Nigeria's IP securitisation plan targets creative sector financing gap

Nigeria is developing a new regulatory framework that will allow creators and technology companies to use intellectual property as collateral for bank loans. The Intellectual Property Securitisation Framework aims to dismantle a longstanding barrier where lenders only accept physical assets like real estate or heavy machinery.

The initiative targets the country’s fast-growing creative and technology sectors, which include globally recognized industries like Nollywood and local fintech. Until now, these businesses have struggled to secure capital despite generating significant revenue through music catalogues, film distribution rights, software subscriptions, and trademarks.

Under the proposed system, future royalty earnings, licensing revenues, and recurring subscription income would be treated as commercially viable security. A musician could finance an international tour against future streaming royalties, while a software developer could leverage recurring revenue to fund product expansion.

For investors and lenders, a functional IP collateral market shifts Nigeria toward a knowledge-based financial model. It would also provide venture capital firms and institutional investors with a transparent legal structure to value and enforce claims on intangible assets, reducing the perceived risk of investing in the local creative economy.

The macroeconomic benefits extend beyond private balance sheets. Scaling these export-oriented digital and creative products would bring valuable foreign exchange into Nigeria, supporting broader economic diversification efforts.

However, executing this framework requires overcoming significant structural deficits. Nigeria currently lacks a deep bench of professionals capable of accurately valuing intangible assets, a prerequisite for banks to confidently underwrite these loans.

Success depends on coordination between the Central Bank of Nigeria, the Securities and Exchange Commission, and IP registries to build interoperable digital databases. These registries must be capable of instantly verifying ownership and identifying existing encumbrances to satisfy lender due diligence requirements.

While the existing Secured Transactions in Movable Assets Act offers a foundation, lawmakers will need to draft stricter provisions covering valuation methodologies and dispute resolution. Furthermore, the framework will fail if creators do not improve their own compliance, as many currently neglect the formal registration and documentation of their IP.

The ultimate measure of this reform will not be the text of the regulations, but the actual volume of credit extended to Nigerian innovators. Market participants will be watching closely for the first successful pilot transactions to confirm that the system works in practice.