Finance experts have called on the Central Bank of Nigeria (CBN) to require all deposit-taking fintech companies and microfinance banks (MFBs) to publish their annual financial reports, arguing that institutions entrusted with public funds should be subject to stronger transparency standards.
The recommendation was made during a recent edition of the Drinks and Mics Podcast hosted by financial analyst Ugo Obi-Chukwu, where industry stakeholders debated the disclosure obligations of fintech operators and other financial service providers.
According to the panellists, the current regulatory framework creates an uneven playing field by imposing stricter disclosure requirements on commercial banks than on many fintech firms that hold customer deposits.
Speaking during the discussion, Obi-Chukwu argued that any institution responsible for safeguarding customer funds should publicly disclose its financial performance.
“My only sticking point for fintechs is that I can’t wait for when the CBN will compel fintechs to publish their annual reports. I don’t know why they wouldn’t do that. Actually, if they’re holding deposits, they should. In fact, all microfinance banks should,” he said.
Supporting the position, finance expert Dele Akintola noted that public financial disclosure is standard practice for financial institutions in several jurisdictions.
“All financial services should report by default. It happens in Kenya. All brokers,” he stated.
Also weighing in on the issue, Arnold Dublin-Green, Managing Director and Chief Executive Officer of Asset Management at Renaissance Capital Africa, argued that traditional banks operate under significantly heavier regulatory requirements than fintech operators.
According to him, commercial banks are subject to stringent capital adequacy standards and non-performing loan ratio requirements, creating what he described as a regulatory imbalance within the financial services sector.
The discussion comes amid existing CBN regulations governing microfinance banks.
A circular issued by the apex bank in March 2020 requires all microfinance banks to submit audited financial statements and abridged accounts to the Director of the Other Financial Institutions Supervision Department (OFISD) for approval within four months after the end of each financial year.
The directive also requires MFBs to display abridged audited accounts at their head offices and branches. National microfinance banks are further mandated to publish their annual accounts in national newspapers.
In addition, external auditors are required to submit domestic reports on audited accounts to the OFISD within three months of the end of the accounting year.
However, not all stakeholders supported extending mandatory public reporting requirements to every fintech operator.
Founder and Chief Executive Officer of Awabah, Tunji Andrews, argued that fintech startups and commercial banks operate under fundamentally different business models and risk profiles.
According to him, imposing full public disclosure obligations on young fintech companies from inception could discourage innovation and create barriers for new entrants.
“If you make it mandatory to publish numbers for all financial service providers, that means no fintech would have become a fintech. A lot of fintechs go through a deep J-curve startup phase. If you report that burn, it could create problems in the early stages,” Andrews said.
He cited the example of a leading deposit-taking fintech that spent heavily on customer acquisition during its formative years.
“If that company had reported that deep burn, even depositors would have carried their money and run away,” he added.
Andrews maintained that fintech firms often face intense competition and must invest aggressively to build customer trust and transaction volumes, unlike established banks that benefit from decades of brand recognition and market confidence.
Responding, Obi-Chukwu distinguished between fintech payment platforms and their licensed microfinance banking subsidiaries.
According to him, while payment technology businesses may not necessarily require extensive public disclosures, entities that hold customer deposits should be subject to greater scrutiny.
“They have the XYZ Microfinance Bank that does the deposit-taking. They have the XYZ Fintech that does the payment. That’s fine. But the deposit-taking entity has got to be public,” he said.
Andrews agreed with the broader principle of transparency but cautioned against making public disclosure a condition for newly established businesses.
“I don’t think there’s anybody that doesn’t want to do it. But if you make it a requirement for businesses that are just starting, you will have far fewer companies,” he noted.
The panel also examined the funding advantages enjoyed by some fintech operators.
Akintola observed that firms such as Moniepoint benefit from very low funding costs because customer balances are largely transactional and often remain within their ecosystems.
“Their cost of funds is effectively zero or close to it. The moment people receive large amounts of money, they move it to a bank they trust,” he said.
He further disclosed that foreign currency-to-naira conversions appear to be increasing, citing feedback from a Tier-1 bank that reportedly processes about $200 million worth of conversions each week.
According to him, the trend may indicate growing confidence among some investors and customers in naira-denominated assets.
While microfinance banks are already required to prepare audited financial statements and submit them to regulators, they are not subject to the same level of public disclosure requirements as listed commercial banks.
Most major fintech operators in Nigeria, including OPay, Moniepoint, Kuda and PalmPay, do not currently publish comprehensive annual financial statements for public review, although several periodically release operational updates and selected financial milestones.
Industry observers believe the debate could shape future regulatory reforms as Nigeria’s fintech sector continues to expand and play a larger role in mobilising customer deposits and providing financial services across the country.
