The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, emphasized the significance of Non-Bank Financial Institutions (NBFIs) in accelerating regional integration and shared economic prosperity within the West African Monetary Zone (WAMZ). Speaking at the 10th meeting of the College of Supervisors for Non-Bank Financial Institutions (CSNBFI) in Abuja, Governor Cardoso acknowledged the importance of monitoring trends, risks, and innovations in NBFIs, given their increasing transaction volumes, which pose significant financial system stability risks.
While recognizing the importance of NBFIs, including Fintech companies, in ensuring financial stability and specialized financial intermediation, Governor Cardoso stressed the need for supervisors to ensure that regulatory requirements are tailored to foster compliance with international standards.
He highlighted the importance of strengthening anti-money laundering practices, deepening supervisory capacity on cybersecurity and Fintech regulation, and implementing a risk-based supervisory approach over NBFIs.
The Governor also noted that Fintech loans are a commonly reported innovation, with some jurisdictions experiencing a growing trend in the volume of these loans. He emphasized the need for effective regulation and supervision of these entities, given their potential impact on financial system stability.
Dr. Olorunshola Olowofeso, Director of the West African Monetary Institute (WAMI), also addressed the meeting, noting that the outlook for the region is gradually improving after turbulent years. However, he highlighted the persisting funding squeeze and emerging risks to the financial system, including climate-related risks, internet disruption, cyber, and social media threats arising from the digitization of financial services.
The meeting aimed to review developments in the non-bank financial institutions sub-sector within the zone, assess regulatory and supervisory challenges, and share experiences to mitigate emerging risks to the financial system of WAMZ. The meeting also focused on identifying, assessing, and monitoring emerging risks, vulnerabilities, and early warning signals in the NBFI sector of WAMZ member countries, and providing relevant recommendations to the Committee of Governors of WAMZ.
Bottom Line
The meeting underscored the crucial role of NBFIs in enhancing access to credit, offering inexpensive and reliable ways of making payments, and supporting economic growth. The need to strengthen the resilience of the NBFI sector to ensure a more stable provision of financing and reliable payments services was also emphasized.
