Keynote Address by the Governor, Central Bank of Nigeria, Godwin Emefiele delivered at the 31st Seminar for Finance Correspondents & Business Editors, held at the Maxbe Continental Hotel, Enugu, Enugu State from October 5-7, 2021
1.0         Distinguished Members of the Fourth Estate of the Realm, it is my pleasure to deliver this keynote address and formally declare open the 31st Seminar for Finance Correspondents and Business Editors holding in Enugu.

2.0         I am very delighted to be here in your midst and particularly pleased to note that over the years, the FICAN Seminar has continued to deepen the knowledge and understanding of CBN’s policies and initiatives for Business Editors and Financial Correspondents. This forum has always availed us an opportunity for a balanced exchange of information and ideas between the Bank and the media.

3.0         I consider the theme of this seminar: TRENDS IN NIGERIAN PAYMENTS SYSTEM: REGULATING THE FINTECH DIGITAL PLAYING FEILD apt in view of an increasingly evolving banking landscape characterized by acceleration in the digitalization of financial services which is facilitated by Fintechs, Open banking and emerging new technologies.

4.0         In my remarks today, I would be focusing on the progress we have made so far in advancing the boundaries of payments system; the areas we are ensuring speedy progress and what we plan for the future of payments system in Nigeria, which shall soon be the hub of payments in Africa.

5.0         In a couple of days from now, the Central Bank of Nigeria will be unveiling its Central Bank Digital Currency (CBDC), the eNaira, making Nigeria one of the first countries in Africa, and indeed the globe, to adopt the digitization of its national currency. However, to appreciate the latest technology, it is proper to cast our minds back to how we got to this point.

6.0         As you are aware, the payments system of any country plays a pivotal role in its economy, being the channel through which financial resources flow from one segment of the economy to the other. This represents the major foundation of the modern market economy.

7.0         In line with our mandate, as encapsulated in the Central Bank of Nigeria Act, 2007, the CBN regulates the Payments System, while banks, the Nigeria Inter-Bank Settlement System (NIBSS), the Nigerian Exchange Group, payment service providers and switching companies are the other major players in the system. The CBN, complemented by the Nigeria Deposit Insurance Corporation (NDIC) provides the necessary oversight function to ensure the efficiency and effectiveness of the payments system.
8.0         The year 2007 marked a turning point in the country’s payments system terrain with the launch of the CBN’s Payment Systems Vision 2020 (PSV 2020), which identified series of recommendations to increase the resilience of the payment system infrastructure and work-streams to encourage the usage of electronic payment methods. Since then, the country has continued to introduce initiatives that would help simplify payments and deepen financial inclusion.
9.0         Over the past 14 years, the Nigerian payment system has evolved significantly with extensive technological development backed by deliberate enabling regulation by the CBN. This has, no doubt, accelerated the development of novel financial products, services and channels all of which have placed Nigeria at the fore of the financial innovation race.

10.0     Due to the lockdowns associated with the management of the Corona Virus (COVID-19) pandemic, financial traffic to digital platforms increased significantly in 2020. Indeed, the spread of the virus at the time accelerated the speed of digitalization of many sectors of the economy. Expectedly, discussions have increased around the issue of the digital economy just as more opportunities have come up for financial institutions and other players within the payment ecosystem to innovate and provide more efficient options for payments and settlements.

11.0     As I noted in different fora before now, the post-COVID economy is predicted to be dominated by certain trends including a radically altered financial industry landscape as the accelerated shift towards digital financial services will attract more fintech investment and encourage competition to traditional financial institutions. This calls for an Increased and intensive regulatory scrutiny on the part of regulators to proactively monitor developments and ensure the continuous safety and soundness of the financial ecosystem. It is therefore imperative that Regulators must keep pace with these exponential developments and leverage new knowledge and technology tools such as Regtech and Suptech to enhance the efficiency and effectiveness of their mandate.
12.0     From all indication, digital revolution will be a focus for Financial Institutions in the months ahead therefore making Fintechs a major driver of the industry. Technology continues to change the face of the financial services industry. The advent of digital financial services, for example, has created faster, more efficient, and typically cheaper transactions compared to traditional financial services. As the global economy recovers from COVID-19, it is obvious that FinTech will play a more important role towards resilient and sustainable recovery.
13.0     Studies have already shown that only 1 percent of FinTechs have been critically affected by COVID-19 and 2 percent severely affected. By comparison, around 17 percent of other high-growth companies fall into these categories. It is therefore unsurprising that many FinTechs have experienced a surge in demand as working practices and customer banking habits changed. As a country with one of the largest millennial population in the world- (an estimated 62% of the Nigerian population  below 25 years of age), fast Smartphone growth driven by increasing affordability, Increasing mobile penetration and fast transition to 5G technology,   Nigeria remains primed to be an active playground for digital transformation and cannot afford to ignore the Fintech challenge.
14.0     All of these validate the choice of theme for this seminar and I commend the management of Corporate Communications Department for the forethought it has demonstrated.
15.0     Ladies and Gentlemen of the media, I will not conclude my address without speaking on the disruptive impact of the Covid-19 pandemic and how the Central Bank of Nigeria has responded to these challenges.
16.0     Covid-19 pandemic is one of the biggest crises that has faced mankind in recent history. As you know full well, the pandemic stretched health systems and impacted economies, with most jurisdictions going into recession. The crisis also disrupted social and business activities globally, affecting lives and livelihoods. Expectedly, Nigeria like most commodity-dependent countries was not spared the deleterious impact of the pandemic, given our dependence on crude oil export as a major source of revenue and foreign exchange.
17.0     Furthermore, the pandemic tested the operational resilience and business continuity strategies of our banks. Operational risk increased due to the increased reliance on technology and third-party service providers during the period. Also, the risk of money laundering and cybercrimes have increased. There is also the elevated risk of unauthorized access to banks’ networks and data security breaches.
18.0     It is noteworthy that the International Monetary Fund (IMF) estimated the global economic cost of the COVID-19 pandemic at $28 trillion in lost output. In a bid to address the fallouts of the pandemic, authorities all over the world have implemented extraordinary policy measures to ease financial stability risks and we were not an exception.
19.0     In response to the crisis, the CBN introduced and implemented a suite of measures aimed at reducing the risk to financial stability, boosting demand and economic growth, ameliorating the impact of the pandemic on some sectors and obligors, such as the Oil & Gas, Manufacturing, Agriculture, pharmaceutical and hospitality sectors.
20.0     Key among the measures taken were the approval of regulatory forbearance to banks to restructure their loans to severely affected sectors; provision of liquidity support to banks; provision of the COVID19 Targeted Credit Facilities (TCF) disbursed to individuals and households through the NIRSAL Microfinance Bank, several CBN intervention funds targeted at the real sector, and the mobilization of the private sector to contribute to the National response under the CACOVID Initiative. Other complementary measures included actions to enhance the resilience of the banking industry to the threat of cyber risk and deployment of an industry wide Cybersecurity Fusion Centre (C2FC) and Malware Information Sharing Platform (MISP) to address the growing cyber risk by providing a unified interface for cybersecurity intelligence sharing and enhanced incident response capabilities .
21.0     No doubt, these measures have yielded the desired outcomes, as we begin to see the initial outline of an encouraging recovery given the recent data released by the National Bureau of Statistics with GDP growth put at 5% for the second quarter of 2021.
22.0     Despite the headwinds associated with the pandemic, the banking industry has however, remained relatively resilient. This is attested to by our financial indicators with the industry Capital Adequacy Ratio (CAR) and Liquidity Ratio (LR) standing at 15.2% and 41.7%, respectively, at end-July 2021. These are above the prescribed prudential minimum. Also, the Non-Performing Loan Ratio, which was 5.4% as at the same period was above the regulatory maximum of 5% by only 40 bps.  Notwithstanding these modest achievements, we cannot afford to rest on our oars as the work is far from over.
23.0     As I noted recently, our robust payment system has continued to evolve towards meeting the needs of households and businesses in Nigeria. The high level of confidence in our payment system, between 2015 and 2020, has attracted the investment of about $500m in firms run by Nigerian founders.

24.0     In spite of these gains, about 36 percent of adult Nigerians still do not have access to financial services. Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to businesses.

25.0     The Central Bank of Nigeria decided to introduce a central bank digital currency, the eNaira, which would help in attaining our goals of fostering greater inclusion using digital channels, supporting cross border payments for businesses and firms as well as providing a reliable channel for remittances inflows into the country.

26.0     With the deployment of the eNaira, Nigerians in remote areas can conduct financial activities using their digital as well as features on phone devices. Partnering with our stakeholders in the financial industry, I believe that more Nigerians will be financially included.
27.0     I have been informed that seasoned professionals have been selected to present papers on the theme of the Seminar. I therefore invite all participants to learn from the wealth of knowledge they are bringing to bear. We expect that at the end of the sessions, participants would have acquired an in-depth understanding of the presentations and acquired a greater appreciation of the Bank’s commitment to economic growth and development.

28.0     Distinguished ladies and gentlemen, I wish to conclude my remarks by thanking the media, once again, for your dedication and support which have contributed in no small measure to the achievements recorded by the Bank in recent times. I assure you of our cooperation at all times. Business editors and finance correspondents are expected to play a critical role in public sensitsation towards the success of our reform efforts as outlined in my five-year policy thrust unfolded in 2019.
29.0     It is now my pleasure to formally declare open the 31st edition of the Seminar for Finance Correspondents and Business Editors. I wish you fruitful deliberations and a pleasant stay in Enugu.

30.0    Thank you for your attention.

Godwin I. Emefiele, CON
Governor, Central Bank of Nigeria