Recommendations for the implementation of the national FinTech strategy in Nigeria

Nigeria is one of the most exciting high-growth markets in Africa financial and related professional services businesses, presenting both the UK and Nigeria with many opportunities for partnership. With recently agreed transition to the Enhanced Trade and Investment Partnership Agreement (ETIP) and UK-Africa Investment Summit (UK-AIS) to be held in April 2024, there is a strong commitment to a strategic long term economic partnership.

Nigeria’s FinTech sector has experienced rapid growth, with new FinTech products being introduced at unprecedented rates. The FinTech sector can be an important catalyst for further economic development, financial inclusion, innovation, and international investment in Nigeria.

The role of government and regulators has been fundamental to the success of Nigeria’s FinTech industry to date, creating a balance between innovation, financial stability, and consumer protection. With rapid developments in technology and new digital services being offered, it is critical that Nigeria’s approach to supporting its FinTech ecosystem continues to evolve. This report explores the role of industry, government, and regulators to ensuring FinTechs have the support needed to establish, flourish, and expand, both in Nigeria and overseas. It finds that while the Nigerian government, regulators and industry associations have shown leadership in driving forward a progressive approach to innovation in financial services, challenges around regulatory clarity, capability development, delivery of support programs, access to finance and export assistance could be limiting the industry’s ability to reach its full potential.

This report therefore puts forward a roadmap with actionable recommendations that build on the strategic objectives identified in NFS as well as other regulators. Its provides a clear and sequenced execution framework that will: (i) develop a well-functioning FinTech ecosystem that advances technological innovation, develops globally competitive FinTechs, creates private sector jobs, and supports all ecosystem members with tools that facilitate growth; and (ii) design and implement policies that promote in the growth of FinTechs, while ensuring fit-for-purpose products that protect consumers, investors and the financial system from excessive risks.

The recommendations in this report are a result of collaboration between UK and Nigerian governments, through the Economic Development Forum (EDF) and collaboration with TheCityUK, and intend to build on the success achieved so far, in helping Nigeria to develop a strong FinTech industry in the face of growing regional and global competition, and lead to increased trade and investment between the UK and Nigeria.


Short-term recommendations

These are recommendations that can be implemented within the next two years:

  • Further socialise the NFS: This will allow FinTechs to understand how to take advantage of the initiatives it contains.
  • Establish a dedicated FinTech one-stop shop: This could have both a physical shop front and a virtual presence with representation from all the relevant regulating agencies. It will allow firms to seek advice on FinTech regulatory matters in one place. This will increase the coordination and efficiency of the regulatory approval process. The possibility to use the CBN sandbox to support this work should be explored.
  • Create a right-touch regulatory framework: The one-stop shop will be responsible for mapping current approval processes and publishing them. Over time this will help identify overlapping or duplicative regulations which can be streamlined. This will support FinTechs to receive the relevant licenses in an efficient timeframe and uncomplicated manner.
  • Improve and strengthen collaboration between stakeholders between FinTechs, FIs, government and the regulators: These will help to improve policymaking, reduce duplications, and boost innovative practices.
  • FinTech ecosystem capacity building and talent development: FinTechs need to enhance their managerial and governance skills to ensure they can address concerns regarding consumer and investor protection, cybersecurity, and anti-money laundering (AML). Given the speed of technology development building the capacity of regulators to understand FinTechs though mentorship and exchange programs is critical. Working closely with education providers to produce future talent pipeline for the industry will support growth.
  • Encourage investment and funding into FinTech: Implement investment strategies to help FinTechs to scale and enter new markets. Mechanisms, such as an investment fund to de-risk private sector investment, loan guarantee funds, and FinTech pilot and procurement programs can enable FinTech to have access to the right funding support to grow.

Medium-term recommendations

Recommendations that can be implemented in the next two to four years:

  • Adoption of supervisory technology: Introduce further IT capabilities at the regulators to support the introduction of SupTech and RegTech solutions to operational practices to increase efficiencies and approval times.
  • Strengthen FinTech focus on consumer protection: Strengthening cybersecurity and consumer remediation measures will ensure consumer protection and build trust, while encouraging innovation.
  • Consider investment incentives: Consider implementing investment/ tax and government grants to attract investment into FinTech.
  • Improve relevant digital and physical infrastructure and capital policy interventions for strategic sectors: It is critical for the adoption of FinTech that consumers and providers have access to the relevant digital infrastructure. To incentivise private investment into infrastructure, the right capital policy interventions need to be designed and implemented.
  • Establish an International Financial Centre in Nigeria: This will deepen the financial and related professional services ecosystem and create the business environment needed to attract significant international investment. It will help develop a modern, trusted international brand for Nigeria.

Long-term recommendations

Recommendations that can be implemented continuously from year four:

  • Conclude mutual recognition and international cooperation: Implementing collaborative efforts between Nigeria and international regulators, such as mutual recognition agreements, will enhance cross-border regulatory cooperation, and further two-way trade and investment opportunities.
  • Undertake semi-annual public private reviews of the FinTech ecosystem to identify future areas of enhancement: These efforts between regulators, government and industry can further address challenges and find solutions to improve the ecosystem as it develops.
  • Crate principles-based framework for future decisions to balance financial stability, economic growth, and innovation: Ensure regulation is enhanced to protect consumers, while not stifling innovation. Create a principles-based framework for future decisions that supports financial stability, contributes to economic growth, and encourages innovation.

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This report was created in partnership with the Federal Government of Nigeria and the Department for Business and Trade: