Nigeria is an emerging economy and has similar challenges to other countries we have discussed. One of the challenges is access to financial services. Despite that, Nigeria has been mentioned as a potential emerging FinTech hub. Nigeria is one of the largest African FinTech hubs along with Kenya, Egypt, and South Africa.
FinTech industry’s development
Nigeria and Lagos, in particular, are home to multiple incubators for tech startups. Altogether it has approximately 3,000 tech companies. Overall, the FinTech ecosystem has seen various regulatory and other changes that have prospered the industry's potential growth. Last year, the Securities and Exchange Commission announced it is working towards setting up a regulatory sandbox.
The FinTech Association of Nigeria is a key part of the community. It is “an umbrella body for fintech in Nigeria that connects stakeholders, accelerates fintech growth, and advocates for an adequate environment for a thriving fintech ecosystem.” Nigeria’s emerging hub status is significant when thinking about future economic development and diversification.
Nigeria’s CBDC
Financial inclusion is one of the challenges for Nigeria’s economy. Therefore, they believe that a CBDC would help make cash more accessible and enable its society to participate in the e-commerce economy. Nigeria has been researching a potential e-naira since 2017. This year, the Central Bank of Nigeria (CBN) has announced a possible CBDC pilot project in October.
Who regulates the industry?
Multiple regulatory frameworks are depending on the types of financial services activities performed or offered by a company. Banks and other financial institutions are licensed and supervised by the CBN on lending activities. The CBN also regulates payments — there are multiple guidelines and frameworks you must follow depending on the provided service. It is similar to other types of activities and working fields within the financial services industry.
Interestingly, there is no specific regulation for cryptocurrencies and cryptoassets; however, in 2021, CBN issued a Circular on Regulated Institutions. They are prohibited from dealing with cryptocurrencies and from facilitating payments for Cryptocurrency Exchanges.
