Contributed By ǼLEX
Laws, Regulations and Industry Codes of Conduct Regulating the Digital Economy
Nigeria does not have a specific law that governs the digital economy, although a Digital Economy and E-Governance Bill is currently being considered by the National Assembly. Nevertheless, there are several laws and regulations that significantly impact the digital economy in Nigeria, including the following.
Legal Challenges in Relation to the Digital Economy
Key legal challenges affecting the digital economy in Nigeria include the following.
A lack of comprehensive regulations for emerging technologies
While there are sector-specific regulations which may address the challenges posed by the adoption of these emerging technologies, there is no specific law in Nigeria that regulates these technologies and the peculiar legal challenges that may arise from their adoption.
Tackling cybercrimes
With the continuous growth of the Nigerian digital economy comes the need to safeguard cyberspace from cyber threats to ensure adequate data security and transaction integrity. In 2022, the CBN reported a 534% increase in attempted cyber-attacks as digital banking surged. For the digital economy to thrive, it is imperative to prioritise measures geared towards improving the security of cyberspace.
Taxation
Due to the pervasive nature of the internet, businesses located outside Nigeria can offer their products and services to individuals in Nigeria using digital technologies. However, taxing these companies poses a challenge for tax authorities as it is difficult for the tax authority to accurately track and identify the income generated from online businesses.
Lack of awareness of intellectual property
The digital economy is powered by intellectual property assets. However, many creators of copyrighted works are unaware of the full extent of the rights granted to them under the CA 2022. This lack of awareness often results in insufficient enforcement of intellectual property rights.
Companies Income Tax (CIT)
The worldwide profits of a Nigerian company, including profits derived from the provision of digital services and goods are subject to companies income tax (CIT) at the rate of 20% (for a medium-sized company whose turnover is between NGN25 million and NGN100 million) or at the rate of 30% (for a large company whose turnover is above NGN100 million).
Under the provisions of Section 13(2) of the Companies Income Tax Act and the Companies Income Tax (SEP) Order 2020, a non-resident entity (NRE) is deemed to have a significant economic presence (SEP) in Nigeria and is liable to tax on its profits derived from Nigeria if it:
Withholding Tax (WHT)
Where any amount is payable by a Nigerian company to another company or person as fees for the provision of technical, professional, management or consultancy services, the company is required to deduct WHT at the rate of 5% (if the payment is due to another Nigerian company) or 10% (if due to an NRE) and pay it to the Federal Inland Revenue Service (the “FIRS”). The WHT deducted on any of these payments to an NRE is the final tax payable in Nigeria. For all other service payments, the company is required to deduct WHT at the rate of 2% (if the payment is due to another Nigerian company) or 5% (if due to an NRE). This 5% WHT is not the final tax payable in Nigeria, but an advance payment of CIT, which an NRE can use to offset its ultimate CIT liability upon filing its tax returns.
Capital Gains Tax (CGT)
CGT at the rate of 10% is payable on chargeable gains arising from the disposal of digital assets in Nigeria.
VAT
VAT is levied on the supply of digital services and goods in Nigeria at the rate of 7.5%.
Tax Compliance Management Challenges
NREs that supply digital services to Nigerian customers are required to register with the FIRS for VAT purposes, collect VAT on their supplies and remit it to the FIRS. In order to fulfil these obligations, an NRE would have to maintain a local presence or appoint a local third party as its tax compliance agent.
There are no special rules for the taxation of digital advertising revenues in Nigeria. The tax treatment of digital services applies equally to digital advertising revenues.
Consumer Protection Laws in the TMT Sector
The FCCPA is the principal consumer protection law applicable to digital goods and services in the TMT sector. Certain sectors have their own specific consumer framework. For example, in the financial sector, the CBN issued the Consumer Protection Regulations 2019 and the Consumer Protection Framework 2016 and in the telecommunications industry, there is the Nigerian Communications (Consumer Code of Practice) Regulations 2024.
Upholding Consumer Rights in the Digital Economy
To uphold consumer rights in the digital economy, companies should implement internal policies that will ensure that they comply with applicable consumer protection legislation and embrace transparency and fairness in their dealings with consumers.
Legal Frameworks for the Resolution of Consumer Complaints in the Digital Economy
A consumer can file a complaint via the FCCPC’s consumer portal. In addition to the portal, consumers can also file complaints through other channels such as email, letter, or in-person visits. The NCC, the CBN and other regulators have similar procedures for the filing of complaints.
