What is a Microfinance Bank (MFB)?

Microfinance Bank (MFB) is any company licensed by the Central Bank of Nigeria (CBN) to carry on the business of providing financial services such as savings and deposits, loans, domestic funds transfer and non-financial services to microfinance clients.

What are the specific objectives of the new microfinance policy?

The specific objectives of the microfinance policy are to: 

1. Make financial services accessible to a large segment of the potentially productive Nigerian population which would otherwise have little or no access to financial services.
2. Provide synergy and mainstreaming of the informal sub-sector into the national financial system.
3. Enhance service delivery by microfinance institutions to micro, small and medium entrepreneurs (MSMEs).
4. Contribute to rural transformation by mobilizing savings.
5. Promote linkage programme between microfinance institutions (MFIs), Deposit Money Banks (DMBs), Development Finance Institutions (DFIs), specialized Funding institutions.
6. Create employment opportunities and increase the productivity and household income of the economically active poor in the country, thus enhancing their standard of living.
7. Promote a platform for microfinance service providers to network, exchange view and share experience.

Who can establish a Microfinance Bank?

Microfinance bank can be established by individuals, groups of individuals, community development associations, private corporate entities or foreign investors.

What are the regulatory and operational framework for microfinance banks?

Microfinance banks are among the specialised banks and other financial institutions governed by the CBN’s supervisory guidelines outlined in Sections 61-63 of the Banks and Other Financial Institutions Act, 2020 (BOFIA) (as amended) and Section 33(1)(b) of the CBN Act 7 of 2007. The following regulations govern the operation of Microfinance Banks in Nigeria.

• Central Bank of Nigeria (CBN) Act 2007;
• Bank and Other Financial Institutions Act 2020;
• Central Bank of Nigeria Guidelines for the Regulation and Supervision of Microfinance Banks in Nigeria, January 2020.

How many categories of MFB licences are available?

There are four (4) categories available to promoters based on geographical spread:

1. Tier 1 Unit Micro Finance Bank (with urban authorization): They are licensed to operate in banked and high-density regions, with a maximum of four (4) branches outside the main office within five (5) contiguous Local Government Areas recognized by the CBN. The minimum share capital for this type of licensing is N200,000,000 (Two Hundred Million Naira).

2. Tier 2 Unit Micro Finance Bank (with rural authorization): They are licensed to operate solely in rural, unbanked, or underbanked areas and may open one (1) branch outside the main headquarters within the same Local Government Area. A Tier 2 Unit Micro Finance Bank has a minimum share capital of N50,000,000 (fifty million naira).

3. State Microfinance Bank: This type of Microfinance Bank is permitted to operate in a single state or the Federal Capital Territory. It is permitted to open branches within the same state or FCT, subject to prior written approval from the CBN for each new branch or cash center. It may not open more than two branches in the same Local Government Area (LGA) unless it has established at least one branch or cash center in each LGA in the State. A newly licensed State Microfinance Bank cannot begin operations with more than ten (10) branches. State microfinance banks must maintain a minimum capital of one billion naira (₦1,000,000,000).

4. National Microfinance Bank: This Microfinance Bank is authorized to operate in multiple states, including the Federal Capital Territory. A newly licensed National Microfinance Bank is prohibited from commencing operations with more than ten (10) branches. National microfinance banks must have a capital barrier of five billion naira (₦5,000,000,000).

What are the permissible business activities of the Microfinance Bank?

A Microfinance bank is allowed to offer the following services to its clients:

• Acceptance of various types of deposits including savings, time, target and demand deposits from individuals, groups and association;
• Provision of credit to its customers;
• Provision of housing micro loans;
• Provision of ancillary services such as capacity building on record keeping and small business management and safe custody;
• Issuance of debentures to interested parties to raise funds from members of the public with the prior approval of the CBN;
• Collection of money or proceeds of banking instruments on behalf of its customers including clearing of cheques through correspondent banks;
• Act as agent for the provision of mobile banking, microinsurance and any other services as may be determined by the CBN from time to time, within the geographic coverage of its licence;
• Appoint agents to provide financial services on its behalf in line with the CBN Agent Banking Guidelines, within the geographic coverage of its licence;
• Provision of payment services such as salary, gratuity, pension for employees of the various tiers of government;
• Provision of loan disbursement services for the delivery of the credit programme of government, agencies, groups and individual for poverty alleviation on non-recourse basis;
• Provision of banking services to its customers such as domestic remittance of funds;
• Maintenance and operation of various types of account with other banks in Nigeria;
• Investment of its surplus funds in suitable money market instruments approved by the CBN;
• Operation of micro leasing facilities, microfinance related hire purchase and arrangement of consortium lending;
• Participate in CBN Intervention Fund and funds other sources;
• Provision of microfinance related guarantees for its customers;
• Financing agricultural inputs, livestock, machinery and industrial raw materials to low- income persons;
• Investment in cottage industries and income generating projects for low-income persons as may be prescribed by the CBN from time to time;
• Provision of professional advice to low-income persons regarding investments in small businesses;
• Issuance of domestic commercial paper subject to the approval of the CBN;
• Provide financial and technical assistance and training to microenterprises; and
• Any other permissible activity as may be approved by the CBN from time to time.

