The Financial System Strategy (FSS) 2020 is a national reform program aimed at developing and transforming Nigeria’s financial sector into a growth catalyst to fast track the achievement of the Vision 20:2020 and engineer Nigeria’s evolution into an International Financial Centre. The strategic objectives of FSS2020 are to strengthen and deepen the domestic financial markets, enhance the integration of domestic financial markets with the external financial markets and supporting the real sector.
To attain these objectives, the key regulators of the Nigerian financial system came together under the leadership of the Central Bank of Nigeria and crafted the vision to make Nigeria the safest and most diversified growing economy among emerging markets. The key institutions are: CBN, SEC, NAICOM, PENCOM, DMO, FMBN, SMEDAN, NSE, NDIC, FIRS and FRC.
FSS2020 aims to transform Nigeria’s financial system into a catalyst for growth, develop Nigeria into an international financial centre, and transform the economy into one of the twenty largest economies in the world by the year 2020.

The broad objectives of FSS2020 are developing a shared vision and an integrated strategy for the nation’s financial system; developing market and infrastructure strategies that will align fully with the strategic intent of the overall system; creating a performance management framework and building a partnership of all key stakeholders to implement the strategy; and establishing a harmonious and collaborative environment for the development and delivery of the strategy.

To accomplish these objectives, the strategy is planned to concurrently strengthen the Nigerian domestic financial markets; enhance the integration with external financial markets; and engineer Nigeria’s evolution into an international financial centre (IFC). The improved financial system shall thereafter be used to catalyse growth in other parts of the economy.



The overall goals of FSS 2020 Financial Markets Sector are derived from the Money and Foreign exchange markets and the Capital market. Money Market refers to the segment of the Nigerian financial system comprising of both the money market and the foreign exchange markets activities. The Central Bank of Nigeria is the regulator of the money market. The capital market is the segment of the financial system where medium to long term funds are mobilized.  The Securities and Exchange Commission is the apex regulatory authority of the Nigerian capital market charged with the dual responsibilities of regulating and developing the market.  The other institutions in the market include: Nigerian Stock Exchange and Nigeria Commodity Exchange.

The recommendations for accomplishing the FSS2020 Financial Markets sector in the first phase of the programme are summarised below:

For the Capital Market, foster a culture of securities innovation and development; foster and encourage liquid and efficient secondary markets for trading in securities; establish an Internationally Competitive Market Infrastructure; and promote a strong knowledge-based capital market.

For the Money Market, facilitate the development of a more robust, vibrant and deep money market; increase the volume of debt instruments issued by corporations, relative to  government treasury bills issued in the market; ensure the development of a robust market information infrastructure  (institutional, content and channel); and elevate the level of corporate governance.

For the Foreign Exchange Market, accelerate the process of currency convertibility; intensify the economic diversification from oil; increase investment flows relative to trade flows; facilitate the development of a more robust, vibrant and deep foreign exchange market; and create a sustained macroeconomic environment that will make exchange rate management predictable.



 The key financial markets strategic objectives to be achieved 2013 to 2020 are the seven transformational programs in the reviewed FSS2020 Strategy Document. They are:

  1. Long Term Financing Product Development:

The Long Term Financing Product development programme is designed to identify and develop instruments and securities for long term financing of infrastructures. Product consideration would include utility bonds, infrastructure bonds, sukuk bonds, Asset Backed Securities (ABS) products, securitization, etc. Of recent is the launching of the green bond initiative program in June 2018 where FSS2020 is a stakeholders. These are products structured to enable Pension Fund and Insurance fund investment, as well as attract international investors.

