Legal Considerations for AI Adoption in Nigeria, An Analysis of Supreme Court of Kenya’s Decision on Finance Act & More on Land Ownership in Tanzania
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AI Adoption in Nigeria: Legal Considerations for Nigerian Businesses
As artificial intelligence (AI) continues to revolutionize industries worldwide, its adoption among Nigerian businesses is gaining significant momentum. In Nigeria, businesses across various sectors, including finance, healthcare, and digital services, are increasingly adopting AI technologies to improve operational efficiency, drive innovation, and gain a competitive edge in both local and global markets. While the benefits of AI adoption are vast and transformative, they also bring forth significant legal and governance challenges. The absence of comprehensive regulatory frameworks, concerns over data privacy and protection, and the need for ethical guidelines present challenges that Nigerian businesses must navigate carefully when adopting AI.
Legal Considerations for AI Adoption
To effectively navigate the legal aspects of AI adoption, Nigerian businesses should consider these major factors;
1. Regulatory Compliance: Despite the absence of specific AI regulations, various existing laws may indirectly influence AI deployment and use in Nigeria. Some of the provisions of these regulations are analysed below;?
Data Protection
For example, the Nigerian Data Protection Act (NDPA) provides that a data subject shall not be subject to a decision based solely on automated processing of personal data except where there is human intervention, and the logic of the decision made is capable of being contested. The implication of this provision is that entities using AI to process personal data must ensure human oversight in their process. Additionally, the Nigeria Data Protection Commission (NDPC) has also issued a draft General Application and Implementation Directive (GAID), which requires data controllers or processors using emerging technologies, including AI, for personal data processing to consider the NDPA, public policy, and other regulatory instruments. When using emerging technologies, the GAID requires data controllers and processors pay particular attention to the various rights of data subjects and the implementation of privacy by design.
Consumer Protection
Similarly, the Federal Competition and Consumer Protection Act (FCCPA), which aims to prevent unfair trading practices and protect consumers, applies to businesses using AI in marketing or customer interactions. For instance, businesses employing AI-driven targeted marketing strategies must ensure that the algorithms do not engage in deceptive practices that mislead consumers about product features, pricing, or availability. Additionally, AI systems that automate customer service interactions must be designed to treat all customers equitably. If an AI system inadvertently discriminates against certain groups—whether through biased training data or algorithmic errors—it could lead to unfair treatment of consumers, violating the principles of the FCCPA. Thus, businesses must implement measures to identify and rectify biases within their AI systems to ensure compliance with FCCPA.
Digital Advisory
The Securities and Exchange Commission (SEC) Rules on Robo-Advisory Services (the “SEC Rules”) seeks to regulate digital advisory services- i.e the provision of investment advice using automated, algorithm-based tools which are client-facing, with little or no human adviser interaction in the advisory process. These rules mandate that Robo-Advisors (i.e a person who provides digital advisory services) implement measures to mitigate bias in their algorithms and ensure that clients are fully informed about the assumptions, limitations, and risks associated with the AI technologies used in providing advisory services.
In summary, while specific AI regulations are still forthcoming, businesses must comply with the NDPA, FCCPA and other applicable laws when developing and deploying AI technologies. Engaging legal counsel to navigate these complexities can significantly help in ensuring compliance and responsible AI adoption.
2. Contractual Framework: When integrating AI technologies into their system, businesses must establish clear contractual framework to govern their relationship with AI developers or service providers. This framework is essential for mitigating risks and protecting the interests of all parties involved. Some of the key components of the contracts include defining liability for any malfunctions or errors, and specifying ownership rights regarding data, algorithms, and any outputs generated by the AI systems. Additionally, businesses should outline performance expectations in service level agreements (SLAs), covering aspects such as accuracy, reliability, and compliance with applicable regulations.
3. Governance Framework: Implementing a comprehensive governance framework is essential for organizations adopting AI technologies, as it establishes the structures and processes needed to manage risks and ensure compliance with applicable laws and international best practices. This framework should include policies that outline the responsible use of AI, and processes to regularly evaluate the functionality and effectiveness of AI systems. Another component of this governance framework involves conducting regular risk assessments to identify vulnerabilities within AI systems and evaluate the potential impact of such vulnerabilities vis-a-vis compliance requirements.