What are the non-permissible business activities of the Microfinance Bank?

Microfinance banks are forbidden from providing the following financial services:

• Foreign currency transactions, except foreign currency borrowings;
• International commercial papers;
• International corporate finance;
• International electronic funds transfer;
• Clearing house activities;
• Collection of third-party cheques and other instruments for the purpose of clearing through correspondent banks;
• Dealing in land for speculative purposes;
• Dealing in real estate except for its use as office accommodation;
• Provision of any facility for speculative purposes;
• Leasing, renting, and sale/purchase of assets of any kind with related parties and/or significant shareholders (five per cent or more of the equity) of the MFB, without the prior written approval of the CBN;
• Financing of any illegal activities; and
• Any activity other than those permitted as stated above or as may be prescribed by the Central Bank of Nigeria from time to time.

What are the procedures and requirements for obtaining a Microfinance Bank Licence?

The application for a Micro-Finance Bank license will be made in three (3) phases, as follows:

• Pre-licensing Presentation
• Approval-in-Principle
• Final License

1. Requirements for Pre-licensing Presentation

Prior to submitting a formal application for a license, promoters and investors must provide the CBN with a pre-licensing presentation on the proposed microfinance bank’s business case.

2. Requirements for Approval-in-Principle

Before submitting an Approval-In-Principle (“AIP”) application to the CBN, promoters and investors must first reserve the name of their prospective MFB with the Corporate Affairs Commission (“CAC”).

A formal application for the grant of Approval-in-Principle shall be made to the Governor of the Central Bank of Nigeria. The following documents must be submitted alongside the application:

• Evidence of payment of non-refundable application fee to the Central Bank of Nigeria;
• Evidence of capital contribution made by each shareholder;
• Evidence of minimum capital deposit in line with Section 4.2.7 of this Guidelines, to be verified by the CBN;
• Evidence of name reservation with the Corporate Affairs Commission (CAC);
• Detailed business plan or feasibility report which shall, at a minimum, include:
• Objectives of the Microfinance Bank;
• Justification for the application;
• Ownership structure in a tabular form indicating the name of proposed investor(s), profession/business and percentage shareholdings;
• Sources of funding of the proposed equity contribution for each investor;
• Where the source of funding the equity contribution is a loan, such shall be a long-term facility of at least 7-year tenor and shall not be taken from the Nigerian banking system;
• Organizational structure, showing functional units, responsibilities, reporting relationships and grade of heads of departments/units;
• Schedule of services to be rendered;
• Five-year financial projection of the proposed bank indicating expected growth, profitability and the underlying assumptions; and
• Details of information technology requirements and facilities.

For institutional investors, promoters shall forward the following additional documents:

• Certificate of Incorporation and certified true copies of other incorporation documents.
• Board resolution supporting the company’s decision to invest in the equity shares of the proposed bank;
• Names and addresses (business and residential) of owners, directors and their related companies, if any
• Audited financial statements & reports of the company and Tax Clearance Certificate for the immediate past 3 years.
• Draft copy of the company’s Memorandum and Articles of Association (MEMART). At a minimum, the MEMART shall contain the following information:
• Proposed name of the MFB
• Objects clause
• Subscribers to the MEMART
• Procedure for amendment
• Procedure for share transfer/disposal
• Appointment of directors
• A written and duly executed undertaking by the promoters that the bank will be adequately capitalized for the volume and character of its business at all times;
• For regulated foreign institutional investors, an approval or a ‘no objection letter’ from the regulatory authority in the country of domicile;
• Shareholders’ agreement providing terms for disposal/transfer of shares as well as authorization, amendments, waivers, and reimbursement of expenses;
• Statement of intent to invest in the bank by each investor;
• Technical Services Agreement, where applicable;
• Detailed Manuals and Policies covering:
• Credit Policy Manual;
• Internal Audit Manual;
• Asset/Liability Management Policy (ALM Policy);
• Accounting policies and principles;
• Roles and responsibilities of the senior management officials responsible for financial management;
• Treasury operations, including funds management, vouchers, payroll and procurement;
• Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Policy;
• Enterprise-Wide Risk Management Framework;
• Whistle Blowing Policy;
• Code of Ethics and Business Conduct;
• Bank Verification Number (BVN) and Tax Clearance Certificate of each member of the Board and significant shareholders.
• Duly signed resume and valid means of identification for proposed shareholders of proposed MFB;
• Criteria for selecting board members;
• Board composition, directors’ duly signed resumes and valid means of identification. The size and composition of the board shall comply with the provision of the CBN Code of Corporate Governance for MFBs;
• Consolidated statement of account showing the capital contribution for all shareholders;
• Completed Fitness and Propriety Questionnaire; and sworn declaration of net worth executed by the proposed shareholders, directors and management personnel;
• Any other information that the CBN may require from time to time.

