By Bassey Udo
The Central Bank of Nigeria (CBN) says it would continue to encourage investments in fintech infrastructures to make the country’s payment systems continue to be resilient to risks associated with the emerging digital financial system.
The CBN governor, Godwin Emefiele, Emefiele gave the assurance in the address he sent to the 31st Seminar for Finance Correspondents and Business Editors in Enugu on Wednesday.
The theme of the seminar was: “Trends in Nigerian Payment Sysyem: Regulating the FinTech Digital Playing Field.”
Represented by the Deputy Governor of the CBN in charge of Corporate Services, Edward Adamu, he used the occasion to announce that plans have been concluded to unveil the Central Bank Digital Currency (CBDC) in a few days time.
The CBDC, which would be the e-Naira, the CBN governor said, would make Nigeria one of the first countries in Africa, and indeed the world, to adopt the digitization of its national currency.
The e-Naira, which is the digital version of Nigeria’s national currency, he said, would set the stage for the country’s emergence as the hub of payments systems in Africa.
The increasingly evolving banking landscape characterized by acceleration in the digitalization of financial services facilitated by Fintechs, he said, has opened banking to emerging new technologies.
He traced the changing landscape of Nigeria’s payments system to 2007 when the CBN’s Payment Systems Vision 2020 (PSV 2020) was launched.
Since then, he said new initiatives have been introduced to help simplify payments and deepen financial inclusion.
Over the years, the CBN governor said the Nigerian payment system has evolved significantly, with extensive technological backing to CBN regulation of the system.
Also, the new technologies have thrown up new challenges by way of cyber risks that threaten the resilience of the banking industry.
To tackle these risks and enhance the resilience of the Nigerian banking industry, Emefiele said the CBN deployed an industry wide Cybersecurity Fusion Centre (C2FC) and Malware Information Sharing Platform (MISP) to provide a unified interface for cybersecurity intelligence sharing and enhanced incident response capabilities.
As a result of the CBN interventions, he said the country’s payment system has become so robust with the capacity to meet the needs of households and businesses in Nigeria.
The interventions would also transform Nigeria into Africa’s payments system hub.
The high level of confidence in the resilience of the country’s payment system, he said, has, between 2015 and 2020, attracted the investment of over $500million in firms run by Nigerian founders.
Acknowledging the payments system of any country as the major foundation of modern market economy, the CBN governor said it is pivotal to growth, being the channel through which financial resources flow from to the other sectors of the economy.
In line with the CBN mandate, Emefiele said the apex bank regulates the payments system, which has the commercial banks, the Nigeria Inter-Bank Settlement System (NIBSS), the Nigerian Exchange Group, payment service providers and switching companies as major players.
With the lockdowns in the global economy as a result of the COVID-19 pandemic, he said the movement of financial services to digital platforms increased significantly in 2020, just as more opportunities have developed for financial institutions and other players within the system.
Some of those opportunities are in fintech investments in the financial payments system to encourage competition among traditional financial institutions.
As the global economy recovers from COVID-19, he said FinTech would play a more critical role towards resilient and sustainable recovery.
As a country with one of the largest populations in the world, with estimated 62 percent below 25 years of age, he identified Nigeria as one of places primed to be an active playground for digital transformation, which Fintech cannot afford to ignore.
On the disruptive impact of the COVID-19 pandemic, Emefiele said the CBN has responded by tackling one of the biggest crises mankind has faced in recent history.
Apart from the disruptive impact of the crisis on commodities-dependent countries, Emefiele said Nigeria was seriously affected, given her dependence on crude oil export as a major source of revenue and foreign exchange.
To mitigate the impact of COVID-19 crisis on some sectors and obligors, such as the oil and gas, manufacturing, agriculture, pharmaceutical and hospitality sectors, he said the CBN introduced and implemented a number of measures to mitigate the risk to financial stability and boost demand and economic growth.
Key among the measures, he said, were the approval of regulatory forbearance to banks to restructure their loans to severely affected sectors; provision of liquidity support to banks; provision of the COVID-19 Targeted Credit Facilities (TCF).
Apart from these credits being disbursed to individuals and households through the NIRSAL Microfinance Bank, he said several CBN intervention funds have also been disbursed targeted at the real sector, and the mobilization of the private sector to contribute to the national response efforts under the CACOVID Initiative.