DealHQ Partners In Corporate, Energy, Energy Transmission, Minigrids

NERC Mini-Grid Regulations 2026: New Introductions and Key Reforms

Introduction

Nigeria faces one of the largest electricity access deficits globally. According to the World Bank’s Tracking SDG7 Report 2025, 86.8 million Nigerians lack access to electricity – the highest absolute deficit of any country – costing the economy an estimated $29 billion annually in unreliable power supply. Against this backdrop, mini-grids have emerged as a highly viable and commercially promising solution to bridge this chronic access gap through decentralized generation and distribution.

To foster an enabling environment for private investment, the Nigerian Electricity Regulatory Commission (the “NERC”) has progressively updated its regulatory frameworks. Following the foundational 2016 rules, NERC issued the 2023 Regulations (No. NERC-R-117-2023) to align with the sweeping reforms of the Electricity Act 2023. The subsequent 2026 Regulations (No. NERC-R-001-2026) advance this framework further by expanding capacity limits, overhauling tariff methodologies, strengthening consumer protections, and formalizing commercial arrangements previously left to private negotiation.

This article provides a critical analysis of the 2023 and 2026 frameworks, examining the strengths of the earlier rules alongside their unresolved gaps and evaluating how the 2026 framework addresses the shortcomings.

Nigeria’s Off-Grid Market

Nigeria’s electricity deficit represents one of the largest markets for off-grid and distributed energy solutions globally. The domestic mini-grid sector alone requires an estimated 10,000 to 15,000 systems to serve communities unlikely to be reached by the main grid within the next decade. Highlighting this accelerating commercial momentum, NERC issued 85 mini-grid licenses and permits between April 2024 and March 2025.

The rapid growth of mini-grids is being driven largely by the continued decline of the national grid. Data from the NERC shows that average grid supply declined from approximately 4,600 megawatts in 2025 to below 3,500 megawatts during the first two months of 2026, largely due to reduced gas supply to generation companies arising from over $1.3 billion in outstanding debts. For many underserved and unserved communities, mini-grids have therefore emerged as the only credible short- to medium-term alternative to unreliable centralised power supply.

Beyond their commercial attractiveness to investors, mini-grids play a vital developmental role. Access to reliable electricity is fundamental to economic productivity, healthcare delivery, education, digital connectivity, and overall quality of life. In this context, mini-grids are not merely energy infrastructure projects; they are essential instruments for inclusive economic development and improved social welfare.

To manage this evolving landscape, the 2023 Regulations replaced the 2016 framework following the enactment of the Electricity Act 2023 – the most significant reform to Nigeria’s power sector in over two decades. This legislative shift decentralized authority by empowering states to oversee intrastate electricity activities, establishing a new framework for renewable energy and distributed power, and fundamentally redefining the jurisdictional relationship between federal and state regulatory institutions.

Key Strengths of the 2023 Regulations

Permits for Interconnected Mini-Grids

A significant innovation under the 2023 Regulations was the extension of the permit framework for interconnected mini-grids. Under the 2016 framework, only operators of isolated mini-grids were required to obtain permits; interconnected operators were governed largely by tripartite agreements without equivalent regulatory oversight. By bringing both categories under a comparable permit regime, the Regulation established a more coherent governing framework that gave project sponsors a clearer legal basis for structuring financing and demonstrating compliance to lenders.

DisCo Network Extension Protections

The 2023 Regulations significantly strengthened investor protection for isolated mini-grid developers by requiring DisCos to provide at least 12 months’ written notice before extending their networks into areas already served by a permitted mini-grid. It also guaranteed compensation for affected developers, covering both the depreciated value of network assets and the pre-tax profit earned by the developer in the 24 months prior to the handover date. These provisions addressed a major weakness in the earlier 2016 regime, where network encroachment could occur without sufficient notice or compensation, creating considerable uncertainty for investors and undermining long-term project viability.

Deemed Consent Mechanism

A mini-grid developer seeking to set up an isolated mini-grid larger than 100kW of distributed power and up to 1MW of generation capacity directly to eligible customers often required some level of coordination, confirmation, or non-objection from (DisCo), particularly where distribution infrastructure, network integration, or territorial service obligations may be affected. This regulatory silence created uncertainty, discouraged private investment, and allowed incumbent DisCos to indirectly obstruct competing or supplementary power projects.

To address this bottleneck, the regulatory framework introduced the deemed consent mechanism as a procedural safeguard. The rule was designed to prevent administrative inaction from frustrating otherwise viable projects by imposing a statutory response deadline on DisCos. In essence, it shifted the regulatory environment from one where silence could be used as a blocking tactic to one where silence carried legal consequences. In essence, the deemed consent rule shifted the balance of power incrementally toward developers and introduced a degree of procedural predictability that had previously been absent.

Weaknesses and Gaps Under the 2023 Regulations

Limited Consumer Protection

While investor-focused in orientation, the 2023 Regulations were notably thin on consumer protection. The framework addressed quality of service but merely required permit holders to supply electricity in accordance with the community contracts prescribed in Schedules 10 and 11. The main body of the instrument lacked standalone regulatory requirements for billing procedures or the publication of service standards. By deferring substantive consumer protections to schedules and bilateral agreements rather than embedding them as mandatory statutory requirements, the framework created a material regulatory gap—particularly since mini-grid customers are predominantly rural communities with limited bargaining power and no alternative power sources.

Weak Dispute Resolution Mechanism

The 2023 NERC Mini-Grid Regulation did not provide a clearly defined or detailed dispute resolution mechanism within its provisions. This creates uncertainty for investors who need to understand, with precision, how disputes will be handled before committing capital. The absence of mandatory timelines, procedural steps, or defined escalation pathways made the provision inadequate as a risk mitigation tool.

Regulatory Overlap

Although the Electricity Act 2023 empowered states to regulate intrastate electricity activities, the 2023 Regulations were entirely silent on how state-level regulation would interact with NERC’s federal oversight. The Regulations applied uniformly to all mini-grids up to 1MW per site but contained no provision addressing the hierarchy of regulatory authority or the framework for resolving conflicts between federal and state regulatory regimes. This created real and unresolved ambiguity for developers operating across multiple states.

Changes Under the NERC Mini-Grid Regulations 2026

On 10 April 2026, the Nigerian Electricity Regulatory Commission (NERC) signed into force the Mini-Grid Regulations 2026 (NERC-R-001-2026), replacing the 2023 Mini grid 2023 Regulation. The 2026 Regulations represent the most comprehensive revision of Nigeria’s mini-grid regulatory architecture to date, covering the full lifecycle of mini-grid development from site exclusivity and permitting technical operation, commercial arrangements, grid arrival transition, and compensation. They apply to isolated mini-grids with installed generation capacity of up to 5 MW per site and to interconnected mini-grids with installed generation capacity of up to 10 MW per site, a significant expansion of the project universe that was effectively constrained to around 1 MW under the 2023 NERC Mini-grid Regulations.

The Abolition of the MYTO Methodology for Isolated Mini Grids

The 2026 Regulations abolished the MYTO Methodology for mini-grid projects. It requires that the proposed end-user tariff be calculated in accordance with the mini-grid tariff model rather than the MYTO methodology, a change that applies from the mini-grid permit application stage itself.

The 2026 Regulation replaces the MYTO-based approach with the dedicated Mini-Grid Tariff Model in Schedule 14. The regulation introduces project-specific flexibility wholly absent from the 2023 regime. NERC may approve an initial loss allowance above the default benchmark where justified by location, remoteness, inherited asset condition, line length, customer density, brownfield conversion characteristics, metering status, or other demonstrable project characteristics. It also sets the ceiling at 8 percent for technical losses and 5 percent for non-technical losses, with a mandatory reduction trajectory over no more than 36 months. The regulation establishes a five-year tariff control period providing the medium-term stability that project lenders require for debt service modelling.

Enforceable Timelines for DisCo Objections

The 2026 Mini-Grid regulation now provide that a DisCo’s objection lapses for the purpose of blocking a mini-grid permit if physical construction does not commence within 12 months of the date of the objection, or if energisation or substantial completion has not occurred within 24 months, in which case a project developer may proceed. This directly addresses the recurrent practice of DisCos blocking the development of some mini-grid projects by referencing expansion plans that they subsequently fail to implement.

It also gives NERC an explicit mandate to grant a permit where it is satisfied that the proposed mini-grid better serves timely electrification, customer welfare, and efficient network development than DisCo’s projected expansion. This position is investor-friendly compared to what was obtainable under the 2023 Regulations which lacked an enforceable timeline for objection lapses and provided no compensation guarantee for affected mini grid developers.

Mandatory Hosting Capacity Information (HCI)

The 2026 Regulations requires every Distribution Licensee to publish feeder-level HCI in Commission-approved form, on its website and on Commission-designated platforms, updated not less than once every 12 months and within 60 days of any material feeder change. Hosting Capacity Information is data showing how much additional power generation or demand a grid can support at specific points without affecting reliability or safety. It helps developers assess connection feasibility and supports better planning for energy projects.

The regulation specifies minimum HCI content: feeder name or code, voltage level, supplying substation, indicative available capacity, unserved and underserved classifications, expected energisation windows, and known technical limitations. This new requirement is highly significant because historically, technical data necessary for mini-grid siting and interconnection planning was difficult to obtain and often required protracted negotiations with DisCos, who had little incentive to cooperate. The HCI framework mandates the transparency necessary to convert this opaque, relationship-dependent process into one governed by published, verifiable data. Any dispute regarding HCI, the scope of a System Impact Study, required reinforcement, or refusal to interconnect shall be referred to the Commission for determination.

Design, Construction, Operation, and Maintenance

The 2026 Regulations provides a tiered technical compliance approach. It requires permit holders to design, construct, commission, operate, maintain, and decommission their distribution networks and related facilities in compliance with the Technical Codes and Standards, and the terms and conditions of their permit and tripartite agreement, and any other standards prescribed by the Commission. Furthermore, it introduces specific obligations covering generation, storage, distribution, interconnection, and customer-side installations for larger systems.

It adds further requirements for interconnected mini-grids above 1MW, requiring compliance with additional metering, protection, communication, and operational coordination requirements. It retains the principle that registered mini-grid operators, as distinct from permit holders, are not bound by the full Technical Codes and Standards but may apply only the minimum technical requirements prescribed in the Regulations. This tiered approach to technical regulation is commercially important for smaller operators and reflects a mature recognition that uniform technical requirements would impose disproportionate costs on low-capacity systems.

One gap that merits attention in future revisions is the absence of any express provision for regulatory certainty around technical code changes, which could impose retrospective compliance costs on operating projects.

Additional License Transition Options

Where the 2023 instrument offered only two license transition options, the 2026 Regulation introduces five transition options namely:

Conversion to an interconnected mini-grid;
Transfer of distribution assets to the DisCo or another approved operator;
Continued operation under a service, franchise, energy supply, or other commercial arrangement approved by the Commission;
Orderly decommissioning and exit; or
Such other transition arrangement as the Commission may approve.

Network Asset Fee and Cost of Energy Charge

For interconnected mini-grids, the 2026 Regulations disaggregate the commercial structure into clearly defined components: the Network Asset Use Fee, being the periodic charge for the use of Distribution Licensee network assets within the designated mini-grid area, and the Cost of Energy charge, being the variable charge for electricity supplied by the Distribution Licensee at the Point of Common Coupling, both determined in accordance with Schedule 8 and expressly captured in the relevant Tripartite Agreement and Interconnection Agreement.

Site Exclusivity for Project Development

The 2026 Regulations explicitly prohibit the transfer of exclusivity agreements to another developer, directly targeting speculative land-banking. To enforce this, the framework introduces rigorous documentary requirements for registration, including a duly executed community agreement, precise boundary coordinates of the site, evidence of at least one formal community meeting with accompanying attendance lists, documentary proof of the developer’s technical capacity, and a project timeline with specific milestones.

Furthermore, developers must submit progress reports within six months of registration or face potential revocation, supported by NERC’s mandate to maintain a publicly accessible exclusivity registry. To deter violations, the regulations impose sanctions on encroaching developers, including a ban of up to 12 months on registering new exclusivity agreements or permit applications.

From an investment standpoint, this tightened exclusivity framework is a welcome development. It safeguards development capital against predatory competition, frees up prime project sites by eliminating the ability to hold land without genuine development intent, and enhances market transparency through a public registry that reduces duplicative project development expenditure.

Shortcomings of 2026 NERC Mini-Grid Regulation

Regulatory Instability

The replacement of the 2023 Regulations after only two years raises legitimate concerns regarding regulatory stability. Mini-grid developments are long-term infrastructure investments designed to operate for 20 to 25 years. Capital commitment over such horizons requires predictable rules, adjustable tariffs, robust asset protection, and clear dispute resolution mechanisms. In the absence of these assurances, the investor risk premium rises, capital costs increase, and otherwise viable projects become uneconomic. In practical terms, such policy volatility translates into reduced private sector participation and a slower expansion of energy access. Consequently, a stable and predictable framework is essential not only for individual project bankability but also for the overarching success of decentralized electrification.

Furthermore, the 2026 Regulations lack transitional protections or stability mechanisms to safeguard existing investments. Instead, the framework merely reserves NERC’s power to amend or repeal the regulations, in whole or in part, without imposing a minimum review period, a mandatory stakeholder consultation process, or grandfathering clauses for current permit holders. By preserving the broad, unconstrained amendment power that allowed the 2023 framework to be replaced so quickly, the new rules risk reinforcing investor hesitation. To overcome this, NERC must demonstrate through consistent, sustained enforcement that the 2026 framework represents a durable regulatory architecture rather than another temporary arrangement.

The DisCo Enforcement Gap

The 2026 Regulations introduce several critical obligations for Distribution Licensees (DisCos), including the mandatory publication of feeder-level Hosting Capacity Information (HCI), a 5-day notification requirement for material feeder modifications, a 15-day timeline for energization approvals, and a 30-day response window for export capability applications. While these provisions are conceptually well-designed, they are highly likely to prove unenforceable.

Crucially, the regulations limit the consequences of a DisCo’s non-response to a “deemed no-objection” for specific procedural steps only, explicitly excluding vital milestones such as energization approvals, safety clearances, and protection waivers. Furthermore, the framework fails to establish a financial penalty regime for DisCos that omit accurate HCI data, delay interconnection approvals, or refuse to engage in good faith.

Historical performance data underscores persistent operational and financial inefficiencies across the DisCo sector, raising significant doubts about their willingness or capacity to consistently provide HCI data to mini-grid developers. Utilities struggling with severe operational losses are unlikely to prioritize the timely publication of data that benefits potential competitors. Ultimately, without meaningful sanctions, DisCos retain the practical power to frustrate mini-grid development, even within this new regulatory framework.

Implementation and Enforcement

Implementation and enforcement under the 2026 Regulations are significantly more operationally demanding than under the previous framework. While this heightened ambition is a positive development, it places considerably greater pressure on NERC’s institutional capacity to effectively administer, monitor, and enforce the expanded rules. Requirements such as mandatory HCI publication oversight, the tiered reporting framework, environmental screening verifications, customer service charter monitoring, and the publicly accessible exclusivity registry all demand active, sustained administrative oversight.

However, none of these provisions are accompanied by an indication of how NERC intends to resource the obligations they create. The legacy of regulatory institutions in Nigeria’s power sector is often one of well-drafted provisions that suffered from inconsistent enforcement. Ultimately, the gap between regulatory ambition and implementation capacity remains a genuine, unaddressed concern.

Investment Opportunities Under the 2026 Regulation

Expanded Project Scale

The expansion of capacity limits from 1MW to 5MW for isolated and 10MW for interconnected mini-grids fundamentally expands the commercial scope of Nigeria’s mini-grid market, creating larger-scale opportunities that can enhance project viability. At 5MW and above, projects can serve small towns and industrial clusters at a scale that generates meaningful revenue, attracts institutional-grade project finance, and produces the returns necessary to attract commercial equity. Developers who can aggregate land, communities, and offtake commitments at this scale will find a significantly more attractive project finance environment under the 2026 framework.

Interconnected Mini-Grid Development

The HCI framework, the simplified interconnection pathway, and the formalised export capability regime create a substantially more transparent and commercially structured environment for interconnected mini-grid development. Developers with the technical capability to navigate the interconnection process and structure commercial relationships with DisCos through the Tripartite Agreement and Interconnection Agreement frameworks have an opportunity to build portfolios with defined revenue streams from both retail customers and electricity export. The explicit definition of the Network Asset Use Fee and Cost of Energy charge provides the revenue and cost certainty that project finance lenders require for underwriting.

Portfolio Development Strategies

The portfolio filing provisions under the regulation enable developers to aggregate permitting, tariff, and reporting obligations across multiple sites, reducing per-site transaction costs and enabling diversified portfolios that are more attractive to institutional investors and development finance institutions. The public exclusivity registry provides market transparency that should help developers identify available sites and avoid duplicative development expenditure.

Conclusion

The trajectory from the 2023 to the 2026 Mini-Grid Regulations is a clearly positive one. NERC has demonstrated a genuine willingness to respond to stakeholder feedback, address implementation challenges, and progressively strengthen a regulatory framework that is central to Nigeria’s rural electrification ambitions. The 2026 Regulation is substantively better than its previous regulations in virtually every measurable respect: more investor-friendly, more consumer-conscious, better aligned with the operational realities of mini-grid development, and more attentive to the coordination challenges between developers and Distribution Licensees. The expanded capacity limits, dedicated tariff model, HCI framework, mandatory customer service charter, amongst others are all genuine and material improvements.

However, the distance between well-crafted regulations and effective implementation is, in Nigeria’s regulatory history, often very significant. The promulgation of this regulatory framework marks not the completion of reform, but the beginning of the critical work required for its effective implementation and practical success.

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About DealHQ

We are an Africa-focused deal advisory/boutique commercial law firm, specializing in supporting businesses and positioning them to operate efficiently within their market sphere. We are known for our quality service delivery which is focused on attention to detail, creativity, timely execution and client satisfaction.

Our service offering includes: Energy & Infrastructure, Aviation, Corporate Commercial, Real Estate, Finance, Capital markets & Derivatives, M&A, Private Equity, Technovation and Data Privacy, Agriculture & Commodities, Business Formations & Start-up Support, amongst others.

This regulatory update is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact our Energy team.

Email: EnergyPT@dealhqpartners.com, clientservice@dealhqpartners.com

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REGULATORY UPDATE: REVISED MINIMUM CAPITAL REQUIREMENTS FOR CAPITAL MARKET ENTITIES

The Securities and Exchange Commission (“the Commission”), exercising its statutory mandate under the Investments and Securities Act, 2025, has issued Circular No. 26-1 on 16 January 2026, introducing revised Minimum Capital requirements for all regulated capital market entities in Nigeria. This revision represents a strategic regulatory intervention aimed at strengthening the resilience and systemic stability of the Nigerian capital market, enhancing investor protection, and ensuring that the capital adequacy of regulated entities is commensurate with the evolving scale, complexity, and risk profile of their operations. Furthermore, the update is designed to support the orderly development and regulation of emerging market segments, including digital assets and commodities markets, thereby promoting innovation within a stable, robust and prudentially sound regulatory environment.

The revised Minimum Capital requirement applies across the full spectrum of entities regulated by the Commission, encompassing both core and non-core capital-market operators. These include, among others, brokers, dealers, sub-brokers, fund managers, and issuing houses. The framework also extends to market infrastructure institutions, including exchanges, clearing houses, and trade repositories, as well as capital market consultants, financial technology operators, virtual asset service providers (VASPs), and commodity market intermediaries.

