October 07, (THEWILL) – The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele has said that the Nigerian financial services sector will witness a digital revolution, especially in the area of payments system, in the post-COVID-19 environment.
He has therefore assured that the CBN will focus more on the progress it has made towards advancing the boundaries of payments systems and strengthening the regulatory process as Nigeria moves towards becoming Africa’s digital payments hub.
Mr Emefiele made these disclosures in his keynote address delivered at the ongoing 31st Seminar for Finance Correspondents & Business Editors in Enugu.
Represented by the CBN Deputy Governor, Corporate Services, Mr Edward Lamekek Adamu, Emefiele enumerated the plans of the apex bank towards repositioning the economy for the demand of digital revolution in post-COVID-19 financial services landscape.
He observed that post-COVID economy will witness a radically altered financial industry landscape as more FinTech investments emerge.
“As I noted in different fora before now, the post-COVID-19 economy is predicted to be dominated by certain trends including a radically altered financial industry landscape as the accelerated shift towards digital financial services will attract more FinTech investment and encourage competition with traditional financial institutions.
“From all indications, digital revolution will be a focus for financial institutions in the months ahead thereby making FinTechs a major driver of the industry”, as “Technology continues to change the face of the financial services industry,” he said.
According to him, the theme of the seminar, “Trends in Nigerian Payments System: Regulating the FinTech Digital Playing Field”, was appropriate in view of the challenges to an increasingly evolving banking landscape.
He emphasised that the new order was characterised by acceleration in the digitalisation of financial services which are facilitated by FinTechs, Open banking and emerging new technologies.
“The advent of digital financial services, for example, has created faster, more efficient, and typically cheaper transactions compared to traditional financial services.
”As the global economy recovers from COVID-19, it is obvious that FinTech will play a more important role towards resilient and sustainable recovery,” the CBN boss said.
Stressing on the importance of a strong regulatory environment, Emefiele said the revolution in the financial services sector through the digital payments system calls for intensive regulatory scrutiny on the part of the regulators.
He said this was to proactively monitor developments and ensure the continuous safety and soundness of the financial ecosystem.
Recalling the economic setbacks of COVID-19, Emefiele disclosed that FinTechs played a major role in sustaining businesses.
“Studies have already shown that only 1 percent of FinTechs have been critically affected by COVID-19 and 2 percent severely affected.
“By comparison, around 17 percent of other high-growth companies fall into these categories.
“It is therefore unsurprising that many FinTechs have experienced a surge in demand as working practices and consumer banking habits changed.
He recalled the role that the CBN played in putting the economy back on track and stressed that the banking system remained strong during COVID-19.
“Expectedly, Nigeria like most commodity-dependent countries was not spared the deleterious impact of the pandemic, given our dependence on crude oil export as a major source of revenue and foreign exchange,
“Furthermore, the pandemic tested the operational resilience and business continuity strategies of our banks.
“Despite the headwinds associated with the pandemic, the banking industry has, however, remained relatively resilient.”
In response to the crisis, he said that the CBN introduced and implemented a number of measures aimed at reducing the risk to financial stability, boosting demand and economic growth, ameliorating the impact of the pandemic on some sectors and obligors, such as the Oil & Gas, Manufacturing, Agriculture, pharmaceutical and hospitality sectors.
“Key among the measures taken 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 COVID19 Targeted Credit Facilities (TCF) disbursed to individuals and households through the NIRSAL Microfinance Bank, several CBN intervention funds targeted at the real sector, and the mobilization of the private sector to contribute to the National response under the CACOVID Initiative,” Emefiele stated.
He noted that these measures have yielded the desired outcomes, as recent data from the National Bureau of Statistics (NBS) showed the initial outline of an encouraging recovery with GDP growth put at 5% for the second quarter of 2021.
He expressed delight that the banking sector has remained relatively resilient in spite of the COVID-19 pandemic.
He revealed that Nigeria’s robust payments system has continued to evolve towards meeting the needs of households and businesses in Nigeria.
“The high level of confidence in our payments system, between 2015 and 2020, has attracted the investment of about $500m in firms run by Nigerian founders,” he said.
He expressed concern that in spite of these gains, about 36 percent of adult Nigerians still do not have access to financial services and proffered a solution:
“Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to businesses,” he said.
“The Central Bank of Nigeria decided to introduce a central bank digital currency, the eNaira, which would help in attaining our goals of fostering greater inclusion using digital channels, supporting cross border payments for businesses and firms as well as providing a reliable channel for remittances inflows into the country.
“With the deployment of the eNaira, Nigerians in remote areas can conduct financial activities using their digital as well as features on phone devices.
“Partnering with our stakeholders in the financial industry, I believe that more Nigerians will be financially included.”
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
