The Policy Choices That Could Define Nigeria’s Digital Economy

Nigeria is tightening its grip on the digital economy with new regulations, from mandatory licenses for social media platforms to the criminalization of unregistered digital asset exchanges under the Investments and Securities Act (2025). However, even supportive policies, like the Nigerian Startup Act, face serious implementation gaps. These include delays in registration, conflicting rules between agencies, and limited access to the ₦10B fund. While the regulatory push signals a commitment to formalizing the digital space, it also creates operational friction for startups navigating overlapping mandates. The country aims to lead in digital innovation, yet unclear and inconsistent policies risk undermining this ambition. The future of Nigeria’s digital economy will be shaped by both the technological innovations of founders and engineers and how policies enable or stifle them. To ensure progress, it is crucial to embrace three core principles: openness, competitiveness, and responsible regulation. Without these, Nigeria’s digital future may remain more promise than reality.

What Innovation Needs to Grow

 The catalyst for sustained innovation lies not just in regulatory clarity but in open access to data, infrastructure, and collaboration. The National Broadband Alliance for Nigeria (NBAN), a public-private initiative, aims to increase broadband penetration to 70% by 2025, while open banking initiatives offer promising opportunities to provide inclusive financial services through standardized data exchange. Yet these examples remain exceptions. In many sectors, access remains a significant barrier. Data is often locked away in silos, infrastructure gaps persist, and startups particularly those outside major cities find it difficult to scale. The regulatory landscape also exacerbates these barriers. High compliance costs, inconsistent data standards, and regulatory overlap complicate matters for startups. For instance, fintech companies must adhere to stringent cybersecurity standards meant for large banks, and startups in energy or agriculture navigate a labyrinth of approvals from multiple agencies. This isn’t just about fairness, it’s about creating a competitive ecosystem where innovation thrives. Access to data, infrastructure, and collaboration between the government and the private sector are crucial for creating an open environment where new ideas can flourish. Without these, Nigeria risks building a highly regulated economy that suppresses rather than nurtures innovation. As we move forward, the question becomes: can Nigeria design a regulatory framework that promotes innovation while ensuring fairness and market stability?

Building a More Inclusive Tech Ecosystem

While innovation is evident in Nigeria, not all players have equal access to opportunities. Major players in telecoms and fintech still dominate infrastructure and funding, often leaving smaller innovators sidelined. For example, MTN controls almost 40% of the market, giving it significant influence over pricing and network access. This makes it difficult for new or regional providers to compete, especially in underserved communities. Similarly, in fintech, platforms like Fair Money and Opay have scaled rapidly with substantial funding and strong regulatory ties. However, smaller startups face longer approval timelines, higher scrutiny, and limited access to opportunities. This imbalance doesn't just affect entrepreneurs, it stifles innovation. When only a few voices dominate the space, the diversity of ideas and solutions shrinks. To create a more competitive landscape, policy must support inclusivity by ensuring public contracts are open to smaller tech firms, startup hubs extend beyond major cities like Lagos, and regulatory frameworks are clear and accessible for all players. Only then will Nigeria be able to utilize its full digital potential and create a more equitable and dynamic tech ecosystem. Addressing this issue requires more than just inclusive policies it demands smart regulation that ensures an even playing field for all.