Key Changes in Minimum Capital (MC) Requirements

Regulated Entities	Revised MC (NGN)
A. Brokage Services
Broker (client execution only)	600 million
Dealer (proprietary trading only)	1 billion
Broker-Dealer (client execution, proprietary trading, margin/securities lending and advisory services)	2 billion
B. Fund/Portfolio Management Services
Tier 1- Portfolio Managers (Full Scope)	5 billion
Tier 2- Fund/Portfolio Managers (Limited Scope)	2 billion
Tier 3- Alternative Investment Managers
Private Equity Fund Manager	500 million
Venture Capital Fund Manager	200 million
Issuing House
Tier 1- Issuing House	2 billion
Tier 2- Issuing House with Underwriting	7 billion
Rating Agency	500 million
Registrar	2.5 billion
Trustees	5 billion
Underwriters	50 billion
Investment Adviser (Corporate)	50 million
Investment Adviser (Individual)	10 million
C. Market Infrastructure
Central Counter Party (CCP)	10 billion
Clearing and Settlement Company (CSC)	5 billion
Composite Securities Exchange 5.00 billion (Trading and Listing of all types of securities)	10 billion
Non-Composite Securities Exchange (Focus on a single type of security, commodity, or financial product)	5 billion
D. Fintechs
Robo Adviser	100 million
Crowd Funding Intermediary	200 million
E. Virtual Asset Service Providers
Ancillary Virtual Assets Service Providers	300 million
Digital Assets Offering Platform (DAOP)	1 billion
Digital Assets Intermediary (DAI)	500 million
Digital Assets Platform Operator (DAPO) (including Token issuers)	500million
Digital Assets Exchange (DAX)	2 billion
Digital Assets Custodian	2 billion
Real-world Assets Tokenization and Offering Platform (RATOP)	1 billion
F. Commodity Market Infrastructure
Tier 1 – Local/ Regional Operations Collateral Management Company (CMC)	200 million
Tier 2 – National/International reach Collateral Management Company (CMC)	500 million
Commodities Broker/Dealer	50 million
Commodities Broker	30 million
Commodities Dealer	20 million
Warehousing Operators	500 million

Compliance Timeline and Requirements

For many operators, the immediate regulatory risk is a capital gap. That is, a shortfall between current regulatory capital and the new minimum requirements which, if not identified and addressed promptly, may constrain strategic options and compress implementation timelines. Against this backdrop, the Commission has prescribed a definitive compliance timeline, requiring all capital-market operators and other regulated entities affected by the revised Minimum Capital framework to achieve full compliance on or before 30 June 2027.

Recognizing that certain entities may require additional time to restructure or raise capital, the Commission has indicated that it may, upon formal application and on a case-by-case basis, consider transitional arrangements where such requests are properly justified and supported by a credible compliance plan. However, such relief is discretionary, not automatic, and does not obviate the obligation to ultimately meet the revised Minimum Capital requirement.

Entities that fail to meet the prescribed requirements within the stipulated timeline face significant operational continuity risk. Post-deadline non-compliance may attract regulatory sanctions, including the suspension or withdrawal of registration, as determined by the Commission. Beyond regulatory enforcement, affected entities may also experience reputational exposure, disruption to business activities, and loss of investor and counterparty confidence, underscoring the importance of proactive and timely compliance planning.

Implications of the Revised Minimum Capital Framework and Compliance Considerations for Smaller Entities

The revised Minimum Capital requirements mark a material shift in the capital market regulatory landscape, with particularly significant implications for small, emerging, and growth-stage regulated entities. For many of these organization’s, the new thresholds represent a substantial increase over prior capital requirements and may exert immediate pressure on existing capital structures, funding capacity, and operational sustainability. Entities operating lean business models or within specialized or niche segments such as sub-brokerage, boutique fund management, FinTech services, virtual asset operations, and commodity intermediation may find that their current capital no longer aligns with the revised regulatory expectations, thereby necessitating strategic reassessment to remain compliant.

Beyond the direct financial impact, the revised framework is likely to influence how smaller entities structure and deliver their services. Many may need to reconsider the scope of their licensed activities, rationalise product offerings, streamline operations, or reposition within lower regulatory tiers (where available), in order to align risk exposure with capital capacity. In some cases, the heightened capital requirements may accelerate industry consolidation, as smaller firms explore mergers, strategic partnerships, or equity participation as viable pathways to compliance. While this may reduce the number of standalone operators, it is expected to strengthen overall market integrity by promoting better-capitalized and more resilient institutions.

In responding to these changes, affected entities should adopt a proactive and deliberate approach to compliance. This begins with a clear assessment of current capital positions against the revised requirements, followed by the development of a realistic capital-raising or restructuring strategy where gaps exist. Entities should also consider engaging the Commission early, particularly where transitional arrangements may be justified, and ensure that governance, risk management, and regulatory reporting frameworks are strengthened in line with the regulator’s supervisory expectations. Collectively, these steps will be critical to preserving operational continuity and supporting long-term sustainability under the new capital regime.

ABOUT DEALHQ
We are an Africa-focused deal advisory/boutique commercial law firm, specializing in supporting businesses and positioning them to operate efficiently within their market sphere. We are known for our quality service delivery which is focused on attention to detail, creativity, timely execution and client satisfaction.
Our service offering includes infrastructure, energy, corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support, amongst others.
The content of this Article was published by DealHQ’s Capital Markets Practice Team. It is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter.

Should you wish to seek the services of an accredited Capital Market Solicitor, you may contact our Capital Market Team; Clientservice@dealhqpartners.com and izu@dealhqpartners.ng ; or call +234 806 820 6038

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Featured Insight: Energy & Infrastructure M&A in Nigeria – Chambers Global Practice Guide 2025

DealHQ Partners is proud to contribute to the Chambers Global Energy & Infrastructure M&A 2025 Guide, offering a comprehensive analysis of market activity, regulatory developments and investment trends shaping Nigeria’s fast-evolving energy and infrastructure landscape.

Our chapter provides critical insights into the surge in upstream asset divestments, bold government reforms, and the rising wave of indigenous participation that continue to redefine Nigeria’s dealmaking environment. We examine the increasing flow of capital into renewables, gas infrastructure, transport, digital connectivity and blended-finance projects, as well as the legal, regulatory and transactional considerations influencing M&A execution in the sector.

Authored by Tosin Ajose, Izuchukwu Ubadinma, Deborah Leshi and Precious Omope, the guide highlights our firm’s deep expertise in transactions across oil and gas, power, clean energy, infrastructure development, and project finance.

This excerpt reflects our commitment to delivering strategic, commercially sound and execution-focused advice to clients operating across Africa’s most dynamic sectors.

Download the full Chambers Global Practice Guide – Energy & Infrastructure M&A 2025 (Nigeria Chapter).

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NIGERIA’S 2025 PETROLEUM LICENSING ROUND: PREPARATORY GUIDELINES FOR PROSPECTIVE BIDDERS.

INTRODUCTION
Nigeria is gearing up for a major milestone in the upstream energy sector as the 2025 Oil Licensing Round scheduled to commence on December 1, 2025, kicks off. This announcement was made by the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), during the Project 1MMBOPD Additional Production Investment Forum in London.
This licensing round is expected to open up discovered but undeveloped oil and gas fields, with a strong focus on natural gas development, reflecting the industry’s drive toward energy transition and the Country’s commitment to the UN Sustainable Development Goals (SDGs). This bid round will undoubtedly boost indigenous crude oil production, attract new investments into the upstream sector, and create more jobs for Nigerians.
The NUPRC has given firm assurance to stakeholders that the bid process will be fair, transparent, and competitive, and will be executed in full compliance with the Petroleum Industry Act (PIA) 2021, with the core objective of promoting industry stability and long-term economic growth.

The 2025 Licensing Round is expected to play a pivotal role in the shaping of the future of Nigeria’s energy and extractive industry, positioning Nigeria as a leading energy producer in Africa. It is designed to increase exploration of our oil and gas reserves, increase production, and make better use of our gas resources as the world moves toward cleaner energy. At the same time, it is expected that the process will deliver real opportunities for indigenous companies and skilled Nigerians, enhancing job creation whilst building domestic expertise. By attracting reputable international partners, the round will also assure a surge of FDI inflow, transfer of new exploration and production technology, while ensuring transparency and accountability in line with global standards. Ultimately, the Licensing Round is about creating a more vibrant, inclusive, and sustainable energy sector that delivers economic value to the country and its citizens.

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ABOUT DEALHQ
We are an Africa-focused deal advisory/boutique commercial law firm, specializing in supporting businesses and positioning them to operate efficiently within their market sphere. We are known for our quality service delivery which is focused on attention to detail, creativity, timely execution and client satisfaction.
Our service offering includes infrastructure, energy, corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support, amongst others.
The content of this Article was published by DealHQ’s Energy Practice Team. It is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice in respect of your participation in the 2025 petroleum licensing round, other aspects of this article any other related subject, you may contact our Energy Practice Team via:

Email: EnergyPT@dealhqpartners.com; clientservice@dealhqpartners.com
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NIGERIA’S NEW INSURANCE FRAMEWORK: THE NEW REALITY AND INVESTOR OPPORTUNITIES

INTRODUCTION

On the 5th of August 2025, President Bola Ahmed Tinubu assented to the Nigerian Insurance Industry Reform Bill, 2025, a landmark legislation designed to strengthen Nigeria’s financial sector and accelerate the nation’s progress towards achieving a $1 trillion economy.

The Nigerian insurance industry is on the verge of a significant transformation with the Promulgation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 (“the Act”). This landmark legislation replaces and consolidates the Insurance Act, 2003 (Cap I17, Laws of the Federation of Nigeria 2004) and other outdated provisions into a single, modern framework designed to strengthen regulation, enhance market confidence, and align the sector with global best practices. The Act introduces far-reaching measures such as compulsory insurance coverage across critical sectors, stricter licensing requirements for agents, increased minimum capital thresholds to ensure financial stability, and robust enforcement Measures to address unlicensed operations and delays in claims settlement.

By addressing long-standing regulatory gaps and operational inefficiencies, the reforms aim to deepen insurance penetration, protect policyholders, and foster a more competitive market. These changes are expected to not only reposition the insurance sector as a key driver of Nigeria’s financial system but also contribute meaningfully to the government’s ambition of building a $1 trillion economy.

