The Securities and Exchange Commission (SEC) is taking steps to regulate the fintech sector, aiming to prevent fund mismanagement and ensure compliance among operators. The Director General of the Nigeria Securities and Exchange Commission (SEC) Mr Agama disclosed this at the Nigeria Fintech Week themed “Positioning Africa’s Fintech Ecosystem to Accelerate Inclusive Growth”.
Mr Agama stated that this initiative, alongside an Accelerated Regulatory Innovation Program that helps fintech companies pilot their solutions within a structured setting before they fully enter the market seeks to position Nigeria as a leading fintech hub in Africa and worldwide.
He emphasized that this is to protect investors’ funds while fostering the growth of the startup ecosystem. In 2023, seven Nigerian startups announced their closures, resulting in a loss of $79.15 million in funding for investors. The majority of these shutdowns stemmed from difficulties in securing additional funding, with some attributed to inadequate corporate governance practices.
According to Agama “We are focused on smart regulation—an approach that encourages innovation without compromising security or market standards”. The SEC DG highlighted that the program has already produced significant results, with several recent approvals and additional applications currently undergoing thorough assessment.
Agama urged the government to promote fintech through initiatives like digital infrastructure development, public-private partnerships, or educational programs to build digital skills in fintech, the SEC DG also urged fintech innovators to continue developing solutions that address Africa’s unique challenges, particularly in the areas of financial inclusion, access to capital, and wealth creation for underserved populations.
SEC is promoting a smart regulation framework to foster a regulated environment that encourages innovation which adapts existing capital laws to meet the specific needs of fintech operators. The capital market regulator has established an innovation and fintech portal, known as FinPort, to help both new and existing fintech companies navigate the regulatory requirements relevant to the capital market.
The Commission has implemented a three-pronged strategy to regulate innovation in the Nigerian capital market, prioritizing safety, market expansion, and problem-solving. This proactive approach is designed to ensure regulatory compliance, enhance stakeholder confidence, and create value for innovators seeking legitimacy.
President of the Fintech Association of Nigeria (FinTech GR), Ade Bajomo, emphasized the importance of having a regulator that fosters a supportive environment for innovation in the fintech sector. He pointed out that investment in the industry has sharply declined, falling to $186 million in the first half of 2024, down from $826 million in the same period in 2023. “We believe fintech is essential to unlocking Africa’s potential, but we cannot achieve this alone. We need investors who recognize the long-term value of our continent,” he stated.
He further added that the group will continue to strengthen relationships with regulators to collaboratively develop policies and proactively address issues affecting the fintech ecosystem.
