A new era: Single regulator for Nigerian fintech as key bill advances

A bill to create the Nigerian Fintech Regulatory Commission, which will oversee, license, and regulate fintech businesses and their operations nationwide, was approved by the House of Representatives for second reading.

Hon. Fuad Kayode Laguda, a representative from Lagos State, is sponsoring a bill that would create the Nigerian Fintech Regulatory Commission (NFRC), a single body that would license and oversee all fintechs in the nation. The bill is currently being considered by the House of Representatives, the lower house of the National Assembly, which has 360 members.

The new dawn as opposed to previous hurdles of multiple regulatory commissions

Instead of working with several agencies whose conflicting directives and overlapping mandates frequently cause confusion, Nigerian fintechs have long advocated for a single regulator.
According to the commission’s authority, a single authorization and compliance gateway will be established in place of the current patchwork of oversight by the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the National Information Technology Development Agency (NITDA), and the Central Bank of Nigeria (CBN).

Depending on their operations (payments, lending, cryptocurrency, crowdfunding, or fintechs must now obtain individual or class licenses under the recently drafted bill. Failure to comply with licensing or renewal requirements may result in revocation, suspension, or significant fines.

A single regulation gateway

A dedicated compliance team and legal counsel, ongoing technology compliance audits, and proving Nigerian involvement in ownership and management are just a few of the more formal but more onerous compliance requirements that the bill introduces.
In order to eliminate uncertainty in fintech operations, the NFRC will not only issue rules and guidelines but also establish performance standards, dispute resolution procedures, data use standards, consumer protection codes, and service quality benchmarks.

The bill gives the NFRC the authority to publish compliance findings, require information disclosure, and carry out both public and private investigations. Established businesses must adapt their current procedures to the new NFRC framework, while early-stage startups may require legal and compliance budgets from the start.
Predatory pricing, collusion, and abuse of market dominance are examples of anti-competitive practices that the NFRC can monitor and stop in order to protect consumers. The bill may provide much-needed respite for consumers, as Nigerian digital loan apps are notorious for their aggressive loan recovery strategies.

By serving as a “one-stop shop” for all fintech oversight, the NFRC would alter that. Every fintech, whether engaged in payments, lending, crowdfunding, cryptocurrencies, regtech, or other digital finance services, will now need to apply for a license directly from the NFRC, per the draft bill that TechCrush was able to obtain.

Penalties for noncompliance could include license suspension, heavy fines, or revocation.

In an effort to cut down on expensive legal battles and administrative bottlenecks, the NFRC will also serve as an arbitration body for disputes involving fintechs, banks, and telecom operators.

The commission will encourage local innovation in addition to regulation by requiring fintechs to invest in research and development in Nigeria and to include local experts in their leadership. In order to comply with Nigerian participation thresholds, foreign-owned fintechs may need to restructure their partnerships or boards.

Dealing with financial crimes and cyberthreats

The lawmaker also voiced concern about the increasing number of online fraud, hacking, and cyberattacks that have afflicted fintech companies like Paystack, Opay, PalmPay, and Moniepoint between 2020 and 2024.

According to him, these difficulties might have been avoided if Nigeria had a separate regulatory body tasked with coordinating cybersecurity, data security, and fintech risk management.

He added that the bill is in line with President Bola Tinubu’s Renewed Hope Agenda, specifically its emphasis on advancing digital inclusion, regulatory reform in the financial technology ecosystem, and ease of doing business.

According to Mr. Laguda, the commission would also guarantee adherence to financial and data protection regulations, improve transparency and accountability, and conduct independent evaluations of fintech performance.

A Watershed in the Ecosystem

One of the most important policy changes in Nigeria’s digital finance industry would be the establishment of the NFRC. Proponents think it could reduce the confusion brought on by contradictory directives from various agencies and provide clarity, consistency, and investor confidence.

Critics warn that if not handled transparently, the concentration of so much authority in one regulator may also result in bottlenecks. Analysts predict that the NFRC’s ability to effectively strike a balance between innovation and oversight will be the real test.

Before the bill can move on to a third reading and any reconciliation with the Senate, Speaker Abbas Tajudeen sent it to the House committees on Banking Regulations and Communication for additional work after it passed the second reading. Lawmakers who support the measure say that by establishing a formal legal framework for digital finance in place of the current patchwork of circulars and ad hoc directives, it will protect consumers, encourage innovation, and reduce systemic risk. It could influence investment, competition, and consumer trust throughout the payments and lending ecosystem by giving Nigeria a single regulatory authority over fintech if it becomes law.