December Regulatory Roundup
Hi there!
While the rest of the world took a short hiatus in December, the world of regulations in Nigeria was far from static. In today's roundup, we delve beyond the headlines, scrutinizing trends, implications, and actionable insights across Nigeria, Africa, and the global crypto sphere.
News in Nigeria: Steering Through New Policies and Celebrating Fintech Wins
The CBN issues New KYC Measures with BVN/NIN Verification
On December 1st, the CBN issued a circular to financial institutions (FIs), including MMOs, Commercial Banks, and Payment Service Banks, introducing a revised set of KYC and Verification measures for their new and existing customers.
Some of the key amendments to the Framework included the mandatory requirement of BVN and NIN for all Tier-1, Tier 2 and 3 accounts, and a mandate that all BVNs be profiled in the NIBSS ICAD (Industry Customer Account Database) to ensure that they are meeting the requirements of Tiered KYC. While this has led to an increase in compliance costs, it has also opened up opportunities for enhanced financial inclusion and fraud prevention.?
NIBSS delists Payment Companies from Outbound Lists for Banks
Payment companies were included in NIP outbound lists, allowing the transfer of funds from bank accounts to payment entities. However, on December 5th, the Nigeria Inter-Bank Settlement System (NIBSS) announced its plans to delist PSPs, Switches, and Super Agents from their outward payment or transfer lists.
This means that people seeking to transfer funds to these entities will no longer find them in the beneficiary lists; instead, they'll be required to make payments directly to the bank they partner with to handle funds on their behalf. No need to fear!
This is simply a reiteration that payment companies should operate within the bounds of their licenses. Payment companies, by virtue of their CBN licenses, are not licensed to accept deposits. Therefore, they should be prohibited from receiving transfers independently.?
Saying Goodbye to Jumia Food
Following the exit of Bolt Food in Nigeria, Jumia Food has also announced the cessation of its operations in Nigeria and six other African countries due to profitability challenges.
This raises a lot of questions. Is the food delivery market in Nigeria dominated by Chowdeck and Glovo? Or is the market just too saturated to thrive??
Global Recognition (and Scrutiny) for OPay
OPay’s recognition by the World Economic Forum (WEF) has put Nigerian fintech on the global map. Their innovative digital banking solutions are not just expanding financial access in Nigeria, but also serving as a model for responsible and sustainable growth in the sector.
That being said, Opay still continually faces a barrage of scrutiny over their weak KYC systems for account opening, underscoring the importance and need for continuous improvement.
CBN issues new Guidelines for VASPs. Good news for Crypto Companies?
On December 22, the CBN lifted its two year ban on crypto currency transactions, issuing the “Guidelines on the Operations of Bank Accounts for Virtual Asset Service Providers.”
Amongst other primary provisions, the regulations state that cryptocurrency companies must now secure a VASP license from the Securities Exchange Commission (SEC) in order to operate. There is a major misconception on what these new guidelines entail, but we have taken the liberty to break this down for you here.
CBN suspends charging of processing fees on all cash deposits
On December 11, the CBN released a circular suspending Financial institutions from charging processing fees of 2% and 3%, which were previously charged on all cash deposits exceeding the thresholds of N500,000 for individuals and N3,000,000 for Corporates.
The circular has been made applicable until April 2024. Till then, this development sets up a win-lose scenario: a win for the public to deposit freely and a loss for financial institutions that get revenue from these deposits.
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New Across Africa: Welcoming Innovation While Addressing Challenges
Vehicle Income Tax rejected by Ghanaians drivers
A few months ago, Ghanaian government announced that they were to impose a vehicle income tax which was to go into effect on the 1 January 2024, mandating that “any commercial vehicle owner that earns income from the operation of a commercial vehicle shall pay income tax on a quarterly basis.”
This has been vehemently rejected by riders for causing strains on their incomes. Many argue that since ride-hailing apps like Bolt and Uber charge commissions as high as 15-20%, they should be responsible for remitting the tax.?
Kenyan Courts Suspend Launch of New Digital IDs
In 2023, Kenya announced that it will be rolling out a new ID system, Maisha Namba, which aims to offer improved online ID authentication possibilities while giving Kenyans more control over sharing their data.?
Following this announcement, the Kenyan High Court suspended the launch due to concerns about transparency, a limited nationwide public participation, and data protection uncertainty. We are eager to see the outcome of the court's assessment of the new IDs and what will come out of it.
Global Crypto
Nigerian Banks set to launch cNGN stablecoin following the Crypto Ban
Major Nigerian banks, including First Bank, Access Bank, Sterling Bank, and Providus Bank, have announced that they will be collaborating? on creating and managing cNGN, a new stablecoin, after the recent lifting of the crypto ban in Nigeria.
Set to launch in January 2024, the cNGN will be pegged one-to-one with the Naira held by all banks. This cNGN project intends to partner with major banks, payment infrastructure giants like Kora, Interswitch, and Budpay, along with blockchain consultants Interstellar and Convexity.
This signals a major milestone in Nigeria's financial sector and we look forward to seeing this being implemented!
Deals and Raises
Africa's tech sector continues to impress with over $130 million raised so far, including notable deals like:
This momentum bodes well for the future of African tech. We pray for more wins for the sector in 2024!
Join the Conversation
Have questions or insights about the regulatory landscape in your region? Reach out to us on any of our social media handles, or email and we would be available to help.
Also, share your thoughts in the comments below and let's continue the conversation!