E-Commerce In Nigeria: Legal Framework And Challenges

Aarndale Solicitors


Aarndale Solicitors
Electronic commerce (e-commerce) is the process of buying and selling tangible products and services online E-commerce relies on technology and digital platforms, including websites, mobile apps, and social media to make trade possible.
Nigeria Consumer Protection
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Electronic commerce (e-commerce) is the process of buying and selling tangible products and services online1 E-commerce relies on technology and digital platforms, including websites, mobile apps, and social media to make trade possible.2 It is part of the greater industry known as electronic business (e-business), which involves all processes required to run a company online.3


E-commerce operates in different types of market segments. There are six major models for conducting e-commerce today namely:

  • Business-to-Business (B2B): TheBusiness-to-Business (B2B) e-commerce business model encompasses all electronic transactions of goods or services conducted ​​between companies. Producers and traditional commerce wholesalers typically operate within this model.4 B2B companies have the option to either sell directly to end users or distribute their products through intermediary businesses that further resell to other companies or consumers.5 Examples of some of the top B2B e-commerce in Nigeria are Cliqueshoppa, Afripaay, Foodlocker Nigeria, Agripeller etc.
  • Business-to-consumer (B2C): The Business-to-Consumer model of e-commerce is distinguished by the establishment of electronic business relationships between businesses and final consumers. It corresponds to the retail section of e-commerce, where traditional retail trade normally operates.6 B2C e-commerce companies sell directly to the product end-user instead of distributing goods through an intermediary. B2C businesses can sell their products—a practice known as direct-to-consumer (D2C)—or they can sell products from other brands. Walmart, BestBuy, Amazon, Jumia, AliExpress, and Shein are classic examples of B2C businesses. They resell other companies' products via e-commerce websites.7
  • Consumer-to-Business: This model reverses the traditional business-consumer relationship, where individual consumers offer products or services to businesses. Examples include freelance platforms where individuals offer their skills or services to businesses.8
  • Consumer-to-Consumer (C2C): Consumer-to-consumer (C2C) type e-commerce encompasses all electronic transactions of goods or services conducted ​​between consumers. Generally, these transactions are conducted through a third party, which provides the online platform where the transactions are carried out.9An example is eBay, which allows a consumer to list and sell their products to another consumer.
  • Business-to-Administration (B2A): This part of e-commerce encompasses all transactions conducted online between companies and public administration. This is an area that involves a large amount and a variety of services, particularly in areas such as fiscal, social security, employment, legal documents and registers, etc. These types of services have increased considerably in recent years with investments made in e-government.10For Example, a data protection company can provide support and maintenance services to government websites to make sure they are secure for users.
  • Consumer-to-Administration (C2A): The C2A (Consumer-to-Administration) model describes sales transactions between consumers and public administrations. C2A is also known as business-to-government (C2G) commerce. This model provides a straightforward means to facilitate communication between consumers and administrative bodies.11 Examples of C2A transactions include electronic tax filing, distance learning programs, e-health services, online surveys, and more.

Legal Framework of E-Commerce in Nigeria

Nigeria has made efforts to establish a legal framework for e-commerce, with several key regulations and initiatives in place:

Companies and Allied Matters Act 2020: This Act provides for the incorporation, registration, organization and management of corporate organizations, including online businesses.12

Electronic Transactions Act (ETA), 2023: The Electronic Transactions Act (ETA), 2023 is the most comprehensive and relevant law governing e-commerce activities in Nigeria. This Act provides the legal framework to facilitate and regulate electronic transactions, including electronic contracts, payments, and consumer protection measures.

Section 16(1) provides that "An electronic commerce business shall provide the consumer with clear and comprehensive information about the goods or services being offered, including the total cost."13

Section 16(2) provides that "An electronic commerce business shall provide the consumer with a method to correct any input errors before the completion of the transaction businesses to provide consumers with a method to correct input errors before completing a transaction."

