BY DAMILOLA OYEBAYO

ELECTRONIC SIGNATURE AND

NIGERIA’S DIGITAL ECONOMY

– KEY ISSUES

With the assistance of Damilola Salawu (Partner, Technology, Innovation and Fintech Practice, Olaniwun Ajayi LP),

Ephraim Ajijola and Gideon Udobong (both of Olaniwun Ajayi LP)

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The adoption and growth of digital platforms (where products and

services are globally accessed through digital channels such as mobile

devices and computers), suggests an increase in the preference of

humans for digital and electronic transactions which are typically

enabled by digital financial solutions cum services. Nigerians have been

equally influenced by this trend and this is evident in the increase in

reported electronic transactions via digital channels. According to

reports by the Nigerian Interbank Settlement System (NIBSS), in the

first half of 2018, the value of electronic payment transactions in

Nigeria hit a record high of N65.3 trillion, representing an increase of

N18.9 trillion in comparison to the sum of N49.4 trillion recorded in the

corresponding period of 20171.

At the core of these electronic transactions are (electronic) contracts

executed between platform operators/providers and users i.e. vendors

and purchasers, producers and consumers, etc. This is radically

different from the conventional contract usually executed between

consenting parties. In its contemporary nature, the platform providers

often utilize electronic signature (“e-signature”) to ensure that the

electronic contract executed by consenting parties (on these platforms)

meet the legal requirements for a valid and enforceable contract. This

paper examines e-signature as the backbone of electronic contracts,

and a relevant tool for the growth of Nigeria as a digital economy.

1. https://nairametrics.com/2018/09/03/nigerias-e-payment-transactions-hit-record-n65-

3-trillion-in-first-half-of-2018/

According to the European Union (EU) eIDAS Regulation (EU) No 910/2014 (“the

Regulation”), an e-signature (simpliciter) is data in electronic form which is attached to or

logically associated with other data in electronic form and which is used by the signatory to

sign. More recently, the United Kingdom Law Commission in its Report on the Electronic

Execution of Documents, 2019 (the Report) described e-signature simply as “a signature in

electronic form”. The Report further provides that an electronic signature is capable in law of

being used to execute a document (including a deed) provided that (i) the person signing the

document intends to authenticate the document; and (ii) any formalities relating to the

execution of that document are satisfied. Based on the two definitions, e-signature can

generally be described as a form of electronic communication through which a signatory

communicates an intention to authenticate and/or authenticates a document.

E-SIGNATURE AS A MODERN

AUTHENTICATION TOOL

The use of e-signature (on electronic contracts) is further justified by the position of the law

that, e-signature is acceptable where the rule of evidence either requires signature or provides

consequences if a document is not signed2, accordingly, the use of e-signature in this regard

suffices or either avoids the consequence.

e-signature can generally be

described as a form of

electronic communication

through which a signatory

communicates an

intention to authenticate

and/or authenticates a

document.

2. Section 93(2) of Evidence Act, 2011(as amended)

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Given that there are different classes of contracts that are admissive of the e-signature, the

Regulation provides for three types of e-signatures, to wit: (i) simple e-signature; (ii)

advanced e-signature; and (iii) qualified e-signature.

advanced e-signature

simple e-signature

qualified e-signature

A simple e-signature is an e-signature that is technology-neutral and requires the lowest level

of security. In practical terms, all that is required for a person to execute a simple e-signature

may be to; type a name at the bottom of an email, click “I accept” on a website, or where a

person signs on a document in wet ink and, subsequently, scans the said document to a

recipient. The English Courts expanded the scope of a simple e-signature where it held that a

name typed at the bottom of an email is a valid simple e-signature3 or clicking an “I accept”

tick box on a website4.

