Nigeria moves to ease banking barriers for non-profits amid regulatory reforms

Nigerian regulators, banks and civil society groups are working to ease stringent banking restrictions on non-profit organisations (NPOs), amid concerns that current compliance practices are hindering humanitarian operations.

The push comes from a multi-stakeholder working group convened by Spaces for Change, which held its fourth meeting bringing together financial institutions, regulators and non-profit representatives to address regulatory bottlenecks.

Non-profits said their biggest challenge is access to the financial system, particularly difficulties in opening and operating bank accounts due to strict compliance requirements.

“One of the major challenges is their inability to open and operate banking accounts… in some cases hindering their ability to provide the good humanitarian services that they are expected to provide,” said Pattison Boleigha, managing director, Pattison Consulting Limited.

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Stakeholders said the problem largely stems from how banks interpret global standards, especially the Financial Action Task Force (FATF) Recommendation 8 on counter-terrorism financing.

According to Boleigha, many banks wrongly classify all non-profits as high-risk entities. “Financial institutions should not just treat all non-profit organisations as high risk,” he said.

Although Nigeria has updated its anti-money laundering and terrorism prevention laws, removing non-profits from the list of reporting entities, implementation gaps persist.

Victoria Ibezim-Ohaeri, Executive Director of Spaces for Change, said banks are reluctant to adjust without explicit directives from regulators.

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“The banks say they know the law has changed, but the Central Bank has not told them to enforce it,” she said, noting that non-profits are caught in the middle. “We are the ones in front of their argument.”

Despite these challenges, stakeholders report progress, particularly a shift towards a risk-based approach to compliance.

“Before, all of them used to categorise NPOs as high risk. That is shifting,” Ibezim-Ohaeri said, citing training programmes for financial institutions across the country.

Bawo Egbakumeh, Registrar/Chief Executive, Compliance Institute Nigeria, said improved engagement is bringing clarity. “There’s a lot of clarity now on how NGOs operate and how they should be onboarded within the financial space,” he said.

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Key reforms under discussion include a uniform onboarding process across banks to standardise documentation and reduce compliance burdens, especially for smaller organisations.

Stakeholders are also advocating a single registration system to replace the current fragmented structure, requiring multiple registrations with different agencies.

“We registered with CAC, SCUML and others… registration, registration, that’s all we do,” Ibezim-Ohaeri said.

Beyond regulation, stakeholders emphasised the importance of collaboration with the private sector to support development efforts.

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“The needs continue to increase… the government alone will not be able to meet these needs. This is where non-profit organisations come in,” said Confidence Obayuwana of the Nigeria INGO Forum.

He added that private sector support should be seen as a strategic investment. “When you contribute to reducing poverty… it opens more market space for private sector players,” he said.

Stakeholders said the goal is to strike a balance between safeguarding the financial system and enabling non-profits to deliver essential services.