Ethical and regulatory challenges of artificial intelligence in Nigeria’s financial sector: A comparative legal policy analysis

Abstract

Artificial Intelligence (AI) is rapidly transforming Nigeria’s financial sector, improving areas such as credit risk assessment, fraud detection, customer service, and financial inclusion. However, its growing use also raises important ethical and regulatory concerns, including algorithmic bias, data privacy risks, lack of transparency in automated decisions, cybersecurity threats, and gaps in consumer protection and regulatory capacity. This study examines the ethical and regulatory challenges of AI adoption in Nigeria’s financial sector. Using legal and policy analysis, the paper reviews Nigeria’s regulatory framework focusing on institutions such as the Central Bank of Nigeria (CBN), Nigeria Data Protection Commission (NDPC), Securities and Exchange Commission (SEC), and National Information Technology Development Agency (NITDA) and compares it with regulatory approaches in the European Union, United Kingdom, and United States. The findings show that while Nigeria has made progress through initiatives like the Nigeria Data Protection Act 2023 and fintech regulatory sandboxes, there are still gaps in AI-specific regulation, accountability standards, cross-border data governance, and institutional capacity. The study recommends a risk-based regulatory approach that emphasizes transparency, fairness, accountability, and effective oversight. It also highlights the need for stronger coordination among regulatory bodies. This study contributes to the growing discussion on AI governance in developing economies and provides practical insights for responsible AI adoption in Nigeria’s financial sector