Section 16(3) provides that "A consumer shall have the right to withdraw from an electronic transaction within a specified period without penalty, except for the cost of return of any goods."

National Information Technology Development Agency Act (NITDA): Following the coming into force of the National Information Technology Development Agency Act, 2007 (NITDA Act) e-commerce regulations now fall under the scope of authority of the National Information Technology Development Agency (NITDA).

The NITDA Act established the NITDA as the regulatory body responsible for the development of the framework of rules for the governance and monitoring of the exchange of data and conduct of transactions online.14

Nigerian Communications Act, 2003: The Act established the Commission to regulate telecommunications services, including aspects related to e-commerce, such as online transactions and data protection. This act regulates electronic commerce, protects consumers, licenses e-commerce service providers, and establishes dispute resolution mechanisms.The Federal Competition and Consumer Protection Act (FCCPA): In 2018, the FCCPA established the Federal Competition and Consumer Protection Councilto develop and promote fair, efficient, and competitive markets in the Nigerian economy and to also facilitate access by all citizens to safe products and secure the protection of rights for all consumers in Nigeria.15The Federal Competition and Consumer Protection Council is a Federal Agency under the Federal Ministry of Trade and Investment that is responsible for competition and consumer protection in Nigeria. It was set up to protect the rights of consumers

Section 73 of the Act provides that "A business shall not engage in any unfair practice that may deceive or mislead consumers."

Consumer Protection Council (CPC) Act, 1992: The CPC Act establishes the Consumer Protection Council, which is tasked with protecting consumers from unfair trade practices, including those prevalent in e-commerce.

Section 3(a) of the Act provides that "The Council shall have power to conduct investigations into complaints, allegations, and situations regarding or touching on the quality of goods and services, misleading advertisement, unfair trade practices and other matters relevant to the protection of consumers"

Cybercrime (Prohibition, Prevention, etc.) Act, 2015: This legislation addresses cybercrimes and online fraud, providing measures to protect consumers from fraudulent activities on e-commerce platforms. The Act prohibits fraudulent online transactions, including those conducted through e-commerce platforms. Section 13 of the Act criminalizes obtaining unauthorized access to computer systems, networks, or electronic devices with the intent to commit fraud.16

Finance Act, 2020: Section 3 of the Finance Act 2020, titled "Amendment of Section 2 of the Principal Act," introduces changes to the Value Added Tax Act by expanding the scope of taxable goods and services to include intangible products, assets, or property. Therefore, online vendors and businesses dealing with intangible products are required to account for VAT on their supplies in accordance with this provision of the Finance Act 2020.

Central Bank of Nigeria's Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria 2019:

The Central Bank of Nigeria (CBN) issued the "Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria 2019" to provide guidelines and standards for electronic payments and collections across various sectors, including e-commerce. This regulation encompasses provisions that impact online businesses and e-commerce activities in Nigeria. Some key provisions related to online business and e-commerce include: 17

  • Payment Gateway Integration: The regulation sets standards for integrating payment gateways with e-commerce platforms to ensure secure and efficient payment processing.
  • Transaction Security: CBN's regulation emphasizes the importance of transaction security for online payments. It mandates the implementation of robust security measures, such as encryption and authentication protocols, to protect sensitive financial information during electronic transactions.
  • Customer Protection: The regulation mandates e-commerce businesses to offer transparent terms of service, refund policies, and dispute resolution mechanisms to protect consumer interests in online transactions.
  • Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance:The regulation requires online businesses to comply with AML and KYC requirements, ensuring thorough customer due diligence to prevent financial crime.
  • Cross-Border Transactions: The regulation offers guidelines on foreign exchange transactions, settlements, and adherence to global payment standards.

