The Search for Good Market Conduct in Nigeria’s Agent Banking Ecosystem 

On October 6th, 2025, the Central Bank of Nigeria (CBN) released a fresh and more stringent set of Guidelines for the Operations of Agent Banking in Nigeria. The move is timely, perhaps overdue. As agent banking continues to grow into a critical delivery channel, especially for bridging the gap between formal finance and underserved markets, more importantly, at the last mile, the need for a clearer, enforceable market conduct regime has become urgent. But lofty objectives will succeed only if implementation is feasible, proportional, and informed by global best practices. In this op-ed, I examine:  

(a) The objectives of the new guidelines 

(b) Their implementation feasibility and alternatives 

(c) Risks and trade-offs 

(d) What a credible path to better market conduct might look like  

The Objectives: Why Nigeria’s Agent Banking Model Needed a Reset 

1. Strengthening Market Conduct and Accountability: Over the years, the growth of agent networks has outpaced regulation, with agents sometimes operating under weak oversight from their principals, mis-selling products, and aiding and abetting fraud. The new guidelines now make principals legally accountable for the actions and omissions of their agents. The guidelines require agent contracts, transparent fees, published agent lists, branding rules, and consumer redress mechanisms. This push aligns with Nigeria’s broader National Financial Inclusion Strategy (NFIS) and the payment system vision goals, which identify agent banking as a pillar for financial inclusion and safe, resilient payments infrastructure.  
2. Mitigating Fraud, Leakages, and Operational Risk: One of the recurring hazards in agent banking is the diversion of agent float to non-agent activities, unrecorded cash handling, device “roaming,” or double-booked terminals. The guidelines propose geo-locking of devices, dedicated agent accounts, daily and weekly cash limits, and real-time transaction monitoring. These levers are intended to close loopholes and limit systemic leakages. For instance, a December 2024 CBN circular already imposed a daily cash-out cap of ₦100,000 per customer, a weekly cap of ₦500,000, and an agent daily aggregate cap of ₦1.2 million.  These caps are now codified in the 2025 guidelines. 
3. Promoting Trust and Inclusion: Agent banking is only useful if end users feel safe. When transactions fail and money disappears, or agents vanish, public trust is eroded. The guidelines mandate instant reversals, two-factor authentication, receipts and alerts showing agent ID + GPS, and a 7-day complaint resolution timeline. Over time, this can raise confidence, meaning more cash will flow through digital channels rather than informal routes. Thus, the guidelines seek to shift the agent banking practices from unregulated growth to structured expansion, from opaque agent relationships to clear lines of liability. 

Implementation Feasibility: Will this Stick? 

While the objectives are sound, the real test lies in execution. Nigeria’s agent ecosystem is vast and heterogeneous, spanning petty shops, farm input stores, micro-agents, fintech terminals, rural kiosks, each with widely varied capacity. I examine five (5) key implementation challenges and possible mitigations: 

1. Infrastructure, Connectivity, and Tech Integration: Geo-fencing, real-time reversals, and continuous reporting require stable connectivity, GPS services, robust switching infrastructure, integration with NIBSS, and oversight platforms. Many rural agents still struggle with power outages, poor networks, or a lack of skilled support. Over-ambitious tech requirements may risk excluding weaker agents. The elephant in the room is unreliable network connectivity, which is the rail on which GPS tracking of agent terminals and the mandated geo-tagging and geo-fencing will rely. If the Federal Ministry of Communications, Innovation and Digital Economy fails in its ambitious fibre optic rollout, then policies like this are bound to fail from the very onset. 

The alternative is to adopt a phased roll-out or tiered compliance (where stronger or tighter rules are first applied to urban agents with access to internet connectivity, or high-volume agents with transactions well over certain thresholds) to curtail prevailing fraud. The Alliance for Financial Inclusion (AFI) casebook documents how regulators in other markets like Indonesia adopt proportional regulation, such as the Laku Pandai programme, which allows simplified KYC and oversight for low-risk agents. 