This article seeks to highlight the key provisions of the Act with a view to emphasizing the significance of the Act on the insurance industry, as well as the opportunities and risks inherent in the introduction of the Act.

BACKGROUND AND RATIONALE

Nigeria’s insurance industry has long struggled to fulfil its potential, hampered by outdated legislation, low public trust, and one of the lowest penetration rates on the continent. The Insurance Act of 2003, while an important milestone at the time, failed to keep pace with the realities of a changing economy, emerging risks, and the need for deeper consumer engagement as a result, the sector has remained underdeveloped, contributing less than 0.5% to GDP well below peers such as South Africa, Morocco, and Kenya. Weak consumer awareness, slow claims processes, and limited regulatory enforcement have reinforced public skepticism.

In recent years, however, industry has shown signs of growth. At the 54th Annual General Meeting of the Nigerian Insurers Association (NIA), it was disclosed that insurance companies in Nigeria recorded gross written premiums of ₦1.562 trillion (approximately $1 billion) in 2024, representing a 56% growth compared to the previous year.

However, Regulators and market stakeholders have identified capital adequacy as a central challenge. Many insurers lack the financial depth to underwrite large risks or respond effectively to macroeconomic shocks. As industry analysts note, a well-capitalized insurance sector not only boosts public confidence but also enables and contributes to economic stability. This understanding has informed the renewed legislative push to strengthen the industry’s regulatory framework.

The new Insurance Act is an ambitious reform by Nigeria that modernizes market oversight, raises prudential standards, promotes competition, and expands access through digital and inclusive models. Aligned with Nigeria’s march towards a $1 trillion economy goal, the Act seeks to build a more transparent and resilient insurance sector capable of mobilizing long-term capital, protecting assets, and driving sustainable economic growth.

KEY CHANGES

This section outlines the major provisions of the Act, highlighting the changes that will shape operational requirements for insurers and the significance of these changes to the industry and relevant stakeholders. The key changes in the Act are as follows:

Licensing and operation of insurer

The Act introduces a more structured and transparent framework for licensing insurers and reinsurers. Under the new regime, no individual or entity may commence or continue the business of insurance, reinsurance, or related activities in Nigeria without first obtaining a license from the National Insurance Commission (NAICOM).

The Act provides that Applications must be made in a prescribed form and accompanied by all supporting documents required by the Commission. Importantly, eligibility for licensing is now clearly defined. Only companies incorporated under Nigerian law as limited liability companies under the Companies and Allied Matters Act 2020 or established under another Nigerian statute can be licensed. In addition, applicants must maintain the prescribed minimum capital, make and maintain a statutory deposit with the Central Bank of Nigeria, and meet all other requirements set by NAICOM. These additional requirements now include the submission of a business plan that identifies the specific niche market the applicant intends to serve.

Another notable introduction under the Act is the requirement for NAICOM to publish a Service Charter. This document must set out the Commission’s products and services, the complete list of requirements for obtaining each one, the applicable fees, timelines for processing, and all supporting processes and documentation. By institutionalizing this Service Charter, the Act seeks to improve transparency, reduce regulatory uncertainty… (continue reading or download pdf)

ABOUT DEALHQ

DealHQ Partners is a Pan-African transaction advisory firm dedicated to enabling businesses to operate efficiently within Africa’s dynamic market. Committed to driving a connected Africa, through cutting-edge solutions, premium deal advisory, beyond-border thinking and rigorous execution.

We are Africa’s foremost “deal-only” law firm, focused on engineering transactions that unlock capital, infrastructure and trade across the continent, one client at a time.

Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support amongst others.

The content of this Newsletter is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.

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DealHQ Partners In Business, Capital Markets, commercial, Corporate, Finance, Sustainability

DealHQ Bluebond Playbook: Practical Guide for the issuance of Blue Bonds

DealHQ Partners Practical Guide for the Issuance of Blue Bonds
Financing the Future of Africa’s Blue Economy

As global attention turns toward protecting our oceans and unlocking climate-resilient growth, Blue Bonds have emerged as a powerful financing tool for sustainable marine and coastal development.

DealHQ Partners—a leading commercial law firm at the forefront of sustainable finance in Africa—presents this Practical Guide for the Issuance of Blue Bonds to support sovereigns, subnationals, DFIs, and private entities in designing and launching credible, investor-ready Blue Bond transactions.

This publication reflects DealHQ’s continued commitment to mobilizing capital for impact and shaping the frameworks that enable Africa’s environmental and economic transformation.

📘 Inside the Guide:
A clear breakdown of what qualifies a bond as blue, and how Blue Bonds differ from green or sustainable bonds

Step-by-step guidance on developing institutional readiness and transaction frameworks for Blue Bond issuance
Legal and regulatory insights from DealHQ Partners, helping issuers manage legal structuring, disclosure requirements, and compliance
Investor engagement strategies and tools to align with global blue finance standards, including post-issuance impact tracking and reporting
Real-life case studies, templates, and frameworks to accelerate deal structuring—especially in emerging markets like Nigeria and across Africa

💡 Why Read This Guide?

Whether you’re a policymaker, multilateral agency, ESG-conscious investor, or sustainability officer, this guide is built to:
Help you mobilize capital for marine conservation, climate resilience, and blue infrastructure
Equip your team with the tools to design credible, transparent and impactful Blue Bonds
Clarify regulatory pathways and enable legally sound, market-attractive instruments
Leverage DealHQ Partners’ legal and transaction advisory experience in pioneering sustainable finance initiatives across the continent

🌍 Why It Matters
With Africa’s oceans under threat and marine sectors critically underfunded, Blue Bonds offer a lifeline to fund impactful projects—from clean coastal energy to sustainable fishing, waste management, and tourism. But credible issuance requires more than good intentions—it demands strategic preparation, legal clarity, and strong investor alignment.

This guide gives you just that—and more.

Ready to make your mark in blue finance?
Click below to download the full guide and start building your path toward innovative, impactful financing for Africa’s blue future.

👉 [Download the Blue Bonds Practical Guide]

About DealHQ

We are an Africa Focused deal advisory/boutique commercial law firm focused on supporting businesses and positioning them to operate efficiently within their market sphere. We are known for our quality service delivery which is focused on attention to detail, creativity, timely execution and client satisfaction.

Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, Africa Trade, business formations & start up support amongst others.

The content of this Article is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.

You may contact our team on:

Email: clientservice@dealhqpartners.com

Telephone: +234 1 4536427 or +234 9087107575

DealHQ Partners In Business, Capital Markets, CBN, commercial, Finance, Newsletters, Regulation & Policy

CHINA’S DUTY-FREE ACCESS TO AFRICA AND ITS ECONOMIC IMPLICATIONS

INTRODUCTION

During the recent Forum on China-Africa Cooperation (FOCAC) meetings, the Chinese government announced that it will grant full duty-free access to exports from 53 African countries with which it maintains diplomatic relations. This new policy, unveiled by President Xi Jinping, significantly expands the scope of duty-free access, previously limited to 33 least-developed African countries (LDCs), to now include 53 nations. Now, except for eSwatini, every African nation that has formal ties with Beijing will enjoy zero tariffs across all product lines. This move underscores China’s broader strategy to deepen trade and economic engagement with Africa by removing longstanding market access barriers.

Beyond tariff elimination, China is also introducing practical trade facilitation measures such as streamlined customs procedures, clearer inspection and quarantine standards, and targeted support for African exporters. The initiative includes commitments to train African trade personnel and boost the visibility of African products within the Chinese consumer market, thereby enhancing the continent’s integration into global value chains.

POLICY OVERVIEW AND IMPLICATIONS

China’s move can be seen as both economic and geopolitical; aimed at expanding markets for Chinese goods and services, securing access to raw materials, and strengthening supply chain stability. It also reflects a broader strategy to deepen its influence and footprint across Africa, positioning itself as the continent’s preferred trade and development partner. This aligns with its Belt and Road Initiative, which seeks to enhance infrastructure and connectivity across Asia and Africa. By reinforcing economic ties with Africa, China is strategically positioning itself as a key player in the continent’s development narrative.

Furthermore, China also holds a dominant position in the global critical mineral supply chain, with a significant portion of its imports from Africa consisting of fossil fuels, metals, and critical minerals resources in which Africa is abundantly endowed.

BALANCE OF TRADE DATA AND EVIDENCE FROM CURRENT DUTY-FREE BENEFICIARIES

Following the duty-free waivers granted to 33 least-developed African countries (LDCs) last year, trade between China and Africa reached $134.16 billion in the first five months of 2025, according to China’s General Administration of Customs. This represents a 12.4% increase compared to the same period in 2024. During this period, Chinese exports to Africa rose by 20.2% to $83.51 billion, while imports from Africa increased by just 1.6%, totaling $50.65 billion.

As a result, Africa’s trade deficit with China widened to $32.86 billion, with declining global commodity prices continuing to affect the continent’s export revenues.

China’s key imports from Africa remain concentrated in crude oil, critical minerals such as cobalt and copper, and agricultural commodities like cocoa and sesame. However, the Chinese market also shows demand for niche finished products, including leather goods, textiles, processed foods, and fashion items.

Despite duty-free access, African LDCs have not significantly closed up the gap in the trade imbalance. While trade volumes have grown, exports have remained largely focused on raw materials and low-value goods. Click here to read more or download pdf file

About DealHQ

We are a Pan-African transactional advisory firm dedicated to enabling businesses operate efficiently within Africa’s dynamic market. We provide stellar business solutions which help businesses navigate the unique challenges and opportunities in the African business landscape whilst enabling them to operate efficiently within their market sphere.