Legal Challenges Associated with E-commerce in Nigeria

Despite the growth of e-commerce in Nigeria, navigating the legal landscape presents various challenges for businesses operating in this sector. Some of these key legal challenges include:

  • Regulatory Compliance: E-commerce businesses must comply with a myriad of regulatory requirements, including consumer protection laws, data protection regulations, and tax laws. Ensuring compliance with these regulations can be complex and time-consuming, especially for startups and small businesses with limited resources.18
  • Intellectual Property Protection: Protecting intellectual property rights, such as trademarks, copyrights, and patents, is essential for e-commerce businesses to safeguard their brand identity and innovations. However, enforcing intellectual property rights in Nigeria can be challenging due to the lengthy legal processes and inadequate enforcement mechanisms.19
  • Contractual Issues: E-commerce transactions often involve multiple parties, including buyers, sellers, payment processors, and delivery services. Ensuring the validity and enforceability of contracts, terms of service, and privacy policies is crucial to avoid disputes and legal liabilities.20
  • Cybersecurity and Data Privacy: E-commerce platforms collect and store sensitive personal and financial information from customers, making them potential targets for cyberattacks and data breaches. E-commerce businesses must implement robust cybersecurity measures and comply with data protection regulations to safeguard customer data and maintain trust.21
  • Payment Regulations: E-commerce transactions involve online payments, which are subject to various payment regulations and policies in Nigeria. Adhering to these regulations, including those related to electronic payments, mobile money, and digital currencies, is essential for e-commerce businesses to facilitate secure and compliant transactions.22
  • Cross-Border Legal Issues: E-commerce enables businesses to reach customers beyond national borders, leading to cross-border legal complexities. Dealing with international trade regulations, customs duties, and jurisdictional issues requires careful consideration and legal expertise.23
  • Dispute Resolution: Resolving disputes arising from e-commerce transactions, such as product defects, delivery delays, or payment disputes, can be challenging in Nigeria's legal system. E-commerce businesses need effective dispute resolution mechanisms, including alternative dispute resolution methods and online mediation services.24

Addressing these legal challenges requires proactive measures, including legal advice from experts, ongoing compliance monitoring, and continuous adaptation to evolving regulatory frameworks. By navigating these challenges effectively, e-commerce businesses can mitigate legal risks and thrive in Nigeria's digital economy.

Safeguards for E-commerce Users

  • Shopping from Secure Websites: It is imperative to ensure that the website being utilized for shopping maintains a secure connection. Users should actively look for HTTPS in the URL and a padlock icon in the address bar, indicating a secure connection.
  • Using Strong Passwords: Users are advised to create unique and robust passwords for their e-commerce accounts to prevent unauthorized access. It is crucial to avoid using easily guessable passwords or reusing passwords across multiple accounts.
  • Being Wary of Phishing Scams: Users must exercise caution when encountering emails, messages, or pop-ups requesting sensitive information such as passwords or credit card details. It should be emphasized that legitimate companies will never solicit such information through unsolicited communication.
  • Checking Seller Reviews: Prior to making a purchase, users should thoroughly read reviews and ratings of the seller to ensure their credibility. They should seek feedback from other buyers regarding the quality of products and customer service.
  • Verifying Payment Security: Users are encouraged to utilize secure payment methods such as credit cards or reputable third-party payment processors. It is advisable to refrain from sharing sensitive financial information over unsecured networks or with unknown sellers.
  • Reviewing Return and Refund Policies: Users should acquaint themselves with the e-commerce platform's return and refund policies before making a purchase. They should ensure that there exists a clear process for returning or exchanging products if necessary.
  • Keeping Software Updated: Users should be reminded to regularly update their device's operating system, web browser, and antivirus software to shield against security vulnerabilities and malware.
  • Monitoring Account Activity: It is essential for users to routinely review their e-commerce account activity and statements for any unauthorized transactions. Any suspicious activity should be promptly reported to the platform's customer support.
  • Exercising Caution with Deals Too Good to Be True: Users need to exercise caution when encountering deals or offers that appear excessively enticing. They should be mindful that scammers may leverage attractive deals to entice unsuspecting users into fraudulent schemes.
  • Staying Educated: Users should be encouraged to stay informed about common e-commerce scams and security best practices. They should remain vigilant and exercise caution while shopping online to safeguard their personal and financial information.


