Cardoso: Rising quantity of non-bank transactions threatens monetary stability in West Africa 

Yemi Cardoso, CBN Governor

The Central Financial institution of Nigeria (CBN) governor, Yemi Cardoso, has raised issues concerning the rising transaction volumes of Non-Financial institution Monetary Establishments (NBFIs) and Different Monetary Establishments (OFIs), citing important dangers to monetary stability. 

Cardoso, represented by Abayomi Arogundade, Appearing Director of the Different Monetary Establishments Division on the CBN, famous this through the tenth Assembly of the Faculty of Supervisors for Non-Financial institution Monetary Establishments (CSNBFI) in Abuja on Monday. 

A non-bank monetary establishment is an organization that provides monetary providers however doesn’t maintain banking licences and subsequently can not settle for deposits. 

The CBN governor additionally commented on the rise in fintech loans, alongside crypto and stablecoin property. 

Cardoso mentioned: “We reiterate the significance of monitoring tendencies, dangers and improvements of NBFIs/OFIs as their growing transaction volumes pose main monetary system stability danger. 

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“Fintech loans are one of the vital generally reported improvements. Whereas total this may occasionally seem small in relation to the dimensions of credit score by DMBs, some jurisdictions globally, have famous a rising development within the quantity of those loans. In lots of circumstances, fintech credit score is offered through digital platforms that join lenders to debtors – through which case the platform takes the position of a monetary auxiliary. 

“In some circumstances, nevertheless, loans are taken on the steadiness sheet of those platforms (even whether it is short-term), through which case the platforms are akin to new forms of monetary intermediaries. These entities are sometimes fintech companies that provide purposes, software program, and different applied sciences to streamline cellular and on-line banking. 

“In lots of jurisdictions, these digital companies have a banking license and are topic to prudential necessities or they might simply be regulated as Fintech cost service companies. Improvements linked to crypto or stablecoin property have been additionally reported by some jurisdictions.” 

He emphasised that whereas these improvements supply important alternatives for monetary inclusion and effectivity, in addition they pose substantial dangers to monetary stability if not correctly regulated.

The CBN has been actively working to develop frameworks that may successfully monitor and handle these dangers. 

West Africa faces funding squeeze 

Dr. Olorunsola Olowofeso, Director Common of the West African Financial Institute (WAMI), additionally recognized main monetary points in West Africa, equivalent to funding squeeze. 

He additional emphasized the necessity to bolster the monetary sector’s resilience towards rising dangers like climate-related points, web disruptions, cyber threats, and social media-driven instability. 

Olowofeso mentioned: “Within the WAMZ, after turbulent years, the outlook is regularly bettering. Nevertheless, the funding squeeze persists as governments proceed to grapple with financing shortages, excessive borrowing prices, and impending debt repayments. 

“Rising dangers to the monetary system embody climate-related dangers, web disruption, cyber and social media threats arising from the digitization of monetary providers.” 

He confused the significance of growing enough nationwide cybersecurity methods and regulatory frameworks to deal with these rising dangers and strengthen the monetary sector’s resilience. 

Extra Insights 

  • That is in line with information launched by the Nigeria Inter-Financial institution Settlement Techniques (NIBSS). The cellular cash transactions determine for Q1 2024 represents an 89% year-on-year. progress in comparison with the N9.1 trillion transactions recorded in the identical interval in 2023. 
  • From 211 on the finish of 2023, the variety of firms authorised to function mortgage apps within the nation has risen to 263, in line with the FCCPC’s database. This whole contains these given full approval, conditional approval, and people licensed by the CBN. 
  • Regardless of the rise within the variety of digital leaders which have registered with the FCCPC and secured approval to function, lots of of different unregistered lenders are nonetheless enjoying out there and getting patronage from determined debtors. 


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