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DealHQ Partners In Business, Capital Markets, CBN, commercial, Finance, Newsletters, Regulation & Policy

HOW THE INVESTMENT AND SECURITIES ACT 2025 WILL CHANGE THE TRAJECTORY OF CAPITAL AGGREGATION IN NIGERIA

INTRODUCTION

The Investment and Securities Act, 2025 (“New ISA” or the Act) marks a significant milestone in the evolution of Nigeria’s capital market regulation. The Act was signed into law in March 2025 by President Bola Ahmed Tinubu. It repeals the 2007 Act, which had steered the Nigerian capital market for nearly two decades.

Since 2007, there is no doubt that the global capital market landscape has evolved considerably, largely driven by technological innovation, changes in international financial trajectories, the emergence of new asset classes, shifts in the global energy and commodities markets, and prioritization of sustainability and climate action by sovereigns, sub-sovereigns, and major corporations.

The new ISA seeks to align our capital market regulation with international best practices whilst appropriating broader powers to the Securities and Exchange Commission (SEC) for firmer market oversight, steeper penalties for infractions, and a more creative regulatory regime geared towards promotion of investor confidence. The ISA 2025 also introduces sweeping reforms aimed at enhancing market integrity, transparency, and financial inclusion. It provides a holistic framework for the regulation of market infrastructure and commodity exchange.

This article provides a concise regulatory update on the ISA 2025, highlighting the key reforms introduced by the legislation and their implications for market participants, regulators, and investors.

KEY REFORMS INTRODUCED BY THE ISA 2025

Enhanced powers of the Commission

The Securities and Exchange Commission has been a signatory to the International Organization of Securities Commissions (IOSCO) MoU since 8^th June 2006. The IOSCO is a global body that sets standards for securities regulation, and one of its core principles is that securities regulations should be operationally independent from pressures that undermine their autonomy.

In line with this, the ISA has expanded the Commission’s powers to emphasize independence in line with IOSCO standards. This signals a shift in reform that prioritizes transparency, accountability, and investor confidence.

Prohibition of Ponzi and Unregistered Schemes

One of the critical reforms introduced by the Act is the express prohibition of Ponzi schemes and other unregistered schemes. The Act provides that the SEC shall prevent and sanction unauthorized and illegal dealings in securities and investment schemes.

The Act empowers the SEC to investigate, prosecute, and shut down operators of such schemes, with significant penalties prescribed for offenders, including fines, asset forfeiture, and imprisonment. It also empowers the commission to enter and seal up all prohibited schemes and obtain an order from the Tribunal or Court to freeze and forfeit all assets of such schemes to the Federal Government. Additionally, any costs incurred by the SEC shall be charged from the funds of the illegal schemes as well as the assets of such owners or managers of the scheme.

The Act also prescribes a fine of not less than NGN20,000,000 or imprisonment for a term of 10 years for offenders.

This reform is a direct response to the surge in fraudulent investment platforms in recent years. By setting out express provisions prohibiting unauthorized and illegal investment schemes, and enhancing enforcement powers of the SEC, the Act seeks to protect investors, restore confidence in the financial system, and promote only legitimate, SEC-registered investment activities.

Categorization of Securities Exchanges

The Act has introduced a new section, which provides a dual classification for securities exchange (composite and non-composite exchanges); hence, ushering a structural shift in Nigeria’s capital market.

This new provision aligns with global trends where exchanges are classified according to their product offerings. A composite securities exchange permits the listing and quotation of all types of securities and commodities on the platform while the non-composite exchange allows for either a mono securities exchange which specializes in listing a particular or singular security, commodity or product or an alternative trading system which provides trading systems that connect buyers or sellers either in a physical location or on the internet.

Commodity exchange

The Act introduces clearer and more robust provisions for the regulation of commodities exchanges in Nigeria. This reform reflects the growing importance of the commodities market in Nigeria’s economy and the need to promote transparency, investor confidence, and orderly market conduct.

The Act formally recognizes commodities exchanges as licensed market institutions and places them under the regulatory oversight of the Securities and Exchange Commission (SEC). The Act expands the SEC’s powers to regulate not just the exchanges themselves, but also key market participants such as commodity brokers, dealers, and clearing entities. It also promotes the standardization of contracts and trading practices, encouraging greater transparency and efficiency in commodities trading.

The implication of these provisions is a more structured and transparent commodities market that supports investor confidence, reduces market manipulation, and enhances price discovery. It lays the foundation for deeper market participation, the growth of structured commodities trading, and the development of critical infrastructure such as warehouse receipt systems.

Warehousing receipts

A warehouse receipt is an electronic receipt of title to a specific commodity of a certain quality and quantity stored in a registered and named warehouse. The Act mandates the registration of warehouse receipts and warehouse operators, provided they meet the suitability and compliance conditions. Operating a warehouse without registration attracts imprisonment of at least 5 years or a fine of at least NGN3,000,000 or both. Section 242 of the Act further requires registered warehouse operators to insure their structures, facilities, and stored commodities.

The Act also provides for a collateral management company, which is a company that is registered by the commission to manage commodities as collateral.

The formalization of commodity exchanges, warehousing receipts, and collateral management company is expected to boost Nigeria’s agricultural sector by providing better price discovery and modernizing Nigeria’s commodity trading ecosystem. This will further integrate it into the broader capital market framework and diversify investment into physical goods and products.

Insolvency in financial market infrastructure and market contracts

The Act addresses the insolvency of financial market infrastructures (FMIs) in a way that ensures the continued stability and reliability of the capital markets. This is especially crucial because FMIs play a central role in facilitating transactions, clearing, and settlement of trades, and ensuring market liquidity.

By the Interpretation of the Act, Financial Market Infrastructure is any entity set up to carry out centralized, multilateral payment, clearing, settlement, storage or recording activities, or providing a platform for trading securities and it includes systematically important payment systems, trade repositories securities exchanges, central counterparts, central clearing houses, central securities depositories and securities settlements systems.

Under the ISA 2025, the general insolvency regime applicable under other laws (such as the Companies and Allied Matters Act or the Bankruptcy Act) will not automatically apply to transactions facilitated under FMIs in the event of insolvency. Instead, the specialized insolvency framework ensures that trading activities and market contracts remain uncompromised due to the insolvency of the FMIs.

By exempting market contracts from standard insolvency proceedings, the Act prevents disruptions to trading, clearing, settlement, and collateral transfer processes that could otherwise cascade throughout the financial system. This protection maintains market liquidity and functionality significantly enhancing the resilience of Nigeria’s capital markets during periods of stress.

The general insolvency laws, which focus on the winding-up and liquidation of companies, would typically apply to the broader corporate sector, but FMIs, due to their systemic importance, are treated differently. This ensures that any insolvency event does not cause broader disruptions in the financial system.

Moreover, the establishment of this separate framework is intended to ensure that FMIs, which often handle complex financial instruments and settlements, can continue their operations in a manner that protects both market integrity and investor interests.

Recognition of digital and virtual assets

The Act marks a transformative moment in Nigeria’s financial landscape by formally recognizing digital and virtual assets, such as cryptocurrencies, and tokenized investment contracts as securities. This provision transforms a previous ambiguous regulatory space into a clearly defined and structured market, where digital tokens, cryptocurrencies, and other blockchain-based instruments are now legitimate financial products. In the light of this provision, the Securities and Exchange Commission (SEC) is now the primary regulatory authority, tasked with overseeing Virtual Asset Exchanges (VAEs), Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and all operators within this sector.

Virtual assets are defined as digital representations of value that can be transferred, traded, or used for payment electronically. These assets exist solely in virtual form and include cryptocurrencies like Bitcoin, Ethereum, and other blockchain-based tokens.

Prior to ISA 2025, digital and virtual assets operated under a prohibitive stance without clear operational guidelines. This created a situation where investors were exposed to significant uncertainties that diminished their confidence in the market and hindered the growth of the sector. Despite the clampdown, Nigeria remains one of Africa’s largest crypto markets, ranking 8^th globally, with nearly 6% of Nigerians holding crypto assets.

The Act mandates VAEs, VASPs and DAOs to adhere to SEC regulations aimed at transparency, investor protection, and accountability. Additionally, entities in sector must comply with anti-money laundering (AML), counter-terrorism financing (CFT), and proliferation financing (PF) regulations. They must implement stringent compliance measures, including customer due diligence, screening client records, and reporting suspicious transactions to relevant authorities.

This innovation sends a strong signal to international investors and the global business community that Nigeria is committed to fostering a safe and innovative financial environment for foreign investment, especially at a time when the adoption of digital technologies is reshaping economic landscapes worldwide. The ISA 2025’s emphasis on transparency and accountability reflects a broader strategy to create a balanced ecosystem that supports both the growth of fintech innovation and the enforcement of critical security measures

Regulation and registration of securities

The Act now provides for approval of offshore or overseas securities offerings. This subsection provides that any public company or issuer intending to issue, offer, or list securities outside Nigeria must seek the prior approval of the commission and report the same to a securities exchange registered with the SEC.

This provision was introduced to enhance regulatory oversight over Nigerian entities engaging in offshore capital market activities. By requiring prior approval and reporting, the SEC can monitor cross-border capital market transactions, ensuring compliance with Nigerian laws and protecting investor interests.

The Act also increases the penalty regime to a fine of not less than NGN5,000,000 in addition to the alternative term of imprisonment for 3 years for any person who issues, transfers, sells, or offers securities to the public without prior registration. Alternatively, the SEC, in lieu of prosecution, may impose the above penalty sum and a further sum of not less than NGN20,000 for every day the violation continues.

Capital raising exercise

The Act introduces new categories of Issuers to include:

Public companies whose securities have been registered with the Commission;
CBN-licensed institutions that are empowered to accept deposits and savings;
Collective investment schemes;
Government agencies, including supranational bodies or any other entity approved by the commission; or
Free trade zone entities whose capital raising exercises have been approved by the commission.

This provision was introduced to broaden the scope of entities eligible to issue securities and raise capital in Nigeria. By expanding the categories of issuers, the Act aims to foster a more inclusive and diverse capital market, enabling a wider range of institutions, including non-corporate bodies, to participate in the securities market.

Regulation of Derivatives

The Act introduces a more comprehensive and structured framework for the regulation of derivatives in Nigeria. The Act explicitly recognizes derivatives as financial instruments and brings their issuance, trading, and clearing under the regulatory oversight of the SEC.

