Banking
From The Report: Nigeria 2024
View in Online Reader

While many Nigerian banks are likely to see greater profitability in 2023, they are still grappling with distressed legacy loans to oil, gas and power companies. Moreover, the cautious policies of financial institutions and the Central Bank of Nigeria (CBN) are indicative of uncertainty in the global financial sector, reflected in continued caution in the policies at home. However, the CBN’s recent policy announcements regarding cryptocurrencies may portend a more expansive regulatory posture. Ultimately, the asset quality and capital ratios of banks are set to remain strong as such institutions maintain a conservative approach to credit growth. Furthermore, Nigeria’s financial technology (fintech) segment is set to further impact banking by streamlining and widening services offered by conventional banks, as well as by creating greater competition between conventional lenders and standalone fintech firms.

Articles from this Chapter

Overview

Growth spurt: A new digital currency and innovative financial technology firms are helping formalise the banking sector
OBG
plus

The Nigerian banking sector has seen robust growth in recent years despite the impact of the Covid-19 pandemic, Russia’s invasion of Ukraine, rising inflation and exchange rate volatility. Driving this has been a combination of high-tech innovations from the financial technology (fintech) industry and a low-tech, traditional policy that has kept banks well capitalized and buffered against external shocks. This combination has led to growth in profit, credit and assets in the last few years that…

Analysis

Innovation for the future: Financial technology firms are playing a larger role in the banking sector, pointing to the need for greater regulation
OBG
plus

Banking has seen a major uptake in financial technology (fintech). The Covid-19 pandemic led to further development in the sector, with Nigeria experiencing the same global shift from physical workspaces to online ones. The pandemic also increased the need for Nigerian businesses and traders to find capital abroad, as foreign investors moved towards safer investments. Fintech has proven to be invaluable in the search for funding. At the same time, foreign exchange issues – such as the growing…

Analysis

Going cashless: The Central Bank of Nigeria hopes to see the number of users of the country’s new digital currency increase
OBG
plus

At a ceremony in Lagos on October 25, 2022, Central Bank of Nigeria (CBN) officials, government representatives and business leaders gathered to mark the one-year anniversary of the eNaira, Nigeria’s official digital currency and the first of its kind in Africa. At the ceremony, the central bank announced that the eNaira had been used in some 700,000 transactions worth around $18.3m since its introduction in October 2021. “The eNaira is expected to enhance financial inclusion, support poverty…

Analysis

Intended consequences: Governments in Africa have started to implement new levies on digital transactions to plug their respective tax gaps
OBG
plus

A number of sub-Saharan African countries have sought to introduce taxes on electronic transactions in response to the sustained uptick prompted by the Covid-19 pandemic. While such moves have been met with criticism, they represent an opportunity to boost tax revenue. Public finances in the region have been affected over the last two years by the global economic crisis, which has eroded revenue from tax and exports. Many governments are therefore looking to e-finance to plug their respective tax…