The Senate has begun debate on a bill seeking to amend the Banks and Other Financial Institutions Act (BOFIA) 2020 to empower the Central Bank of Nigeria (CBN) to designate and supervise non-bank financial institutions.
The bill targets major fintech operators whose activities,
lawmakers say, now constitute critical national infrastructure.
Tokunbo Abiru, chairman of the senate committee on banking,
insurance and other financial institutions and sponsor of the bill, said the
amendment had become urgent due to the rapid evolution of Nigeria’s financial
ecosystem.
Abiru said mobile money operators, payment service banks,
wallet providers, digital lenders and switching companies now serve tens of
millions of Nigerians and process huge volumes of daily transactions.
Advertisement
He said these entities hold vast pools of sensitive
financial data but operate under a regulatory framework that has not fully
adapted to their systemic importance.
“The reality today is that a non-bank institution, because
of its market dominance, data concentration, customer reach or technological
capacity, may pose risks equal to or even greater than those posed by a
traditional bank,” he said.
“We are therefore confronted with a regulatory gap that
leaves critical parts of the financial system operating outside the highest
tier of statutory oversight; this bill seeks to correct that mischief.”
Advertisement
The senator warned that without modernising BOFIA, the country
risked exposing itself to data insecurity, foreign control of sensitive
financial infrastructure and vulnerabilities that could undermine national
security.
Abiru said many fintechs operate across foreign-owned
networks or offshore servers and store customer data in jurisdictions outside
regulatory reach.
“Today, we cannot say with certainty where all the financial
and behavioural data processed by some of these institutions is stored, who has
access to it, or which foreign jurisdictions may lay claim to it,” he said.
Abiru recalled the temporary CBN restriction on fintech
onboarding in April 2024 following concerns around KYC compliance, money
laundering red flags and suspicious transactions.
Advertisement
The amendment proposes five key objectives, including
creating a statutory framework for designating systemically important
institutions and establishing a national registry of fintechs.
The bill also seeks to empower the CBN to impose enhanced
supervisory requirements, strengthen data sovereignty and improve consumer
protection.
Abiru dismissed calls for a separate fintech regulatory
agency, saying such duplication would fragment oversight and weaken regulatory
efficiency.
“Fintech regulation is deeply intertwined with monetary
policy, payments oversight, prudential supervision and systemic-risk
monitoring, functions that already reside naturally within the Central Bank,”
he said.
Advertisement
“International best practice overwhelmingly favours
integrating fintech oversight within existing regulators, not creating new
bureaucracies.”
The senate also raised concerns about expanding
vulnerabilities in the digital financial ecosystem, saying some large fintech
platforms could become systemic risks capable of destabilising the national
economy.
Advertisement
Abiru said the financial system had undergone a dramatic
transformation in a decade, with digital institutions now operating at scales
comparable to mid-sized banks.
He said some fintechs hold data with national security
implications but store them on offshore servers and opaque ownership networks.
Advertisement
The lawmaker cited the April 2024 halt in customer
onboarding by several fintech firms as evidence that the scale of their
operations had outgrown existing regulatory tools.
The amendment proposes reforms, including a national
registry to ensure traceability, enhanced prudential tools for digital
institutions, data sovereignty safeguards and stronger consumer protection.
Advertisement
Contributing to the debate, Adams Oshiomhole, former
president of the Nigerian Labour Congress (NLC), described how his bank
accounts were hacked through a fintech platform.
Oshiomhole said most fintech operators have unknown
ownership structures and may evade accountability for regulatory infractions.
“I know the directors of our regular banks, but I can’t say
the same of these fintech banks; I don’t know the directors of MoniePoint, Opay
and all others,” he said.
Oshiomhole said proper regulation through enabling
legislation would ensure that online financial institutions operate in the
interest of Nigerians.
Natasha Akpoti-Uduaghan, senator from Kogi central, said the
debate must also consider income disparities affecting young Nigerians earning
through global digital platforms.
She cited what she described as “huge discrepancies” in
payments to Nigerian content creators, sometimes as low as 50 cents per 1,000
views compared with $10–$30 paid to creators in the United States.
The Kogi senator said the inequities undermined the earning
capacity of Nigeria’s growing digital workforce and called for stronger
engagement with global technology companies.
Barau Jibril, presiding officer and deputy senate president,
referred the bill to the banking committee for additional legislative work
after scaling second reading.
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com