Navigating Global Tides: An Analysis of Cross-Border Transactions in Nigeria

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22nd March 2024




Navigating Global Tides: An Analysis of Cross-Border Transactions in Nigeria


Nigeria is an important player within the African and global economies. With significant imports and steadily growing exports, cross-border transactions are necessary for the flow of trade and investments.

The intricacies of cross-border transactions in Nigeria are explored in this article, along with the factors that influence them, the regulatory frameworks that shape them, the role of technology in such transactions, and the associated challenges and opportunities.

Motivations Behind Cross-Border Transactions.

A multitude of variables drive cross-border commerce in Nigeria. The pursuit of diversity by companies looking to grow internationally is a key motivator. The growth in cross-border activity is attributed to the emergence of multinational firms, a rise in foreign direct investment (“FDI”), and Nigeria’s advantageous location as a regional economic hub in West Africa. Additionally, Trade policy liberalisation in conjunction with the search for new markets and expansion prospects, increases cross-border trade and promotes regional and global economic integration.

Regulatory Framework Governing Cross-Border Transactions in Nigeria

Cross-border transactions in Nigeria are governed by a comprehensive regulatory framework that includes the following:

Central Bank of Nigeria and Foreign Exchange Regulation

The Central Bank of Nigeria (“CBN”) is the central institution regulating cross-border transactions in Nigeria. The CBN is essential to monitoring and controlling foreign exchange activities and maintaining the value of the nation’s currency, the Naira. Trade finance, foreign investment, and remittances are just a few of the foreign exchange activities that fall under the purview of the CBN’s regulatory rules. The Foreign Exchange Manual published by the CBN acts as a thorough guide, outlining the legal specifications, acceptable transactions, and paperwork required for cross-border operations.

The Investment and Securities Act 2007 and Supervision by the Securities and Exchange Commission

The Investment and Securities Act 2007 (the “ISA”) establishes the legal foundation for governing capital markets and securities activity in Nigeria. The Securities and Exchange Commission (“SEC”) is the regulatory agency tasked with upholding the provisions of the ISA and issuing applicable rules and regulations, and maintaining the capital market’s integrity and transparency. Cross-border issuances, investments, and trading of securities are examples of cross-border capital market operations governed by SEC rules. Cooperating with other regulatory agencies and global organisations, the SEC unifies regulatory standards and promotes an atmosphere that is favorable to cross-border transactions.

The African Continental Free Trade Agreement and Regional Cooperation

Nigeria signed the African Continental Free Trade Agreement (AfCFTA) on 7th July 2019 and became the 34th member of the trading bloc. The agreement was ratified on the 11th of November 2020. The AfCFTA seeks to promote intra-African investment and trade by establishing a single market for products and services across the continent. The pact offers member nations a framework for regulatory cooperation, promoting the smooth cross-border movement of capital, products, and services. Nigeria’s membership of the bloc impacts cross-border transaction regulations.

National Office for Technology Acquisition and Promotion Act

The procurement of foreign technology and technical services is governed by the National Office for Technology Acquisition and Promotion (“NOTAP”), set up according to the National Office for Technology Acquisition and Promotion Act (“NOTAP Act”). NOTAP gives effect to the NOTAP Act by evaluating and registering technology transfer agreements which are expected to be submitted within 30 days from the effective date.

Essentially, NOTAP is responsible for monitoring, regulating, and facilitating the inflow of foreign technology to Nigeria.  Concerning this, a key function is the registration of technology transfer agreements and contracts executed between parties for the transfer of technology to Nigerian parties. To facilitate trade and investments, NOTAP also engages in trade development and promotion activities.

Nigerian Investment Promotion Commission (NIPC) Act, 2004

Investor regulation and promotion in Nigeria is facilitated by the Nigerian Investment Promotion Commission (“the NIPC”) further to the Nigerian Investment Promotion Commission Act, 2004 (“NIPC Act”). The One-Stop-Investment Center (OSIC) is a facility established for investors by the NIPC Act. This implies that a single government office can provide international investors with all the permissions, clearances, and approvals they need for their ventures.

Export (Incentives and Miscellaneous Provisions) Act

Export incentives and other connected matters are provided for under the Export (Incentives and Miscellaneous Provisions) Act. The Nigerian Export Promotion Council is also involved in its execution, and its goal is to promote and assist export-related operations.

The Role of Technology in Cross-Border Transactions

Innovations in technology have completely changed how cross-border transactions are conducted in Nigeria. The implementation of Internet banking, digital payment systems, and financial technology solutions has accelerated and rationalised the procedures involved in cross-border trading. The introduction of blockchain technology opens up new opportunities for international trade while improving efficiency, security, and transparency. With the ability to solve fraud-related issues and guarantee a quicker and more dependable financial ecosystem, this technology has completely transformed the way cross-border transactions are carried out. Notably, the Finance Act 2023 now recognises digital assets such as blockchain as taxable property.

