Leading banking, economic and risk-underwriting experts at the weekend maintained that for Nigeria to achieve the $1 trillion Gross Domestic Product (GDP) by 2026, there was the growing need for all stakeholders in the nation’s economic landscape, including the banks and financial technology (fintech) players, to collectively champion the growth of the real sector over the next years.
The experts gave this advice at the 2024 annual conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos with the theme ‘Nigeria’s Journey Towards $1 trillion Economy: Impact of Banks’ Re-capitalisation, Opportunities for Fintechs and Real Sector’.
Delivering his keynote address at the event, the Managing Director/Chief Executive Officer of the Nigerian Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, noted that the current recapitalization initiative of the Central Bank of Nigeria (CBN) must be effectively implemented in order to position the economy on sustainable growth path.
According to him, this is necessary to enhance the resilience, solvency and capacity of Nigerian banks to absorb shocks and continue to support economic development of the nation by efficiently performing their function as the fulcrum of financial intermediation.
The deposit insurance expert explained that the role of strong and well capitalized banks in supporting the current administration’s bold vision of growing Nigeria’s economy to a $1 trillion must be appreciated by the relevant players in the financial sector.
He said: “The opportunities and potentials for growth of the real sector depend, among others, on the availability and affordability of financing the economy. To achieve the desired level of financing required by the real sector, the window offered by banks in partnership with Fintechs, must be adequately harnessed.”
Hassan, however, stressed the need for financial system supervisors to understand the interconnection among the various financial services providers and how their policies and actions can affect the efficiency and optimality of the overall financial system.
He noted that many Nigerian banks have focused almost exclusively on large corporations, underserving small and medium enterprises as well as the financially excluded active poor unlike the fintechs that have the potential of closing this gap through deployment of innovative financial services, using new technology and reduction of bottlenecks associated with traditional financial institutions.
The NDIC boss expatiated: “Notwithstanding the opportunities for growth and the benefit that the system stands to gain through the exploration of Fintechs in the financial services ecosystem, we must, as stakeholders, be conscious of the additional risks and complexities that the system may be further exposed, particularly in the area of privacy, personal information, customer protection, transparency, and cyber-security.
“This no doubt has made regulatory oversight increasingly more complex. Financial regulators must evaluate existing rules and consider adoption of new regulations to better address the opportunities and challenges presented by these new technologies,” Hassan added.
On the role of stakeholders, he emphasized that the vision of growing Nigeria’s economy remained the starting point for the national policy rethink, stakeholder engagement and realignments of efforts and policies toward achieving the objective.
According to him, the CBN and NDIC have in furtherance of their mandates repositioned the banking industry to better serve its intermediation role for the benefits of real sector and other sectors of the economy.
Hassan said: “The objective of the CBN and NDIC is to promote safe, sound and stable banking system that is capable of providing the required financing to our productive sectors of the economy. This is crucial in Nigeria’s journey towards the $1 trillion economy that we all aspire to attain.”
The guest speaker at the event and Group Managing Director, United Bank for Africa Plc (UBA), Mr. Oliver Alawuba, said Nigeria’s journey to a $1 trillion economy was not just a vision but also a shared responsibility.
Alawuba, who was represented by the bank’s Executive Director, Finance and Risk Management, Ugo Nwaghodoh, however, charged players in the banking, fintech, the real sector, and regulatory institutions to collaborate to drive the desired transformation of the economy.
The banker said: “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.”
According to him, Nigeria has the largest fintech market in Africa, populated by a rapidly growing number of start-ups offering solutions that address the inefficiencies of the traditional banking sector.
Alawuba clarified: “Fintech has already transformed how Nigerians access financial services – from mobile payments to lending platforms, the scope is vast.
“As we march towards a $1 trillion 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,” he added.
Earlier in his welcome address, the National Chairman, FICAN, Mr. Chima Nwokoji, expressed his concerns on fluctuations in exchange rates, and regulatory pronouncements such as the exclusion of retained earnings from capital calculations.
He explained that there was evidence of global best practices that showed that a robust banking system is vital for economic growth, citing the experience in Singapore’s banking sector to justify his stance.
Nwokoji maintained that the banking sector recapitalisation would increase lending to MSMEs, driving entrepreneurship, and by implication, boost job creation and support fintechs through strategic partnerships, improve financial inclusion; enhance credit facilities for agriculture, manufacturing, and infrastructure development and boost investor confidence, thereby attracting foreign direct investment.