Reforming Regulation for a Digital Economy

In light of the challenges outlined above, regulatory fragmentation, overlapping mandates, and uneven access to opportunities, the core issue remains: How can Nigeria design a regulatory system that supports startups while maintaining stability? The country has already shown its potential in sectors like fintech and broadband expansion. However, its regulatory environment has often lagged behind the rapid pace of innovation. This disconnect creates a structural challenge that impedes progress. Take cryptocurrency, for example. The Central Bank of Nigeria (CBN) prohibits banks from facilitating crypto transactions, while the Securities and Exchange Commission (SEC) classifies crypto assets as securities. This conflicting stance leaves fintech companies uncertain of how to comply, creating a grey area where no clear rule applies. The same issue arises with mobile money, where approvals from both the CBN and the Nigerian Communications Commission (NCC) create duplicated efforts and long delays. These are not isolated incidents. The implementation gaps in the Nigerian Startup Act, where startup registration can take up to 14 days, are another example of inefficiency, especially when compared to Rwanda’s 6-hour turnaround. To address these issues, Nigeria must adopt a smart regulation approach. The country’s regulatory system needs to evolve from a fragmented, confusing landscape to one that is coherent, transparent, and responsive to change. This means harmonizing definitions, streamlining processes through a single-window system for licensing, and fostering collaboration between agencies, as well as creating regulatory sandboxes that allow for controlled experimentation with emerging technologies like blockchain and AI. Only through such reforms can Nigeria build a regulatory environment that not only supports innovation but fosters a competitive, inclusive, and stable market. Smart regulation is not about loosening the rules; it’s about creating frameworks that balance innovation with consumer protection, market stability, and inclusive growth. With over 60 million unbanked adults, a young, tech-savvy population, and increasing global interest in its digital markets, Nigeria has a unique opportunity to lead, not just in innovation, but in the governance that enables it.

Policy Priorities for a Thriving Digital Economy

To unlock Nigeria’s digital economy, reform must move beyond reactive fixes and embrace proactive, coordinated change. The first step is establishing a true single-window licensing system—one that eliminates duplicated efforts, conflicting approvals, and long wait times. Countries like South Korea have shown what’s possible. Their centralized digital platform integrates over 50 regulatory agencies, cutting export license approvals from days to hours and saving billions in compliance costs annually. Closer to home, Benin’s mobile-first platform reduced business registration from five days to two hours, doubling the rate of formal business formation. Nigeria can replicate this by embedding real-time API integrations between the CBN, SEC, NCC, and NITDA, and by allowing founders to track their application status digitally. These changes wouldn’t just reduce delays, they would restore trust in the system. But streamlining processes isn’t enough without equitable access to the infrastructure that powers them. If only urban founders can afford to innovate, then regulation, no matter how efficient, will remain exclusionary. Countries like Kenya have tackled this by mandating open access to non-sensitive government datasets, creating opportunities for startups in health, transport, and agriculture to build localized solutions. Nigeria’s broadband strategy is a good starting point, but to truly democratize innovation, access must go further: affordable data plans, free Wi-Fi in public spaces, and public-private partnerships to deliver connectivity to underserved communities. Inclusion here is not just a moral imperative; it is a market expansion strategy. Another area demanding reform is startup financing. Nigeria’s ₦10 billion startup fund has barely scratched the surface. Only 12% of the fund was disbursed in 2023 due to bureaucratic roadblocks. Without capital, ideas die early. Countries like South Africa have taken a different route, blending philanthropic and private capital to reduce risk and attract more investors to early-stage ventures. Kenya and South Africa also offer tax incentives for angel investors, stimulating domestic capital flows to young businesses. Nigeria doesn’t need to reinvent the wheel; it needs to refine and scale what already exists, with transparency and execution as the missing links. Finally, regulation should not be a guessing game. Policy frameworks in countries like Singapore and Estonia have evolved to include real-time feedback loops between startups and regulators. Sandboxes allow startups to test innovations in a controlled environment, while public dashboards provide transparency into application timelines and pending decisions. Nigeria’s SEC sandbox is a promising foundation, but its scope must expand beyond fintech. More importantly, regulatory agencies must shift from being gatekeepers to collaborators, engaging startups not just after launch, but at every stage of product development. Ultimately, these reforms are not technical luxuries. They are foundational shifts that can turn Nigeria’s regulatory bottlenecks into catalysts for growth.

Conclusion

For Nigeria’s digital economy to thrive, policy must move from ambition to execution. The country has the talent and market potential, but fragmented regulation, slow licensing, and limited access continue to hold back innovation. The way forward lies in coordinated systems, like single-window platforms, open data policies, and inclusive funding models that reduce friction and level the playing field. This is not just about startups; it’s about economic resilience. Smart, responsive regulation can unlock growth across sectors and regions.