ASSET-BACKED SECURITIES IN NIGERIA: AN APPRAISAL OF THE LEGAL AND REGULATORY FRAMEWORKS GOVERNING SECURITIES IN NIGERIA

Abstract

The legal and regulatory framework governing securities in Nigeria is essential for ensuring market efficiency, investor protection, and financial stability. This study critically examines the legal structures that regulate securities transactions in Nigeria, specifically focusing on asset-backed securities (ABS) as an alternative financing mechanism. Despite the growing adoption of ABS in global financial markets, Nigeria lacks a comprehensive securitisation framework, creating legal uncertainties that hinder the sector's development. The paper’s objectives include evaluating the existing statutory and regulatory provisions relevant to ABS, assessing their adequacy, and identifying gaps that require legislative or policy reforms. Key legislations analysed include the Companies and Allied Matters Act (CAMA) 2020, the Investment and Securities Act (ISA) 2025, the Banks and Other Financial Institutions Act (BOFIA) 2020, and the Central Bank of Nigeria (CBN) Act 2007. The paper also examines the role of regulatory bodies such as the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) in overseeing securities transactions and ensuring compliance. Using a doctrinal legal research approach, this paper explores statutory provisions and international best practices to assess the effectiveness and limitations of Nigeria’s legal framework in regulating ABS. The findings indicate that the absence of a dedicated securitization law creates regulatory ambiguity, discouraging financial institutions and investors from participating in ABS transactions. The paper recommends the enactment of a specific Securitisation Act to standardise the definition, regulate SPV operations, ensure credit enhancement mechanisms, and harmonise regulatory oversight by the Securities and Exchange Commission and Central Bank of Nigeria. Also, Legal reform should incorporate investor protection measures, tax clarity, and mechanisms for risk transfer. These reforms would facilitate financial innovation, enhance liquidity, and promote securitisation as a credible vehicle for long-term capital formation in Nigeria.