by vernialp | Oct 12, 2026 | Commercial Law, Society & Law
Nigeria though a developing nation has experienced the massive growth of Artificial Intelligence [AI] in almost every industry. More particularly, AI is increasingly becoming embedded in Nigeria’s financial-services ecosystem, especially in fraud detection, customer onboarding, risk modelling and credit assessment.
While Nigeria has no standalone artificial intelligence statute, and with none in view to address the growing AI concerns especially as it pertains to people’s rights, the Nigeria Data Protection Act 2023 [NDPA], the NDPA General Application and Implementation Directive 2025 [GAID], and the FCCPC’s Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations 2025 [“DEON Regulations”] serve as guides and regulators to the use of AI to limit the breach of people’s right and to ensure fairness especially fair lending in the financial eco-system.
AI deployment in high-impact sectors such as finance raises concerns relating to ethics, bias, transparency and privacy, and it is very important that a human-centred approach is adopted to ensure that AI systems are fair and accountable.
Sections.17, 18, & 163 of the Federal Competition and Consumer Protection Act [FCCPA] 2018 provides for the functions and Power of the Federal Competition and Consumer Protection Commission to make regulations to protect consumers’ interest and ensure market fairness.
The FCCPC have therefore established the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations 2025 [DEON Regulations] to regulate AI-assisted lending including any lending to consumers either by way of cash, airtime, data, cashback, services, barter in exchange for specific or verifiable monetary value, wherever the transaction occurs by digital, electronic, online, or non-traditional means [Regulation 12 of the DEON Regulations].
Regulation 17 [a] of the DEON Regulations, 2025 provides that:
“17- To promote transparency and enhance disclosure practices in the provision of the Consumer Lending Services, the Lender/Service Provider shall ensure the following:
[a] that the terms of the Lending Service provided to the Consumer (including interest rates, repayment terms, and any associated fees) are fully disclosed to consumers before any transaction is completed, and that such terms are made available to the consumers in clear, legible and simple English Language comprehensible to the average consumer, and in such manner that shall not be misleading or deceptive;…”
Therefore, the unavailability of an AI legislation is not an excuse for unfair lending in the financial services eco-system.
Regulation 18 [a] of the DEON Regulations, 2025 further provides that:
“18- The Lenders/Service Providers shall comply with the following provisions to ensure the fair treatment of consumers-
[a] “treat each and every consumer equitably and fairly without discrimination, exploitation or bias…”
Therefore, while many financial services deploy the use of AI to ascertain the credit worthiness, they must ensure that it is not unfairly adopted to discredit prospective lenders.
The Regulations do not prohibit technological credit assessment. Infact, Regulation 19(i) expressly requires a lender, before granting credit, to “profile or assess the capability to repay in a sustainable manner” through proper credit assessment, due diligence and creditworthiness assessment.
However, this permission to assess creditworthiness is accompanied by a substantive consumer-protection constraint which is highlighted above in the provision of Regulation 18.
Consequently, an AI credit-scoring system cannot be treated merely as a technological tool whose output automatically determines the applicant’s fate. Its deployment remains subject to the lender’s underlying obligation of fair treatment.
This is particularly important because an AI model may derive a credit decision from large quantities of personal or behavioural data and identify statistical correlations which are not necessarily transparent to the applicant.
A model may therefore produce systematically different outcomes for particular groups even where discriminatory characteristics are not expressly included in the model. The legal concern is consequently not limited to whether the lender intentionally discriminated; it extends to whether the deployment of the system produces a prohibited discriminatory or biased outcome.
The GAID expressly addresses Artificial Intelligence as an “Emerging Technology”. Article 43 provides that a controller or processor deploying AI for processing personal data must consider the NDP Act, public policy and the GAID, and establish technical and organizational parameters for the processing. These parameters must take account of, among other matters, the right of a data subject not to be subject to a decision solely based on automated processes or algorithms, safeguards for vulnerable groups, and privacy by design and by default.
In conclusion, Fintech lenders should not regard an algorithmic decision as an unreviewable substitute for institutional responsibility. Where an applicant is rejected, the use of AI should not extinguish the consumer’s rights to transparency, fair treatment, complaint handling and appropriate redress. Equally, lenders should ensure that model
development, validation, deployment and monitoring are sufficiently documented to demonstrate compliance with applicable regulatory obligations.
Team Vernia
by Vernia Legal Practitioners | Sep 28, 2026 | Commercial Law, Intellectual Property, Society & Law, Uncategorized
Every acquisition begins with an attractive story. A thriving customer base, a recognisable brand, a strong balance sheet, a market position worth paying for. It can be genuinely persuasive, which is why it deserves a second look. What a seller presents is rarely the whole picture, and the gap between the story and the reality is where most acquisition regret is born.
Beneath the numbers, a business may be carrying unpaid taxes, unresolved lawsuits, undisclosed debts, property with questionable title, regulatory breaches, staff entitlements that were never settled, or intellectual property it uses freely but does not actually own. None of this usually appears in a pitch deck. It surfaces, if it surfaces at all, through due diligence.
Due diligence is simply the discipline of finding out what is actually being bought, legally, financially, commercially and from a regulatory standpoint, before the transaction closes. Done well, it comes down to one question worth sitting with: what exactly is this business, once the story is set aside?
