The Central Bank of Nigeria’s recent circular restricting payment firms from operating on both sides of the merchant-consumer ecosystem has brought renewed attention to the evolving role of regulation in shaping Africa’s digital economy.
Beyond its immediate implications for payments, the directive raises broader questions about whether African regulators are taking a more assertive approach to market structure, competition and concentration in the technology sector.
In this interview with Business A.M.’s Onome Amuge, Kehinde Fagbule, senior consultant at TechCabal Insights, an Africa-focused digital economy consultancy, examines what the development means for founders, investors and the wider technology ecosystem. She also discusses whether the move signals a broader shift in regulatory thinking across Africa, why market concentration is becoming an increasingly important policy concern, and the lessons founders must consider when building businesses for long-term growth. EXCERPTS:
To start with the basics, how do you interpret the CBN’s circular restricting payment firms from operating on both sides of the merchant-consumer ecosystem? What problem do you think the regulator is trying to solve?
The CBN has drawn a hard line around concentration before it becomes irreversible. Any institution with more than 25 percent market share in consumer issuing or merchant acquiring is now capped at 15 percent on the other side, and the numbers explain the timing: Moniepoint controls roughly 38.5 percent of Nigeria’s POS market, OPay sits near 27 percent. Both are already past the threshold the CBN now treats as a structural risk trigger.
This isn’t a single rule, it’s three pillars working as one argument. Market share caps address concentration, UBO disclosure addresses ownership, data localisation addresses control of information. Put together, the CBN is asking who owns these systems, where the data sits, and whether any single player has become too embedded to fail or to regulate. That question carries weight because Nigeria’s payments ecosystem processed over ₦1.2 quadrillion in 2025. When that volume runs mostly through two or three entities, a bad day for one of them becomes a bad day for the economy.
What stands out is the posture. The CBN isn’t accusing anyone of wrongdoing, it’s saying the market evolved faster than the guardrails around it. That’s a more mature form of regulatory action than Nigerian policy is usually given credit for, and it signals the CBN wants to shape market structure ahead of a crisis rather than clean one up after it happens.
What practical changes could this create for payment companies whose business models currently span multiple layers of the ecosystem, from consumer wallets and merchant services to processing and distribution?
The companies most exposed are the ones that deliberately built across every layer of the value chain at once. Moniepoint is the clearest case: it moved from a merchant acquiring company with strong distribution to something closer to national infrastructure, using payments as the hook and credit as the lock-in. That architecture, built for scale, now reads as a compliance liability. The timing makes it worse. Paystack acquired Ladder Microfinance Bank in January and Flutterwave secured its own microfinance banking licence in April, both moves designed to turn payment users into banking customers. Some companies may already be sitting in breach territory before they’ve finished executing the strategy that got them there.
Practically, there are three paths out. Structural separation into distinct holding entities, which Paystack has already tested through The Stack Group. Strategic retreat, giving up ground in whichever segment pushes them over the cap. Or white-labelling the divested capability to smaller players, turning a forced exit into a new revenue line instead of a pure loss. None of these are quick fixes, and each reshapes the economics that justified the original build-out. Layered on top is data localisation, a separate but equally serious problem: a meaningful share of Nigerian payment data still sits on foreign servers, and local data centre capacity isn’t built out enough to absorb the migration on the CBN’s timeline.
The companies that move first on restructuring, rather than waiting to see how enforcement plays out, will likely keep more optionality over which parts of their business they get to keep. This is exactly the kind of decision that’s still being shaped in real time, which is why conversations like Moonshot by TechCabal’s Government & Policy track matter: getting founders, operators, and policymakers in the same room while the rules are still being interpreted, not after they’re settled.
Beyond compliance, what does this move tell us about how Nigerian regulators are beginning to think about concentration, platform power, and ecosystem dominance in tech-enabled markets?
This circular doesn’t speak like bank regulation, it speaks like competition law: market share thresholds, rolling windows, structural separation. The CBN is now treating payments as digital infrastructure with market power implications, not just a financial sector to supervise.
That logic doesn’t stop at issuing and acquiring. Any segment where one or two players have become the chokepoint, lending, insurance distribution, agent networks, could face the same structural treatment next.
Founders can no longer treat regulation as something to route around after scaling. Market structure now has to be part of the strategy from day one, which is exactly the conversation Moonshot’s Government & Policy track is built for.
Why do you think market concentration is becoming a bigger issue now? Is it because digital markets are maturing, because a few firms are becoming systemically important, or because regulators are trying to act before dominance becomes harder to unwind?
Honestly, it’s all three; but they’re not happening simultaneously. They’re sequential, and the sequence matters
First, digital markets matured. The first wave of Nigerian fintech was about access — getting people onto digital rails, building merchant acceptance. That phase created the conditions for concentration by rewarding the players who scaled fastest and built the widest distribution
Then, a few firms became systemically important.
Now, the regulator is acting before dominance becomes harder to unwind. From April 1, 2026, a separate CBN rule forced every POS agent to be exclusive to just one principal. This circular is the next step in that same direction. The CBN has been moving consistently, this is just the most explicit statement yet.
The window analogy is important here: India showed with UPI that if you mandate open, interoperable infrastructure before any single player locks the market, you get more innovation and more competition. If you wait until after, the tools available to you are far more disruptive to the market you’re trying to protect. The CBN appears to understand that window is closing
For founders building in fintech and adjacent sectors, what should they take away from this moment? Does it indicate they need to rethink the “super app” or end-to-end platform model that many startups aspire to?
Don’t read this as hostility to fintech ambition. Nigeria’s fintech ecosystem hasn’t succeeded despite regulation, and this circular is an evolution of that posture, not a reversal of it. The super app model isn’t dead, but it now attracts regulatory scrutiny in direct proportion to how dominant you become. Paystack’s restructuring into The Stack Group is the template worth studying: separating regulated entities and ring-fencing risk so the group can keep experimenting elsewhere without exposing its core payments engine to regulatory fallout. The founders who do well from here are the ones who treat regulatory design with the same rigour they give unit economics, a first-class consideration from day one, not a fire drill once a circular forces the issue.
How should founders now think about product expansion and ecosystem playbooks? For example, if a startup wants to serve both consumers and merchants, what kinds of regulatory risks should it be evaluating much earlier than before?
The first question used to be “can we build this?” Now it has to be “what is our regulatory exposure if we build this and it works?” That shift changes the order of operations. If you’re processing payments for merchants and eyeing a consumer wallet, you need to model, before launch, at what market share your issuing position would start capping your acquiring business, not after you’ve already built distribution around owning both. Flutterwave’s CEO captured the old logic well when the company secured its MFB licence, saying the firm could now build faster because it controlled the value chain. Two months later, the CBN’s circular directly targeted that kind of value chain control. The ambition wasn’t wrong, the sequencing was. The regulatory conversation needed to happen at the strategy table, not after the licence was already secured.
Practically, that means three things move up the timeline: mapping where you’d sit against the 25%/15% thresholds at your target scale, not your current scale; treating corporate structure (holding company separation, ring-fenced entities) as a launch decision rather than a scale-up decision; and building relationships with the CBN’s supervisory teams early enough that market share reporting isn’t the first time they’re hearing about your expansion plans.
Do you think this kind of intervention could slow innovation by limiting how startups scale, or could it actually create a healthier market by preventing gatekeeping and opening up room for smaller players?
Both are possible. The outcome depends almost entirely on enforcement consistency and implementation details the CBN hasn’t yet published.
Case for a healthier market: If dominant players are forced to pull back in certain segments, space opens up for others to grow. Moniepoint and OPay’s dominance has made certain segments functionally inaccessible to smaller players; the caps change that.
Case for disruption: Data localisation places asymmetric cost burdens on smaller operators. Larger institutions can absorb the compliance cost; super agents and smaller switching companies face the same deadline with far fewer resources.
