According to the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, threats to the financial service system prompted the development of a set of new and revised policies, laws, and regulations to address potential violations, change private sector incentives, and restructure the market to foster competition and encourage new entrants.
The CBN chief noted that the apex bank is aware of the possibility that new forms of innovative financial products or services could render some existing banking laws and regulations obsolete and potentially harm consumers. He made these remarks yesterday in Abuja at the 28th edition of the annual internal executive seminar on “digitalization of money and monetary policy in Nigeria.”
He acknowledged that the widespread adoption of digital technology had introduced new types of hazards, such as sophisticated cybercrime and digital fraud.
He described the initiatives taken to increase operational resilience and guarantee the security of the financial system, including digital identification, anti-money laundering standards, domestic and international safety and security measures, and cyber security.
Emefiele continued by saying that in the current digital revolution, central banks are not only concerned with creating an environment that will allow for the adoption of digital technology in the financial system, but also at the forefront of cutting-edge innovative products and services to provide safe and open payments for a digital economy. Emefiele was speaking through the deputy governor in charge of financial system stability, Aisha Ahmed.
Despite the fact that there is still much work to be done, the CBN governor stated that low-level formal financial services, low income, financial illiteracy, an underdeveloped technology ecosystem, and a fragile infrastructure have all continued to limit Nigeria’s ability to integrate digital financial services.
He emphasized that although significant progress has been made in increasing financial inclusion in Nigeria, the inclusion rate, which is currently 64.0%, delays the process of digital transformation because all individuals must be included in order to fully benefit from a digital economy.
Emefiele also said: “Also, despite the significant progress recorded in the use and spread of digital payment infrastructure, particularly in the economic cities, the current financial inclusion rate suggests that more work is needed. The high cost of telecommunications infrastructure, including Internet and electricity, in remote, urban and low economic activity areas, continue to dissuade investments in such areas, where low income and financial illiteracy are already inhibiting social and economic advancement.
As such, there is ample room for deepening the financial system through broader coverage.”
Dr. Kingsley Obiora, the CBN’s deputy governor for economic policy, made a suggestion during the event that the amount of eNaira currently in circulation is N2.10 billion, up 190.1% from when it was first introduced.
He said that the advancement is supported by the significant progress made in the field of digital currency, as the development of both consumer and business wallets has gained traction and is anticipated to significantly boost eNaira transactions in Nigeria.
Dr. Obiora pointed out that while roughly 17 million persons do not currently use electronic payments but do own phones and are interested in mobile money, another 22 million adults claim that they might change their minds in the future.
“This reflects the extent to which the eNaira could impact the unbanked and under-banked to improve livelihoods, as well as economic growth and development in Nigeria,” he added.