The Nigerian Senate has raised significant concerns regarding vulnerabilities in the country’s rapidly expanding digital financial sector. On Thursday, lawmakers warned that without immediate legislative action, certain fintech and technology-enabled financial service providers could develop into systemic risks that threaten national economic stability.
The discussion was centred around a proposed amendment to the **Banks and Other Financial Institutions Act (BOFIA) 2020**, led by Senator Adetokunbo Abiru and supported by all members of the Senate Committee on Banking, Insurance and Other Financial Institutions. This amendment aims to empower the **Central Bank of Nigeria (CBN)** to designate, register, and impose enhanced oversight on Systemically Important Institutions (SIIs), including non-bank fintech firms that play a critical role in Nigeria’s financial landscape.
Legislative Response to Growing Risks
During the debate, Abiru highlighted the profound transformation of Nigeria’s financial system over the past decade. He noted that mobile money operators, digital lenders, and payment service banks now serve tens of millions of Nigerians, processing substantial transaction volumes and managing vast amounts of sensitive data. Despite this growth, he pointed out that existing laws do not adequately reflect the influence or interconnectedness of these entities.
He cautioned that while the BOFIA Act allows the CBN to identify systemically important banks, it fails to account for the potential risks posed by dominant non-bank fintech platforms. “Some fintechs now operate at scales that rival mid-sized banks. Their data holdings carry national security implications,” Abiru stated, emphasizing the need for regulatory clarity on data storage and access.
Abiru referenced the regulatory pause in April 2024 that halted customer onboarding for several fintech firms due to concerns related to Know Your Customer (KYC) and Anti-Money Laundering (AML) practices. This situation underscored the urgency for reform, as he remarked, “The scale of these institutions has outgrown existing regulatory tools.”
To close the oversight gaps, the proposed amendment outlines five key reforms: establishing a statutory basis for designating fintechs as SIIs, creating a national registry for traceability and beneficial ownership disclosure, enhancing CBN’s prudential tools for digital institutions, promoting data sovereignty, and strengthening consumer protection and systemic stability.
Abiru dismissed the idea of a new standalone fintech regulatory agency, arguing that it could lead to duplication and increased administrative costs. He advocated for integrating fintech oversight within existing central bank structures while enhancing collaboration with other regulatory bodies, including the **Securities and Exchange Commission (SEC)** and the **National Information Technology Development Agency (NITDA)**.
Social Implications of Fintech Growth
Adding a social perspective to the discussion, Senator Natasha Akpoti-Uduaghan addressed the economic disparities impacting young Nigerians who rely on global digital platforms for income. She highlighted stark payment discrepancies, noting that Nigerian creators often receive as little as **$0.50 per 1,000 views** on platforms like Facebook, compared to **$10–$30** earned by U.S. creators for similar content.
Akpoti-Uduaghan warned that these inequities could hinder financial inclusion and undermine the earning potential of Nigeria’s burgeoning population of digital entrepreneurs. She called for more robust regulatory engagement with international technology companies to safeguard local creators and their livelihoods.
Following the debate, the bill was referred to the Senate Committee on Banking, Insurance and Other Financial Institutions for further legislative consideration. As Nigeria’s fintech ecosystem continues to evolve, the urgency for effective oversight and regulation remains paramount to ensure financial stability and protect the interests of all stakeholders involved.
