The Central Bank of Nigeria has approved the operating parameters for open banking in Nigeria, kicking off the country’s open banking system. Musa Jimoh, Director of the CBN’s Payments System Management Department, issued a circular outlining the guidelines on March 7, 2023.

The policy will usher in a new era of financial innovation and financial inclusion in Nigeria and throughout Africa.

On February 7, 2021, the CBN announced the regulatory framework for open banking in Nigeria, laying the basis for an industry group to prepare a draught of operating guidelines in May 2022. This draught has now become the legislation for CBN-supervised banking and fintechs.

Since data privacy is a vital pillar for this type of banking, the Nigeria Data Protection Regulation (NDPR) was issued in 2019.

Many innovative fintech companies, like Mono, Okra, and Stitch (all members of the Open Banking Nigeria consortium), have gone ahead and developed creative hacks while waiting for open banking. But now that they can provide the market more richer data than is currently accessible, their days of suffering are gone.

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A new era of financial inclusion and innovation would start with open banking. strengthening Nigeria’s position as a worldwide leader in financial services and payments.

Key Provisions Of The New Regulations

The rules require the CBN to develop and operate an Open Banking Registry, which will act as a regulatory monitoring tool for open banking ecosystem players. This register is also intended to improve transparency and give a mechanism of regulating system operators.

In addition, the rules establish a Consent Management framework, which requires consumers to express explicit consent before their data may be accessed for open banking products and services, among other purposes.

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“The adoption of open banking in Nigeria will foster the sharing of customer-permissioned data between banks and third-party firms to enable the building of customer-focused products and services.

“It is also aimed at enhancing efficiency, competition, and access to financial services,’’ the memo shows.

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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