Nigeria's Economic Stability at Risk as CBN Battles Financial Fraud.‎‎By Clem AguiyiNigeria's Economic Stability at Risk as CBN Battles Financial Fraud.‎ - By Clem Aguiyi

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‎The Central Bank of Nigeria (CBN) has sounded the alarm on a disturbing rise  of digital financial fraud cases in the country. According to the CBN Governor, Olayemi Cardoso, financial fraud has surged by a staggering 45% within a single year, with a significant 70% of the resulting losses attributed to digital channels, particularly unregulated virtual asset platforms. This revelation was made at a public lecture organized by the Economic and Financial Crimes Commission (EFCC) in Abuja.
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‎The CBN's Financial Stability Report 2024 highlights the gravity of the situation, revealing a sharp increase in financial fraud cases. The report also notes that over 30 Ponzi-style investment schemes exploiting digital currency narratives have been flagged by the Securities and Exchange Commission (SEC) and other agencies. These developments pose significant risks to the country's financial system, including loss of consumer confidence, weakening of financial integrity, and reputational challenges for Nigeria in the global financial system.
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‎The CBN Governor emphasized that while digital innovation has enabled broader financial inclusion, it has also introduced complex regulatory and security challenges. The adoption of digital financial services in Nigeria, including cryptocurrencies and tokenized investments, has increased exponentially. However, this growth has also given rise to complex challenges, such as fraud and money laundering.
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‎According to Cardoso, Nigeria recorded over $56 billion in crypto-related transactions between July 2022 and June 2023, making it Africa's digital transaction leader. However, this growth is not without consequences. The surge in digital innovation has brought benefits, such as greater financial inclusion, but has also introduced new risks that need to be addressed.
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‎Emomotiti Agama, Director General of the SEC, highlighted the growing risks posed by virtual asset fraud to investor confidence and market integrity. Corruption remains a significant impediment to Africa's economic growth, social development, and investor confidence. The rise of virtual asset fraud and sophisticated investment scams is exploiting unsuspecting investors, undermining market integrity, eroding trust, and diverting resources meant for sustainable development.
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‎The SEC is committed to enhancing investor protection through increased education and awareness on how to identify and avoid fraudulent schemes. The Commission is also updating regulatory frameworks to respond to emerging risks in virtual assets and digital investments, while promoting international cooperation to tackle corruption and illicit financial flows.
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‎The Director General of the National Orientation Agency (NOA), Malam Lanre Issa-Onilu, commended the EFCC for its efforts in combating financial crimes. However, he warned that the human cost of fraud extends far beyond the financial system. Deception is foundational to fraud, and its impact goes far deeper, undermining citizens' confidence in their country. Every Naira lost to fraud causes far-reaching effects, affecting people and the country's development.
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‎The NOA has launched a nationwide campaign against the "get rich quick" mentality among Nigerians. The initiative aims to help Nigerians, especially young people, understand that lasting success comes from honesty and hard work, and it takes time. Value orientation is a powerful tool in combating financial crimes, and the NOA is committed to promoting a culture of integrity and transparency.
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‎The Registrar General of the Corporate Affairs Commission (CAC), Hussaini Ishaq Magaji, stressed the need for regulators, institutions, and stakeholders to remain vigilant and proactive in addressing emerging threats such as fraud, money laundering, and financial manipulation. The CAC is collaborating with the SEC and other sector-specific regulators to strengthen corporate governance and enforce compliance, ensuring transparency and accountability within Nigeria's financial ecosystem.
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‎The alarming rise of financial fraud in Nigeria poses significant risks to the country's economic stability. The CBN, SEC, EFCC, and other regulatory agencies must work together to address these challenges. The promotion of a culture of integrity and transparency, combined with increased education and awareness, can help mitigate the risks associated with financial fraud. Ultimately, Nigerians must understand that lasting success comes from honesty and hard work, and it takes time. By working together, we can build a more stable and prosperous financial system for all.


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