Tag: FinTech

For Nigeria to achieve the $1trillion Gross Domestic Product (GDP) by 2026, the Nigeria Deposit Insurance Corporation (NDIC), among other stakeholders, have emphasised on the need for banks and Fintech companies to collaborate and drive the  real sector growth.

Delivering a keynote address at the 2024 annual conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos over the weekend with the theme, “Nigeria’s Journey Towards $1 trillion Economy: Impact of Banks’ Re-capitalisation, Opportunities for Fintechs and Real Sector” the Managing Director/Chief Executive, NDIC, Bello Hassan stated that the current recapitalisation initiative of the Central Bank of Nigeria (CBN) must be effectively implemented.

According to him, this is necessary towards enhancing the resilience, solvency and capacity of Nigerian banks to absorb shocks and continue to support economic development of the nation by efficiently performing their function as the fulcrum of financial intermediation.

He noted the role of strong and well capitalised banks in supporting the current administration’s bold vision of growing Nigeria’s economy to a $1 trillion must be appreciated by the relevant players in the financial sector.

 “The opportunities and potentials for growth of the real sector depend, among others, on the availability and affordability of financing the economy. To achieve the desired level of financing required by the real sector, the window offered by banks in partnership with Fintechs, must be adequately harnessed,” he said.

He, however, stressed on the need for supervisors to understand the interconnection among the various financial services providers and how their policies and actions can affect the efficiency and optimality of the overall financial system.

He noted that many Nigerian banks have focused almost exclusively on large corporations, underserving small and medium enterprises as well as the financially excluded active poor unlike the  Fintechs  that have the potential of closing this gap through deployment of innovative financial services, using new technology and reduction of bottlenecks associated with traditional financial institutions.

“Notwithstanding the opportunities for growth and the benefit that the system stands to gain through the exploration of Fintechs in the financial services ecosystem, we must, as stakeholders, be conscious of the additional risks and complexities that the system may be further exposed, particularly in the area of privacy, personal information, customer protection, transparency, and cyber-security.

 “This no doubt has made regulatory oversight increasingly more complex. Financial regulators must evaluate existing rules and consider adoption of new regulations to better address the opportunities and challenges presented by these new technologies,” Hassan said.

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On the role of stakeholders, he emphasized that the vision of growing Nigeria’s economy initiated  by President Bola Tinubu, is the starting point for the national policy rethink, stakeholder engagement and realignments of efforts and policies toward achieving the objective.

He stated that the CBN and NDIC have collectively through their respective mandates repositioned the banking industry to better serve its intermediation role for the benefits of real sector and in fact all other sectors of the economy.

He said the CBN foreign exchange rate unification and banks recapitalization are some of the key initiatives necessary for propelling national economic growth.

Hassan highlighted that the foreign exchange rate unification policy has the potential for promoting foreign direct investment, foreign portfolio inflows, increased investor confidence, reduction of budget deficit, and improved sovereign credit ratings.

 “The objective of the CBN and NDIC is to promote safe, sound and stable banking system that is capable of providing the required financing to our productive sectors of the economy. This is crucial in Nigeria’s journey towards the $1 trillion economy that we all aspire to attain,” he added.

While giving his guest speaker address, the Group Managing Director, United Bank for Africa Plc (UBA), Mr. Oliver Alawuba  said Nigeria’s journey to a $1 trillion economy is not just a vision but also a shared responsibility.

Alawuba, who was represented by the Executive Director, Finance and Risk Management, UBA, Ugo Nwaghodoh, however, called on the banking sector, fintech innovators, the real sector, and regulatory institutions to work hand-in-hand to drive this transformation.

 “We are on the cusp of a new era, one that will be defined by innovation, resilience, and sustainable growth. Let us take this opportunity to collectively shape the future, ensuring that the Nigeria of tomorrow is one where prosperity is shared, opportunities abound, and our economy stands as a beacon of growth on the global stage,” he said.

According to him, Nigeria has the largest fintech market in Africa, populated by a rapidly growing number of start-ups offering solutions that address the inefficiencies of the traditional banking sector.

 “Fintech has already transformed how Nigerians access financial services – from mobile payments to lending platforms, the scope is vast.

 “As we march towards a $1 trillion economy, the Fintech Sector is poised to play a crucial role in expanding financial access, driving innovation, and stimulating competition within the broader financial system,” he said.

In his welcome address, the National Chairman, FICAN, Mr. Chima Nwokoji, however, raised concerns on fluctuations in exchange rates, and regulatory pronouncements of which one is the exclusion of retained earnings from capital calculations.

He explained further that, “There is evidence of global best practices that show that a robust banking system is vital for economic growth. Singapore’s banking sector, for instance, has facilitated its rise as a financial hub and supporting economic growth.”

He highlighted that the banking sector recapitalisation would increase lending to MSMEs, driving entrepreneurship. According to him, this will boost job creation and support fintechs through strategic partnerships. This, in turn, will improve financial inclusion; enhance credit facilities for agriculture, manufacturing, and infrastructure development and boost investor confidence, thereby attracting foreign direct investment.

Managing Director, SystemSpecs Technology Services Limited, Demola Igbalajobi, has underscored the critical role of corporate governance in ensuring sustainable business success, especially in the dynamic fintech landscape.

Speaking at the second National Corporate Governance Summit in Lagos, Igbalajobi offered invaluable insights into the challenges and opportunities facing the industry during a plenary session on “Fintech Evolution and Corporate Governance Imperatives for Sustainable Impact”.

The STSL Managing Director was joined by industry leaders such as Babatunde Obrimah, Chief Operating Officer, Fintech Association of Nigeria; Femi Williams, CEO, NewWaves Ecosystem; Patrick Akinwuntan, Former Managing Director, Ecobank Nigeria PLC; and Agada Apochi, CEO, Unified Payment Services Limited.

In response to a question on SystemSpecs’ journey with the Federal Government’s Treasury Single Account (TSA) project, Igbalajobi highlighted the importance of strong corporate governance, a sense of responsibility and adherence to best practices in delivering such projects.

 “Corporate governance is not a luxury – it is a necessity. Our experience with the TSA project has shown that strong and demonstrable corporate governance culture that runs from the organisation’s Board right through to its operational and business practices can be a lifeline when such projects are challenged or questioned, and you need to show evidence of what had been done. Without this, the fundamentals of the organisation, and potentially its existence, can become questionable”, he remarked, pointing out the long-term repercussions of short-sighted decisions.

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The 2nd National Corporate Governance Summit brought together over 500 industry leaders, policymakers, and experts to discuss and advocate for stronger corporate governance frameworks in Nigeria.

According to recent data from the Nigerian Stock Exchange, companies with robust governance practices have seen a 40% increase in investor confidence and a corresponding rise in market capitalisation. Other speakers at the summit echoed Igbalajobi’s sentiments: Dr. Olusegun Aina, President of the Fintech Association of Nigeria, emphasised, “Corporate governance is the backbone of sustainable fintech growth. Without it, we risk undermining the very foundations of our technological advancements.”

Professor Oluseyi Oduyemi, a renowned expert in corporate governance, also added, “The statistics are clear: companies with strong governance frameworks outperform their peers by 30% in terms of long-term profitability.”

Igbalajobi also noted the importance of combining technical expertise with a deep understanding of the business environment. He emphasized the need for companies to advocate for Nigerian interests, particularly when dealing with foreign partners.