An advanced e-signature entails, comparatively speaking, a higher level of security and must

satisfy the following characteristics, viz: (i) it must be unambiguously linked to the signatory;

(ii) it must enable identification of the signatory; (iii) be created by electronic signature

creation data over which the signatory can be certain of keeping exclusive control; and (iv) be

linked to data associated with the signature in such a way that any subsequent modification of

the data can be detected. Whereas qualified e-signature requires the highest level of security

and is technology-central. Specifically, it binds the identity of the signatory to the signature

and requires the issuance of a qualified certificate by an accredited authority. In addition, the

signature of the user is managed by a Qualified Electronic Signature Creation Device or QSCD.

E-SIGNATURE AS A MODERN

AUTHENTICATION TOOL

3. 4 Golden Ocean Group Ltd v. Salgaocar Mining Industries PVT Ltd [2012] EWCA Civ

265, [2012] 11 WLR 3674 at [32]

4. 5 Kathryn Bassano v Alfred Toft & ors [2014] EWHC 37 (QB) at [43] and [44]

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An analysis of legislation or case law in Nigeria indicates the absence of an express definition of

e-signature in Nigeria. For this reason, inferences are made from the provision of section 93(3)

of the Evidence Act 2011 (as Amended) which states that:

A literal interpretation of this provision suggests that e-signature in Nigeria could either be the

simple e-signature or the advanced e-signature5. However, there is a dearth of Nigerian case

law which provides judicial interpretation to the afore-reproduced provision of the Evidence

Act, nonetheless, there is no ambiguity under Nigerian law on the validity and admissibility of

e-signature.

E-SIGNATURE IN NIGERIA –

DESCRIPTION, VALIDITY AND ADMISSIBILITY

An electronic signature can be proved by

either showing that a procedure existed by

which it is necessary for a person, to

proceed further with a transaction, to have

executed a symbol or security procedure

to verifying that an electronic record is that

of the person.”

5. This is similar to what obtains in the EU and the UK. Also, under Nigerian law, where a

statute is clear and unambiguous, a literal interpretation is applicable thereto. Ifezue v.

Mbadugha & Anor [1984] LPELR-1437 9SC) Pp. 26-27, paras. D-C

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On the issue of validity, pursuant to section 17(1)(a) of the Cybercrimes (Prohibition,

Prevention, etc.) Act, 2015 (“Cybercrimes Act”), documents executed by e-signature are

binding. In addition to recognizing the validity of e-signature, section 17(2) of the Cybercrimes

Act further sets out certain transactions or declarations that cannot be consummated by e-

signature which include; creation and execution of wills, codicils and or other testamentary

documents, death certificate, birth certificate, etc. Regarding the admissibility of e-signature,

by section 93(2) & (3) of the Evidence Act, documents executed by e-signature are admissible.

It is also worthy to note that the Electronic Transaction Bill 2017 (“the Bill“) which was passed

by the Nigerian Senate in 2017 is yet to receive the assent of the President. Essentially, the Bill

seeks to provide a legal and regulatory framework for electronic transactions. If passed into

law, the Bill seeks to cement the framework and regime for the e-signature and its applicability

in Nigeria. Specifically, section 11(1) of the Bill provides that “where the signature of a person

is required, that requirement is met in relation to an electronic communication if: (a) any

method is used to identify the person and to indicate the person’s approval of the information

communicated; (b) having regard to all the relevant circumstances at the time the method was

used, the method was as reliable as was appropriate for the purposes for which the information

was communicated; and (c) the person to whom the signature is required to be given consents

to that requirement being met by way of the use of the method mentioned in paragraph (a)”6.

The Bill further provides that the administration of e-signature shall be in accordance with

rules, guidelines and standards as may be prescribed by the National Information Technology

Development Agency (NITDA).

D O C U M E N T S E X E C U T E D B Y E -S I G N A T U R E A R E V A L I D A N D B I N D I N G .

...the Electronic

Transaction Bill 2017 (“the

Bill”) which was passed by

the Nigerian Senate in

2017 is yet to receive the

assent of the President.