Handling Consumer Disputes Effectively
To handle consumer disputes effectively, TMT companies should:
Cryptocurrencies and blockchain technology have impacted the legal landscape, necessitating the creation of new regulations. Some key effects include the following.
Regulation
The SEC has introduced rules to regulate digital assets and expanded its regulatory incubation programme to accommodate entities providing services related to cryptocurrencies and other forms of digital assets. The regulation of cryptocurrencies has led to the creation of different licence categories for various VASPs.
Taxation
The Finance Act 2023 amended the relevant tax laws in Nigeria. Notably, the Capital Gain Tax Act was amended to include digital assets as chargeable assets for CGT purposes. In essence, cryptocurrencies are now classified as property, thereby requiring the payment of capital gains at the rate of 10% on sales of cryptocurrencies.
Challenges
Classification
There is legal ambiguity over whether cryptocurrencies are securities, commodities, or currencies, thereby impacting their treatment under the law and ascertaining the relevant regulator.
Anonymity v KYC/AML laws
The pseudonymous nature of cryptocurrencies presents a significant challenge with respect to compliance with KYC and AML laws.
Cross-border legal disputes
Blockchain transactions occur across multiple jurisdictions. This complicates the determination of applicable law and forum for settlement of disputes.
Opportunities
Efficient cross-border operations
Cryptocurrencies eliminate intermediaries in cross-border transactions, reducing costs and delays.
Intellectual property and content management
Automating royalty payments and licensing through smart contracts has the potential to reduce disputes and administrative costs. Blockchain can also provide transparent and tamper-proof records of content ownership and usage, aiding in copyright enforcement.
New business models
Blockchain can enable tokenisation of assets or revenue streams, creating new business models.
Blockchain and Crypto Regulation
Blockchain
In May 2023, following the approval of the Federal Executive Council, the NITDA issued the National Blockchain Policy for Nigeria (the “Blockchain Policy”) as a roadmap for Nigeria’s adoption of blockchain technology. Through the Blockchain Policy, the Nigerian government recognised cryptocurrency as a potential catalyst for the adoption of blockchain. One of the expected outcomes of the Blockchain Policy is the creation of supportive legal and regulatory frameworks that will provide clarity and certainty to persons who intend to adopt blockchain to create innovative solutions in any sector.
Before the introduction of the Blockchain Policy, the NITDA had developed and issued the National Blockchain Adoption Strategy (the “Adoption Strategy”), providing a detailed roadmap and strategy for adopting blockchain. In terms of regulation and legal framework, the Adoption Strategy envisions a principle-based and technology-neutral approach that encourages innovation and development.
Cryptocurrencies
In 2022, the SEC released the Digital Assets Rules. The Digital Assets Rules created various categories of digital assets service providers and their respective registration and licensing requirements, including VASPs, digital asset offering platforms (DAOPs), digital asset custodians (DACs) and digital asset exchanges (DAXs).
However, the Digital Assets Rules were not operationalised and applications for registration or licensing were not accepted by the SEC. In 2024, the SEC issued the ARIP Framework to facilitate the onboarding of qualified cryptocurrency entities into the SEC’s ARIP Framework and provide a path to registration for operators.
The SEC subsequently issued the Exposure of Amendments to the Digital Assets Rules in 2024. They will come into effect on 30 June 2025. The amendments to the Digital Assets Rules cover advertisements, marketing and promotion, including third-party/social media promotions and mandate disclosure of paid promotions. Furthermore, the amendments create a new digital assets intermediary (DAI) category to cover persons that are not DAOPs, DAXs or DACs but are facilitating virtual assets transactions.
Similarly, the CBN reversed its prohibition on banks facilitating cryptocurrency transactions, through the issuance of the Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (the “VASP Guidelines”), which permit financial institutions to open bank accounts for cryptocurrency businesses, provided the requirements set out in the VASP Guidelines are fulfilled, including obtaining a relevant licence or registration from the SEC.
Laws, Regulations and Industry Codes of Conduct in Cloud and Edge Computing
There is no specific legislation on cloud and edge computing in Nigeria. However, the NITDA issued the Nigeria Cloud Computing Policy 2019 (the “Policy”), which applies to public institutions and government-owned corporations. The aim of the Policy is to ensure an increase in the adoption of cloud computing by public institutions and small and medium enterprises that provide digital enabled services to the government.
