SEC declare support for Fintech investment in Nigeria
The Nigerian Securities and Exchange Commission (SEC) has declared its support towards encouraging financial technology (Fintech) firms contribute towards the growth in Nigeria’s investment landscape.
According to Mary Uduk, the SEC’s acting director general, the SEC has begun engaging with the investment community by setting up a Fintech committee to come up with a road map for the Nigerian capital market in general which has now been presented at the recently concluded second quarter capital market committee meeting.
Uduk stated that the commission also has a fintech division that engages with the fintech community. A form on the SEC’s website inviting would-be fintech organisations that want to operate in the capital market was made available to enable the SEC understand the areas of interest. Out of which, 42 have been fully engaged and ripe to be registered and admitted to the capital market as full operators.
Recognising that Fintechs has come to stay and disrupt the financial community, the SEC boss consequently stated that the apex regulator is embracing fintech to be able to move the capital market forward
A look at existing firms already disrupting the mode of conventional investment practices however raises issues of competition and how the Fintechs can be regulated.
Investigation shows that in a short while, the pace of investors growth will outrun current status, as Fintechs find more support from the country’s financial regulatory authorities and are embraced by the upcoming generation.
Total investors in the capital market according to data from the Central Securities and Clearing System (CSCS) indicates that 3 million of an approximate 200 million Nigerians invest in the market
But an easier navigation of the peculiarities of Nigeria’s investment landscape offered by the fintechs have begun to receive the attention of Nigerian millennials. These millennials find the disruptive approach of Financial Technology (Fintech) firms towards savings for investment attractive enough to facilitate capital raise amounting to billions of naira.
According to these fintech startup firms, the introduction of easy and attractive financial initiatives will boost financial development. The companies will also
Millennials are young adults born roughly between the early 1981 and 1996. Today they are people of ages early 20 to late 30’s, who are internet-savvy and wants to get things done on the go. They make up 30 percent of Nigeria’s population but comprise less of the current active workforce. They are however poised as the generation that will lead the financial development of the country to its next level.
For Instance, PiggyVest, which boasts of being the largest online savings and investment platform in Nigeria, says it is facilitating the saving and investment of N1 billion from its over 100,000 users, majority of which are millennials, every month. PiggyVest says it can offer as high as 25 percent return on investments and 10 – 13 percent interests on savings.
The company partners with a Nigerian bank, who warehouses the funds, an insurance institution to safeguard investments and small and medium scaled enterprises where the raised funds are channelled towards.
Likewise, with N100, CowryWise another Fintech startup says users can purchase mutual funds of their choice. I-Invest another fintech company provide users with an array of treasury bills investment opportunities. All of these applications currently have users in excess of 100,000.
However, Like the saying which says “with great power comes great responsibility,” regulatory issues remains at the fore, while the extinction of traditional advisory roles played by highly trained professionals such as brokers threaten.
Many of these Fintechs have hinted of future plans to upgrade to become digital banks, but with growing risks peculiar to the financial system not just in Nigeria but across the globe, regulators have set up stringent requirements so as to meet up with risk management and capital adequacy challenges.