2. Agent Liquidity Management and Capital Strain: Stricter float accounting, daily caps, and restricted roaming reduce how agents manage cash across branches. Many agents function on thin margins and rely on informal float arbitrage across networks. The new regime curtails that flexibility. To address this challenge, principals and super-agents must step in with better liquidity support tools (local cash pooling, float top-ups, and reconciliation advances), which should be accompanied by agent training and cash management tools. 

3. Monitoring, Enforcement, Regulatory Capacity: For rules to matter, the CBN and supervising agencies must actively audit, sanction, and support. While the CBN sees punitive sanctions as the last resort, it is also important to note that some players take advantage of this good regulatory posture. Nigeria’s regulatory institutions are sometimes overstretched, making the rollout of geo-tag oversight, daily returns checking, and prompt enforcement across thousands of agents a heavy lift. A complementary model would be the use of third-party audit partners for compliance checks and/or deployment of regtech and suptech to drive compliance and supervision. 

4. Pushback from Stakeholders: Agents and principals will always resist certain rules imposed by any policy, especially those perceived as too restrictive (exclusivity, transaction caps, geo-locking). Already, the ecosystem has a subtle pushback on the 10-metre radius geo-fence and the Android 10+ PoS devices as native compliant terminals. There is a risk of large-scale economic disruptions, given that 53.9% or ~2 million of the total industry terminals are likely to be phased away if there is no shift in the policy requirements. This would mean the loss of livelihoods for millions of agents whose lives depend on agency banking. The transition requires strong stakeholder engagement, flexible implementation periods, and incentives for compliance. 

5. Cost Burdens: Upgrading devices, training, software licensing, and compliance overheads are all costs that many small agents will struggle to absorb. If principals shift the cost burden to them, many may drop out. Already, some agents pay for the PoS devices that they use, and it is yet to be clear what these agents will do with the PoS devices that are not Android 10+ native compliant, which the policy seeks to phase out. Proposed solutions could include cost-sharing, grants/subsidies for lower-tier agents, or phased compliance windows to ease pressure. 

The policy is implementable, but only if it balances rigour with pragmatism, infrastructure investment, and stakeholder support. 

Global Benchmarks and Empirical Lessons 

To assess how Nigeria’s approach compares, it is worth looking at global experiences with agent banking regulation. 

1. CGAP’s Review—Four Regulatory Themes: A classic CGAP Focus Note, Regulating Banking Agents (2011), outlines four critical regulatory axes: contractual clarity, liability allocation, transaction limits and ceilings, and monitoring and compliance. Nigeria’s new guidelines cover all four, which is a good sign that Nigeria is also paying attention to global best practices. But CGAP warns that too tight rules can limit growth or push agents off the books; too weak rules invite fraud. 
2. Brazil’s Correspondent Banking Model: In Brazil, banks use “correspondents bancários” (shops, post offices) under rules that restrict certain services, mandate service menus, cap risk, and require agent classification by risk category. Their success lies in strong payment rails (PIX instant system), rigorous audit, and a regulated “agent of last resort” approach. Over time, Brazil scaled into hundreds of thousands of agents with good conduct. Key lesson: scalable infra + tiered rules for agent classes. 
3. Kenya’s M-Pesa and Agent Regulation: Kenya’s M-Pesa ecosystem relied on strong liquidity support, commission incentives, and regular audits. Although much of the regulation was industry-driven, formal regulation via the Central Bank of Kenya set standards for float management, agent training, and reporting. Kenya also uses mystery shopping and performance metrics to monitor agents’ conduct. 
4. India’s DFS and Bank Correspondents: India’s business correspondent model mandates that banking agents follow bank-led KYC, grievance handling, and settlement timings. But regulators allow differentiated KYC (light touch) for low-value accounts to reduce barrier to entry. India also uses mobile apps for complaint logs and TEC audits to monitor agent behaviour.  