The Act gives the SEC regulatory oversight concerning derivatives, derivatives markets or business, derivatives exchanges, derivatives market infrastructure, derivatives business operators, trade associations of derivatives business operators, and preventing unfair derivatives trading practices.

Collective investment schemes

Under the Act, the definition of a Collective Investment Scheme has been expanded to include a close-ended investment scheme. This expands the types of collective investment schemes that can be administered in the Nigerian Capital Market.

With the new provision, which amends section 171 of the ISA 2007, modifications and additions have been made to expand the asset classes in which the funds for a scheme could be invested.

Furthermore, by this amendment, specialized or alternative schemes and collective investment schemes are to be treated as pass-through vehicles for taxation, which means that the income of the scheme is not taxed directly; instead, the investors pay taxes on the profits or losses they receive from the scheme.

CONCLUSION

The Investment and Securities Act 2025 represents a significant advancement in Nigeria’s capital market regulatory framework, introducing comprehensive reforms that enhance market resilience, foster innovation, and align the country’s securities regulation with global best practices. The legislation substantially expands the SEC’s regulatory powers, creating stronger protection for investors while establishing the legal foundations for emerging asset classes and trading mechanisms, and in turn making it on par with other markets.

The provisions introduced under the Investment and Securities Act 2025 represent a significant step toward modernizing and regulating Nigeria’s capital market. By addressing issues such as Ponzi schemes, financial market infrastructure, digital assets, and commodity exchanges, the Act ensures a resilient market, faster innovation, and also promotes competition within the local and foreign markets. The introduction of stricter rules on securities, collective investment schemes, insolvency, and systemic risk management will foster confidence in the Nigerian capital market, attracting both local and foreign investors.

As market participants adapt to this new regulatory landscape, Nigeria’s capital markets are poised for significant growth and increased relevance in the global financial ecosystem, potentially establishing the country as a leading financial hub within Africa and beyond.

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DealHQ Partners In Business, Capital Markets, CBN, commercial, Finance, Newsletters, Regulation & Policy

UNDERSTANDING NIGERIA’S CPI AND GDP REBASING: IMPLICATIONS FOR BUSINESSES AND LEGAL CONSIDERATIONS

For the second time in its economic history, Nigeria embarked on a comprehensive GDP and CPI rebasing exercise. For context, the last rebasing exercise in Nigeria was conducted in 2014, updating the base year for GDP calculations to 2010, from 1990. The exercise resulted in a significant jump in the nation’s GDP, driving the outcome of a more accurate representation of the economy by incorporating previously underrepresented sectors such as telecommunications and entertainment.

According to the United Nations System of National Accounts (UN SNA)-2008, the base year for calculating a nation’ Gross Domestic Product needs to be revised periodically (usually every five years) to capture structural changes in the economy, new industries emerging, and shifts in consumption patterns. While it is undeniable that Nigeria was long overdue for a rebasing of its economic indicators; this step comes with significant implications for businesses, policymakers, and everyday Nigerians.

This article examines the implications of Nigeria’s CPI and GDP rebasing efforts for businesses, focusing on its impact on the pricing of goods and services, taxation, and key sectors such as agriculture, energy, and manufacturing. It also provides insights into how businesses can effectively navigate this transition.

Understanding CPI Rebasing & GDP Rebasing

Consumer Price Index

A consumer price index (CPI) serves as a vital tool for understanding the economic health of any nation. Essentially, it provides a statistical estimate of goods and services procured for consumption by households in the Country. The calculation of the Consumer Price Index (CPI) involves identifying a representative selection of essential goods and services, commonly referred to as a “market basket.” The prices of these items are systematically monitored over time, and a weighted average is computed, taking into account the relative frequency of consumption for each item.

A revision of the Consumer Price Index (CPI) was concluded in February 2025 to accurately reflect evolving consumption patterns within the Nigerian economy.

*YEAR CONDUCTED*	2014	2024
ITEMS IN THE CPI BASKET	734	940
DIVISION	12	13

Key takeaways from the 2024 CPI rebasing.

This revision involved significant adjustments to the market basket, a key component used by statisticians to quantify inflation. Specifically, the number of items included in the basket was increased from 740 to 940, whilst the weighting of the basket goods and services were adjusted to reflect their current significance. Notably, sectors like fintech and healthcare, which were previously underrepresented, now hold a more substantial position within the basket. The rebasing has also introduced a new division “Insurance and Financial Services”, expanding the total number of divisions from 12 to 13, reflecting the importance of financial products in people’s lives. It has also resulted in the feature of supplementary indexes for services, energy and farm produce.

Gross Domestic Product

The Gross domestic product (GDP) refers to a monetary measure of the total market value of all the final goods and services produced in a specific period by a country, used to measure the economic performance of a country or region. To rebase a country’s GDP is to update the base year used to calculate economic output to a more recent year. This will enable the GDP computation take into account structural changes that have occurred in the economy between the previously adopted base year and the most recently adopted base year to provide a more realistic representation of national economic performance.

Why Nigeria is Rebasing Its Gross Domestic Product (GDP)

Nigeria’s 2014 GDP rebasing exercise dramatically reshaped its economic standing, propelling it to become Africa’s largest economy – surpassing South Africa, with an 89% surge to USD$509 billion. This transformation was not unexpected, as the previous base year had become increasingly obsolete, failing to capture the significant diversification of the Nigerian economy over 24 years.

Now, ten years later, Nigeria’s macroeconomic landscape has witnessed momentous shifts across various sectors. Stakeholders and policymakers agree that the rebasing of Nigeria’s CPI Index and GDP, is not only overdue, but has become critical, given the growing divergence between the base year’s economic data and the rapidly evolving realities of the Nigerian economy. To address this, the ongoing rebasing effort seeks to incorporate burgeoning sectors such as technology, digital services, NSITF (Nigeria Social Insurance Trust Fund), NHIS(National Health Insurance Scheme), Modular refineries and the informal economy, with a view to enhancing the reliability of Nigeria’s economic statistics. It is important to note that Nigeria’s current GDP rebasing exercise is still in progress. Therefore, stakeholders should be aware that any preliminary data or analysis may be subject to revision upon completion of the process.

YEAR CONDUCTED	2014	2025
BASE YEAR	2010	2019
GDP($000,000,000)	509	TBD
KEY SECTORS INRODUCED	Telecommunications, IT, Nollywood	Technology, Digital services, NSITF (Nigeria Social Insurance Trust Fund), NHIS (National Health Insurance Scheme) Modular refineries and the informal economy
POSITION IN AFRICA	1^st	TBD
POSITION IN THE WORLD	26^th	TBD

Recognizing the need for precision in both GDP and inflation tracking, the National Bureau of Statistics (NBS) has selected 2019 as the base year for the ongoing GDP rebasing. The selection of 2019 as the base year is due to its relative economic stability compared to the turbulent years that followed, which were significantly disrupted by the COVID-19 pandemic leading to global supply chain shocks, and fluctuating oil prices from which the world is only now recovering.

Whilst some schools of thought may view a GDP rebasing as a statistical facelift, in reality, it could be a blessing or a curse as it will illuminate both the growth and inherent challenges in the economic landscape. The rebasing exercise does not only adjust GDP figures, but also directly impacts key economic metrics expressed as proportions of GDP, such as fiscal deficits and debt-to-GDP ratios. Typically, a higher GDP, resulting from rebasing, lowers these ratios, presenting a more favourable fiscal outlook.

Beyond fiscal management, a rebased GDP also provides valuable support for development planning by highlighting growth trends across various sectors. These insights will prove invaluable for data-driven economic planning as it enables the Government allocate resources efficiently, target high-growth industries, and address economic gaps.

How Investors and Consumers should Interpret the rebased GDP & CPI

The rebased CPI and GDP figures present a nuanced landscape for investors. On the surface, the reported decline in inflation and an expanded GDP—driven by the inclusion of sectors like fin-tech, digital services, and formalized informal industries—may signal economic diversification and resilience. This could attract foreign investment, particularly in sectors newly reflected in the GDP, which now appear more prominent contributors to Nigeria’s economic output. A larger nominal GDP might also improve Nigeria’s debt-to-GDP ratios, potentially enhancing its creditworthiness.

However, the risks lie in the details. The GDP increase is partly a statistical recalibration which may not necessarily be backed by real growth in productivity or output. For instance, while the 2019 base year captures Nigeria’s post economic recovery, it may overemphasize Nigeria’s progress in addressing underlying structural challenges, such as infrastructure gaps or over-reliance on oil exports. Similarly, the post rebasing inflation rate shaped by updated consumption weights (e.g., reduced emphasis on volatile food prices), could mask ongoing cost pressures in utilities, transportation, or imported goods. Investors comparing pre- and post-rebased data without adjusting for methodological shifts may misallocate capital. In responding to the rebasing outcome therefore, investors would need to employ a holistic approach; looking closely at other indicators like employment rates, currency stability, and consumer buying power to get a true sense of the economy’s health. This comprehensive approach helps avoid overestimating the positive impact of the statistical updates.

For consumers, the rebased CPI could flay a dangerous misconception that inflation has meaningfully slowed, and that prices of goods and services are stabilizing. The reported decline of food inflation to 24.48% might lead households to believe their purchasing power has improved, prompting increased spending or reduced savings. This decline, however, is largely a consequence of a re-weighted CPI basket which now assigns lower weight to staple foods like cassava or yam and higher weight to services like healthcare or streaming platforms. Prices for essential goods such as fuel, electricity, or imported rice may still be rising sharply, but their impact on the headline inflation rate is now de-emphasised.

