Nigerian FinTechs are subject to the rules and regulations that govern the niches in which they operate. There’s no single agency that exists to regulate FinTechs alone. Startups and established companies in this category have to pay attention to constantly changing laws in multiple spheres.
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In recent times, we’ve seen these regulators issue directives that have impacted the way FinTechs operate in the country. These events have drawn the attention of industry watchers and regular people to the importance of government-run agencies to the survival and thriving of financial technology.
If you’re a FinTech founder, enthusiast, or prospective entrepreneur in this space, you’ll want to know who your regulators are (or will be). Here’s a list of ten of them, with notes about what they do within and outside of FinTech.
Central Bank of Nigeria (CBN)
The CBN is Nigeria’s ‘apex bank’; it’s the principal regulator for Nigeria’s financial institutions, including banks. It issues operating licenses to these institutions, whether they be banks or FinTechs. If a finance organization doesn’t get the nod from the CBN to operate in the country, it is not recognized as a legal entity.
Securities and Exchange Commission (SEC)
The SEC regulates Nigeria’s Capital Market and ensures that it functions within the limits of legality and fairness. If a FinTech provides products linked to the capital market (e.g. investment platforms), it is expected to be registered with the SEC.
Nigeria Deposit Insurance Commission (NDIC)
This body takes care of the settlement of financial obligations owed to individuals and organizations by financial institutions if the latter is unable to repay their customers’ deposits. In other words, it ensures the deposits of customers of banks and other financial institutions. Consequently, FinTechs that receive and hold deposits (e.g. savings platforms) are within the NDIC’s regulatory sphere.
Nigerian Communications Commission (NCC)
Every organization in the communications industry is subject to the NCC’s rules and regulation. FinTechs whose services leverage mobile phones—basically Mobile Money Operators –are under the regulatory purview of the NCC.
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National Information Technology Development Agency (NITDA)
NITDA exists to implement the National IT policy. In practice, this includes ensuring Data Privacy and protection. FinTechs have access to (and use) customer data for various purposes, so they are all subject to NITDA’s rules concerning privacy protections.
National Office for Technology Acquisition and Promotion (NOTAP)
NOTAP evaluates and issues permits for technology transfer agreements, and oversees the commercialization of Research and Development. It regulates FinTechs that have foreign shareholders—a category that’s growing by the day.
Nigeria Inter-Bank Settlement Scheme (NIBSS)
NIBSS is responsible for the infrastructure that makes automated transactions between financial institutions possible. It also takes care of the risk of credit loss that exists with electronic fund transfer. The NIBSS regulates FinTechs involved in Inter-Bank transaction.
Shared Agent Network Expansion Facilities (SANEF)
SANEF is an initiative of the CBN. It runs with a mission to improve financial inclusion. The agency works with FinTechs and banks to find agents across the country. FinTechs covered by SANEF includes Mobile Money Operators, digital banks, and lending platforms.
National Identify Management Commission (NIMC)
This body is in charge of all issues concerning identity management within Nigeria. FinTechs whose platforms depend on NIMC-issued identifiers to authenticate and verify their users may have to engage the NIMC. Companies in this category include digital banks, Nobile Money Operators, digital lenders, and investment platforms.
National Insurance Commission (NAICOM)
NAICOM regulates the insurance industry and protects customers of insurance companies from exploitation. InsurTech startups are under NAICOM’s supervision, insofar as they offer insurance products and operate via means that are subject to the body’s scrutiny.
The growth of FinTech in Nigeria has caught the attention of the government. Its agencies are now watching the industry more closely, and are keen to enforce existing rules in this space. Hopefully, both regulators and companies in the industry can work together to make FinTech an even greater force for good than it currently is.
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