It is worthy of note that the minimum and maximum number of Directors on MFB boards are five (5) and seven (7) for Unit MFBs; five (5) and nine (9) for State MFBs; and seven (7) and twelve (12) for National MFBs.

Also, take note that at least two (2) members of the Board of Directors, other than the Executive Directors, must have banking or comparable financial industry experience.

Upon receipt of an application, the CBN must convey its decision to the applicant within 90 days. If the CBN is pleased with the application, it will give an Approval-in-Principle (AIP) to the applicant.

Registration with the National Association of Microfinance Banks (“NAMB”) is required after acquiring an AIP.

3. Requirements for granting of final license

The CAC will finalise the incorporation of the MFB after the AIP is granted.

Then, promoters of a proposed microfinance bank shall file an application with the CBN for the issuance of a final licence, addressed to the Governor of the Central Bank of Nigeria, no later than six (6) months after receiving the AIP. The following documents must be included with the application.

• Evidence of payment of non-refundable licensing fee to the Central Bank of Nigeria;
• Certified true copy (CTC) of the Certificate of Incorporation of the bank;
• CTC of MEMART;
• CTC of Form CAC 1.1 (Application for Registration of Companies);
• Evidence of the location of the Head Office (rented or owned) for the take-off of the business;
• Schedule of changes, if any, in the Board, Management and Shareholding after the grant of AIP;
• Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, and telecommunications, to perform the bank’s operations and meet CBN and other regulatory requirements;
• Copies of letters of offer and acceptance of employment in respect of the management team;
• List of proposed top management staff and duly signed resume stating their qualification (including photocopies of academic and professional credentials), experience, records of accomplishments and valid means of identification;
• Comprehensive plan on the commencement of the bank’s operations with milestones and timelines for roll-out of key payment channels; and 
• Board and staff training programme.

Before obtaining a final license, the Central Bank of Nigeria must conduct an inspection of the proposed bank’s facilities and premises, which include:

• Checking the physical structure of the office building and infrastructure provided for the take-off of the MFB;
• Sighting the original copies of the documents submitted in support of the application for license;
• Meeting with the Board and Management team whose resumes had earlier been submitted to the CBN;
• Verifying the capital contributions of the promoters; and
• Verifying the integration of its infrastructure with the National Payments System.

If the CBN approves the Application for Final Licence, it may award Final Licence to the Microfinance Bank.

Also, shareholders must deposit the Minimum Share Capital with the CBN when submitting an application for AIP. This amount may or may not be invested by the CBN, but it is refundable (with or without interest) at the end of the process.

What is the estimated timelines for granting licence?

The estimated timeline for granting an AIP is 3 to 6 months after submitting an application.

Likewise, the projected timeline for granting a Final Licence is 3 to 6 months after submitting an Application for Final Licence.

What are the step-by-step procedure of how to apply for Microfinance Bank license online?

The Central Bank of Nigeria (CBN) has launched a new online platform for submitting microfinance bank (MFB) license applications, known as the CBN Licensing, Approval, and Other Requests Portal. The new online platform replaces the previous laborious approach of physically submitting MFB license applications to the CBN. These are the steps to apply for an MFB license online.

• Open a browser, input the URL https://larp.cbn.gov.ng/to access the application. On the navigation bar below, click on “Register”.
• Select an “application type”, from the drop-down list above and then enter the proposed institution name (as reserved by CAC).
• Enter the CAC Reservation Code.
• Enter the Applicant details and submit the registration details. NOTE: If the proposed application name is already an existing financial institution, the system will not accept the name.
• If the LGA of the proposed application is in a Tier 1 LGA location, you will be required to pay the minimum deposit based on the location of the proposed MFB.
• If the LGA of the proposed MFB is not in a Tier 1 LGA location, you may select the Tier of the application you want to register the application.
• The applicant’s email address must be verified. This will involve an OTP being sent to the applicant’s email address. After the verification, the user can continue with the registration process.
• The applicant would be required to input the OTP that was sent to their email to complete verification to proceed.
• The applicant would be required to check the “I agree with the terms of use” and click on register to complete the registration process.
• Once the registration is completed, an email will be sent, and the applicant will be required to make payments for the Application Fee and the Minimum Capital Deposit at his preferred Bank within 72 hours.
• Then see screenshot for the mail received upon registration:
• Once the Bank has made your payment, they will give the applicant a printout. The applicant is expected to wait for 24 – 72 hours for the payment to be verified and approved by CBN. When the payment process has been completed, an email with the applicant username and default password will be used to log into the system.
• Thereafter, the applicant will be prompted to change your password. Ensuring that the password consists of Uppercase, Lower Case, Number, Special Character, and it must be a minimum of 8 characters.

