By Chantel Umar and Chidiebube Temple Innocent
Introduction
On 6th October 2025, the Central Bank of Nigeria (CBN) issued revised Guidelines on Agent Banking aimed at strengthening oversight of Nigeria’s rapidly expanding point-of-sale (POS) and agent banking ecosystem. Among the most significant reforms introduced is the mandatory geo-fencing of POS devices, which requires agent banking transactions to be carried out strictly within registered and approved locations.[1]
Geo-fencing is intended to function as a regulatory tool for fraud prevention, transaction traceability, and customer protection. However, its introduction has generated considerable debate, particularly regarding its practical impact on POS operators and its compatibility with constitutional guarantees under Chapters II and IV of the 1999 Constitution of the Federal Republic of Nigeria (as amended).
These concerns make it necessary to carefully scrutinise the Guidelines to ensure that, in both their design and enforcement, they operate within constitutional boundaries and do not impose avoidable restrictions on lawful economic activity.
The Geo-Fencing Requirement Under the 2025 Guidelines
The Guidelines provide that any device deployed to an agent or utilised by an agent in carrying on agent banking services shall be geo-fenced or tagged to operate within the agreed registered agent premises or location.[2] An agreed location is defined as a principal-approved place of business with a physical structure no smaller than a kiosk situated at a clearly identifiable location.
In practical terms, each POS device must be registered with precise geographic coordinates and technically restricted from processing transactions outside those coordinates. This requirement forms part of a broader compliance framework that also mandates real-time transaction processing, the inclusion of location data on transaction receipts and enhanced reporting obligations for financial institutions.[3]
Implementation is to occur in phases, with agent location and agent exclusivity taking effect from 1 April 2026. This phased approach allows principals, super agents, and agents time to adjust their operations. Non-compliance attracts significant sanctions, including fines of not less than ₦5,000,000.00 (five million naira), daily penalties for continuing breaches and possible suspension or blacklisting of principals and super agents.
From a regulatory perspective, geo-fencing is designed to improve oversight, reduce fraud involving untraceable POS terminals and strengthen consumer protection. By linking each terminal to a verifiable location, regulators and financial institutions can more easily investigate fraudulent transactions, monitor agent distribution, manage liquidity risks by location and respond to customer complaints.[4]
Practical Challenges for Implementation in the Nigerian Operating Environment
Despite its regulatory objectives, the geo-fencing requirement presents practical difficulties when applied to Nigeria’s diverse agent banking landscape. Agent banking in Nigeria encompasses a wide range of operating models, including formal retail shops, informal market stalls, campus vendors, fuel stations, and mobile micro entrepreneurs.
In practice, a substantial proportion of POS operators do not operate from fixed kiosks or enclosed structures. Many agents conduct their business with minimal setup, consisting of a table, a chair, and an umbrella, particularly in markets, roadsides, and bus stops.
The Guidelines’ insistence on an “agreed location” defined by reference to a physical structure no smaller than a kiosk therefore risks excluding a significant segment of existing operators whose businesses are lawful, functional and integral to local economies, but structurally informal. By conditioning regulatory compliance on the existence of fixed physical premises, the geo-fencing framework may inadvertently privilege capital-intensive operators while shutting out micro-entrepreneurs who constitute the backbone of agent banking in many communities.
In many underserved or remote areas, roaming POS agents are often the primary or only access point to cash and basic financial services, especially during prolonged ATM cash shortages. Overly restrictive location controls therefore risk undermining the Central Bank’s broader financial inclusion objectives as well as the intent of economic welfare reflected in Chapter II of the Constitution.[5]
Constitutional Considerations
Regulatory measures introduced by the Central Bank must not only achieve policy objectives but must also conform to the constitutional framework within which all public power is exercised. While the Central Bank possesses broad statutory authority to regulate financial services and protect the integrity of the payment system, that authority is not unlimited. Where regulatory rules affect how individuals earn a livelihood, use their property, or organise their commercial relationships, those rules must be assessed against the constitutional protections that govern economic activity in Nigeria. It is against this background that the geo-fencing requirement must be examined through the lens of both Chapter II and Chapter IV of the Constitution.
