The Central Bank of Nigeria has upgraded the licences of several fast-growing financial technology firms and microfinance banks, stepping up regulatory oversight of digital lenders whose operations have expanded far beyond their original approvals.
The move reflects a broader effort by the regulator to align licensing with the true scale of activity in Nigeria’s rapidly evolving financial services market, where mobile banking platforms and agent networks have outpaced existing supervisory frameworks.
Yemi Solaja, director of the CBN’s Other Financial Institutions Supervision Department, disclosed the decision at the annual conference of the Committee of Heads of Banks’ Operations held in Lagos on January 23. He said a number of institutions were effectively operating nationwide despite holding licences that restricted them to unit or state level activity.
“There has been a clear mismatch between the licences some institutions hold and the reality of their operations,” Mr Solaja said. He cited firms such as Moniepoint Microfinance Bank, Opay and Kuda Bank, noting that their customer bases and transaction volumes now span the country.
Nigeria’s fintech sector has expanded rapidly over the past decade, driven by widespread mobile phone adoption, limited access to traditional banking services and the rise of agency banking models. Many of today’s largest digital lenders entered the market under regulatory categories designed for far smaller, geographically limited institutions.
Regulators have grown increasingly concerned that this gap between licence scope and operational reach weakens consumer protection and accountability, particularly given the customer profiles of many digital platforms. Mr Solaja said a large proportion of users operate in the informal economy, making clear reporting lines and dispute resolution mechanisms essential.
“These customers need to know where to turn when there is a problem,” he said.
Under the revised framework, national licences will only be granted after firms meet tighter regulatory benchmarks, including higher capital requirements and stronger compliance systems. The minimum capital base for national microfinance banks has been raised to N5 billion, up from N2 billion previously, according to the CBN.
The central bank also used the forum to press for closer collaboration between commercial banks and fintech operators, arguing that better integration could help reduce the volume of cash circulating outside the formal financial system. Mr Solaja urged banks to adopt more digital-first operating models to reflect changing consumer behaviour.
Despite the emphasis on digital delivery, the CBN stressed that nationally licensed fintechs and microfinance banks must maintain a physical presence in key locations. Branches, the regulator said, remain important for handling disputes and for serving customers who prefer face to face engagement.
The licence upgrades come amid heightened scrutiny of Nigeria’s digital finance sector. In 2024, the CBN fined Moniepoint and Opay N1 billion each for breaches of know your customer rules, signalling a tougher stance on compliance and customer due diligence.
Digital lenders have gained broad acceptance among Nigerians, offering simpler account opening processes, lower transaction costs and more reliable platforms than many traditional banks. For the regulator, the challenge now is to harness that reach to deepen financial inclusion while imposing controls on a sector that has grown faster than the rules designed to govern it.