The Policy requires public sector entities to prioritise the procurement of cloud-based information and communication technologies where a cloud-based offer is essentially equivalent to other kinds of technology solutions.
Restrictions on Certain Industries
As there is no specific legislation on cloud and edge computing, no industry is subject to greater restrictions than others.
Personal Data Processing in the Context of Cloud Computing
In cloud computing, the provisions of the NDPA with regards to processing personal data must be complied with at all times specifically the following.
Laws, Regulations and Industry Codes of Conduct in Relation to the Use of Artificial Intelligence (AI)
There is no legislation that specifically governs the use of AI in Nigeria. However, the provisions of the NDPA, the CA 2022, the FCCPA, the Cybercrimes Act, the SEC Rules on Robo-Advisory Services 2021 etc may all impact the use of AI in Nigeria.
Deepfake Technologies
The CA 2022 protects original works of creators, including literary, musical and artistic works, audiovisual, sound recordings and broadcasts. The CA 2022 recognises and protects the moral rights of the original creators of works that are eligible for copyright protection. Therefore, where a person’s moral rights are breached by deepfake technologies, the person can have recourse to the remedies provided under the CA 2022.
With respect to a person’s likeness, the CA 2022 protects artistic and cinematographic works, which may include depictions of a person’s personality or image through mediums such as photographs, paintings, sculptures, or cinematography. Consequently, a person’s likeness that has been reduced to an artistic work such as a photograph is protected from unauthorised exploitation. A person’s likeness such as the person’s face, voice and mannerisms qualify as personal data under the NDPA, and as such the use of a person’s likeness needs to comply with the requirements of the NDPA.
Relevant Laws or Regulations About Applications of AI in Transport
There are no laws or regulations that specifically address the application of AI in transport.
Relevant Elements
Liability
Where any harm is caused by an AI system, the developers or users of the AI system, may be liable for such harm under the law of tort.
Data protection
Data protection is an integral aspect of AI as AI systems rely on a vast amount of data to function. Although recourse is not made expressly to processing in the context of AI in the NDPA, the NDPA requires that the data subjects be made aware of the processing of their personal data prior to the commencement of the processing activity. Accordingly, AI developers should inform individuals before they can use the personal data of the individuals to train their AI models. The NDPA also mandates that data controllers (including AI developers and deployers) inform data subjects about the existence of automated decision-making processes.
Intellectual property
The training of AI models with copyrighted materials should comply with the CA 2022. A critical IP consideration is the ownership of AI-generated works. Nigerian IP laws currently lack provisions on ownership of AI-generated works, leaving the ownership of these works in a grey area.
Fundamental human rights
The right to privacy and freedom from discrimination are two essential fundamental human rights provided for in the 1999 Constitution of Nigeria (the “Constitution”). AI systems must be built to ensure that the right to privacy is not breached. It is also important to ensure that AI systems are trained on unbiased data to prevent bias and discrimination against any person or a group of people in AI outputs.
Laws, Regulations and Industry Codes of Conduct in Relation to the Internet of Things (IoT)
While there is no specific law on the internet of things (IoT) in Nigeria, the provisions of the NDPA, the Nigeria Communications Act, the Cybercrimes Act and intellectual property laws will all impact the use of IoT technologies.
Relevant Elements
Machine-to-machine communications, communications secrecy and data protection
The IoT primarily thrives on data exchange. To promote confidentiality and integrity of the data, it is necessary that data exchange is done securely. It is therefore expedient to deploy data protection and information security strategies to ensure data protection. Nigeria has enacted adequate data protection laws to ensure safe data processing in the course of deploying the IoT.
The Cybercrimes Act also criminalises intentionally accessing a computer system or network to obtain computer data, gain access to any programme, commercial or industrial secrets or classified information.
Compliance Challenges for IoT Solutions in Nigeria
There are no specific laws on IoT technologies and so it may be difficult for IoT companies to understand the regulatory landscape. Additionally, in deploying IoT solutions, companies are usually faced with requirements to comply with multiple regulations which can be very complex.
Governance Frameworks for Managing IoT Deployments in Nigeria
To manage IoT deployments in Nigeria, companies should implement:
Key Data Sharing Requirements for IoT Companies
IoT companies intending to share data with third parties may enter into a formal data sharing agreement and non disclosure agreements with third parties. When the data to be shared includes personal data, the IoT companies are required by the NDPA to enter into a data processing agreement with the third party and ensure that the third party:
These data sharing requirements apply to all companies that share personal data with third parties.