Chapter II and Economic Objectives of the State
Chapter II of the Constitution sets out the Fundamental Objectives and Directive Principles of State Policy, including the State’s obligation to promote planned and balanced economic development and to prevent the concentration of wealth to the detriment of citizens. These principles align with agent banking policies that expand financial access and support the informal economy, which are objectives expressly acknowledged in the CBN’s 2025 Guidelines.[6]
However, Section 6(6)(c) of the Constitution renders Chapter II generally non-justiciable.[7] The Supreme Court has consistently affirmed this position, including in Attorney General of Ondo State v. Attorney General of the Federation,[8] where it held that Chapter II provisions are not enforceable unless specifically incorporated into legislation.
As a result, a geo-fencing policy cannot be invalidated solely because it undermines financial inclusion. Nonetheless, Chapter II remains relevant as an interpretive guide when courts assess the reasonableness of restrictions imposed on enforceable rights under Chapter IV.[9]
Chapter IV and Fundamental Rights Implications
Chapter IV guarantees enforceable rights that may be indirectly affected by the geo-fencing regime, particularly where its application is rigid or disproportionate.
- Freedom of movement
Section 41 guarantees every citizen the right to move freely throughout Nigeria. The courts have consistently held that restrictions on movement must be clearly grounded in law and justified by legitimate reasons.[10]
While geo-fencing does not directly restrict physical movement, disabling a POS terminal once an agent moves beyond a narrow radius may effectively prevent the agent from carrying on a lawful occupation while moving freely. In circumstances where the business model is inherently mobile, this may amount to a constructive restriction on occupational mobility.
This concern is amplified by the reality that many POS agents operate without permanent kiosks, relying instead on movable setups such as tables and umbrellas. In such contexts, conditioning device functionality on the presence of fixed physical structures may effectively penalise lawful economic activity that depends on mobility, thereby raising questions about proportionality under Section 45 of the Constitution.
b. Freedom of association
Section 40 protects the right to associate for lawful purposes, including commercial relationships. The Guidelines restrict agents to a single principal and impose location controls that, together, may significantly limit contractual flexibility and economic autonomy for POS operators.[11]
c. Right to property
Sections 43 and 44 protect the right to acquire, own and use property subject only to lawful acquisition. Where geo-tagging decisions unreasonably prevent an agent from using a lawfully acquired shop or kiosk, such as through arbitrary refusal to tag a location or discriminatory exclusion of certain areas, there is a risk of constructive deprivation of property without due process or compensation.[12]
d. Fair hearing and access to court
Sections 36 and 46 guarantee the right to a fair hearing and access to court in the determination of civil rights and obligations. The Guidelines contemplate sanctions such as terminal deactivation and blacklisting. Any enforcement action taken without prior notice, proper investigation, and a genuine opportunity for the agent to be heard would be inconsistent with these constitutional guarantees.
Section 45(1) of the Constitution permits limited restrictions on the rights guaranteed under Sections 37 to 41, provided such restrictions are reasonably justifiable in a democratic society and imposed in the interests of public safety, public order, or the protection of the rights of others. This provision supplies the constitutional yardstick against which geo-fencing rules and their enforcement must be measured, determining whether any resulting limitation on freedom of movement and related rights can be lawfully sustained.
In Jungudo Haruna Mohammed v. Plateau State Independent Electoral Commission,[13] the court emphasised that Section 45 cannot justify blanket or excessive limitations on fundamental rights. A uniformly narrow geo-fencing radius, particularly in rural or semi-urban markets, may therefore struggle to satisfy this standard.
Towards a More Balanced Regulatory Approach
To reconcile regulatory objectives with constitutional and commercial realities, a tiered geo-fencing framework offers a more proportionate and balanced approach. On this basis, the following policy recommendations are proposed:
- Static agents operating from permanent shops, kiosks, or bank-led outlets may reasonably be subject to strict location-based controls.