In conclusion, a Microfinance Bank in Nigeria is a specialized financial institution dedicated to providing affordable and accessible banking services to the unbanked and underserved portions of the population, particularly micro-entrepreneurs and small enterprises.

The CBN reserves the right to oversee, regulate, or even revoke a registered MFB’s license in accordance with the authority granted to it by the Banks and Financial Institutions Act 2020, so anyone interested in establishing a microfinance bank in Nigeria should proceed with caution and demonstrate competence and professionalism.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on banking related matters including how to process microfinance bank licenses in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Who are bank customers?

Generally, a customer of a bank is someone who has an account with a bank, or without having an account the relationship of banker and customer exists. In the latter case, some money transaction must connect the banker and the customer but must arise from the nature of a contract. See, Union Bank of Nigeria Plc. V. Integrated Timber & Plywood Producers Ltd. (2000) 12 NWLR (pt. 680) 99 (CA). 

A bank customer is any person having an account with a bank or for whom a bank has agreed to collect items and includes a bank carrying an account with another bank as to letters of credit, a buyer or other person who causes an issuer to issue credit or a bank which procures issuance or confirmation on behalf of that bank’s customer. See, Inland Bank (Nig) Plc v. Ruhanti (Nig) Ent Ltd &Ors(2010) LPELR-4324(CA)

What is the relationship between a bank and its customer?

The relationship between a banker and its customer is founded on simple contract. It is a settled principle of banking law that any money paid into a bank belongs to the banker from the moment of such payment. Thus, creating as between the banker and the customer a debtor/customer relationship. When money is paid by a customer into the bank, there is a contract between the banker and the customer in which the banker receives the money as a loan from the customer against the promise by the banker to honour the customer’s cheque or other orders of the customer. The law of contract clearly requires that both parties to a contract must fulfill their contractual obligations. 

A bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to the operations within its contracts with its customers. This duty extends to the whole range of banking business within the contract with the customer. This duty applies to interpreting, ascertaining, and acting in accordance with the instructions of the customer. 

A banker and customer relationship is also one rooted in trust and confidence and this is the only reason a person would confidently entrust his hard-earned money to a bank in the belief that the money will be safe and well managed in the bank. It is based on this trust and confidence that a fiduciary relationship exists between the bank and the customer.

A fiduciary relationship arises whenever confidence is reposed on one side, and domination and influence result on the other, the relation can be legal, social, domestic, or merely personal. The banker/customer relationship places the bank in the position of a fiduciary to the customer and the bank therefore owes the customer a duty to exercise a high standard of care in managing the customer’s money.

It is settled in the law and practice of banking, that the relationship between a bank and its customer is contractual. See, GTB PLC v. MOBCOM TECHNOLOGIES LTD (2023) LPELR-60658(CA)

What are the rights of bank customers?

Bank customers in Nigeria have a number of rights protected by law, regulations, and conventions. These rights are aimed to protect customers’ interests and guarantee that banks treat them fairly. These rights include but not limited to the following:

Right to be informed: Bank customers have the right to complete, relevant, and true information regarding the products and services supplied by the bank. This includes the right to understand contractual terms and charges prior to entering into any agreement or contract. The bank is required to clarify these terms in a way that the consumer understands, allowing them to make sound decisions.

The Right to Choose: Customers have the right to choose from the variety of products and services provided by the bank at competitive rates. Banks are prevented from limiting consumers’ options or forcing them to accept goods or services that do not meet their demands. If a customer is dissatisfied with the bank’s service delivery, they have the right to terminate the contract or even the banking relationships, provided that all outstanding commitments have been met.

The Right to Safety: Banks must provide a safe and comfortable banking environment for all customers, free of dangers to their safety and health. This covers protection from accidents on the bank’s facilities as well as the negative impacts of pollution.

Right to privacy and confidentiality: Bank customers have the right to secure their account information from disclosure and unlawful access by third parties. There are some exceptions to this right, such as when the bank is required by law to make a disclosure or when the customer agrees to the disclosure.

The Right of Redress: Banks must provide a way for clients to communicate their complaints or dissatisfaction. This system should be free, open, transparent, timely, and convenient. Customers have the right to be kept informed about the resolution process and can request a review of the decision by the bank, the Central Bank of Nigeria (CBN), or a court if they are displeased.

The Right to Good Service: Banks and their staff must treat customers with respect and dignity to ensure they receive value for their money. Banks must respond appropriately to customer demands and complaints.

The Right to Equality: Customers deserve to be treated equally, regardless of financial status, physical ability, age, gender, race, or creed. Banks cannot give preferential treatment to certain customers at the expense of others, while they can distinguish between consumers based on the nature of the products or services purchased.

