Introduction
Nigeria’s digital economy has become one of Africa’s most visible success stories. Driven by fintech ingenuity, entrepreneurial energy, and a large, tech-savvy young population, the country has emerged as a leading hub for technology startups and digital services on the continent.
Lagos alone hosts several of Africa’s most valuable unicorns—companies like Flutterwave, Paystack, and Moniepoint—that have attracted global capital and positioned Nigeria as one of the fastest-growing digital economies in the world.
Building on this momentum, Nigeria is working to strengthen its position as a frontier-market tech ecosystem through infrastructure and capacity-building programs. The 3 Million Technical Talent (3MTT) initiative—supported by private sector partners like MTN—is reported to have already trained tens of thousands in areas such as software development and data science, with ambitions to reach three million Nigerians by 2027.
Meanwhile, broadband and fibre optic campaigns are underway to connect all 774 local government areas—part of a broader state-led digital vision. As of Q2 2024, the ICT sector contributes nearly 20% of Nigeria’s real GDP, a striking figure that reflects the centrality of technology in the country’s economy.
But this promise is being undermined by a regulatory posture still shaped by excess and unpredictability.
Technology regulation in Nigeria has long leaned toward interventionism. Across sectors—fintech, crypto, digital identity, and content moderation—the Nigerian state has positioned itself, time and again, not as a referee but as an active participant.
In still recent memory, government actors and regulators have suspended platforms, detained executives, reversed policies without warning, and banned market ecosystems out of existence. These moves betray the country’s own digital economy but, more importantly, reflect an impulse toward overinvolvement.
These actions are often framed as necessary to curb fraud, stabilise the naira, or protect national sovereignty. But they reveal something else: a governing logic shaped less by long-term strategy than by institutional anxiety, ultimately misaligned with the needs of a competitive, innovation-driven frontier economy.
It is tempting to explain this away as the necessary pains of a developing country—an institutional immaturity that the country will eventually outgrow. But that argument no longer holds.
Nigeria has engaged with disruptive technologies for well over a decade—long enough to have cultivated a more predictable, more principled approach to governance. And while the solution cannot be imported wholesale, there is another way to think about regulation.
The American Lesson
The U.S. system of governance is far from perfect. But its regulatory philosophy offers something Nigeria has yet to internalise: regulatory restraint.
In the U.S., particularly in relation to technology, the overarching posture is one of limited regulatory intervention in the absence of clear market harm or outright fraud. The default is not an absence of oversight, but oversight underpinned by restraint.
The regulatory process, when it comes into gear, is also designed to allow contestation. Tech companies don’t always like regulation—so they can challenge it. If an agency overreaches, there is often a court to rein it in. If a fine is issued, there is typically a process to review or negotiate.
The system is driven by contestation—but in ways that preserve economic agency and allow innovation to thrive.
This principle reflects what legal scholars have termed adversarial legalism—a term coined by Robert Kagan to describe the American reliance on formal process, legal challenge, and institutional checks to resolve disputes.
This combination of regulatory restraint and proceduralism may be unappealing for governments less inclined to be on the sidelines, and may, in excess, become messy—but it builds something Nigeria sorely lacks: predictability.
This is not to say the U.S. always gets it right. American regulatory responses to market harms have often been too little, too late. But the point is not that the U.S. has solved tech regulation. The point is that its institutional infrastructure allows for open contestation and gradual refinement.
The process—not perfection—matters more when interacting with a space as capricious as the digital market.
Why Restraint Matters
In markets like Nigeria, where capital is mobile and infrastructure is thin, the predictability of regulation matters more than its strictness.
Investors can price risk—but not randomness. Founders can plan around tax or licensing burdens—but not unexpected state hostility.
In 2021, the Central Bank of Nigeria (CBN) issued a sudden ban on cryptocurrency transactions through financial institutions, citing concerns about volatility and criminal use. Banks were ordered to shut down accounts linked to crypto activity—a move that wiped out formal market gains and simply drove activity underground.
In early 2024, Nigerian authorities detained executives of Binance without trial for weeks, accusing the company of economic sabotage. The charges shifted over time, but the message appeared to be that compliance is whatever the government dictates—preferably post hoc.
Other examples abound: Iroko TV’s exit following the broadcast code debacle; the Courier and Logistics Services (Operations) Regulation controversy; the SEC’s short-lived implied “ban” on the offering of foreign securities and its disruption to invest-tech in 2021; the abrupt outlawing of motorbikes and the costs to the motorcycle ride-hailing business ecosystem; and the still-questionable Twitter ban.
All these reflect the same misalignment—and it is not a functional policy bent.
These episodes do not merely inconvenience businesses—they send a signal that success in Nigeria’s digital economy is contingent on navigating the unpredictable whims of state actors.
In a market that must attract global capital and compete with more stable jurisdictions, this posture is not just unhelpful—it is self-defeating.
Regulatory restraint is not a luxury for later; it is the precondition for the kind of credibility Nigeria needs now.
The Myth of the Benevolent Regulator
Behind market overregulation often lies a fantasy: that the state is a wise steward of national interest, and that, left alone, private actors will harm the people or the economy.
But this logic collapses when the regulator is less accountable than the regulated.
When agency decisions cannot be challenged, when seizures occur without due process, when economic policy is made on X (Twitter) and enforced by police, the myth of the benevolent regulator falls apart.
The other possibility, of course, is that government intervention is not meant for the benefit of the market but is, in itself, government activity in its own interest—an assertion of state power untethered from public legitimacy.
This would not be regulation in the service of development.
What adversarial systems like the U.S. understand is that private power can be dangerous—but so can public power.
The goal is not to shield the state from challenge, but to subject it to the same scrutiny it demands of others.
Restraint, in this view, is not ideological—it is functional.
Regulatory power in a modern economy must be understood not only as enforcement but as design. When deployed well, it stabilises markets, encourages competition, and protects consumers.
But when wielded arbitrarily—or in ways that disregard stakeholder input—it becomes indistinguishable from disruption.
In nascent markets like Nigeria, regulation needs to be progressive and aim to support the growth of the ecosystem rather than hamper it.
What Must Change
Consider this: the United States, for all its regulatory complexity, has managed to remain the most attractive destination for tech innovation—in part because of this combination of restraint and procedure.
Regulators know they can intervene to implement discipline in markets, but they also know that they must exercise restraint in engaging with disruptive technologies because the priority is to allow the market to thrive, not to perform regulatory genius.
Companies know that rules matter—but they also know that if the government overreaches, they have recourse.
This friction doesn’t make innovation easy, but it makes it secure.
Finding the right coefficient of friction, in the Nigerian context, is the ultimate challenge of her regulatory policy.
Nigeria must radically rethink how it regulates technology—not in terms of content, but in terms of overarching philosophy.
We need laws that are legible, predictable agencies, and a political culture that sees private innovation as critical infrastructure.
Nigeria does not just need more regulation; it needs better regulation.
And better, in this context, means bound.
This is not abstract—the cost of an unstable regulatory environment is the loss of credibility in global tech markets.
The scars of arbitrary bans, sudden crackdowns, and opaque enforcement are not easily hidden.
The reforms Nigeria needs are not just economic—they are epistemic.
We must change not only how we regulate, but what we think regulation is for.
The goal cannot be control; it has to be trust.
And trust, in any system, begins with restraint.