- Agents operating within defined markets, estates, or campuses may require broader community-based location limits.
- Mobile and rural agents operating in underserved areas may require wider area-based tagging to preserve access to financial services.
This approach should be supported by procedural and technical safeguards. Digital due process is essential to ensure that agents receive notice and an opportunity to respond before permanent sanctions are imposed. Regulatory expectations must also reflect infrastructure realities, including GPS inaccuracies and network limitations in rural areas. Finally, an inclusion-focused approach is necessary to ensure that geo-fencing does not unintentionally exclude vulnerable communities from basic financial services.
Conclusion
Geo-fencing is a legitimate regulatory tool in modern financial systems, and its objectives of reducing fraud, promoting accountability, and protecting consumers are important. However, regulation must be implemented in a manner that is constitutionally proportionate, economically realistic and sensitive to local operating conditions.
A rigid one-size-fits-all geo-fencing regime risks undermining fundamental rights and weakening financial inclusion. By adopting a flexible and context-sensitive approach, the Central Bank of Nigeria (CBN) can strengthen regulatory oversight while ensuring that the Guidelines operate within constitutional limits and continue to support the communities that agent banking was designed to serve.
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[1] Geraldine C. Nzulumike and Chantel Umar, ‘Reforming Agent Banking in Nigeria: A Legal Analysis of the CBN’s 2025 Guidelines,’ The Nigeria Lawyer 18 December 2025 <https://thenigerialawyer.com/reforming-agent-banking-in-nigeria-a-legal-analysis-of-the-cbns-2025-guidelines/> accessed 19 December 2025
[2] Central Bank of Nigeria, ‘Guidelines for the Operations of Agent Banking in Nigeria,’ October 2025, Clause 11(v) <https://www.cbn.gov.ng/Out/2025/CCD/CIRCULAR%20AND%20GUIDELINES%20FOR%20THE%20OPERATIONS%20OF%20AGENT%20BANKING%20IN%20NIGERIA%20OCTOBER%206%202025.pdf> accessed 19 December 2025
[3] Central Bank of Nigeria, ‘Guidelines for the Operations of Agent Banking in Nigeria,’ October 2025 <https://www.cbn.gov.ng/Out/2025/CCD/CIRCULAR%20AND%20GUIDELINES%20FOR%20THE%20OPERATIONS%20OF%20AGENT%20BANKING%20IN%20NIGERIA%20OCTOBER%206%202025.pdf> accessed 19 December 2025
[4] Emmanuel Paul, “CBN’s geotagging rule: The end of roaming POS agents in Nigeria?’ Finance in Africa 28 August 2025 <https://financeinafrica.com/insights/cbn-geotagging-pos-agents-nigeria/> accessed 19December 2025
[5] Ibid
[6] Ibid n3
[7] Chapter II of the Constitution of the Federal Republic of Nigeria 1999 (as amended)
[8] (2002) 9 NWLR (Pt. 772) 222
[9] Priscilla Ngozi Nnawuba, ‘Non-Justiciability and Enforceability of Chapter II of the Nigerian Constitution as an Impediment to Enjoyment of Economic Rights and Development,’ African Journal of Law and Human Rights (AJLHR) 6(2) 2022 <https://journals.ezenwaohaetorc.org/index.php/AJLHR/article/download/2165/2209> accessed 19December 2025
[10] Ezeigbo v. Asco Investment Ltd (2022) 8 NWLR (Pt. 1832) 367
[11] Duruaku v. Nwoke (2015) 15 NWLR (Pt. 1483) 417
[12] Independent Television Radio v. ESBIR (2015) 12 NWLR (Pt. 1474) 442
[13] Suit No. NICN/ABJ/263/2022 <https://www.nicnadr.gov.ng/judgement/details.php?id=7823> accessed 19 December 2025