Right to a Free Monthly Statement of Account: Banks are mandated to give customers free monthly statement of account, although exceptional requests may incur fees. These rights are vital to ensure that bank customers in Nigeria are treated fairly and respectfully. They are intended to increase accountability, transparency, and consumer happiness in the banking industry.

Does a customer have a duty to the bank?

Yes, the duties that bank customers owe to banks in Nigeria are vital elements of the bank-customer relationship. Here are some fundamental duties that consumers are expected to perform.

Duty of Knowledge and Understanding: Customers must obtain relevant information and understand the terms and circumstances of their banking activities. This duty entails being informed about the bank’s products and services, as well as the related charges and contractual terms.

Duty of Care: Customers are to act with care and prudence throughout contacts with the bank. This duty involves delivering correct information, adhering to security measures, and behaving in good faith throughout transactions.

Duty of Honesty: Customers have a duty to provide accurate information to the bank and to conduct honestly in their transactions. This duty contributes to the integrity of the banking system and promotes transparency in financial transactions.

Duty to Comply with Instructions: Customers must follow the bank’s guidelines and policies while making transactions. This duty helps to optimize banking procedures and ensure smooth service delivery.

Duty to Report Issues: Customers must promptly report any anomalies, frauds, errors, or difficulties that arise during their banking activities. Timely reporting helps the bank address and resolve problems efficiently.

Duty to Maintain Security: Customers are responsible for the protection of their banking information, such as passwords, PINs, and account numbers. This duty prevents fraud and unauthorized access to accounts.

Duty to Cooperate: Customers are expected to comply with the bank during investigations, verifications, and compliance procedures. Cooperation helps resolve disagreements and guarantee regulatory compliance.

Duty of financial obligation: Customers must repay credit facilities and pay agreed-upon interest on loans and financial services provided by their banks on time. Banks are responsible for providing loans and financial services to customers, thus this is one of the customer’s main obligations. Customers must make timely payments to their bank to avoid default charges and penalties.

What are the possible remedies readily available to a bank customer?

There are numerous legal remedies accessible to bank customers in Nigeria who have been exploited or had problems with their banks:

Litigation: Customers may sue their bank in court for concerns such as unreasonable fees, unjustified deductions, fraud, negligence, breach of contract, etc. The relevant court depends on the amount involved: Magistrate Court for claims under ₦10 million in Lagos, and High Court for claims over ₦10 million.

Damages: Customers can pursue monetary damages from the bank in court for losses suffered owing to the bank’s negligence, violation of contract, or other unlawful acts. Damages may include amounts improperly deducted or not paid out by the bank, consequential losses for missing business chances and penalties, general damages for inconvenience and mental distress.

Where the banker fails to perform his duty of care and professional diligence in his dealings with the customer, he may be held liable for breach of contract, and the customer may be able to recover damages.

Specific Performance: A court may order the bank to fulfill its contractual responsibilities, such as paying genuine claims or correcting erroneous debits. This remedy is useful when the damages alone are insufficient.

Injunction: A court may grant an injunction to prevent the bank from conducting specific acts, such as closing a customer’s account without notice or exposing sensitive information. Injunctions are temporary remedies that maintain the status quo until the lawsuit is determined.

Restitution: The court may order the bank to pay back any unjust enrichment received at the customer’s expense, such as excessive fees and interest. Restitution seeks to rectify the bank’s wrongful profits.

Debt Recovery: If a bank makes an error in transferring funds to a customer’s account, they must return the money. If they refuse, the bank may acquire a court order to debit the account or reclaim the funds through legal action.

Complaint to the Central Bank of Nigeria (CBN): The CBN has set up a Consumer Protection Department to handle customer complaints against banks. Customers can make complaints using the CBN’s official website, email, or postal mail. The CBN will investigate the allegation and urge the bank to address it.

Arbitration: Banks need to establish an internal dispute settlement procedure. If a customer is dissatisfied with the bank’s response, they can escalate their complaint to the Bankers’ Committee for resolution. If the case remains unresolved, it may be referred to the Chartered Institute of Bankers of Nigeria (CIBN) for arbitration.

Regulatory Enforcement: The CBN and the Federal Competition and Consumer Protection Commission (FCCPC) have the authority to initiate enforcement action against banks that violate consumer protection laws. This involves issuing fines, suspending licenses, and barring erring bank staff.

Finally, bank consumers in Nigeria have several legal options for seeking restitution and compelling institutions to meet their duties. Each case’s individual circumstances determine the proper treatment. Seeking expert legal counsel is advised to identify the best course of action.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co., a full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on banking related matters in Nigeria.

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Value Added Services (VAS) in the telecommunications industry refer to network-based services other than voice calls that are provided in various forms such as text, video, graphics, pictures, multimedia, or data for the purpose of conveying information or executable content. These services are often supplied for an additional cost and can include a variety of services such as:

• Information services/content: news, updates, data, quizzes, games, ringtones, video streaming, alerts, product information, call centers, and database access.

