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Nigerian Fintechs Face $1mln Compliance Costs Amid Anti-Fraud Measures

Monday, 10 June 2024 18:01
Nigerian Fintechs Face $1mln Compliance Costs Amid Anti-Fraud Measures

(Ecofin Agency) - Nigerian financial technology companies, including Opay, Palmpay, and Moniepoint, are grappling with compliance costs nearing $1 million. These expenses stem from new anti-fraud requirements implemented by the Central Bank of Nigeria in 2023. The measures aim to bolster consumer protection and combat money laundering and terrorism financing.

Fintechs must now adhere to strict obligations, such as verifying customer identities and collecting detailed financial activity information. According to the Nigerian Inter-Bank Settlement System (NIBSS), financial sector fraud losses in Nigeria fell to 3 billion naira (about $6.5 million) in the first quarter of 2024. This marks a significant decrease from previous quarters, which saw much higher losses.

Analysts credit the improved security measures by financial institutions and regulatory bodies for this positive trend. The NIBSS, overseeing electronic payments and interbank transfers, has intensified efforts to combat fraud and raise consumer awareness. Campaigns have highlighted the importance of protecting personal information and remaining vigilant against scams.

While this decline in fraud is encouraging, experts stress that combating fraud must remain a top priority for Nigeria's financial sector. The increasing digitization of banking services and the popularity of mobile payments create new opportunities for fraudsters, necessitating continuous updates to security measures.

Regulatory developments in Nigeria are closely monitored by other African countries. As fintechs play a crucial role in enhancing financial inclusion, analysts predict that transactions in the sector could reach $65 billion by 2030. Although not the largest market compared to other regions, compliance costs will be scrutinized by investors, especially if they impact margins and returns.



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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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