The India UPI analogy: Mandating open, interoperable infrastructure created more innovation by preventing any single player from controlling the rails. There’s a version of this CBN intervention that produces the same outcome, but only if structural separation creates genuine openness, not just a compliance exercise incumbents navigate more easily
What does this mean for startups that have already built their growth strategy around cross-market integration? Are we likely to see restructurings, spinouts, licensing changes, or more cautious product roadmaps?
The honest answer is: we don’t yet know what the responses will look like. Companies have until December 31 and nothing structural has been publicly announced. But the question the circular forces on every affected company is: which side of the market is your real moat? Consumer issuing or merchant acquiring? You now have to pick one to dominate and manage the other below 15 percent.
The likely menu of responses:
Restructuring into holding company structures with clearly separated regulated entities. This ring-fences risk and gives the CBN a clean line between activities.
Spinouts of the weaker side – If your merchant acquiring is dominant but your consumer wallet is subscale, the wallet becomes a liability worth separating or divesting.
Licensing changes — Some companies may find it cleaner to surrender one licence category than to manage the reporting and compliance burden of staying in both.
More cautious product roadmaps — particularly for companies not yet at the 25 percent threshold, who will now be watching their market share numbers before launching adjacent products.
The consolidation dynamic is also worth watching. Companies forced to retreat from one segment may find it more attractive to acquire a focused competitor in their dominant segment than to defend a weak position on the other side.
For startups not yet at scale, this is actually a window. If dominant players are required to pull back, that’s mandated white space, but only for founders who move quickly and with regulatory clarity
How should investors interpret this development? Does it materially change how they should assess fintech business models, particularly those that depend on controlling multiple parts of the value chain?
Two things need to update in fintech valuation models right now. The “winner takes all” premium for cross-market dominance needs a regulatory discount, a company at 38 percent POS share while growing a consumer wallet has a structural compliance problem with a hard December 31 deadline, not just a growth story. The flip side is investable too. Whoever fills the space dominant players get forced to vacate is worth identifying now, before that white space becomes obvious. Portfolio companies with cross-market exposure need immediate scenario modelling, what the business looks like if it has to pick one side, and whether the unit economics still hold.
For foreign-backed players like Flutterwave and Paystack, UBO disclosure changes the information relationship with the CBN, ownership now has to be transparent all the way up the chain, not just at the Nigerian operating entity. The bigger question is whether this is Nigeria-specific or the start of a more interventionist era across African tech broadly. If it’s the latter, the playbook shifts away from end-to-end platform control and toward interoperability and modularity, with moats built from execution rather than structural lock-in.
Looking ahead, if this is indeed the beginning of a more interventionist regulatory era in African tech, what should founders, operators, and investors be doing now to build companies that can still achieve scale while remaining resilient to changing market-structure rules?
Build regulatory intelligence as a core competency: The signals for this circular were visible months in advance, the April POS exclusivity rule, CBN commentary on concentration risk, the pace of licensing upgrades. Companies reading those signals had a head start on scenario planning while everyone else spent the week of June 15 scrambling to interpret a circular.
Architect for modularity from the start: The Stack Group structure, whatever its original intent, is now the template for how you build a large fintech in Nigeria, separate regulated entities, ring-fenced risk, clean lines between business units. Build that architecture at Series A, not after you’re a unicorn facing a December deadline.
Don’t build moats from structural lock-in, build them from execution: The companies most exposed right now are the ones whose competitive advantage depends on controlling both sides of a transaction. The companies best positioned are the ones whose advantage comes from product quality, distribution depth, or data, none of which the CBN can cap.
Show up where the conversations are being shaped: Moonshot by TechCabal 2026’s Government & Policy track in October is where founders, policymakers, and capital sit in the same room at the National Theatre. The operators who show up with data and perspective help shape what the next circular looks like. That’s not a soft benefit, it’s a competitive advantage.