In Nigeria, that question has grown more complex in recent years. Reforms to tax law, data protection, competition regulation and the capital markets mean that acquisition risk can now arise from several directions at once. The following considerations outline what a prospective buyer should examine.
- Determine the Transaction Structure
Before any investigation begins, the structure of the proposed transaction must be clear. Is the buyer acquiring the company itself, its shares and everything that comes with them, or is it acquiring specific assets from the business?
The distinction carries real weight. In a share acquisition, the company retains its existing obligations, and the buyer takes on its full legal history. In an asset acquisition, the buyer can be more selective about what it takes on and, depending on structure, may leave certain liabilities behind with the seller. This decision shapes the entire due diligence exercise and should be settled at the outset rather than worked out afterwards.
- Confirm Ownership and Control
A seller’s assurance that it owns the business is not sufficient on its own. Ownership should be verified against records held by the Corporate Affairs Commission [CAC], including incorporation documents, shareholding structure, share transfer history, registered charges and persons with significant control. Under the Companies and Allied Matters Act 2020, shares may only be transferred and registered in specific ways, and registration may be refused in defined circumstances. Where the documented position does not match what the buyer has been told, that discrepancy deserves further scrutiny.
- Examine the Financial and Tax Position
A business can appear profitable while carrying substantial liabilities. Financial due diligence should extend beyond headline revenue figures to examine debts, guarantees, contingent liabilities and related party dealings.
Tax matters merit particular attention. With the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 now shaping the federal tax framework, buyers should review registration status, filing history, outstanding assessments, pending audits or disputes, and any incentives the business currently relies on. A clean set of accounts offers little comfort if an undisclosed tax exposure exists beneath them, since that exposure passes to the buyer the moment control changes hands.
- Look Beyond Active Litigation
Pending litigation is straightforward to identify. The more difficult risks are those that have not yet crystallised into formal proceedings: a breached contract no counterparty has pursued, a regulator raising quiet concerns, an employee grievance that has not reached a tribunal. A thorough review should map not only current proceedings but the liabilities that could reasonably emerge after completion.
- Verify the Target’s Assets
A business may list land, equipment, receivables, licences and inventory among its value, but ownership must be confirmed rather than assumed. This involves checking title to property, identifying mortgages or registered charges (which CAMA governs), and establishing whether key equipment is owned outright or subject to financing arrangements. If the purchase price reflects an asset, the seller must be able to demonstrate that it can actually transfer it.
- Distinguish Ownership from Use of Intellectual Property
For many modern businesses, real value resides in the brand, the software or proprietary technology rather than in physical assets. Using an asset, however, is not the same as owning it. Buyers should examine trademark and patent registrations, copyright ownership under the Copyright Act 2022, and, importantly, whether intellectual property created by employees or external developers was properly assigned to the company. It is not unusual for a business to have built considerable value around technology that, on closer inspection, partly belongs to someone else.
- Account for Employment Obligations
Employees carry obligations of their own: unpaid salaries, unresolved disciplinary matters, restrictive covenants and pension contributions among others. The Pension Reform Act 2014 sets minimum contribution requirements, and shortfalls in this area can accumulate quietly into a genuine liability. A workforce with unresolved entitlements is a workforce the buyer is about to inherit.
- Review Material Contracts Closely
Many businesses depend on a small number of critical relationships: a major customer, a key supplier, a lease, a financing facility. These contracts should be examined for how they treat change of control, assignment and termination. A customer or lender may hold the right to withdraw, or to renegotiate terms, the moment ownership changes. Discovering this after signing is considerably more costly than discovering it beforehand.
- Consider the Regulatory and Competition Landscape
Different sectors carry different licensing requirements, and not every licence transfers automatically with a change in ownership. Separately, the Federal Competition and Consumer Protection Commission has stated, as recently as April 2026, that qualifying transactions must be notified for prior review and approval before implementation. Where a public company or capital markets element is involved, the Investments and Securities Act 2025 may also apply. These are not procedural afterthoughts; they can determine the entire transaction timetable.
- Treat Data Protection as a Deal Issue
Where the target holds customer or employee data, the buyer is inheriting responsibility for how that data has been managed. Under the Nigeria Data Protection Act 2023, buyers should examine what categories of data are processed, the legal basis relied upon, the security measures in place and any history of breaches. A data protection weakness rarely stays contained; it can lead to regulatory action and reputational harm well after completion.
A Problem Discovered Is Not a Reason to Abandon the Deal
Finding an issue during due diligence does not automatically mean walking away; it means the buyer now has leverage. Price can be renegotiated, the seller can be required to resolve the problem before completion, specific indemnities or warranties can be sought, funds can be held in escrow, or the affected asset can be excluded from the transaction. The purpose of due diligence is to allow these decisions before the risk becomes the buyer’s problem.
The Central Point
The most useful question in any acquisition is not simply how much the business costs. It is what exactly is being acquired, what liabilities accompany it, and what protection is needed before completion. A properly conducted due diligence process, one that feeds directly into how the transaction documents are drafted, is what turns those questions into answers and a risky purchase into an informed one.
Engaging experienced legal advisers early in the process does not delay a transaction. It ensures that the agreement ultimately signed reflects the business actually being acquired.
Team Vernia