Requirements for Specific Categories of Data
The NDPA has particular requirements for two specific categories of data: the personal data of children and sensitive personal data.
Under the NDPA, an IoT company processing a child’s personal data is required to obtain verifiable consent from the child’s parent or legal guardian. The company must also implement robust mechanisms to verify the child’s age and the authenticity of the consent provided.
Sensitive personal data means data relating to an individual’s:
Companies, including IoT companies, are prohibited from processing sensitive personal data except under the following conditions:
The Main Requirements for Providing Audiovisual Media Services
The provision of audiovisual media services in Nigeria is regulated by the National Broadcasting Commission (the “NBC”) under the National Broadcasting Commission Act. The NBC requires any applicant requesting a broadcasting licence to meet the following conditions.
Video streaming platforms currently operate in a regulatory grey area with respect to licensing. However, in 2021, the government directed the NBC to commence the licensing of all over-the-top (OTT) media platforms.
The National Film and Video Censors Board (the “NFVCB”) also plays a critical role in regulating films and video content distributed within Nigeria. It issues licences to exhibit films and video works. While streaming and video-sharing platforms are not explicitly mentioned in the National Film and Video Censors Board Act (the “NFVCB Act”), films distributed via these platforms needs to comply with the NFVCB Act.
Procedure
Application for a broadcasting licence
Apply to the director general of the NBC specifying the type of licence (eg, free-to-air terrestrial television, FM radio) required.
Submit an application along with the following:
Once approved, an applicant has to pay the prescribed licence fee and sign a licence agreement with the NBC.
A broadcast licence is valid for a period of five years from the date of issuance. The operator must apply for renewal at least six months prior to the licence’s expiration.
The fees for a broadcast licence in Nigeria vary based on the category of licence sought and the geographical coverage of the broadcast station. The fees are as follows.
Technologies and Services Within the Scope of Local Telecommunications Rules
The scope of Nigerian telecommunication laws
Nigerian telecommunication laws regulate all telecommunication services and networks used in Nigeria. Services in this sense include applications services, content services, network services, network facilities services or any combination of these services that facilitate any communication in the form of sound, data, text, visual images, signals or any other form. This includes internet access services, telephone network services, fixed wireless services, Voice over Internet Protocols, satellite communications and content provision services.
Nigerian telecommunication laws also regulate the use of all equipment, systems and technologies applied to communications including customer devices and equipment used for lawful interception of communication.
Requirements for introducing a product or service into the Nigerian telecommunication market
Every individual or corporate body that intends to introduce a product or service into the telecommunication market must ensure that the relevant licence is sought and obtained from the NCC. The applicant must also be an incorporated entity under Nigerian laws. Furthermore, the applicant must ensure that the product or service complies with technical regulations issued by the NCC. The applicant may also have to get clearance from other relevant agencies like the Standards Organisation of Nigeria.
Relevant security requirements for telecommunications services
Protection of consumer information
Providers of telecommunication services are required to ensure the protection of consumer information in line with Nigeria’s data protection laws. They are also required to disclose the security measures adopted to protect the information of consumers.
National interest
The NCA obligates a telecommunication services provider to use its best endeavours to prevent the network facilities it owns or provides or its services from being unlawfully accessed or used.
Rules and Regulations Around Net Neutrality
Regulatory framework
The issue of net neutrality is primarily regulated by the provisions of the Internet Code of Practice (the “Internet Code”) issued by the NCC. The Internet Code grants internet users the right to access and distribute information and content, use and provide applications and services and use appropriate terminal equipment of their choice. No lawful content, applications or services are to be blocked or made unavailable to users of internet services. No lawful content, applications or services will be discriminated against by any internet access service provider.
Internet service providers (ISPs) will treat all lawful traffic within the same service category equally, without discrimination, restriction or interference, irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided or the terminal equipment used. Similarly, an ISP will not block any lawful content, applications, services or non-harmful devices, with the exception of reasonable network management. An ISP will not impair or degrade lawful internet traffic on the basis of internet content, source, destination, application or service or use of a non-harmful device, with the exception of reasonable network management. An internet access service provider is prohibited from engaging in preferential data prioritisation under any circumstances.
