Economy
STAKEHOLDERS in the financial industry have emphasised the need for collaboration between banks and Fintech companies to drive real sector growth.
According to them, this is necessary for Nigeria to achieve a one trillion dollar Gross Domestic Product (GDP) by 2026.
They said this at the 2024 annual conference of the Finance Correspondents Association of Nigeria (FICAN) on Saturday in Lagos.
The theme of the conference is “Nigeria’s Journey Towards $1 trillion Economy: Impact of Banks’ Re-capitalisation, Opportunities for Fintechs and Real Sector”.
Delivering a keynote address, the Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Mr Bello Hassan, said it was important to ensure effective implementoin of the current recapitalisation initiative of the Central Bank of Nigeria (CBN).
According to him, this initiative is crucial for enhancing the resilience, solvency and capacity of Nigerian banks to absorb shocks while supporting the nation’s economic development.
Hassan also spoke on the role that well-capitalised banks play in supporting the current administration’s vision of growing Nigeria’s economy to one trillion.
He urged relevant financial sector players to recognise and appreciate this role to ensure sustained progress.
“The opportunities and potential for growth in the real sector depend, among other factors, on the availability and affordability of financing.
“To meet the financing needs of the real sector, banks must harness opportunities in partnership with Fintechs,” Hassan stated.
He further stressed the importance of supervisors understanding the interconnectedness among various financial service providers.
He noted that the understanding was necessary to ensure that policies and actions contribute to the efficiency and optimal functioning of the entire financial system.
Hassan also noted that while many Nigerian banks focus predominantly on large corporations, Fintech companies had demonstrated the potential to close the gap in serving Small and Medium Enterprises (SMEs) and financially excluded individuals.
Fintechs offer innovative financial services by leveraging new technologies and reducing bottlenecks associated with traditional banks.
However, he cautioned that the rise of Fintechs also brings additional risks and complexities, particularly in areas such as data privacy, customer protection, transparency, and cybersecurity.
These challenges, he explained, necessitate a more sophisticated regulatory oversight framework.
“This has made regulatory oversight increasingly complex.
“Financial regulators must evaluate existing rules and consider new regulations that address the opportunities and challenges posed by emerging technologies,” Hassan said.
He emphasised that achieving President Bola Tinubu’s vision of growing Nigeria’s economy required a national policy rethink, stakeholder engagement and realignment of efforts to achieve the desired outcome.
Hassan further explained that the CBN and NDIC, through their respective mandates, had repositioned the banking industry to better serve its role in financial intermediation.
This, the managing director noted, remained vital for the growth of both the real sector and the overall economy.
He described the CBN’s foreign exchange rate unification and bank recapitalisation initiatives as key measures necessary for propelling national economic growth and fostering financial stability.
Hassan emphasised that the foreign exchange rate unification policy has the potential to promote foreign direct investment, increase investor confidence, reduce the budget deficit, and improve Nigeria’s sovereign credit ratings.
“The goal of both the CBN and NDIC is to promote a safe, sound and stable banking system that can provide the financing required by the productive sectors of our economy.
“This is crucial to Nigeria’s journey towards the $1 trillion economy we aspire to achieve,” he added.
In his address, the Guest Speaker, Group Managing Director of United Bank for Africa Plc (UBA), Mr Oliver Alawuba, said that Nigeria’s journey to a trillion-dollar economy was not just a vision but a shared responsibility.
Alawuba, represented by the Executive Director of Finance and Risk Management, UBA, Mr Ugo Nwaghodoh, called on the banking sector, Fintech innovators, the real sector, and regulatory institutions to collaborate in driving the transformation.
“We are on the cusp of a new era, one that will be defined by innovation, resilience, and sustainable growth.
“Let us take this opportunity to collectively shape the future, ensuring that the Nigeria of tomorrow is one where prosperity is shared, opportunities abound, and our economy stands as a beacon of growth on the global stage,” Alawuba said.
He also highlighted Nigeria’s position as Africa’s largest FinTech market, home to a rapidly growing number of start-ups offering solutions that address inefficiencies in the traditional banking sector.
“Fintech has already transformed how Nigerians access financial services, from mobile payments to lending platforms.
“As we march toward a one trillion- dollar economy, the FinTech sector is poised to play a crucial role in expanding financial access, driving innovation, and stimulating competition within the broader financial system,” Alawuba added.
In his welcome address, the National Chairman of FICAN, Mr Chima Nwokoji, raised concerns about fluctuations in exchange rates and regulatory pronouncements, particularly the exclusion of retained earnings from capital calculations.
Nwokoji also drew comparisons with global best practices, noting that a robust banking system is vital for economic growth.
He cited Singapore’s banking sector as an example of how a well-capitalised banking system can facilitate economic development.
He further explained that banking sector recapitalisation would increase lending to MSMEs, driving entrepreneurship and job creation.
This would, in turn, support Fintechs through strategic partnerships, improve financial inclusion, enhance credit access for sectors such as agriculture and manufacturing, and boost investor confidence.
Nwokoji said that these developments would attract foreign direct investment, helping to accelerate Nigeria’s journey toward a one trillion-dollar economy. (NAN)
28th September, 2024.
C.E
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