By In a significant move to protect investors and uphold market integrity, Nigeria’s Securities and Exchange Commission (SEC) has announced a crackdown on fraudulent activities within the country’s fintech sector.
To achieve this, the SEC plans to enforce ‘smart regulations’ across the fintech ecosystem to mitigate fund mismanagement and ensure operators comply with existing laws.
Emomotimi Agama, the SEC’s director-general, conveyed this message during his keynote address, themed “Positioning Africa’s fintech ecosystem to accelerate inclusive growth”, delivered recently at Nigeria Fintech Week.
While recognising the potential of fintechs to transform Africa’s financial landscape, Agama warned of the significant risks they pose.
“We cannot afford to leave this growing sector unchecked. Large amounts of investment data could be misused without consent, and companies are increasingly raising public funds without adequate regulatory control,” he said.
“It is time for fintech operators to adhere to the capital market rules when it comes to fundraising,” Agama added.
He clarified that public limited companies raising funds must engage with the SEC, while private fundraising must comply with the law.
To balance regulatory oversight with innovation, the SEC is promoting a smart regulation regime, which tailors existing capital laws to the unique needs of fintech operators.
Agama explained: “It is tailored regulation for products that exist. Regulations often are laid bare without considering the peculiarities of the products.
“For smart regulation, you are considering the peculiarities of those products and introducing regulations that will adapt to them. Because it’s not one hat that fits all.”
He said, smart regulation should be flexible and rigorous, promoting innovation while upholding security, consumer protection, and market integrity standards. Agama also outlined the SEC’s three-pronged approach to fintech regulation, focusing on regulatory compliance, stakeholder confidence, and investor validation.
“Our regulatory framework is designed to ensure that innovative solutions meet the necessary standards of security and consumer protection while driving sustainable growth in the market,” he added.
As part of its mission to improve awareness and help new and existing fintech companies navigate the regulatory landscape, the SEC has established an innovation and fintech portal, called FinPort.
Agama said that FinPort was created to assist fintech companies understand the regulatory demands, as well as requirements relevant to the capital market.
He reasoned that, with over 200 fintech companies currently operating in the country, the space is often staffed by tech savvy entrepreneurs, who may lack extensive financial sector knowledge, especially around regulation.
“The current SEC is a friendly and accommodating institution, knowing full well that many people involved in fintech are young and inexperienced,” he said.
Agama stressed the importance of regulatory frameworks for secure and beneficial fintech innovations, and noted that the SEC was conscious of getting the regulatory balance right. “Effective regulation is about creating an enabling environment that fosters innovation while protecting investors,” he said.
ITweb