Impact on the telecommunication sector
ISPs are obligated to take reasonable measures to prevent unlawful content on the internet while promoting consumers’ right to an open internet. Effectively, the regulatory landscape facilitates a telecommunication industry that promotes innovation and prevents unfair and anti-competitive practices in the sector. For example, the Internet Code, which prohibits the blocking of any lawful internet service, prevents arrangements by big players in the telecommunication sector to stifle upcoming industry players in order to protect their position and revenue inflow.
Impact of Technologies Like 5G, IoT and AI on the Telecommunications Legal Landscape
The rapid advancement of 5G, IoT and AI has significantly transformed the legal landscape of telecommunications. These technologies demand a more robust regulatory framework to address critical issues like spectrum allocation, data protection, cybersecurity, intellectual property, consumer protection and antitrust regulations.
With respect to 5G, telecommunications investments and terrestrial fibre infrastructure in Nigeria are concentrated in large commercial cities like Lagos, Abuja and Port Harcourt, creating an infrastructure gap in rural areas. To bridge this gap, network infrastructure sharing, particularly for 5G, is essential. The NCC has issued 5G spectrum licences to two telecom providers. If these licensed operators share their 5G infrastructure with other operators, telecommunications coverage can easily be extended to underserved areas.
Although AI is relatively new and its impact on the telecommunications sector is in its infancy, it will play an important role in the deployment of 5G, especially in the areas of resource allocation, efficient spectrum usage and intelligent traffic steering.
The rise of IoT technologies has implications for the type approval process of telecommunications equipment. As IoT devices proliferate, regulators will need to develop and implement updated type approval certification standards to address the unique characteristics of these new technologies.
Legal Considerations for TMT Companies in Integrating Emerging Technologies
Companies integrating emerging technologies in Nigeria should be aware of the following.
Data protection and privacy concerns
With 5G, IoT and AI technologies enabling the faster and more efficient transfer of personal data, including cross-border transfers of personal data, it is essential for companies to comply with the requirements of the NDPA. Essentially, companies should implement procedures to enable data subjects to exercise their rights.
Consumer protection
Compliance with the provisions of the FCCPC and other sector-specific consumer protection laws is essential. Companies must avoid unfair trade practices and provide clear terms of service in line with relevant consumer protection laws.
Freedom against discrimination
Companies must ensure AI systems are designed to avoid bias and discriminatory outcomes, aligning their efforts with Nigeria’s constitutional principles of equality and non-discrimination.
Tax implications
Tax implications are significant, particularly for digital businesses. Understanding and complying with digital tax laws is crucial.
Cybersecurity
Companies must anticipate ways these technologies may be exploited for cybercrimes and implement safeguards that align with Nigerian cybersecurity regulations and frameworks. The NDPA requires companies to adopt appropriate technical and organisational measures to protect information technology systems from unauthorised interference.
Main Challenges Faced by Organisations Entering into a Technology Agreement
Regulatory and compliance challenges
Given Nigeria’s complex and sometimes uncertain regulatory environment, with several laws and regulations, agencies and guidelines governing the technology sector, organisations have the burden of ensuring that their technology agreements comply with all these laws and regulations.
Increased cost
Technology transfer agreements in Nigeria are subject to mandatory registration with the National Agency for Technology Acquisition and Promotion (the “NOTAP”). Failure to do so will result in the Nigerian party being unable to remit payments through the official foreign exchange market. The NOTAP has specific guidelines regarding fee limits payable under the agreement, as well as certain local content requirements. Without these the technology agreement will not be registered.
Cross-border legal and jurisdictional issues
Technology agreements, such as technology transfer agreements, often involve cross-border collaborations. This can create complexities in contract enforcement. If the technology provider is based outside Nigeria, enforcing the agreement in case of a breach may pose significant challenges for the Nigerian party.
Data protection and data privacy concerns
Technology agreements that involve cross-border transfer of data face particular challenges, as they must comply with the additional requirement under the NDPA with respect to cross-border transfer of data.
Mandatory or Excluded Laws to be Taken into Account
Several requirements are mandated by certain regulations which parties cannot exclude by contract when entering into technology agreements in Nigeria. These include the following.
Price Revision
A telecommunication company cannot revise the prices of their services without the prior approval of the NCC.
Foreign Exchange Controls
The CBN has regulations in place governing foreign exchange transactions in Nigeria. Contracts that involve payments in foreign currencies (eg, US dollars) need to comply with the applicable exchange control rules. When a party to a contract seeks to repatriate funds in foreign currency through an authorised dealer, such as a commercial bank, they are required to provide relevant documentation, including regulatory approvals such as approval from the NOTAP for technology transfer agreements or approval from the NCC for telecom-related agreements.