• Interactive services/applications: charting, contest participation, e-voting, e-government, text-to-win, polls and surveys, coupons, online games, promotions, prepaid calling card services, call directories, and location-based services.

• Commerce: mobile money, e-ticketing, telemarketing, e-health and e-banking.

The VAS sector is divided into four major segments, with the following market players:

• Network operators
• Aggregators
• Content and application service providers, and
• Developers of content, applications and platforms

Regulatory and Legal Regime for Value Added Services (VAS) in Nigeria

The Nigerian Communications Commission (NCC) is the regulatory agency responsible for providing licences and guidelines for Value Added Services in Nigeria. The NCC ensures that customers are informed about the nature and costs of VAS services, that consumers have the opportunity to opt in and out of services, and that there are complaint resolution systems in place.

The primary regulations and frameworks that govern VAS in Nigeria are:

• NCC Value Added Services and Aggregator Framework, 2018:This framework defines a VAS provider as a person or organisation that provides value-added mobile/fixed services. It specifies the conditions for VAS activation, deactivation, denial of activation, or illegal deactivation.

• NCC Competition and Market Rules for VAS Businesses in Nigeria: These regulations prohibit network operators from providing VAS, save for NCC-approved services. They also specify the conditions of VAS hosting, including technical specifications and requirements for content and application providers.

Procedures for obtaining a Value-Added Services License in Nigeria

To obtain a Value-Added Services (VAS) license in Nigeria, the applicant must follow these steps:

1. Sign up on eservices.ncc.gov.ng and click on Licensing Application Management System to apply

2. Fill the form and upload the relevant documents listed below:

• Certificate of Incorporation.
• Tax Clearance Certificate.
• Certified True Copy (CTC) of Articles & Memorandum of Association.
• Feasibility report of proposed service.
• Soft Copy of Passport photographs of authorized representative.
• Certificates of qualified technical staff (where applicable).
• Certified True Copy (CTC) of Form CO7 (List of Company Directors).
• Soft Copy of Passport photographs of Directors of the company.
• Certified True Copy (CTC) of Company’s Registered Address.
• Utility bill of the official address of the Company.
• Evidence of funding for the project.
• The amount budgeted for the project i.e. estimated funding for the deployment of the proposed service.

3. Applications should be submitted when all documents above have been uploaded.

4. On submission of the application, a non-refundable administrative charge, which is 5% of the relevant license fee would be paid via the Licensing Application Management System.

5. License fee is payable on approval of application.

6. All Automated Vehicle Tracking Service (AVTS) applicants henceforth must obtain a security clearance from the State Security Service (SSS) for the proposed service before applying for the license, as a condition precedent for the grant of license by the Commission. The Personal History Statement Form (PHS) for the company and its Directors will be provided by the Commission for completion by applicants.

7. All VAS (Content Service using Short Code) applicant (s) must present:

• Evidence of an Agreement or a Memorandum of Understanding (MOU) entered between the company and any of the VAS Aggregators.

• Alternatively, the company should provide a copy of License duly issued to it by the Central Bank of Nigeria (CBN) for Mobile Money Services or from the National Lottery Regulatory Commission (NLRC) for lottery services.

The applicant must meet all NCC technical and financial requirements, as well as the license’s terms and conditions. It is advisable to seek proficient legal guidance to verify that all requirements are met and the application process is performed correctly. A foreign or local company can successfully obtain a Value-Added Services license in Nigeria if it follows these processes and meets the essential standards.

By Adeola Oyinlade & Co.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

Adeola Oyinlade & Co provides help and offer advisory to clients on telecommunications and sub-Telecoms matters in Nigeria.

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

In the captivating landscape of African music, Nigerian music has emerged as one of the most vibrant in Africa, garnering accolades such as BET and MOBO Awards, Grammy nominations and other global recognition. It has emerged as a pivotal force in the Afrobeats scene, showcasing a blend of traditional African beats, highlife, and modern Western influences. Renowned artists such as Wizkid, Davido, Burna Boy, Tiwa Savage, alongside emerging talents like Asake, Rema, and Ayra Starr, have significantly propelled this genre into the global stage.

Notwithstanding its remarkable success, the African global music industry encounters various legal and regulatory challenges. One notable challenge is the lack of engagement of specialised intellectual property lawyers by artists venturing into the music business. By seeking legal support, artists can navigate the complexities of the industry and safeguard their artistic endeavours. 

LEGAL RIGHTS OF ARTISTES

In Nigeria, the legal framework that protects music artist’s rights includes copyright laws and various intellectual property regulations. Copyright is a bundle of rights which the author or originator of certain intellectual works is entitled to. The act addresses key aspects relevant for the protection, promotion and monetization of creative endeavours.  The copyright act aims to protect the artistic creation of writers, photographers, composers, publishers of music, cinematographers and other creative. 