6. Section 13 of the Bill also provides that Electronic Signature Certification services shall

be provided by a certification authority in accordance with the provisions of the

accreditation granted under the electronic signature administration.

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The absence of a robust legislation on e-signature in Nigeria is arguably affecting; (i) the

adoption and growth of e-signature on digital platforms; (ii) the use of digital platforms by

Nigerians; and (iii) the progress of the country as a digital economy.

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the law in Nigeria

is not clear on

e-signature

related issues

The uncertainty on the type of e-signature that is required for simple and complex electronic

transactions definitely impacts the trust framework required for transactions on these

platforms, as such, many platform operators/consumers continue to resort to and rely on

traditional signatures or simple e-signatures (notwithstanding the complexity of the

transaction), thereby increasing the security risks associated with electronic transactions.

Furthermore, the law in Nigeria is not clear on e-signature related issues such as the; (i) forms

and types of e-signatures i.e. the law does not provide for different types of e-signature as is

the case in advanced jurisdictions; (ii) formalities of e-signature vis-à-vis what constitutes the

validity of e-signature; (iii) the absence of the verification mechanism (which is provided for

pursuant to section 93(2) of the Evidence Act); (iv) security and reliability of e-signature; (v)

verification of the identity and authority of the signatory; (vi) cross-border validity and

admissibility of e-signature executed in Nigeria (particularly in the absence of a framework for

either advanced e-signature or qualified e-signature); etc.

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REGULATORY AND PRACTICAL

CHALLENGES TO E-SIGNATURE IN NIGERIA

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The above provides a clear justification for a robust legislation that will regulate the use and

applicability of e-signature in Nigeria. The proposition is a legislation that will resolve the

uncertainties associated with the lack of classification of e-signature cum its applicability to

different types of transactions (however simple or complex). In the absence of this legislation,

consumers who continually execute complex transactions using simple e-signature remain

highly susceptible to security breaches and disputes, a situation which will not bode well for a

nation which is still at the nascent stage of its digital economy.

Therefore, a clear regulatory framework on e-signature will potentially contribute to the ease of

doing digital business as consumers will operate under a clear framework, thus, electronic

transactions can be concluded as quickly as possible, while promoting the trust needed by

consumers and investors alike. It will also lead to more certainty as to the form of e-signature

that may be required in simple and complex transactions. Lastly, this will significantly impact

the growth of electronic transactions, significantly limit and aid the resolution of commercial

disputes arising from such transactions, thereby contributing to the growth of electronic

transactions and the digital economy on the overall.

No doubt, the Electronic Transaction Bill has become long overdue, and in the absence of the

assent of the President, it is highly recommended that NITDA (in its regulatory capacity)

publish a Regulatory Guideline on e-Signature.

Conclusively, most developed countries that have consistently taken advantage of the global

digital economy have put in place the required infrastructure and institutions that enable the

adoption and growth of the digital economy, therefore, in order to position Nigeria as a country

ready and willing to improve as a digital economy, relevant authorities and stakeholders need

to consider having a proper legal framework for the use of e-signature.

RECOMMENDATIONS & CONCLUSION

With nearly 60 years' experience in helping organizations and individuals achieve their goals, Olaniwun Ajayi LP has a track record of involvement in some of the largest and most complex transactions in dynamic

sectors of the Nigerian economy. Our unparalleled capacity to handle intricate legal issues is the bedrock of our practice, and our clients depend on us to help translate their opportunity into reality

Olaniwun Ajayi LP Olaniwun Ajayi LP @OlaniwunAjayiLPwww.olaniwunajayi.net

For further information, please contact:

Damilola Salawu

Partner (Technology, Innovation and Fintech)

+234-1-2702551 Ext 2722

dsalawu@olaniwunajayi.net

Damilola Oyebayo

Associate (Technology, Innovation and Fintech)

+234-1-2702551 Ext 2641

doyebayo@olaniwunajayi.net

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