Abuja, July 2, 2024 – Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), says the increasing transactions of non-bank financial institutions threatens the stability the financial system in Africa.
Cardoso made the observation while addressing the College of Supervisors for Non-Bank Financial Institutions (CSNBFI) at its 10th meeting in Abuja on Monday.
The CBN governor, who was represented by Arogundade Abayomi, the Acting Director of Other Financial Institutions Department of the apex bank, said the transactions of non-bank financial institutions could expose the system to risks.
He called for close monitoring of the trends and innovations in such organisations.
He listed said the NBFIs to include Bureaux de Change (BDCs), Primary Mortgage Institutions (PMIs), Development Finance Institutions (DFIs), and insurance companies.
“We reiterate the importance of monitoring trends, risks and innovations of NBFIs/OFIs as their increasing transaction volumes pose major financial system stability risk.
“Fintech loans are one of the most commonly reported innovations.
“While overall, this may appear small in relation to the size of credit by Deposit Money Banks (DMBs), some jurisdictions, globally, have noted a growing trend in the volume of these loans.”
Cardoso said fintech credits were typically offered through electronic platforms that linked lenders with borrowers, making the platform act as a financial intermediary.
Olorunsola Olowofeso, the Director-General of the West African Monetary Institute (WAMI), identified funding squeeze as a major financial issue in West Africa.
He emphasised the need to bolster the financial sector’s resilience against emerging risks like climate-related issues, internet disruptions, cyber threats, and social media-driven instability.
“However, the funding squeeze persists as governments continue to grapple with financing shortages, high borrowing costs and impending debt repayments.
“Emerging risks to the financial system include climate-related risks, internet disruption, cyber and social media threats arising from the digitisation of financial services.”