1. Protection of Creative Works: Section 1 of the Copyright Act provides cogent mechanisms to protect diverse creative works, including literary, artistic, musical, and cinematographic works, among others. Copyright laws provide music artists with the legal framework to protect their creative works from unauthorised use, reproduction, and distribution. It serves as a bulwark against unauthorised exploitation. 
2. Monetary Compensation: It is of utmost importance to recognise the inherent value of creative expression. The act ensures fair and equitable compensation for creators. Copyright laws enable artists to negotiate royalty agreements and licensing frameworks. Section 15 of the Copyright Act seeks to uphold the principle of remuneration commensurate with the economic value generated by creative works.
3. Moral Rights Preservation: Section 14 of the Copyright Act enshrines the concept of moral rights, safeguarding the integrity and attribution of music artists. Music artists retain the rights to be identified as the authors of their works, and to object to any unauthorised distortions or modification of their work. 
4. Registration and Enforcement: The act incorporates streamlined registration procedures and establishes standardised mechanisms for the resolution of disputes. It empowers music artists to assert their rights through civil remedies and equitable remedies, thereby deterring infringement and ensuring swift redress. In order to seek redress, it is advisable to register their work with the Nigerian Copyright Commission. This registration helps provide legal protection and establishes a record of ownership for their creative works. 
5. Licensing and Collaboration: The importance of collaboration in the creative industry cannot be overemphasised. The act encourages synergy between music artists and record companies. It provides a framework for establishing agreements, licensing, and royalties, which helps foster mutually beneficial relationships in the music industry and it also propagates the exploration of new revenue streams and the expansion of creative horizon.
6. Royalty Collection: The act mandates the establishment of transparent and accountable royalty collection mechanisms. Through collective management societies and digital platforms such as spotify, Apple Music and Youtube music, creators can effectively track and monetise their works. Organisations like Nigerian Copyright Commission play a crucial role in managing and distributing these royalties to artists. 

Confronting Obstacles: Navigating the Roadblocks Encountered by Nigerian Music Artists

Nigerian music artists are usually faced with variety of challenges such as execution of unfavourable contract, royalty collection issue, low per-stream payouts, digital piracy, distribution disparities, copyright infringement, and lack of legal awareness. 

1. Execution of Unfavourable Contract: Despite legal protections provided by copyright laws, music artists often find themselves at a disadvantage when negotiating contracts with record companies and streaming platforms. The issues of restrictive clauses can result in music artists signing agreements that undervalue their work and drastically diminish their long-term earning potential.
2. Royalty Collection Issues: The high complexities of royalty collection present a great challenge to music artist seeking fair compensation for their contributions. Nigeria has multiple collective management organisations (CMOs) responsible for collecting and distributing royalties on behalf of music artists. However, the existence of multiple CMOs often leads to inefficiencies in royalty collection. 
3. Low Per-stream Payout: The rapid advent of digital streaming platforms has improved the consumption of music. However, the prevailing model of per-stream payouts has been subject to scrutiny for its inadequacy in remunerating music artists fairly. Despite millions of streams, many music artists receive low payouts, raising concerns about the sustainability of their livelihoods in an increasingly digital landscape. 
4. Digital Piracy: The rapid increase of digital piracy poses threat to the economic interests of music artists. Illicit streaming websites, peer-to-peer file sharing, and unauthorised distribution channels encourages the unauthorised dissemination of copyright contents, resulting in gross loss of revenues and diminished incentives for music artists to produce new works.
5. Distribution Disparities: limited access to global distribution networks, language barriers and cultural biases can hinder the visibility and commercial success of musical works.
6. Copyright Infringement: Despite legislative frameworks, copyright infringement still remains a pervasive issue, fuelled by the ease of digital reproduction and dissemination. 
7. Lack of Legal awareness: Music artists may unwittingly relinquish their rights or fall victim to exploitation due to ignorance of copyright laws and contractual obligations.

Breach of Exclusive Rights of the Author of a Musical Work or Sound Recording

It is pertinent to note that music artists invest countless hours, talent and resources into crafting their compositions, only to be saddled with the disheartening reality of unauthorised use, reproduction, or distribution that undermines their exclusive rights. The instances of copyright infringement are delineated in Section 15 of the Copyright Act, encompassing the following actions:

1. Unauthorised utilisation or commercially distributing a protected music work.
2. Importing copies of a musical work into Nigeria, which would constitute infringement if produced domestically.
3. Public exhibition of articles infringement, such as pirated sound recordings.
4. Manufacturing or possessing plates, master tapes, machinery, or equipment intended for producing infringing copies of musical work.
5. Allowing public venue or business establishment to host a performance of a musical work without proper authorisation, thereby committing infringement.
6. Engaging in or facilitating performances of musical works for trade or business purposes, or as ancillary activities supporting trade.

