FinTech is the abbreviation for financial Technology, the financial technology business in Nigeria came about with the need to finding a softer and easier way of doing business involving money without going to the traditional commercial banks, the allure of doing a seamless transaction without visiting any bank has even made fintech more inevitable, the advantages such fintech brings has made it more than necessary to regulate them, but in Nigeria there is no law expressly called fintech laws. the laws regulating fintech at present are however utilized because fintech engages in banking and financial services solutions, hence laws applying to banks ends up applying to them. with the rise in population in Nigeria, it remains very obvious that the traditional banks cannot be more ubiquitous than fintech, With the surge in financial transactions daily, it is expected that these financial technologies as they keep growing will aid in solving the daily needs in our society.
LAWS REGULATING FINTECH BUSINESS IN NIGERIA.
i. COMPANIES AND ALLIED MATTERS ACT 2020(CAMA 2020): The powers of the corporate affairs commission to approve and disapprove the registration of companies including FinTech’s ,stems from the provisions of the companies and allied maters act, the provisions of Cama has stated that every e-commerce payment solutions technology company, must meet up with a minimum share capital of two hundred and fifty million share capital(250m) before it can be approved ,there are other requirements that any fintech must meet up with before the final approval. With the new laws, one person can float a fintech company, and own all the shares in it. Anyone starting a fintech, such as e-commerce payment solutions, a daily contribution savings financial technology, crowd funding financial technology and blockchain fintech’s must first pass-through Cac, before they can procced.
ii. CBN ACT 2017– Although there have been some arguments in some quarters regarding whether the ACT envisaged fintech companies, but the hard truth is that any fintech that does banking services, must need to meet up with compliance with cbn. the cbn ACT 2017, the regulations are CBN Regulations on Electronic Payments and collections for private and public sector in Nigeria,CBN framework and guideline on mobile money services in Nigeria, CBN Frameworks on quick response payments codes in Nigeria, etc follow the link on cbn regulatory frameworks and guidelines on fintechs operations in Nigeria .
iii. BOFIA ACT 2020 (BANKS AND OTHER FINANCIAL INSTITUTIONS ACTS):The Bofia Act, among other laws such as CAMA,is primarily set up to regulate the incorporations, operations of banks, and banking services in Nigeria, the role of cbn for a distressed bank, and the mandatory requirement of obtaining a license from cbn before operating as a bank in Nigeria. see section 2(5) of BOFIA ACT 2020.
iv. NDIC ACT -The Nigerian deposit insurance corporation Act is a big legislation that protects the insurance of money deposits of bank customers, therefore depending on the niche of fintech ,the NDIC act might apply to you if you do receive and save money for depositors.
v. ECONOMIC AND FINACIAL COMMSSION ACT 2004 – This piece of legislation protects investment banking technologies users from such scheme that is not commercially viable for them, such as ponzi network, and pyramid schemes ,the comssion is to protect the public users, by extending their watch on such technologies.
v. MONEY LAUNDERING PROHIBITION ACT 2011-The money laundering act applies to fintechs ,,as the Act seeks to protect money transaction, from money launders, every financial institution has mandate to report such transactions suspected to be money laundering to the commission(EFCC).the economic financial commission issues scuml certificate to companies into investment and large scale financial transactions, this act also ensures the sanity of international payment solutions services et’al.
vi. INVESTMENT AND SECURITIES ACT 2007-The act marks as legal the establishment of securities and exchange commission, the body with a statutory duty of overseeing investment schemes, such as real estate investments schemes, securities and equity investment schemes, collective investment schemes, establishment of investors protection funds, etc. the Act regulates fintechs that are into collective investment, real estate investments and other general investment schemes, it is required of starts up in fintech to obtain license from Securities and exchange commission before carrying on investment network.
vii. MONEY LENDERS ACT 2007: Money lending is an all-comers affairs, but to borrow and expect an interest in return ,the borrower must confine with the provisions of money lenders Act, hence the need to follow the procedures to obtain a valid license before embarking on money lending. most money lending companies, are loan sharks and does not qualify as a true licensed money lender. the money lenders Act sets the regulation for fintech’s to operate in compliance with the provisions of the law.
viii. FEDERAL COMPETITION AND CONSUMERS PROTECTION ACT 2018: The act is set up to work against any anti-competitive and preventive practices by companies, and also set in place the priority of consumers right, so in essence any fintech company which ordinary want to operate in Nigeria, would review its operations in line with these laws.
OVERVIEW OF THE GROWTH OF FINTECH INDUSTRY IN NIGERIA
The FinTech industry in Nigeria is a fast-growing one, According to FROST AND SULLIVAN an American research consulting firm, they said that Nigerians fintech industry estimated revenue will be $543.3 million in 2022 which is higher than the $153.1 million that it was in 2017. Most founders have found a lot of investors competing for the Nigerian fintech market. The Nigerian start up bill, when signed into law is expected to be one piece of legislation that will address major loophole currently being witnessed in the fintech and other internet technology driven industry.