Implication of GDP and CPI Rebasing on Pricing Strategies & Models

It is important for businesses and Investors to adjust their pricing models and strategies to align with the updated CPI basket which now emphasizes modern sectors like technology and services while reducing the weight of traditional industries such as agriculture. For example, businesses in the agricultural sector or particularly reliant on inputs (e.g., food processors) may find their rising costs underrepresented in the new CPI, as staples like cassava or maize now carry less statistical influence. On the other hand, tech firms offering digital services—now more prominently weighted—could leverage their heightened visibility in inflation metrics to justify price adjustments. This shift requires businesses to analyse their pricing strategy and structures through the lens of the revised CPI, potentially renegotiating supplier contracts or diversify supply chains to mitigate discrepancies between reported inflation and actual expenses to reflect the reported changes in consumer taste and behaviour.

Implication of GDP and CPI Rebasing on Tax Reforms

Nigeria’s 2014 GDP rebasing was a watershed moment, propelling the nation to the top of Africa’s economic rankings overnight. Yet, it revealed a glaring disconnect: while the economy looked larger on paper, its tax-to-GDP ratio remained one of the lowest in Africa.

Fast-forward to 2024, and policymakers are at a crossroads with the anticipated passage of the Tax Reforms Bill 2025. Take agriculture, the backbone of Nigeria’s economy which according to Statista, contributed 22.72% to GDP in 2023—a figure still anchored to the outdated 2010 base year. Yet, its tax contributions remain negligible, a paradox that underscores a systemic flaw. A rebased economy offers a clearer map of taxable activity, empowering policymakers to cast a wider net. Sectors like tech and financial services, now amplified by rebasing, offer a prime opportunity for the implementation of smarter taxation strategies.

Sector-Specific Challenges

Agriculture, Energy, Manufacturing & Oil and Gas

For Nigeria’s farmers, manufacturers, and energy producers, rebasing feels like shifting sands beneath their feet. For example, manufacturers importing machinery may face a cruel irony: rising global costs clash with a CPI that underweights these expenses, leaving them stuck between raising prices, losing customers or assuming massive losses.

Agribusinesses who are already battling climate shocks and poor infrastructure, now risk being left in the cold. If the rebased CPI downplays food price volatility, government aid could dry up, and attention could shift to more prominent sectors of the economy.

Banking & Finance

The banking and financial sectors must re-assess lending rates, interest rates, and credit accessibility based on the rebased economic data. This could lead to adjustments in lending rates mortgage, personal and corporate loans

Retail and Consumer Goods

Adjustments in CPI weightings reflects reshaped consumer behaviour analytics, requiring businesses in retail to revisit demand forecasting models and consumer pricing strategies.

Conclusion.

Nigeria’s comprehensive GDP and CPI rebasing exercise represents a pivotal moment in the nation’s economic history. While the statistical adjustments offer a more nuanced and contemporary view of the economy, they also necessitate a strategic recalibration for businesses, investors, and consumers alike. The shift in economic indicators, driven by the inclusion of emerging sectors and updated consumption patterns, demands a proactive approach to contract renegotiation, regulatory compliance, and financial planning as the impact extends beyond mere statistical adjustments, directly influencing pricing strategies and tax reforms.

For investors, the rebased figures present both opportunities and risks, requiring a holistic assessment that transcends surface-level data. Consumers, too, must remain vigilant, understanding that reported inflation figures may not fully reflect the lived reality of rising essential costs. The need for expert legal guidance becomes paramount in navigating the complex contractual and regulatory landscapes that emerge from these changes.

Ultimately, the successful adaptation to this economic recalibration hinges on a collective commitment to transparency, data-driven decision-making, and a thorough understanding of the evolving economic terrain. By embracing these changes, Nigeria can ensure that the rebasing exercise serves as a catalyst for sustainable economic growth and expansion.

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UNDERSTANDING NIGERIA’S APPROPRIATION BILL 2025

The 2025 Budget, titled “The Restoration Budget: Securing Peace, Rebuilding Prosperity,” was presented by President Bola Ahmed Tinubu during a Joint Session of the National Assembly on Wednesday, December 18, 2024. To date, the budget is yet to receive legislative approval from the National Assembly, marking the latest start to the yearly legislative process for financial appropriation in 25 years. The Chairman of the Senate Committee on Appropriation, Senator Solomon Adeola, attributed the delay to the introduction of the Tax Reform Bill which is required to be passed concurrently with the Appropriation Bill 2025 and without which the underpinning revenue assumption will be doubtful. He further noted that the National Assembly is working diligently to pass the Appropriation Bill by January 31, 2025. In the interim, the National Assembly has approved an extension to the term of the 2024 Appropriation Act from December 31st 2024 to June 2025.

The 2025 Budget represents a significant step toward improving the overall health of the Nation’s economy, restoring macroeconomic stability, and building on the progress recorded by the current administration in the last nineteen months to give the Nigerian economy the much needed uplift.

In his Budget Proposal presentation, President Bola Tinubu outlined the Federal Government’s key priority areas for the 2025 fiscal year, to include restructuring the economy, boosting human capital development, increasing trade and investment volumes, bolstering oil and gas production, and revitalizing the manufacturing sector to enhance Nigeria’s economic competitiveness. He emphasized that defense and internal security, infrastructure development, healthcare, education, human capital development, and agriculture remain at the core of his administration’s fiscal objectives.

The budget proposal is guided by the assumptions set out in the multi-year Medium Term Expenditure Framework (MTEF) 2025–2027 and the Fiscal Strategy Paper (FSP) which serve as a vital tool for prudent fiscal management and resource allocation. The MTEF incorporates factors such as inflation, interest rate, currency exchange rates, foreign exchange reserves, capital import flows, and the performance of the preceding year’s budget to establish the foundational assumptions influencing the fiscal plan for 2025.

Comparative Analysis of Key Budget Assumptions

	2025	2024	2023
Crude Oil Price (Per Barrel)	$75	$77.96	$75
Crude Oil Production (MBPD)	2.06	1.78	1.69
GDP Growth Rate	4.6%	3.88%	3.75%
Inflation Rate	15%	21.4%	17.16%
Exchange Rate (USD 1)	NGN 1500	NGN 800	NGN 435.57

Table 1: Comparison of key assumptions underlying Nigerian budgets from 2023 to 2025

Fig 1: Key Assumptions in the 2025 budget

Key Elements of the Budget – Revenue summary

The 2025 Appropriation Bill projects a total revenue of NGN 36.35 Trillion, a 40.51% increase from the total aggregate revenue for 2024.

The total aggregate revenue of NGN36,352,202,174,299 for 2025 is therefore broken down as follows:

FGN Share of Net Federation revenue is projected to be NGN 27.49 Trillion – (75.56% of the total aggregate expenditure).
Independent Revenue is projected to be 3.47 Trillion representing – (9.51% of the total aggregate expenditure).
Other Dividends (less NLNG Dividend) are projected to be NGN 7.52Billion – (0.02% of the total aggregate expenditure).
Aids and Grants are projected to be NGN 761.9 Billion – (2.09% of the total aggregate expenditure).
Special Funds/Account Receipts are projected to be NGN 300 Billion – (0.83% of the total aggregate expenditure).
Revenue from Government-Owned Enterprises are projected to be NGN 2.87 Trillion – (7.89% of the total aggregate expenditure).
Other Revenue Sources are projected to be NGN 1.46 Trillion – (4.02% of the total aggregate expenditure).

The Medium-Term Expenditure Framework (MTEF) 2025–2027 and Fiscal Strategy Paper (FSP) assumes a total revenue of NGN 34.82 Trillion for 2025:

Oil-related sources: NGN 19.6 Trillion, representing 56.32% of the total projected revenue.
Non-Oil-related sources: NGN 15.22 Trillion, representing 43.68% of the total projected revenue, which includes non-oil taxes, mining revenue, GOE revenue, aids, grants, and social fund receipts.

Whilst there exists a marginal discrepancy between the projected revenue in the 2025 Appropriation Bill (NGN 36.35 Trillion) and the MTEF/FSP assumption (NGN 34.82 Trillion), the negligible margin of difference suggests alignment in the fiscal posture of the Federal Government. The almost equal ratio of oil related revenue and non-oil related emphasizes the drive to achieve a more diversified revenue pool, particularly from taxes, government-owned enterprises, and social funds, reinforcing the government’s commitment to a sustainable fiscal mix.

Figure 2: percentage-based representation of revenue projection under the 2025 budget

Key Elements of the Budget – Expenditure Summary

The Appropriation Bill 2025 projects a total aggregate expenditure of NGN49.74 Trillion, reflecting a 41.91% increase in comparison 2024, including the approved supplementary budgets.

The projected expenditure for 2025, amounting to NGN49,740,165,355,396, is allocated as follows:

Aggregate Capital Expenditure is estimated at NGN14.85 Trillion representing 29.85% of the total aggregate expenditure, and a 7.84% increase from the 2024 budget including the approved supplementary budgets.
Recurrent (non-debt) expenditure is estimated at NGN14.12Trillion representing 28.39% of the total aggregate expenditure, and a 25.40% increase from the 2024 budget including the approved supplementary budgets.
Total Debt service is estimated at NGN16.33Trillion, representing 32.83% of the total aggregate expenditure, and a 97.81% increase from the 2024 budget including the approved supplementary budgets.
Statutory transfers are estimated at NGN4.44 Trillion, representing 8.93% of the total aggregate expenditure, and a 154.60% increase from the 2024 budget including the approved supplementary budgets.

Of the total aggregate expenditure approved for the 2025 financial year, a total of NGN8.2 trillion is appropriated for the service of domestic debts and NGN7.6 trillion for the service of foreign debts, while NGN 430.268 billion is to be held in a Sinking Fund Account for the retirement of maturing promissory notes.