 Enforcement Mechanism:

 Litigating Copyright Infringement

In the musical industry, copyright infringement poses a persistent threat to the rights of music artist, and as such violation of the exclusive rights is prohibited under the Copyright Act, potentially leading to a lawsuit for copyright infringement. 

Upon identifying instances of infringement, music artists may choose to pursue legal action to enforce their rights and seek remedies for damages. However, it is essential to acknowledge certain limitations before initiating this process.

Limitations to Consider

The jurisdiction to adjudicate matters of copyright infringement lies exclusively with the Federal High Court, and legal action for infringement may only be pursued by the creative owner, assignee, or an exclusive licensee of the musical work. In lieu of this, individuals attempting to initiate a copyright infringement case in any other capacity, such as non-exclusive licensee, would lack the legal standing to maintain the action. 

Furthermore, in cases where both the copyright owner and exclusive licensee have concurrent rights of action against an infringement, neither party may proceed with legal action without the court’s permission unless the other party is either joined as a plaintiff or added as a defendant.

In addition, individuals engaged in activities that relates to negotiating licenses, collecting royalties, or representing multiple copyright owners are restricted from bringing lawsuits for copyrights infringements unless they are authorised to operate as a collecting society or have obtained exemption from the Nigerian Copyrights Commission. 

Remedies for Copyright Infringement

Similar to other civil lawsuits, a claimant in a copyright infringement case has the option to seek declaratory relief, perpetual injunctions, or general damages. It is important to understand that declaratory reliefs solely determine the rights of the parties without further action. Therefore, it is advisable to accompany a request for declaratory relief with a request for injunction to prevent future infringement, as well as damages to compensate for past infringement.

Moreover, where it is established or admitted that infringement occurred but the defendant was unaware or had no reasonable grounds to suspect that the work was protected under the Copyright Act at the time of infringement; the court may only order an account of profits against the defendant. 

CONCLUSION

The Nigerian music industry is experiencing rapid growth. However, it is faced by challenges, particularly the lack of understanding of rights and legal protection among artists. There is a need for mechanisms to ensure fair compensation, and the importance of raising awareness, promoting legal education, and implementing robust systems that safeguard the rights of artists. In the same vein, there is need to curtail infringing practices through competent litigation to ensure that only authors or persons duly authorised by them, profit from exploitation of a copyright protected musical work.

By Adeola Oyinlade & Co.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

Adeola Oyinlade & Co provides help and offer advisory to clients including Musical artists, Record companies, producers, composers, writers, photographers cinematographers, and publishers of music on intellectual property rights and entertainment law in Nigeria.

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Conducting land search and verifying land title of a landed property is important for the purpose of ascertaining that the land or property has a good root of title or for detecting any defect in the title. Land searches and verifications involve carrying out due diligence at the Land Registry and other applicable places depending on the specific land transaction.

The processes involved in conducting search and verifying land titles include the following:

1. Search at the Land Registry, Lagos State.

The Land Registry maintains all documents relating to land within the state.  A search at the Land Registry will reveal the true owner of the land as well as any encumbrances such as government acquisition, mortgages, or leasehold on the property. Only land that has been duly registered with the state government can be verified.

2. Confirmation of survey at the office of the Surveyor-General Lagos State.

This is an important process in land verification. It involves the verification of the location of the land using the land coordinates in the survey plan. This process verifies the survey plan and reveals in the land in under acquisition.

3. Conducting a search at the Corporate Affairs Commission (CAC).

Companies are required to be registered with the CAC before they can acquire properties. Thus, a search is conducted at the CAC to confirm whether there is an encumbrance or charge registered in CAC with regards to the company’s assets.

• Search at the Probate Registry

A landed property may form part of a deceased estate, thus a search at the Probate Registry will verify whether probate has been given on any estate; who the administrators of the estate are; or to determine the executors of a testator in a situation of properties belonging to the estate of a deceased.

• Traditional Investigation

The land title of a single individual vendor, can be verified by conducting a traditional search. An investigation of the vendor’s family to identify the principal members of the family, as well as the community in the town where the land is located, particularly if the land is subject to family or community ownership. It is vital to confirm that the consent of all family members, including the family head, was obtained and that the family name is not void or voidable.

• Search at the Court’s Registry

This search will reveal if a landed property is subject to court litigation or has been litigated upon and the end result of the dispute.

• Physical Inspection of the land site

Physical inspection is to confirm the physical condition of the land or property, to know the boundary of the land, to confirm if it corresponds with the coordinates on the survey plan, and to know whether it is in possession by any person or than the vendor.

Conducting due diligence search and verification on land titles will assist a buyer in eliminating doubt, ambiguity or confusion surrounding a property.

By Adeola Oyinlade & Co.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

Adeola Oyinlade & Co provides help and offer advisory to clients on conducting due diligence search and verification on land titles in Lagos, Nigeria

Need help? Kindly contact us using the details below:

Email: [email protected]Mobile: +234 803 826 7683 / +234 802 686 0247