Finance experts have called on the Central Bank of Nigeria (CBN) to require all deposit-taking fintechs and microfinance banks (MFBs) to publish their annual financial reports, arguing that institutions entrusted with public funds should be subject to greater transparency.

The recommendation was made during the latest edition of the Drinks and Mics Podcast hosted by Ugo Obi-Chukwu.

According to the panellists, the current regulatory framework creates an uneven playing field, with commercial banks facing stricter disclosure requirements than many fintech operators.

What they are saying

Ugo Obi-Chukwu argued that any institution holding customer deposits should be obligated to make its financial performance publicly available.

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  • “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 service providers in several markets.

  • “All financial services should report by default. It happens in Kenya. All brokers,” he said.

Also weighing in, Arnold Dublin-Green, Managing Director and Chief Executive Officer, Asset Management at Renaissance Capital Africa, argued that traditional banks operate under heavier regulatory requirements than fintechs.

According to him, banks face stricter rules on capital adequacy and non-performing loan (NPL) ratios, creating what he described as regulatory imbalance.

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The debate comes against the backdrop of existing CBN regulations governing microfinance banks.

  • A March 2020 CBN circular requires all MFBs 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 their financial year.
  • The circular further mandates MFBs to display abridged audited accounts at their head offices and branches, while national MFBs are required to publish their annual accounts in national newspapers.

In addition, external auditors are expected to submit domestic reports on the accounts to the OFISD within three months of the end of the accounting year.

More insights

Not everyone on the panel supported extending public reporting requirements to all fintech operators.

Tunji Andrews, Founder and Chief Executive Officer of Awabah, argued that fintechs and commercial banks operate under different business models and risk structures.

According to him, imposing mandatory public disclosure requirements on startups from inception could stifle innovation and discourage 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,” he said.

Andrews cited the example of a major deposit-taking fintech that heavily subsidized customer acquisition during its early years.

  • “If that company had reported that deep burn, even depositors would have carried their money and run away,” he added.

He further argued that fintechs must work aggressively to attract customers and transactions, unlike established banks that benefit from decades of customer trust and brand recognition.

Distinction between fintechs and deposit-taking entities

Responding to Andrews, Obi-Chukwu drew a distinction between fintech platforms and their licensed microfinance banking subsidiaries.

According to him, while fintech payment businesses may not necessarily need public disclosures, entities that hold customer deposits should be subject to greater transparency.

  • “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 principle but cautioned against making such disclosures a prerequisite 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 said.

Funding dynamics and customer trust

The panel also discussed the funding advantages enjoyed by some fintech operators.

Akintola noted that companies such as Moniepoint benefit from extremely low funding costs because customer balances are often transactional in nature.

  • “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 also revealed that foreign currency-to-naira conversions appear to be rising, citing feedback from a Tier-1 bank that reportedly processes about $200 million worth of conversions weekly.

According to him, the trend suggests increasing confidence in naira-denominated assets among some customers.

What you should know

While microfinance banks are required to prepare audited financial statements and submit them to regulators, they are not subject to the same level of public disclosure as listed commercial banks.

Most leading fintech firms in Nigeria, including privately held operators such as OPay, Moniepoint, Kuda and PalmPay, do not publish comprehensive annual financial statements for public consumption, although some periodically disclose key operational and financial milestones.