In a welcome development, the Central Bank of Nigeria (CBN) recently announced the lifting of the ban on crypto currency trading, a move that no doubt has far-reaching implications for E-commerce and Digital trading in Nigeria and by extension it’s economy. It goes without saying, that the lifting of the crypto currency trading ban marks a noteworthy development, indicating a shift in Nigeria’s regulatory approach toward digital currencies. This change is expected to have a ripple effect on the e-commerce sector, which relies heavily on digital transactions and payment systems. Consequently, the legal framework governing e-commerce in Nigeria is in dire need of reevaluation to accommodate and align with the new stance of the CBN. This article aims to reassess the legal aspects of e-commerce and digital trading in Nigeria while also underscoring the substantial implications arising from this pivotal shift.
THE LEGAL FRAMEWORK OF E-COMMERCE AND DIGITAL TRANSACTIONS IN NIGERIA
The COVID-19 pandemic precipitated the adoption of e-commerce globally, and Nigeria is no exception [1]. Lockdowns and various restrictions on physical movement led to increased reliance on online platforms for shopping and services, prompting governments to recognize its significance and implement or adapt laws and regulations to address the challenges and opportunities associated with online transactions. Here are some of the laws and regulations pertaining to e-commerce in Nigeria:
- The Cybercrime (Prohibition, Prevention, Etc) Act
The Cybercrime (Prohibition, Prevention, Etc) Act enacted in 2015 is a comprehensive legislation that covers a wide range of cybercrimes including online fraud, hacking, identity theft, and cyber-terrorism.
The purpose of the Cybercrime Act is to provide legal framework for the prevention, detection, investigation, prosecution, and punishment of cybercrimes in Nigeria. [2]
The Cybercrime Act contains several crucial provisions that businesses involved in e-commerce must take cognizance of. One of such provisions is Section 13, which provides thus;
“A person who knowingly accesses any computer or network and inputs, alters, deletes or suppresses any data resulting in inauthentic data with the intention that such inauthentic data will be considered or acted upon as if it were authentic or genuine, regardless of whether or not such data is directly readable or intelligible, commits an offence and is liable on conviction to imprisonment for a term of not less than 3 years or to a fine of not less than 7,000,000.00 or both”
Furthermore, Section 15 of the Cybercrime Act criminalizes the interception of electronic messages. This provision makes it illegal to intercept, without authorization, electronic messages sent by another person, such as emails, instant messages, or text messages.
In view of the above, businesses engaged in e-commerce must take active steps to ensure that their computer systems and networks are secure and protected from cyber-attacks. They must also ensure that they comply with the provisions of the Act to avoid legal liability by implementing strong password policies and using encryption technology to protect customer data. [3]
- The Companies and Allied Matters Act, 2020
The Companies and Allied Matters Act (CAMA) is the principal legislation governing the incorporation, regulation, and management of companies in Nigeria. The CAMA applies to e-commerce businesses that are registered as companies in Nigeria.
E-commerce businesses are obligated to adhere to company registration regulations outlined in the Companies and Allied Matters Act (CAMA) 2020. This involves fulfilling requirements like acquiring a certificate of incorporation [4], submitting annual returns [5], and ensuring proper maintenance of accurate financial records [6].
Additionally, CAMA imposes certain reporting responsibilities on e- commerce entities. These include the disclosure of beneficial ownership and the mandatory filing of financial statements [7]. In essence, e-commerce businesses must comply with legal formalities and disclose relevant financial information as stipulated by CAMA as failure to do so may result in the suspension or revocation of said company’s registration, as well as fines and other penalties
- The Central Bank of Nigeria (Establishment) Act 2007 (CBN Act) and the Banks and Other Financial Institutions Act (BOFIA) 2020
The CBN Act establishes the Central Bank of Nigeria as an autonomous body responsible for enforcing the CBN Act and the Banking and Other Financial Institutions Act (BOFIA). Its key objectives encompass ensuring stability in monetary and pricing matters, as well as regulating various financial entities, including banking and related businesses.
In carrying out its supervisory role and in compliance with the provisions of Section 47(2) of the CBN Act which charges the CBN with the obligation “…to promote and facilitate the development of an efficient and effective system for the settlement of transactions (including the development of electronic payment systems”, the CBN has released several regulations that are essential to the digital transaction ecosystem, which include, but are not limited to:
- Guidelines on Operations of Electronic Payment Channels, 2016; [8]
This aims to;
- Promote and facilitate the development of efficient and effective systems for the settlement of transactions, including the development of electronic payment systems;
- Regulate, among other things, the use of ATMs, mobile point of sale services and web acceptance services; provide for dispute resolution of issues that may arise from the use of electronic payment channels.
- The Central Bank of Nigeria’s Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria 2019.
- Guidelines on Electronic Banking in Nigeria (E-Banking Guidelines)
- Guidelines on International Money Transfer Services in Nigeria, 2014;
- Regulatory Framework for Mobile Payments Services in Nigeria (M-Payment Service Regulation);
- Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995.
The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, established the Autonomous Foreign Exchange Market and provides the regulatory framework for foreign exchange transactions in Nigeria. [9]
- Advance Fee Fraud and other Related Offences Act 2006.
This Act addresses fraud-related offenses, outlining prohibitions and penalties. It also outlines specific responsibilities for entities offering telecommunication, internet, telephone, electronic communication, or remote computing services to;
- obtain from the customer or subscriber their full names, residential or corporate address;
- maintain a register of all fixed-line customers for inspection by any authorized officer of the Commission;
- register with the Economic and Financial Crimes Commission;
- assist the Commission and exercise a duty of care that their services are being lawfully used.
- The Startup Act 2022.
This legislation serves as both a legal and institutional foundation aimed at fostering a conducive environment for technology-enabled startups in Nigeria. The Act encompasses provisions for the issuance of certificates, entitling companies to grants, tax reliefs, and incentives. Furthermore, it establishes the National Council for Digital Innovation and Entrepreneurship (NCDIE), tasked with overseeing and enforcing the regulatory framework outlined in the Act, with the overarching goal of promoting the growth and development of technology startups in Nigeria.
- Sale of Goods Laws
Nigeria has a host of sale of goods laws adopted as state legislation. These apply to contracts or transactions for the sale of goods and are relevant to sales of goods via online platforms. [10]
- Federal Competition and Consumer Protection Act 2019
Enacted to drive fair competition and safeguard consumer interests, this legislation establishes both the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal. The primary objective of the Act is to foster and sustain competitive markets within the Nigerian economy by prohibiting restrictive agreements and preventing the abuse of dominant positions.
The Act also seeks to ensure that consumers receive fair value for goods and services with the view of promoting a balanced and equitable marketplace.
- Standards Organisation of Nigeria Act 1971
The Act establishes the Standards Organisation of Nigeria, which regulates the standards for methods and products in Nigerian industries. Goods sold online must also meet the standards prescribed by the Standard Organisation of Nigeria.
- The Nigerian Data Protection Act, 2023
The Act establishes the Nigerian Data Protection Commission (NDPC). The NDPC, among other things, monitors the use of electronic data interchanges and other forms of electronic communication transactions, regulate the processing of personal information, investigate, implement and impose penalties in respect of any infraction of the provisions of the act. [11]
- The Finance Act 2020
This Act amends portions of the principal tax legislation to bring non-resident companies that provide digital services and products to Nigerians under the Nigerian tax regime. Furthermore, the Act imposes Value Added Tax on supplies of intangible products, assets or property (excluding interests in land).
Essentially, the afore-mentioned legislations are put in place to protect the rights of e-consumers in Nigeria and as such, e-commerce businesses should be aware of their obligations under said legislations, such as providing accurate product information and ensuring that their goods are in compliance with safety and quality standards.
CONCLUSION & RECOMMENDATIONS
In conclusion, the CBN’s decision to lift the ban on crypto currency trading represents a transformative moment for e-commerce and digital transactions in Nigeria. As the regulatory landscape evolves, e-businesses must reassess their legal positions, align with the new realities, and leverage the opportunities presented by this significant policy shift.
As earlier established, e-consumer protection and data privacy are paramount concerns for e-consumers and as such several regulatory bodies, including the Central Bank of Nigeria (CBN) have introduced guidelines and regulations to address these issues. To further fortify e-consumer safeguards and ensure data security, the following recommendations are proposed:
- Enhanced E-consumer Protection by CBN:
The CBN needs to bolster its consumer protection regulations for digital payments. This includes mandating digital payment providers to furnish clear and transparent information regarding fees. Additionally, mechanisms for e-consumers to dispute transactions and seek redress should be established. [12]
- Unified Digital Payment Legislation:
It is imperative for the National Assembly to formulate a comprehensive legislation dedicated to regulating digital payments, e-service providers and financial institutions involved in facilitating digital transactions. Such legislation would effectively delineate the responsibilities, rights, liabilities, and obligations of both e-consumers and digital financial service providers.
- Cyber security Measures and Sanctions:
The meteoric rise in online activities has raised legitimate concerns about cyber security threats. There is an urgent need to impose and implement stricter sanctions contained in the Cybercrime Act which would serve as a deterrent to hackers and individuals alike and ensure the security of digital transactions.
- The Federal Competition and Consumer Protection Commission Oversight and Sanctions:
The FCCPC should be empowered to investigate and take decisive action against digital payment providers engaging in unfair or deceptive practices. Sanctions should be imposed for practices such as charging fees beyond stipulated limits, providing misleading information, or participating in predatory lending. [13]
REFERENCE
- https://unctad.org/news/how-covid-19-triggered-digital-and-e-commerce-turning-point
- Nicholas Idoko, accessed 23rd January, Understanding Nigeria’s E-commerce Legislation Landscape , < https://professions.ng/e-commerce-legislation/>
- Ibid 2
- Section 41 of CAMA
- Section 42(1) of CAMA
- Section 388 OF CAMA
- Section 388(3) of cama
- https://uk.practicallaw.thomsonreuters.com/w-020-0579?transitionType=Default&contextData=(sc.Default)&firstPage=true
- Ibid 8
- Ibid 9
- Kelvin Erue, AOC Solicitors website, accessed 23rd January, 2024 https://aocsolicitors.com.ng/safeguarding-data-the-importance-of-data-protection-in-nigeria/
- Saviour Archibong and Etinosa Egharevba, Papers SSRN website, accessed 26th January, 2024 https://ssrn.com/abstract=4564098
- Ibid 12