Senate Committee Calls for Enhanced Oversight of Fintech in Nigeria
The Senate Committee on Banking, Insurance and Other Financial Institutions has raised concerns about the increasing number of financial fraud cases within Nigeria’s banking system. In response, the committee has called on the Central Bank of Nigeria (CBN) to enhance its regulatory oversight of financial technology (fintech) firms.
This move comes amid growing worries over the proliferation of Ponzi schemes that have defrauded many Nigerians in recent years. The committee emphasized the need for stricter regulatory measures to address these threats effectively.
During an investigative hearing focused on the operations of Ponzi schemes in Nigeria, Senator Adetokunbo Abiru, the chairman of the committee, made a compelling case for legislative action. The hearing was organized jointly by several Senate committees, including those on ICT and Cyber Security, Capital Market, and Anti-Corruption and Financial Crimes.
Abiru, representing Lagos East Senatorial District, proposed that fintech operations should be placed under the supervision of the CBN. He highlighted the importance of amending the Banks and Other Financial Institutions Act (BOFIA) 2020 to accommodate technology-driven financial service providers.
“It is more effective to strengthen the BOFIA framework, modernise CBN supervisory powers and ensure robust coordination with agencies such as the Securities and Exchange Commission, Nigerian Communications Commission, National Information Technology Development Agency, Corporate Affairs Commission, Federal Competition and Consumer Protection Commission, Office of the National Security Adviser and the Federal Ministry of Finance,” he stated.
According to Abiru, the proposed amendment would empower the CBN to designate qualifying fintech and digital financial institutions as important institutions. This would include establishing a national registry to improve transparency and beneficial ownership disclosure, strengthening risk-based supervision tailored to technology-driven services, and promoting data sovereignty and systemic stability.
He also pointed out that while some have suggested creating a new standalone regulatory agency for fintech supervision, this could lead to duplication of existing functions, bureaucratic overlap, increased administrative costs, and fragmented regulatory authority in a sector that requires strong coordination.
Challenges in the Fintech Sector
Nigeria’s fintech sector has experienced rapid growth over the past decade, driven by increased mobile phone penetration, digital payments, and financial inclusion initiatives led by the CBN. However, this growth has exposed regulatory gaps, with some digital platforms operating between banking, capital market, and telecommunications regulations.
Recent cases, including the collapse of the Crypto Bullion Exchange (CBEX), have renewed concerns about consumer protection and regulatory oversight. Ponzi schemes continue to exploit digital platforms and social media to attract unsuspecting investors.
Key Recommendations from the Committee
The Senate Committee outlined several key recommendations to address these challenges:
- Amend the BOFIA 2020: To ensure that fintech firms are properly regulated and supervised.
- Strengthen CBN Supervisory Powers: By modernizing the regulatory framework to keep pace with technological advancements.
- Establish a National Registry: To improve transparency and beneficial ownership disclosure.
- Promote Data Sovereignty and Systemic Stability: Through enhanced risk-based supervision tailored to technology-driven services.
- Ensure Coordination with Relevant Agencies: Including the Securities and Exchange Commission, Nigerian Communications Commission, and others.
Conclusion
The call for enhanced oversight of fintech firms reflects the growing recognition of the need for a coordinated and comprehensive regulatory approach. As the sector continues to evolve, it is essential for regulators to adapt and implement measures that protect consumers while fostering innovation and growth.