Fig. 3: percentage based representation of revenue allocation under the 2025 budget

	2025	2024	2023
Aggregate Expenditure	NGN49.74tn	NGN28.7tn	NGN21.83tn
Statutory transfers	NGN4.44tn	NGN1.743tn	NGN967.49bn
Recurrent (non-debt) expenditure	NGN14.12tn	NGN8.769tn	NGN8.33tn
Capital expenditure	NGN14.85tn	NGN9.995tn	NGN6.46tn
Debt service	NGN15.89tn	NGN8.271tn	NGN6.31tn
Sinking Fund	NGN430.2bn	NGN223.662bn	NGN247.7bn

Table 2: YOY Comparison of expenditure allocation in the budgets from 2023 – 2025

Key Elements of the Budget – Budget Deficit and Deficit Financing

The Budget deficit for the 2025 fiscal year stands at NGN13.39 trillion, representing 3.9% of our National GDP and a 45.36% increment from the NGN 9.18 trillion budget deficit for 2024. This sharp increase highlights the Federal Government’s strategic decision to expand fiscal spending in response to pressing national priorities. Although this exceeds the threshold set by the Fiscal Responsibility Act, the Federal Government has represented that the need to address critical security and economic challenges validates this increased expenditure. The Budget deficit is expected to be financed primarily from the proceeds of strategic asset sales/privatization which Federal Government estimates will return circa NGN312,332,810,711 (2% of total deficit); multilateral/bilateral project-tied loans disbursements estimated at NGN3,799,281,435,450 (28% of total deficit) and other debt financing sources estimated at NGN9,276,348,934,936 (69% of total deficit).

The Federal Government’s approach to deficit financing reflects an unprecedented strategy, relying on a domestic and external borrowing threshold. Whilst this strategy will likely facilitate economic growth and development across various sectors, it leaves in its trail growing concerns about rising National debt, layered with rising cost of debt service which could further flay inflationary pressure.

Fig 4: percentage-based representation of the allocation of the budget deficit financing under the 2025 budget

Analysis of the 2025 Budget – Key highlights

Macroeconomic assumptions

As with previous budgets, questions have been raised around the viability of the macroeconomic assumptions underpinning the 2025 Appropriation Bill. The USD exchange rate benchmark is set at NGN1,500/USD, whereas current market rate hovers around NGN1,535/USD. The gap between the projected and actual exchange rates signals a significant risk, especially if FX availability declines or the FX market conditions worsen. We note however that the Central Bank of Nigeria’s (CBN) Electronic Foreign Exchange Matching System (EFEMS), may likely improve transparency and efficiency in the FX market.

Furthermore, a review of the performance of the 2024 budget reveals discrepancies in inflation assumptions which was projected at 21% for 2024 and which later settled at 34.6%; oil production was pegged at 1.78mbpd, yet actual production averaged 1.4mbpd. These variances have raised significant concerns about the credibility of the 2025 assumptions, especially given persisting challenges such as oil theft, fluctuating global crude prices, and foreign exchange volatility. Critics argue that these overly optimistic assumptions could lead to higher deficits and greater borrowing to cover revenue shortfalls.

Ambitious Revenue Assumptions

The revenue projections for 2025 have drawn significant scrutiny from experts, with the Federal Government projecting a total revenue of NGN36.35 trillion, representing a 40.51% increase from the 2024 budget revenue projection. This includes projected oil revenue of NGN19.6 trillion, a target that many consider overly optimistic, given Nigeria’s declining oil production volumes of circa 1.6mbpd over the past two years and the persistent challenges of pipeline vandalism, oil theft, and fluctuating crude prices. However, the recent approval of major oil and gas acquisitions, such as the Seplat-Mobil Petroleum Nigeria Unincorporated (MPNU), Oando-Eni, Chappal-Equinor, and Shell-Renaissance deals are expected to increase oil and gas production capacity. These deals, which bring in critical investments for the development of new oil fields and the revitalization of existing ones, are anticipated to help Nigeria achieve higher output levels, and possibly validate the production assumptions.

In the light of the record decline in consumer spending and the growing economic hardship, many stakeholders have also adjudged the Non-oil revenue projections as ambitious. The Federal Government expects NGN15.22 trillion from non-oil sources, including VAT and Corporate taxes. It is however worthy of note that the Federal Inland Revenue Service (FIRS) exceeded its 2024 revenue collection target, realizing NGN21.6 trillion over and above the NGN19.4 trillion target, including significant gains in Company Income Tax and Education Tax.

It is our considered opinion that achieving the 2025 revenue projections hinged primarily on increased oil and gas production, Stabilization of global oil prices and production costs fluctuations in oil prices could directly impact the revenue from this sector and Significantly improve the non-oil revenue stream.

Debt Financing and Rising Debt Servicing Cost

Under the 2025 Budget, debt service is estimated at NGN16.33 trillion, accounting for 32.83% of total expenditure, significantly higher than the NGN8.49 trillion allocated in 2024. This increase reflects both the rising debt stock and the impact of global interest rate hikes on external borrowings. The fluctuating exchange rate, instability of the Nigerian Naira, and the rise in domestic lending rates further exacerbate the debt servicing burden, as more local currency may be required to meet both foreign and domestic debt obligations.

Nigeria’s growing debt burden continues to be of great concern to stakeholders. The 2025 Budget deficit of NGN13.39 trillion will be financed through a mix of borrowing, multilateral loans, and asset sales/privatization proceeds, further increasing the country’s debt stock. Debt-to-GDP ratio, which stood at 50.7% in 2024 is however projected to decrease marginally to 49% in 2025, highlighting concerns about long-term fiscal sustainability. The high debt-servicing costs will crowd out spending in vital sectors such as healthcare, education, and infrastructure, hindering efforts to achieve inclusive economic growth, thereby calling for an efficient long-term debt management strategy and enhanced fiscal discipline.

The 2025 Tax Reform Bill

The proposed 2025 Tax Reform Bill, currently undergoing the legislative approval process, is what underpins key revenue assumptions under the 2025 Budget and the Federal Government’s strategy to increase revenue generation and improve fiscal sustainability. This Bill which has been applauded by many stakeholders, shows a much longer term approach to tax reforms in contrast to the previous Buhari administration, which passed a Finance Bill alongside its Appropriation Laws to deliver strategic reforms and stimulate economic activity in priority sectors in each Fiscal Year. The Tax Reform Bill when passed, is expected to enhance tax compliance, streamline fiscal policies, expand the national tax base, and consolidate existing tax laws, whilst delivering long-term fiscal health, and addressing systemic inefficiencies in tax administration and aligning tax policies to the broader fiscal objectives of the Federal Government.

Conclusion

The 2025 Appropriation Bill is an ambitious fiscal proposal designed to restructure critical sectors of Nigeria’s economy, drive revenue growth, and tackle pressing national challenges. Its key objectives include reducing dependence on petroleum imports, promoting the export of finished petroleum products, boosting agricultural production through improved security, and increasing foreign exchange inflows through foreign investments. Further, the budget targets a significant increase in crude oil output and exports while aiming to lower upstream oil and gas production costs. However, the ongoing delay in the budget’s approval by the National Assembly poses the risk of potentially stalling progress on these vital initiatives and delaying the execution of key projects.

Achieving the objectives of the 2025 budget will require a comprehensive and strategic approach by the Federal Government. This includes the rigorous implementation of tax reforms, diversification of the economy to reduce oil dependency, substantial investment in critical infrastructure, and the strengthening of governance frameworks to enhance transparency and accountability. These measures are essential for improving fiscal discipline, attracting investments, and building a resilient economic foundation.

For businesses, subject to its timely passage, we already see key economic benefits that are likely to positively impact the business landscape in Nigeria. The significant increase in capital expenditure is expected to translate to increased infrastructure development; it is also expected that the Country will enjoy a much more stable and predictable fiscal and monetary policy direction which will restore investor confidence and promote economic growth.

The Budget also records significant allocation of revenue to education:- supporting teacher training, supporting initiatives such as the Universal Basic Education, Vocational Training Initiative, the expansion of the National Open University of Nigeria, and the promotion of equal opportunity to education through scholarships and grants to students from disadvantaged backgrounds. This will in the long run improve the size and depth of the Nation’s skilled workforce pool which has suffered significantly on account of increased workforce migration.

In summary, the 2025 budget presents promising opportunities for sectors such as manufacturing, agriculture, education and infrastructure with the increased capital flow to be recorded in the current fiscal year and the overall impact this will have on the overall economy. Nonetheless, businesses must remain proactive and adaptable, keeping a close watch on evolving fiscal policies, potential tax reforms, and macroeconomic indices that may impact their operations. Ultimately, the budget’s success will depend on timely legislative approval, efficient policy execution, and prudent fiscal management. These factors will determine the extent to which the 2025 budget influences Nigeria’s economic trajectory and the broader business landscape.

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Introduction

Nigeria’s Off-Grid Market

Key Strengths of the 2023 Regulations

Permits for Interconnected Mini-Grids

DisCo Network Extension Protections

Deemed Consent Mechanism

Weaknesses and Gaps Under the 2023 Regulations

Limited Consumer Protection

Weak Dispute Resolution Mechanism

Regulatory Overlap

Changes Under the NERC Mini-Grid Regulations 2026

The Abolition of the MYTO Methodology for Isolated Mini Grids

Enforceable Timelines for DisCo Objections

Mandatory Hosting Capacity Information (HCI)

Design, Construction, Operation, and Maintenance

Additional License Transition Options

Network Asset Fee and Cost of Energy Charge

Site Exclusivity for Project Development

Shortcomings of 2026 NERC Mini-Grid Regulation

Regulatory Instability

The DisCo Enforcement Gap

Implementation and Enforcement

Investment Opportunities Under the 2026 Regulation

Expanded Project Scale

Interconnected Mini-Grid Development

Portfolio Development Strategies

Conclusion

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Comparative Analysis of Key Budget Assumptions

Table 1: Comparison of key assumptions underlying Nigerian budgets from 2023 to 2025

Fig 1: Key Assumptions in the 2025 budget

Key Elements of the Budget – Revenue summary

Figure 2: percentage-based representation of revenue projection under the 2025 budget

Key Elements of the Budget – Expenditure Summary

Fig. 3: percentage based representation of revenue allocation under the 2025 budget

Table 2: YOY Comparison of expenditure allocation in the budgets from 2023 – 2025

Key Elements of the Budget – Budget Deficit and Deficit Financing

Fig 4: percentage-based representation of the allocation of the budget deficit financing under the 2025 budget

Analysis of the 2025 Budget – Key highlights

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