Emefiele Urges Financial Institutions to Take Proactive Steps against Rise in Cybercrime

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has advised banks and other Financial Institutions (OFIs) to prepare against the rising threats of cybercrime in the financial system

Emefiele said this yesterday at the second National Risk Management Conference where stakeholders gathered to discuss, “Risk Management in the Promotion of Financial System Development for Economic Growth.”

This was just as the Registrar of the National Collateral Registry (NCR) Mr. Bulus Musa yesterday revealed that over N16.6 trillion in credit has been collateralised on the registry’s portal since its inception.

Emefiele who was represented by Director, Financial Markets Department, Dr. Angela Sere-Ejembi stressed that effective risk management in the financial system was a catalyst for economic growth.

The CBN governor said: “Traditionally, financial institutions have predominantly focused on financial risk, but have made efforts in rebalancing over the past decade to strengthen non-financial risk management.

“However, over time, the lines between financial and non-financial risk have started to and will continue to blur. This is apparent when considering increased recent targeted cyber-attacks on critical IT infrastructure, the opportunities and risks presented by financial innovation driven by technological change (Fintechs), developments on the central bank digital currency, and our learnings from the recent response to the pandemic.”

“Technological disruptions experienced in the last decade has been forceful and impactful in all spheres of life. The rapid evolution of fintech companies has continued to alter the financial landscape globally and developments have continued to disrupt traditional ways of offering financial services in the banking landscape.

“Business transactions and financial services are becoming more digitised and reliant on the internet. Alongside this, the extent of technology risks and the level of sophistication of cyber-attacks are rapidly expanding. “Threats such as ransomware, targeted phishing attacks etc have become prevalent and could destroy the trust placed on financial institutions and OFIs. This development has demanded that financial institutions, including OFIs, strengthen their cyber resilience and take proactive steps to secure their critical information assets to ensure their safety and soundness,” the CBN governor said.

According to him, given how extensively technology has altered the world today, being technology savvy has become a crucial requirement for risk managers today.

“Technological savviness is crucial for two reasons. First, technology can be harnessed to improve business operations and enhance risk management.  Secondly, it allows us to quickly identify and respond to new sources of risks emanating from technological developments.

“The potential of technology in risk management is vast, not only for the automation of tasks, but increasingly as a tool for making business decisions as well.

“The application of big data analytics and artificial intelligence to assess and predict human behaviour, for instance, can provide great value to businesses in terms of reducing risks. Considering these issues highlighted, there is a need for risk managers to be quick in identifying and responding to cyber risks,” he said.

He pointed out that the CBN recently issued a risk-based cybersecurity framework and guidelines for OFIs, which represent the minimum requirements to be put in place by all OFIs, saying this was in addition to a series of fintech-based policies and guidelines which include the regulatory sandboxes, open banking, and cybersecurity, among others. He said they were released by the central bank to strengthen cyber security risk management in its determination to ensure a robust regulatory landscape without stifling innovation.

Also in other reforms undertaken by the CBN to sustain growth in the economy, he said the central bank worked with the fiscal authorities in instituting strong policy support measures under the Economic Sustainability Plan (ESP), which was designed to contain the effects of the pandemic, restore stability to the economy by helping households and businesses affected by the pandemic and to lift our economy out of the woods through massive interventions to critical sectors.

He added: “Under this plan, the monetary and fiscal authorities collectively mobilised and injected over N5 trillion to support households and businesses. The CBN deployed more than N3.5 trillion, – about 4.1 percent of Nigeria’s GDP to critical sectors such as agriculture, manufacturing, electricity, and healthcare in order to stimulate and help the economy recover from the deep shock.

“In the real sector, the CBN has released the sum of N66.99 billion to 12 additional projects in manufacturing and agriculture. Cumulative disbursements under the Real Sector Support Facility (RSSF) currently stands at N2.10 trillion disbursed to 426 projects across the country.”

Furthermore, he pointed out that under the 100 for 100 Policy on Production and Productivity (PPP), the apex bank disbursed the sum of N20.17 billion to 14 projects in healthcare, manufacturing, and services, bringing the cumulative disbursement under the facility to N93.39 billion to 62 projects.

In the healthcare sector, N4 billion was disbursed to two healthcare projects under the Healthcare Sector Intervention Facility (HSIF), bringing the cumulative disbursement to N130.54 billion for 131 projects, comprising of 32 pharmaceuticals, 60 hospitals and 39 other services.

“Under the Export Facilitation Initiative (EFI), the Bank funded several commodity projects in the non-oil export segment for value-addition and production to the tune of N3.24 billion, aside the N50 billion disbursed through the Nigerian Export Import Bank (NEXIM).

“In the Micro, Small and Medium Enterprise (MSME) sector, the Bank supported entrepreneurship development with the sum of N39.26 million under the Tertiary Institutions Entrepreneurship Scheme (TIES), bringing the total disbursement under this intervention to N332.43 million.

“Under the Intervention Facility for the National Gas Expansion Programme (IFNGEP), the Bank disbursed N1 billion to support the adoption of Compressed Natural Gas (CNG) as the preferred fuel for transportation and Liquefied Petroleum Gas (LPG) as the preferred cooking fuel,” Emefiele said.

Also speaking at a town hall meeting on the sensitisation of the use of Secured Transactions in Movable Assets (STMA) Act 2017 which was organised by the Development Finance Department of the CBN in collaboration with the NCR in Lagos yesterday, Musa also revealed that the about 752,000 Nigerians have registered on the NCR portal.

The NCR is an initiative of the CBN with support from the International Finance Corporation (IFC), to improve access to finance particularly for MSMEs using movable assets as collateral.

Musa said, “We have captured about 752,000 and credit that has been granted or collaterised currently stands at N16.6 trillion on the NCR portal”

“We want to use the movable assets as collateral for granting credit. What the small-scale industries need to do is go to their bank, tell their bank that I do not have landed properties but I have a motorcycle, vehicle, jewelry, an account receivable from a reputable company, inventory and discuss with them, they will register these documents on the NCR and when it is registered on the NCR, it gives that bank the priority over these assets and they give you the amount you need for credit but you know payment is still with you,” he said.