Regulated Industries
The financial sector in Nigeria is subject to greater regulations. This is due to the sensitive nature of the data these industries handle, as well as the specific regulatory requirements imposed on them. Consequently, the institutions must comply with both the NDPA and sector-specific regulations such as the CBN’s Cybersecurity Framework and Open Banking Guidelines which impose higher data protection obligations on participants.
Key Elements of Telecommunications Service Agreements
The NCC Nigerian Communications (Consumer Code of Practice) Regulations sets out mandatory terms to be included in a telecommunications service agreement, which are as follows.
Negotiating Favourable Contractual Terms
In negotiating favourable terms in telecommunications service agreements, companies can consider the following strategies.
Considerations for TMT Companies Before Entering Interconnection Agreements
Some factors companies should consider before entering interconnection agreements include the following.
Regulation of Trust Services, Electronic Signatures and Digital Identity Schemes
Regulation of trust services
Under the NITDA Public Key Infrastructure Regulations, the NITDA introduced a voluntary licensing regime for certification authorities. The licensing of a certification authority by the NITDA is an indication to the public that the certification authority is trustworthy and deserving of consumer confidence.
These certification authorities issue digital certificates, which are used to authenticate and verify electronic transactions and digital signatures. Digital certificates issued by licensed certification authorities provide this assurance, ensuring that the transactions are secure, reliable and tamper-free.
Recognition of electronic signatures
With regards to the recognition of electronic signatures, the Nigerian Evidence Act recognises the use of electronic signatures as a means of authenticating electronic records. However, the Act stipulates that an unsecured digital signature will only be deemed reliable if it can be proven that the signature is uniquely linked to the signatory.
Regulation of digital identity in Nigeria
The laws that regulate digital identity in Nigeria include:
The NIMC Act is the primary regulation that provides for digital identity in Nigeria. It established the NIMC. The responsibilities of the NIMC include the creation, management, maintenance and operation of the national identity database. The NIMC Act requires the details of the following persons to be included in the database:
The NCC Regulations
The NCC issued the Registration of Telephone Subscribers Regulations 2011 which provides a regulatory framework for the registration of subscribers to mobile telephone services using subscription medium in Nigeria. Telecommunication companies are required to register each subscriber and ensure that the information of the subscribers is protected and not disclosed to any third party.
Banking and Financial Sector-Specific Regulations
The CBN’s Know Your Customer (KYC) guidelines require banks and financial institutions to verify the identity of customers, often using identity information like national identification numbers or bank verification numbers. This ensures that financial institutions can securely identify their clients.
Relevant Elements
Liability
Licensed certification authorities are required to inform their users of the scope and limitations of certification authorities’ liabilities with respect to the expected reliance to be placed in the information contained in the digital certificates issued by the certification certificates.
Under the NITDA Public Key Infrastructure Regulations, the liabilities of licensed certification authorities are limited. Certification authorities will not be liable for any loss caused by reliance on a false or forged digital signature of a subscriber as long as the certification authorities have complied with the requirements in the NITDA Public Key Infrastructure Regulations.
Data protection
Trust service providers, telecommunication service providers, financial institutions and other organisations are required to put procedures and security controls in place to protect the privacy and confidentiality of the subscribers’ data. Confidential information provided by the subscriber must not be disclosed to a third party without the subscribers’ consent unless the information is required to be disclosed under Nigerian law or a court order.
Laws or Regulations in Relation to the Gaming Industry
Before November 2024, the regulation of lotteries and gaming was done at both the federal and state levels of government. These included:
However, following a recent Supreme Court decision in November 2024 in the case of Attorney-General of Lagos State & Ors and the Attorney-General of the Federation & Ors, the NLA has been declared void and the regulation of the industry is now limited to the State level.
Key Legal Challenges
Complex and multiple regulatory frameworks
Following the decision of the Supreme Court, the gaming industry is now subject to regulation by multiple state regulators and the FCCPC. The multiple state regulatory frameworks will require operators wishing to engage in lottery and gaming activities to obtain several licences from the various states in which they want to operate.
Licensing and compliance issues
Decentralisation complicates operations by requiring businesses to navigate diverse state regulations on licensing and compliance, leading to higher administrative burdens and costs for multi-state operators.
