With certain developments in the polity, one could easily conclude that the Central Bank of Nigeria is against the economic empowerment of the Nigerian youth. The recent freezing of the bank accounts of six fintech companies for 180 days, alleging that they were complicit in operating without a license as asset management companies and utilising foreign exchange sourced for purchasing foreign bonds/shares has a significant impact on individuals transacting with these entities, and the tech ecosystem at large. It is more disheartening to know that these companies have licenses from Nigerian authorities to operate as digital platforms for buying and selling stocks. I am personally pained by this freeze because I use one of the platforms to save money in dollars, to protect my savings from the weakening naira. So, what does the government want us to do now? Continue to see our savings lose value by the day?
One can easily reel out actions by the government and its agencies that have negatively impacted the tech ecosystem in Nigeria over the years. I remember sometime in 2020, the Lagos State government banned Gokada, Opay, and other bike hailing platforms overnight. There was an outcry from all corners as those platforms allowed one to meander through the perpetual and horrendous Lagos traffic. There may have been conversations behind closed doors between the operators and the state government, but the eventual ban was effected abruptly. I say abruptly because some of these companies had raised funds to scale operations, with full confidence in the government of the day. Sadly, the ban led to most of them selling off their fleet of bikes and pivoting to goods delivery to stay in business.
Players in the investment and payment space appear to be the new target. In the second quarter of the year, the likes of Paystack were banned by the CBN from offering bank verification number validation services. Let’s not even talk about the ban on cryptocurrency that sent shockwaves through the system and saw the immediate death of many up-and-coming technology companies. What was the goal of banning cryptocurrency? What has the nation gained since the ban? I am curious to know the answers to these questions.
In my opinion, the key reason fintechs and technology companies see good rates of adoption is because they offer convenient and valuable services. Looking at the economics of their operations, they create jobs, improve the well-being of Nigerians and attract significant foreign direct investment into the country. So, one would wonder, why the frequent clampdown on their operations?
Nigeria has been experiencing a decreasing inflow of foreign direct investments over the years. The COVID-19 pandemic may have had an impact, but the bigger issue is the level of volatility, uncertainty, complexity and ambiguity of the business environment. Investors generally want a haven for their money to yield sustained returns, and they are increasingly looking elsewhere. Even though the Nigerian regulatory bodies pose as supporters of innovation, they do not walk the talk.
The government and its regulatory agencies need to do better. The CBN approved a regulatory sandbox framework to enable fintech innovation; they should use it effectively. Government should adequately engage stakeholders such as the Fintech Association of Nigeria, start-up founders and technology communities in its design of policies for the sector. Also, state governments should learn from Oyo State, which has been enjoying the positive impacts of SafeBoda’s operations.
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