CBN’s clampdown on fintech firms may hinder investments

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Finance and investment analysts at the weekend flayed the Central Bank of Nigeria (CBN)’s decision to freeze the bank accounts of some fintech companies as a desperate move that could hamper the long-term development of the economy.
This came as the Nigerian Exchange (NGX) Limited underscored the importance of fintechs in achieving an inclusive digital economy.
Market analysts at Cordros Securities said the freezing of the fintech accounts was “a desperate move to preserve the value of the naira” but it could further worsen the country\s economic perception.
“For us, this development could further worsen foreign investors’ perception of the country’s investment climate and may constrain private investment in the fintech space,” Cordros Securities stated.
The CBN had obtained a court order to freeze the account of five fintech companies on the basis of allegations that they were operating without asset management licenses and utilising foreign exchange (forex) sourced from the Nigerian forex market for purchasing foreign bonds and shares in contravention of the CBN circular referenced TED/FEM/FPC/GEN/01/012, dated July 1, 2015.
The affected companies included Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, CTL/Business Expenses and Trove Technologies Limited. Their accounts were last week frozen for 180 days pending the outcome of the apex bank’s investigation.
Speaking on the theme: “Roadmap to a Digital Nigeria: Harnessing Fintech, Cryptocurrencies and Artificial Intelligence to Create Stronger Financial Markets”, at the 2021 national workshop of the Chartered Institute of Stockbrokers (CIS), the NGX said the collaboration between fintech and the capital market would effectively create a digital economy as well as increase financial inclusion and cashless payments.
Divisional Head, Trading Business, Nigerian Exchange (NGX) Limited, Jude Chiemeka, explained that fintechs have a huge potential to transform the capital markets and effectively build a digital economy.
He added that rather than seeing fintechs as competitors, they are potential partners to incumbent capital market infrastructure providers like NGX.

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