How will key regulation topics affect the Nigerian tech space in 2024?
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Happy Superbowl weekend, and welcome to Part 3 of this series. Please catch up on Part 1, and Part 2 if you have not read them. Today’s post will focus on the big elephants in the room: The CBN, Crypto, and Fraud.
Regulatory Trends
1. The Department of Banking Supervision relocating to Lagos is a net positive.
Godwin Emiefele of blessed memory was good at one thing: Pleasing his bosses, which was why his only positive legacy was being the only CBN governor to serve two terms despite ignoring numerous legislative house summons. That's all the good I can say about that man.
So far, Mr. Cardoso and his team seem to be worse at communication than his predecessor. 6 Months into his tenure and a currency crisis, he has not yet held an MPC meeting. At least Godwin was a fighter, Mr. Cardoso does not realize his house is on fire.
That being said, the relocation of the offices of banking supervision, is a great welcome development that just makes sense. It should (in theory at least) create a better relationship and understanding between all participants of the financial services ecosystem and the main regulator.
No more expensive Abuja trips and teams for everyone to pay for just to get clarity on the latest CBN memo. I also was never a fan of those Abuja-based grifters who only seemed to sell a faster and easier way of dealing with CBN or getting your licence/approval due to their leveraging of personal relationships with CBN teams in Abuja.
That's not real work my brother. If these hustles die because CBN is now in Lagos, we should all be happy. Let's all eat at the same Amala joints as our regulator. That's how it's supposed to be abeg.
There is a cloud hovering behind this though, and Mr. Cardoso already warned about this during the banker’s committee dinner. They are going to get tough on banks and other financial services operators. The outcome will lead to some of us reminiscing about the Emiefele days. But as long as we get clarity, fewer gray areas, and a sanitised financial services space, so be it.
2. The war on Fraud continues to have one winner. Sadly
Every day, it seems that new methods are created to compromise customer accounts and financial provider systems. Dealing with fraud and scams(two different things) is the worst part of financial services.
Opportunities for a system to be exploited of vulnerabilities somehow is one of the earliest contributors to growth, and also one of the factors that impede your growth in this industry.
Smile Identity released a report on fighting fraud in the last year, and the AI-generated/Deepfake image section of that report was sobering. How do you defend against this?
Collaborations, recertification exercises, and disconnections are all welcome developments, it seems like the only solution to this is a scorched earth solution, but as long the political will to do this is lacking, we will keep losing this war.
Will Mr. Cardoso and other industry stakeholders be willing to sacrifice growth for a sanitised system with only Tier 3 accounts and a more stringent KYC regime? Your answer is as good as mine.
3. cNGN is going to fail badly. It's going to do worse than e-Naira.
This project has been delayed twice already. My thoughts and prayers are with the bankers who have had to start their year working on this project that has only one outcome. Let everyone stay in their lanes and focus on fighting fraud.
4. Much ado about VASPs
The CBN reversed its decision to “ban” cryptocurrency transactions, paving the way for licenced Virtual Assets Service Providers(VASPs) to exist and offer cryptocurrency services legally within the financial services ecosystem.
It’s been almost two months, and no one has announced their license award yet, despite the speed at which the applications were submitted.
I really hope this new licencing regime finds a way to be lenient and speedy, so I can legally make crypto transactions with my bank account again without fear of P2P fraud or being unbanked.
5. Crypto Experiments are back:
The Crypto industry in general is an experimentation haven with quasi-limitless opportunities.
Just before the ban, a few traditional finance products and apps in the market allowed you to buy and hold crypto on their platforms, via their partnerships with local crypto exchanges. The ban put a hold on lots of partnership discussions to enable onramps between crypto and TradFi players.
Crypto being back will see lots of experiments resurrect under different names, Stablecoin on ramps, blockchain integrations, cross-border payments, payment links, DeFi loans, staking, trade finance, etc.
At the end of the day, the use case that this market needs is an efficient stablecoin on ramps Just give my people stable coin on ramps and get out of their way.
Finally, I would love all talk about financial inclusion to be killed. We had Goddy for 8 years, and he made “Financial Inclusion” a goal that we did not need to chase.
It's a pipe dream. Let's focus on serving customers who can make money for businesses. Anyone who wants to be financially included knows what to do. Till then, please leave people alone with their co-operatives and MFBs. I promise you, they’re okay.
A few things I am reading
The case for opsimaths. Maybe late bloomers aren’t so late
Thank you to Busolami K. for her contributions to this. And to you for reading this series so far. Till next time.