July 21, 2024

CBN Outlines Regulatory Plans for Fintechs Amid Interest Rate Hike




The Central Bank of Nigeria (CBN) has clarified its regulatory stance on financial technology companies (fintechs) and its ongoing engagement with the sector. This comes amidst recent adjustments to the country’s monetary policy aimed at curbing inflation.


CBN Governor Olayemi Cardoso provided insights during a press briefing in Abuja on Tuesday, where he announced a hike in the Monetary Policy Rate (MPR) by 150 basis points, raising it to 26.25 percent from 24.75 percent. This marks the third increase in less than three months as part of efforts to stabilize the economy.


Cardoso emphasized the need for persistent measures to address inflation, which has been on the rise for over 13 months, reaching 33.69 percent year-on-year, primarily driven by food inflation. He acknowledged the complexity of the inflationary challenges, stating, “There is no magic wand to tackle the inflationary challenges, but we are optimistic that the various tools deployed by the bank will yield the needed results in the coming months.”


Regarding the fintech sector, Cardoso explained the CBN’s intent to tighten regulations, not to hinder the industry’s growth, but to enhance its benefits to the Nigerian public. He asserted, “The fintechs have definitely not been singled out for any exceptional kind of treatment. On the contrary, we are very proud of what the fintechs have been able to do for the country and their positive impact globally.”


However, the CBN’s increased regulatory scrutiny is driven by concerns over illicit financial flows and money laundering within the sector. Cardoso highlighted the importance of safeguarding the financial system, noting, “These crimes create the need for heightened surveillance of the sector.”


Despite the stricter regulations, Cardoso reassured that no fintech company’s license has been revoked. He mentioned ongoing dialogues with fintech firms to reinforce compliance and operational standards. “We have had conversations with a number of them and explained the need for them to take another look at what they are doing and the need to strengthen their operations,” he said.


The briefing, held during the 295th meeting of the CBN’s Monetary Policy Committee (MPC), underscored the bank’s dual focus on economic stability and the sustainable development of the fintech industry.

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