Remote operations
Online gaming operators licensed in one state (eg, Lagos State) but serving customers in other states may come within the regulatory purview of the various states. This will lead to potential conflicts of authority, regulatory overlap and conflicting legal requirements.
Sector-Specific Issues
Nigeria’s current gaming regulatory framework does not explicitly mention or address in-game purchases or loot boxes, but the laws of the various states could potentially apply. For in-game purchases, the FCCPC may intervene where, for example, a game’s in-game purchase system is misleading or causes harm to consumers or is found to use deceptive tactics to pressure users into making in-game purchases. Similarly, if loot boxes are considered to involve an element of betting or a game of chance, they will fall under the regulatory purview of the relevant state regulator.
Legal Requirements for Game Developers
In Nigeria, it is illegal for persons under the age of 18 to be involved in gambling activities. All operators must ensure that they adhere to responsible gaming policy by ensuring that persons under 18 are prevented from gaming. Consequently, games developers can employ anti-underage gaming measures such as reliable age verification methods or setting up age restriction options to prevent underage gambling.
Furthermore, under the LSLGA, it is a requirement for a grant of a licence for an operator to have measures in place to protect underage people from exploitation or harmful or addictive gaming tendencies. These measures which are to be submitted as part of the application process, will be reviewed and assessed by the LSLGA and serve as a determinant for whether or not it may grant the licence.
While video games are regarded as exempted works that do not require the prior approval of the NFVCB, video games will cease to be classified as such if, to any significant extent, they depict explicit sexual activities, mutilation or torture, acts of gross violence towards humans or animals.
Developers must also adhere to advertising standards, consumer protection laws and privacy regulations. They must ensure that promotional content for games, whether through in-game ads, TV, online ads or other media, complies with the advertising standards in the Nigerian Code of Advertising Practice.
Primary Regulatory Bodies
The primary regulatory bodies overseeing the gaming industry include:
Enforcement Powers
The enforcement powers of the regulators include:
Examples of Recent Enforcement Actions
In 2024, Netbet Wakabet and Supabets were shut down for operating without licences. The management of the unlicensed operators were also arrested and face possible prosecution.
Following the Supreme Court’s decision nullifying the NLA, the Lagos State Lottery and Gaming Authority issued a directive requiring all gaming operators in Lagos to regularise their operations by obtaining the necessary licences. The NLA further warned that non-compliance would result in enforcement actions against operators.
Common IP Challenges
Some common IP challenges faced by game developers are the following.
Game cloning
The rampant practice of copying game concepts, characters, and storylines without proper authorisation from the authors.
Software piracy
The illegal/unauthorised copying and distribution of game software.
Trade mark squatting
Competing brands maliciously register trade mark(s) similar to existing game titles or characters to profit from the established trade mark’s reputation.
Counterfeiting
Counterfeiting of game mechanics and technology is another common challenge.
Creator Rights
In Nigeria, creators can protect their rights under the CA 2022 which affords creators protection over their literary and artistic works/expressions in a game, including the game’s source codes, artwork and associated music to prevent unauthorised use or reproduction.
Creators can protect their rights by registering their branding materials such as names, logos, colours or any other distinctive features as trade marks. Trade marks prevent others from using similar brand identity materials in the gaming industry.
Creators also have the right to protect the process/method involved in producing their product if the process is novel, results from an inventive activity and is capable of industrial application. This right also prevents others from using, making or selling the process without permission from the creator.
Key Considerations for Copyright in Digital and Virtual Assets
When dealing with copyright in digital and virtual assets, several key considerations arise. These include the following.
Originality
Copyright protects original works in that the creator of the work must have expended sufficient efforts to give the work an original character. With respect to virtual assets, it is critical for the creator of the asset to show that this threshold of originality is satisfied.
Ownership of copyright
The CA 2022 states that unless there is an agreement stating otherwise, the copyright in a work belongs to the person who created the work. It is necessary to clarify the ownership of virtual assets.
Rights in derivative works
Virtual assets typically build on or incorporate pre-existing works. The creation of derivative works based on pre-existing works requires permission from the original copyright holder unless the pre-existing work is deemed to be part of works in the public domain.
Applicability of Trade Mark Laws to Virtual Goods and Services
Trade mark laws apply to both physical and virtual goods and services. Trade marks are governed primarily by the Trademarks Act in Nigeria. The Trademarks Act is designed to protect marks associated with goods and services in the course of trade. While the Trademarks Act does not explicitly mention virtual goods and services, its principles may be extended to these categories of goods and services.