In conclusion, while e-commerce in Nigeria faces various challenges, including regulatory complexities and infrastructural limitations, the prospects for growth and development are significant. By addressing these challenges through collaboration between stakeholders and policymakers, Nigeria can harness the full potential of e-commerce to drive economic growth, create employment opportunities, and improve access to goods and services for its citizens


1. Andrew Bloomenthal (29th March, 2024) "E-commerce Defined: Types, History, and Examples" INVESTOPEDIA https://www.investopedia.com/terms/e/ecommerce.asp Accessed on 12/04/2024 <</p>

2. Christiana Jolaoso (7th September, 2023) "What is E-commerce? Definition, Types& Getting started" FORBES https://www.forbes.com/advisor/business/what-is-ecommerce/ Accessed on 12/04/2024 <</p>

3. Darren Dematas (28th March, 2024) "What is E-commerce" ecommerceCEO https://www.ecommerceceo.com/learn/what-is-ecommerce/ Accessed on 12/04/2024 <</p>

4. BLOOMIDEA "Types of e-commerce" https://bloomidea.com/en/blog/types-e-commerce Accessed on 12/04/2024

5. SEMRUSH TEAM "6 Types of E-commerce: Business Models, Marketing, and More" https://www.semrush.com/blog/types-of-ecommerce/ Accessed on 12/04/2024

6. BLOOMIDEA "Types of e-commerce" https://bloomidea.com/en/blog/types-e-commerce Accessed on 12/04/2024

7. https://www.semrush.com/blog/types-of-ecommerce/

8. BLOOMIDEA "Types of e-commerce" https://bloomidea.com/en/blog/types-e-commerce Accessed on 12/04/2024

9. Ibid.

10. Oksana Yakovlieva (5th March, 2022) "Types Of Ecommerce Businesses: What Model Is Right For Your Online Business?" ELOGIC COMMERCE https://elogic.co/blog/types-of-ecommerce-businesses-what-model-is-right-for-your-online-business/#:~:text=B2A%20(business%2Dto%2Dadministration,they%20are%20secure%20for%20users. Accessed on 12/04/2024 <</p>

11. Ibid.

12. Section 18 (Companies and Allied Matters Act) 2020

13. Section 16 (Electronic Transactions Act) 2023

14. Section 6 (National Information Technology Development Agency Act)

15. https://starlionlegal.com/2020/10/23/legal-and-regulatory-framework-for-setting-up-an-e-commerce-business-in-nigeria/

16. Finance Act,2020 (Amendment) https://firs.gov.ng/wp-content/uploads/2021/01/finance-act-2020_signed.pdf Accessed 18/04/2024

17. CBN circular "REGULATION ON END-TO-END ELECTRONIC PAYMENT OF SALARIES, PENSIONS & OTHER REMITTANCES, SUPPLIERS AND REVENUE COLLECTIONS IN NIGERIA" https://www.cbn.gov.ng/out/2019/psmd/circular%20and%20guideline%20on%20e-payment.pdf Accessed 18/04/2024

18. Omotola, S. (2020). "E-commerce regulation and consumer protection in Nigeria: A critical appraisal. Covenant Journal of Business & Social Sciences" (CJBSS), 11(1), 1-19.

19. Ani, J. C., & Okpala, C. (2019). "E-commerce and intellectual property rights in Nigeria. International Journal of Computer Science and Information Security" (IJCSIS), 17(12), 103-110.

20. Oyewo, B. M. (2018). "Legal issues in e-commerce: An analysis of Nigerian laws and practice. African Journal of Computing & ICT," 11(1), 17-29.

21. Ibid.

22. Ibid.

23. Ajiboye, T., & Onikoyi, I. (2018). "Legal and regulatory framework for e-commerce in Nigeria. Journal of Emerging Trends in Economics and Management Sciences" (JETEMS), 9(1), 1-8.

24. Ibid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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