In a move to mitigate the adverse effects of Nigeria’s unpredictable regulatory landscape on the burgeoning tech sector, the Central Bank of Nigeria (CBN) has announced the immediate unfreezing of bank accounts belonging to multiple tech startups and companies. This pivotal development follows a series of regulatory actions taken in 2021, which significantly hampered these businesses’ operations and stifled growth prospects.
In a circular issued by A.M. Barau, acting on behalf of the CBN’s director of banking supervision, the apex bank directed all financial institutions to lift the post-no-debit restrictions on the accounts of 440 individuals and companies. The post-no-debit restriction had previously paralyzed vital debit transactions, including ATM withdrawals and check payments, while still permitting incoming funds. Surprisingly, the circular did not provide any explicit reasoning for the initial imposition of restrictions.
The list of affected companies reads like a who’s who of Nigeria’s thriving tech startup ecosystem. Bamboo Systems Technology Limited, Escale Oil & Gas Limited, Rise Vest Technologies Limited, Chaka Technologies Limited, abokiFX Limited, Nairabet International, Northwood Energy Services, Proport Marine Limited, and others found their operations grinding to a halt due to the financial constraints imposed.
The repercussions of these unstable regulatory actions resonate from a tumultuous past in 2021 when the CBN instructed banks to freeze the accounts of 18 diverse companies spanning bureaux de change, construction firms, investment companies, laundering services, and property developers. This prior freeze of accounts presented a significant setback to the affected companies, dampening investor confidence and causing disruptions across various sectors.
However, as part of the CBN’s current reforms, the freeze order on all 18 companies’ accounts has now been lifted, signaling an apparent shift towards rectifying the tumultuous regulatory environment that has plagued the Nigerian business landscape. The recent decision aims to restore normalcy and foster an enabling environment for businesses to thrive.
Yet, challenges remain for the Nigerian tech ecosystem, as the sector has also endured other turbulent regulatory encounters. In 2021, foreign stock-trading startups were caught in the crosshairs, facing allegations of “illegal foreign exchange transactions.” As a result, a court-ordered freezing of their bank accounts for 180 days ensued, casting a cloud of uncertainty over their operations.
read also How Startups In Nigeria Can Apply For New Funding Under TIES By CBN
While the CBN’s latest reforms represent a positive step towards streamlining regulatory practices, industry stakeholders remain cautiously optimistic. As Nigeria seeks to harness its digital potential and encourage innovation in the tech sector, a consistent and stable regulatory framework becomes paramount for the sustained growth of startups.
As the unfrozen tech startups begin to regain their financial footing, analysts eagerly await further clarifications and updates from regulatory authorities. These critical developments will determine the trajectory of Nigeria’s tech landscape, either propelling it to new heights or once again grappling with the consequences of an unstable regulatory climate.
Accounts Unfrozen Nigeria Accounts Unfrozen Nigeria
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard