- Mulls regulatory framework for fintechs
The Central Bank of Nigeria (CBN) has injected a total of $18.067 billion into the interbank segment of the foreign exchange (FX) market since it started its forays into the market in February last year.
According to the weekly FX sales by the central bank between February 21, 2017, and March 23, 2018, the CBN sold the greenback to authorised dealers in a total of 76 sessions.
A breakdown of the dollar sales showed in 2017 alone, the bank intervened with a total of $15.043 billion.
Also, between January 12 and March 23, 2018, it has offered a total of $3.024 billion through wholesale forwards and retail Secondary Market Intervention Sales (SMIS).
Market analysts stated that the interventions by the central bank have helped in eliminating the pressure on the FX market, ensured exchange rate stability and eliminated currency speculators.
The naira exchange rate has remained stable since last year when the central bank commenced the FX sales.
In April 2017, the CBN introduced a new exchange rate window, the Nigerian Autonomous Foreign Exchange Fixing Mechanism (NAFEX), commonly known as the Investors’ and Exporters’ (I &E) window.
The I & E window and the interbank market have been seen as the main exchange rate windows utilised in foreign currency trading.
The interbank market window trades at around N326-N345 to $1 while the I & E window trades around N360/$1.
The aggressive interventions, notwithstanding, Nigeria’s external reserves recently hit a five-year high of $46 billion, representing an increase of 18 per cent or $7 billion over the country’s reserves figure of $38.912 billion as of January 2, 2018.
It has also significantly surpassed the $40 billion target for 2018 announced by the CBN Governor, Mr. Godwin Emefiele, last November, and is expected to inch up to $50 billion in the next few months.
CBN spokesman, Isaac Okorafor recently pointed out that the interventions in the FX window helped to moderate the pressure on the forex reserves by sustaining liquidity in the market and boosting production and trade.
Okorafor also noted that the CBN policy restricting access to FX from Nigeria’s foreign exchange market to importers of some 41 items had made a huge impact on the status of Nigeria’s reserves and boosted the supply of local substitutes for imported goods, created jobs at home, and enhanced the incomes of farmers and local manufacturers.
Meanwhile, as part of efforts to encourage start-ups that are financial technology (fintech) companies, the CBN at the weekend disclosed plan to develop a regulatory framework for operators in the sub-sector.
The Deputy Director, Payment System Department, CBN, Mr. Musa Jimoh, who revealed this during the launch of the Association of Financial Service Innovators in Lagos, also said a regulatory sandbox would be developed for members of the association.
A sandbox is a security mechanism for separating running programmes, usually to mitigate system failures or software vulnerabilities from spreading.
According to Jimoh, the regulatory framework would be out before the middle of the year.
“One of the things we have done now is to start the process of introducing a regulatory sandbox that would lower the barrier for entry.
“We (CBN) are actually working in partnership with Bill and Melinda Gates Foundation. They are the ones giving us technical assistance in developing the framework,” he explained.
He pointed out that the objective of the association was to empower start-ups, innovators, technology companies and young Nigerians that have great ideas, but lack the financial wherewithal to bring out their products or even integrate with the banks.
“We don’t want those ideas to just die off. So, what the CBN and the Nigeria Interbank Settlement System did was to bring all these start-ups together and try to understand their pains and constrains and see how we can give them helping hands.
“Our believe is that if we give them helping hands, we are basically building the economy. We are bringing a new categorisation of companies called fintechs.
“So, the essence of this association is so that they can come with one voice to tell the regulators and the banking community how we can support them and how we can leverage on some of the digital services that they have.
“Overall, their contribution would lower the barrier for financial inclusion. There is this global understanding that digital technology would aid financial inclusion because it would be able to provide tools that from your house, your homes and the gadgets you carry, you are able to access financial services,” he added.
Source: Thisday
