By Jimoh Babatunde

In Nigeria, technology regulation often occurs suddenly through circulars, new laws, or enforcement actions, resulting in unexpected changes to what is permitted. Explanations for these changes are typically provided only after the fact, leading companies and investors to prioritise flexibility over the development of strong compliance systems.

This ongoing trend has become a part of Nigeria’s regulatory landscape. Some view it as a natural response to economic challenges and the rapid pace of technological change. However, Vincent Chimobi Okonkwo argues that this regulatory instability stems from the structural decisions regarding authority, rather than being a temporary issue.

Okonkwo, a scholar and policy practitioner based in the U.S., studies the intersection of digital economy regulation, institutional design, and governance, particularly focusing on the dynamics between Africa and the U.S. His insights stem from a deep understanding of Nigerian regulatory practices and global technology governance discussions, enabling him to assess the effectiveness and behaviour of regulatory frameworks in the face of political and market pressures.

In his recent essay, Rethinking Technology Regulation: What Nigeria Can Learn from Adversarial Legalism, Okonkwo asserts that Nigeria’s primary challenge is not a lack of regulation, but rather a lack of due process. He highlights that regulatory power is exercised quickly and sometimes aggressively, often without sufficient checks and balances.

Recent events illustrate this pattern, such as the Central Bank of Nigeria’s 2021 decision to prohibit banks from facilitating cryptocurrency transactions, effectively dismantling a formal market while informal activities continued. Similarly, in 2024, the detention of Binance executives on fluctuating charges demonstrated that compliance in Nigeria is often dictated more by proximity to regulatory power than by stable rules.

Okonkwo emphasises that while governments have a responsibility to act in the public interest, this does not justify bypassing due process. He argues that effective regulation relies on consistency rather than forceful intervention. Without fair procedures, good intentions can resemble arbitrary power.

He contrasts this with “adversarial legalism” in countries like the United States, where regulatory processes allow for contestation and transparency. This creates a stable environment for markets, even amidst disagreements over specific rules.

In Nigeria, the absence of clear, formal procedures complicates the ability of investors to assess risk. While various costs can be predicted, arbitrary enforcement remains unpredictable. Okonkwo recognises that his model cannot be applied directly to Nigeria due to its unique legal and institutional context. Instead, he suggests that predictability is achievable through the establishment of credible processes for contesting regulatory actions.

While supporters of Nigeria’s regulatory approach argue that restraint is unfeasible due to issues like fraud and weak consumer protections, Okonkwo reframes this by asserting that a lack of procedural discipline can lead to greater instability and opacity in the market. He concludes that Nigeria’s regulatory challenge lies in institutional design rather than ambition. Regulations should be viewed as mechanisms to foster trust, thereby enhancing credibility rather than merely asserting authority. For a digital economy reliant on mobile capital and long-term investments, establishing a stable regulatory environment is crucial for investor confidence.