Nigeria utilises the Nice Classification of Goods and Services and under Class 42 of the Nice Classification, trade marks can be registered in respect of scientific and technological services including:
It is therefore possible for the Trademarks Registry to recognise and register trade marks for virtual goods and services.
Implications of User-Generated Content on IP Rights
User-generated content (UGC) refers to any form of content created by an individual. Users who create content, such as videos, images, music or text, often own the copyright to their original works. This grants them the exclusive right to reproduce, distribute and licence their content. Many platforms require users to grant broad licences to the platforms for the use and distribution of their content, potentially limiting the creator’s control.
While UGC is protected by copyright, the creators of the work may find it difficult to exercise any of their exclusive rights, especially where the works have been shared on social media platforms like Facebook or TikTok. This is because it is somewhat easy for other users of the platform to copy the works without permission.
Laws and Regulations Relevant to Social Media
Code of Practice for Interactive Computer Service Platforms/Internet Intermediaries
The Code aims to combat online harm by regulating platforms like social media where users share or access content.
CA 2022
The CA 2022 contains provisions empowering the copyright owner to notify social media platforms to take down or disable access to infringing content or links hosted on the platform.
Cybercrimes Act
The Act criminalises identity theft, cyber bullying, harassment, online fraud, the dissemination of false information, the distribution of obscene or pornographic content, phishing and unauthorised access to computer systems. The use of social media platforms to facilitate any of these offences such as spreading false information via Facebook with the intent to disrupt public order or distributing obscene or pornographic content through TikTok carries legal consequences.
National Broadcasting Commission Act
The broadcasting laws prohibit the broadcast of contents that contain hate speech or contents that incite violence. Broadcasts should also not contain contents that promote discrimination on the grounds of ethnicity, religion, gender, etc. The use of social media platforms to violate these requirements attracts penalties.
The NDPA and NDPR
The disclosure of someone’s personal data on social media without authorisation and without any lawful basis can lead to legal actions under the NDPA. Consequently, users of social media must adhere to the NDPA and NDPR. The social media platforms must also comply with the NDPA and NDPR and ensure that users’ personal data is secured and processed in line with the NDPA.
Advertising Regulatory Council of Nigeria Act 2022
This Act governs advertising in Nigeria, extending its scope to online advertisements. Under its provisions as well as the provisions of the Nigerian Code of Advertising Practice, advertisers are required to obtain prior approval from the ASP before any advertisement is made available to the Nigerian market.
Key Legal Challenges
With respect to social media, the key legal challenges are as follows.
Primary Social Media Regulatory Bodies
The NITDA
The NITDA oversees the IT sector, including social media platforms. It also promotes the ethical use of technology, including social media.
Its enforcement powers include investigations of complaints of violations of the law related to social media platforms and issuing take down orders.
The NBC
Traditionally focused on radio and television broadcast, the NBC has extended its oversight to digital media.
Its enforcement powers include issuing take down orders and removing false information likely to cause public disorder.
The NDPC
The NDPC ensures that social media platforms collect and process users’ data transparently and lawfully. It mandates platforms to inform users about the purpose and use of their data.
Its enforcement powers include investigating any complaints related to data protection violations, conducting inspections of entities, issuing orders and directives and imposing penalties and fines.
The ARCON
The ARCON was established to regulate advertising in Nigeria, and as such it is responsible for ensuring that adverts exposed online comply with the advertising laws.
Its enforcement powers include imposing fines on organisations that expose adverts without the approval of the ASP. It can also demand organisations take down offending adverts.
The FCCPC
The FCCPC is responsible for consumer protection. It also ensures that users of social media platforms are protected against unfair commercial practices.
It has the power to impose fines on undertakings that violate consumer protection laws after conducting investigations.
Recent Enforcement Actions
The FCCPC recently fined Meta Platforms NGN220 million for violations of data protection laws. This was after a joint investigation by the FCCPC and the NITDA (the erstwhile data protection regulator) into the practices of Meta Platforms between May 2021 and December 2023.
The ARCON filed a lawsuit against Meta Platforms Incorporated claiming NGN30 billion and a declaration that the continued publication and exposure of various advertisements targeting the Nigerian market through Facebook and Instagram, without ensuring the adverts are vetted and approved prior to exposure, is illegal, unlawful and in violation of Nigeria’s advertising laws.
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