Advantages and Opportunities in Cross-Border Transactions

  1. Market Expansion: Cross-border transactions enable Nigerian businesses to access larger and more diverse international markets, expanding their customer base and increasing sales opportunities.
  2. Diversification of Revenue Streams: Engaging in cross-border transactions allows businesses to diversify revenue streams, reducing dependence on the domestic market and mitigating risks associated with economic fluctuations.
  3. Access to Capital and Fund: Nigerian businesses can attract foreign direct investment (FDI) and international funding, providing additional capital for expansion, research and development, and infrastructure projects. Additionally, increased cross-border trade and investment contribute to economic growth, leading to the creation of employment opportunities and poverty reduction.
  4. Foreign Exchange Earnings: Export-oriented cross-border transactions contribute to foreign exchange earnings, bolstering Nigeria’s foreign reserves and supporting currency stability.

Challenges in Cross-Border Transactions

Cross-border transactions though advantageous, present a myriad of challenges. Some of the challenges are:

  1. Currency fluctuation: This is a persistent difficulty in cross-border transactionsin Nigeria. Exchange rate fluctuations have the potential to affect importers and exporters equally by introducing uncertainties, affecting investors’ ability to repatriate funds, and inevitably raising transaction costs.
  2. Regulatory compliance: Trade, investment, and financial operations are regulated by different sets of laws in different Therefore, organisations involved in cross-border transactions face a great deal of difficulty in adhering to the many regulatory systems that exist across different jurisdictions.
  3. Delayed transaction procedures: Cross-border transactions are typically complicated, time-consuming, and prone to unforeseen events, friction, and delays that hamper payment processThis is a major barrier preventing some Nigerian companies from global expansion.
  4. Political and Economic Instability: Transactions involving several countries may be in danger due to instability in some areas. To make wise judgments, businesses must evaluate the geopolitical and economic environmentbefore committing to contracts.


Nigeria’s increasing volume of cross-border transactions indicates the country’s active involvement in the world economy. This increase in cross-border transactions is motivated by commercial opportunities such as market expansion and income stream diversification. While presenting significant advantages, challenges like currency fluctuations, regulatory complexities, procedural delays, and geopolitical instability persist. Navigating these challenges requires strategic measures to ensure the continued growth and resilience of Nigeria’s cross-border transactions in the evolving global landscape.


For further information on this article and area of law
please contact Mindy Okibe at:
S.P. A. Ajibade & Co., Lagos by
Telephone: (+234.908.735.5890, +234.816.168.8181)
Fax (+234 1 4605092)
Mobile: +234.081 3071 0111


  1. Mindy Okibe, Associate, Corporate Finance and Capital Market Department, S.P.A. Ajibade & Co., Lagos, Nigeria.  
  2. See, Omosola ArawomoJ. F. Apanisile “Determinants of Foreign Direct Investment in the Nigerian Telecommunication Sector” (May 2018) available at,The%20study%20therefore%20concludes%20that%20the%20key%20determinants%20of%20FDI,expenditure%2C%20inflation%20and%20interest%20rate, accessed on 1st November 2023.
  3. See, Central Bank of Nigeria (CBN) Foreign Exchange Manual, accessed on 3rd November 2023.
  4. The Investment and Securities Act 2007. Cap 29, Laws of the Federation of Nigeria 2004.
  5. Securities and Exchange Commission (SEC) regulations on cross-border capital market activities
  6. See, Eastern African Community (EAC) “African Continental Free Trade Agreement (AfCFTA)” available at,and%20boost%20intra%2DAfrica%20trade. accessed on 16th November 2023.
  7. The National Office for Technology Acquisition and Promotion Act Cap N62 Laws of the Federation of Nigeria 2004.
  8. The Nigerian Investment Promotion Commission Act, 2004, Cap N117 Laws of the Federation of Nigeria 2010.
  9. See NIPC’s “Guide to Investing in Nigeria: Getting Started” available at  accessed on 1st November 2023.
  10. The Export (Incentives and Miscellaneous Provisions) Act, No. 65 of 1992, Cap. E19, Laws of the Federation of Nigeria (LFN) 2010.
  11. See, “Revolutionizing-cross-border-trade-digital-technologies-global” (9th June 2023) available at, accessed on 2nd November 2023.
  12. Section 3(a) of the Act prescribes a Capital Gains Tax rate of 10% on digital assets.
  13. See, Zhixu Liu “Analysis of Advantages and Disadvantages of Cross-Border E-Commerce in International Economy and Trade” (March 2023) available at  accessed on 15th November 2023.
  14.   See, Bancoli “Should your business do cross-border commerce?” (25th January 2023) available at, accessed 17th November 2023.
  15. See, Amala Umeike, Adenike Oguntoye, and Stanley Chuka-Umeora “Cross border financial transactions: Roadblocks and legal challenges”  (July 27, 2023) available at, accessed 3rd December 2023.

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