for a continuous or aggregated period of six months within 12 months.

Conclusion

The issuance of the Guidelines is aimed at facilitating MSMEs access to credit at low interest rate. This is a step in the right direction by CBN. It will ensure that credit loans are guaranteed by minimizing credit risks that banks and other financial institutions are reluctant to take up. It would potentially also lead to business and economic growth for Nigeria especially in the MSME sector.

In applying for approval in principle and license, CGCs are to be prudent by ensuring that all CBN’s requirement for CGC’s licensing are met.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact us.

The post Overview of the Central Bank of Nigeria Exposure Draft Guidelines for Credit Guarantee Companies in Nigeria first appeared on Goldsmiths Solicitors.