4. Transparency and Explainability: Transparency is a fundamental principle that organizations must prioritize when adopting AI technologies, particularly as these systems increasingly influence decision-making processes. Businesses must ensure that their operations involving AI are clear and understandable to stakeholders, including consumers, regulators, and employees. For example, under the SEC Rules, Robo Advisers are required to disclose, in writing, to their clients; assumptions, limitations, and risks of the algorithms; circumstances under which the Robo Adviser may override the algorithms or temporarily halt the Robo Advisory Service; and any material adjustments to the algorithms.
In conclusion, as Nigerian businesses increasingly embrace AI technologies, understanding the associated legal considerations is crucial for successful adoption. With focus on the legal considerations explored in this newsletter, businesses may leverage the benefits of AI while maintaining regulatory compliance, upholding ethical standards and safeguarding their reputations.
These insights have been provided by:
Borne out of a vision to meet the legal requirements of businesses by adopting the highest professional standards in a less archaic fashion, Pavestones is a client focused, solution driven and commercially savvy law practice, providing innovative, quality, timely and tailored legal solutions to its esteemed clients.
Selected Articles
Kenya - Cliffe Dekker Hofmeyr
Finally, Some White Smoke: An Analysis of the Recent Supreme Court of Kenya’s Decision on the Finance Act, 2023
Over the last year or so, the Kenyan tax environment has been uncertain, not only because of protests and/or demonstrations that resulted in the withdrawal of the Finance Bill, 2024, but a myriad of court cases challenging the constitutionality of the Finance Act, 2023.?On 29 October 2024, the Supreme Court rendered a decision in the appeal case of?The Cabinet Secretary for the National Treasury and Planning and Four Others v Okiya Omtatah Okoiti and 52 Others. Though the court effectively overturned the?Court of Appeal's declaration of the entire Finance Act, 2023 as unconstitutional,?the judgment gives a level of certainty and direction as to the applicable law going forward. Continue reading
Mauritius - AXIS
Key Updates: Finance (Miscellaneous Provisions) Act 2024-2025
On 27 July 2024, the Mauritian Parliament enacted the Finance (Miscellaneous) Provisions Act 2024, which gives legal effect to the measures outlined by the Minister of Finance in the 2024-2025 Budget Speech. The Act reflects the government’s focus on fostering sustainable economic growth, promoting social equity, and enhancing climate responsibility. It addresses a range of national and global challenges while reinforcing Mauritius' commitment to maintaining a robust economic structure, supporting key industries, and ensuring compliance with international standards. Key highlights include initiatives aimed at environmental sustainability, regulatory improvements, and targeted measures to alleviate inflationary pressures and foster inclusive growth. Continue reading
Tanzania - FB Attorneys
Proposed Relaxation on Land Ownership for Diaspora Abandoned
On 26 June 2024, the Attorney General published the Written Law (Miscellaneous Amendments) (No.2) Bill, 2024. The Bill proposed, among others, amendments to the Land Act and the Immigration Act. Specifically, the proposed amendments in the two Acts were meant to create special immigration status and allow holders of such status to engage in various economic and social activities, including occupying land through a special derivative right granted by the Commissioner for Lands. Continue reading
by Africa Risk Consulting (ARC)
Mozambique
Industry and commerce minister?Silvino Moreno?announces that Mozambique will become a full member of?African Continental Free Trade Area (AfCFTA)?by January 2025.
Zambia
The African Development Bank?Group’s board of directors approves an $8m concessional loan to support the construction of a 25MW solar farm in the?Ilute?plan.
Nigeria
Nigeria-based fintech company?Moniepoint?has raised $110m in new funding from investors including?Google?to increase the prevalence of digital payments and banking across?Africa?in a funding round from?United Kingdom-headquartered?Lightrock?private equity fund.
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