Nigeria’s new guideline echoes many of these lessons in theory, but success depends on execution fidelity. Key lessons emerge from the global case studies considered above. First, there is a need to apply a risk-based regulation (less strict for low volumes), combine ex‐ante rules with ex-post monitoring and sanctions. Second, there is a need to provide incentives (commissions, float support) for good behaviour, which principals must work into their Service Level Agreements (SLAs) with their agents. Third, the leverage of technology using suptech and regtech for oversight is a necessity. Fourth, the regulator needs to allow transition periods (from announcing, phasing to sunsetting), while at the same time providing relevant capacity support for ease of implementation. Finally, regulators cannot afford to pursue a ‘one size fits all’ rigidity in an ecosystem as diverse as Nigeria’s Digital Financial Service (DFS) ecosystem. 

Balanced View: Benefits and Trade-Offs 

Let’s begin with an assessment of the benefits. The new guidelines offer better consumer protection as grievance redress will be faster, with customers now equipped with reversal rights. The issuance of receipts with the agent’s details (location, GPS, and ID) provides better evidence for redress. Then, there is the potential enhancement of system integrity with reduced fraud, clearer audit trails, and fewer leaks. All of these are geared towards increasing trust, the absence of which has hampered the adoption and sustained use of DFS.  As reliability improves through market discipline (principals monitoring agents and reducing free riding), more Nigerians will use agent channels.  

Notwithstanding, there are trade-offs and potential risks. First, implementing the policy will result in the exit or drop-off of some agents as older devices (non-native compliant) will be phased out. Some Fintechs are likely to struggle in offsetting the compliance burden. Second, there will be slow growth in the agent network as principals go about upgrading non-native compliant terminals as well as recruiting new agents to make up for those who will opt for other principals as a result of the exclusivity rule. As operations cost rises, some principals will pass the cost-to-serve to agents, which in turn will be transferred to users as cost-to-use in the form of increased prices for services. 

Defining the Roadmap to Success 

To deliver on the promise of better market conduct, Nigeria must pay attention to these enablers: 

1. Clear implementation timeline and grace periods should be set as agents and principals need time to upgrade systems, change business practices, and adapt liquidity. A phased schedule with clear milestones is essential. 
2. Capacity building and technical assistance— training, toolkits, shared software, and continuous agent support hubs must be provided to compensate for low digital literacy among agents. 
3. There needs to be robust monitoring and enforcement. The rules must mean something. The CBN and NIBSS should team with third-party auditors, use mobile feedback loops, conduct field audits, and enforce meaningful sanctions. 
4. Liquidity and float support schemes are critical. Principals must provide mechanisms for small agents to manage float imbalances— cash pickup, mini-branch servicing, float rebalancing, or short-term advances. 
5. Stakeholder engagement and feedback loops should be regular to refine rules, fix unintended consequences, and build legitimacy. 
6. Evaluation and iteration of the guidelines, leveraging data from agent reports, complaints, and KPIs are also critical for success. 

Conclusion: The Search for Good Market Conduct 

The CBN’s Guidelines for the Operations of Agent Banking in Nigeria (2025) is a bold restatement that agent banking must mature. The guidelines set a new threshold for market conduct: accountability, transparency, and consumer protection. However, rules alone do not change behaviour. Nigeria’s agent ecosystem is sprawling, uneven, and resource-constrained. The success of this reform rests on pragmatism: phased implementation, proportional application, meaningful support, and credible enforcement. The guidelines are necessary, but not a silver bullet, as realising the vision requires all stakeholders— regulators, principals, super-agents, agents, and consumers to co-own the journey. 

If Nigeria pulls this off, it sets a high bar for emerging markets: growth in digital access and good conduct. That is how agent banking will earn trust and fulfil its promise of expanding access, reducing friction, and sustaining inclusion at the margins. Good market conduct is the foundation of confidence, without which agent banking becomes a liability, not an asset. Confidence comes with trust, which regulation, compliance, supervision, and enforcement must drive. With good market conduct, we can embed millions of Nigerians into a secure and inclusive formal financial system.