Collaboration between banks and fintech companies is crucial for Nigeria to achieve a $1 trillion Gross Domestic Product (GDP) by 2026, the Nigeria Deposit Insurance Corporation (NDIC) and other stakeholders have said, stressing the importance of this partnership in driving real sector growth.
At the 2024 annual conference of the Finance Correspondents Association of Nigeria (FICAN), held in Lagos, NDIC’s managing director/Chief Executive, Bello Hassan, delivered a keynote address on the theme, “Nigeria’s Journey Towards $1 Trillion Economy: Impact of Banks’ Re-capitalisation, Opportunities for Fintechs and Real Sector.”
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Hassan emphasised that the Central Bank of Nigeria’s (CBN) recapitalisation initiative must be effectively executed to enhance the resilience, solvency, and capacity of Nigerian banks. This will ensure they can absorb shocks and continue supporting national economic development by serving their core role as financial intermediaries.
Hassan also highlighted the vital role well-capitalised banks play in advancing the current administration’s vision of growing Nigeria’s economy to $1 trillion. He pointed out that growth in the real sector largely depends on accessible and affordable financing. To reach the necessary financing levels for the real sector, collaboration between banks and fintech companies must be fully leveraged.
However, Hassan noted the importance of financial supervisors understanding the interconnections between various financial service providers. This understanding will help ensure that policies and actions optimise the efficiency of the entire financial system. He observed that many Nigerian banks have traditionally focused on large corporations, neglecting small and medium enterprises (SMEs) and the financially underserved population. Fintech companies, however, have the potential to close this gap by providing innovative financial services and reducing the bureaucratic barriers associated with traditional financial institutions.
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Hassan also cautioned stakeholders about the risks posed by increased reliance on fintech, particularly in terms of privacy, data security, customer protection, and transparency. These risks have made regulatory oversight more complex, requiring regulators to review existing rules and consider adopting new ones to better manage the opportunities and challenges that come with technological advancements.
Hassan further underscored the need for all stakeholders to align their efforts toward achieving the vision of a $1 trillion economy, a goal championed by President Bola Tinubu. Both the CBN and NDIC, through their respective mandates, have repositioned the banking sector to better support the real sector and overall economic growth. He pointed to the CBN’s foreign exchange rate unification and recapitalisation of banks as key steps in boosting national economic growth.
According to Hassan, the foreign exchange rate unification policy will help attract foreign direct investment, increase portfolio inflows, boost investor confidence, reduce budget deficits, and improve Nigeria’s sovereign credit ratings. He stated, “The objective of the CBN and NDIC is to promote a safe, sound, and stable banking system capable of financing our productive sectors. This is crucial for Nigeria’s journey toward a $1 trillion economy.”
In his speech, Oliver Alawuba, group managing director of United Bank for Africa Plc (UBA), echoed similar sentiments, stressing that the journey to a $1 trillion economy is a collective responsibility.
Alawuba, represented by UBA’s executive director of finance and risk management, Ugo Nwaghodoh, called on banks, fintech companies, the real sector, and regulators to collaborate to drive this transformation.
He noted that Nigeria has the largest fintech market in Africa, with numerous startups offering solutions to the inefficiencies of the traditional banking sector. Alawuba emphasised that fintech companies will play a key role in expanding financial access, fostering innovation, and promoting competition as Nigeria moves toward a $1 trillion economy.
In his welcome address, Chima Nwokoji, National Chairman of FICAN, expressed concerns over fluctuating exchange rates and recent regulatory changes, including the exclusion of retained earnings from capital calculations. Nwokoji highlighted global best practices, such as Singapore’s banking sector, which has significantly contributed to its emergence as a financial hub and economic powerhouse.
He noted that the recapitalisation of Nigeria’s banking sector could drive lending to micro, small, and medium enterprises (MSMEs), boosting entrepreneurship, job creation, and strategic partnerships with fintechs. This, in turn, would enhance financial inclusion, increase credit for agriculture, manufacturing, and infrastructure development, and attract foreign direct investment.
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