  1. Payment System:

The purpose of this programme is to build and enhance current payments system to make it more efficient, more transparent and more integrated to match internal requirements and standards, both local and international. Payments system comprises of institutions, instruments, rules, procedures, standards and technical means established to effect the transfer of monetary value between parties discharging mutual obligations in all trade and exchange transactions in an economy or other trading partners.

   iii.            Consumer Credit Scoring System

The objective is to develop a credible credit scoring system for individuals by setting up an organization similar to Equifax, Call credit and Experian to assess whether individuals are credit worthy. This organization would compile information and have a system to send data on any Nigerian individual to a prospective lender. The data would come in various sources and provide consumer credit information on individual consumers for a variety of uses. Such data will include key information on individual identity, borrowing and bill paying record, court records, payment history with utilities companies, telecom, etc.

  1. Nigerian International Financial Centre

The highest objective of the FSS2020 programme is to develope an international financial center within a clearly defined geographic location. The Centre will be designed to principally attract international financial services institutions and other complementary businesses. The benefits include enhanced economic development for Nigeria; deepen domestic financial markets; enhance integration with external markets, Africa & Global; speed up infrastructural development; and enhance the image, position and world relevance of Nigeria.

  1. Framework and structure for commodities

The objective is to develope appropriate structure and products for commodities to make Nigeria a point of reference for commodities. The passage of the legal framework for warehouse receipts (WRS) and privatization of the Abuja Commodity Exchange are part of this programme. The benefits include price stability of commodities;  broader market with the creation of trading instruments for commodities (including spot, forward, WRS, OTC and futures.);  diversification of the economy; and deepen the financial system and increased participation in the FM.

  1. Advocacy & Incentives to Expand Capital Market Listing

This programme is for advocacy to influence fiscal and structural policies for long-term stability of the financial system which will, in turn drive listing of both large companies and Small and Medium Enterprises. The benefits include the collaboration and coordination of successful execution of FM6, FM7 and FM8; and increased listings.

vii.            Risk Based Supervision framework

This programme is designed to leverage the Risk Based Supervision framework developed and implemented by CBN for the Banking & OFIS to other sectors such as Insurance. The framework might need to be tailored and adopted for the various sectors by the relevant regulator.  The benefit is the cross-regulatory collaboration and coordination for a standard approach for effective risk based supervision.










Long Term Financing Product Development

FM1-Deepen and diversify products, services  and institutions to drive the increased participation in FM



Payments System

FM2-Facilitate the reduction of operational and transaction costs




Consumer Credit Scoring System

FM3- Establish international competitive market infrastructure



NIFC – Nigeria International Financial Centre

FM4- Ensure competitiveness of the financial markets products and services

FM5- Support the integration of FM across West Africa



Framework and structure for commodities

FM9-Work with the government in operationalizing the commodities exchange market



Advocacy & Incentives to Expand Capital Market Listing

FM7- Work with the government to put an incentive structure for large companies to list on NSE

FM8- Facilitate the listing of small and medium enterprises

FM6-Work with the government on fiscal and structural policy as the foundation for long term stability of the financial system



Risk Based Supervision framework – system adoption




The following summarizes the progress so far achieved in the execution of financial markets initiatives:

        i.Long Term Financing Product Development

PENCOM has authorized financing options to broaden the FGN securities market in order to sustain the development of other segments of the bond market and support Government’s financing needs through the introduction of new products. The investment must be fully guaranteed by Irrevocable Standing Payment Orders (ISPOs) or external guarantees by eligible banks or development finance institutions. Pension Fund Assets can be invested in infrastructure projects through eligible bonds and debt securities. The Bonds and debt instruments issued to finance infrastructure projects shall have a robust credit enhancement.

     ii.Payment System

The system is used for the adoption of electronic payments in agriculture, establishment of working groups to offer opportunities in education, hotels of entertainment, consumer bills payments, government flows, health and transport. It is used for the introduction of SWIFT Sanction screening to improve transparency of international payments at the point of origination.

The system issued guidelines for offshore banking operations and deployment of new RTGS and Script less Securities Settlement System. Agent banking has been introduced as well as the implementation of BVN to promote and strengthen Know Your Customer programme.

Payment Card Industry Data Security Standards (PCIDSS) has been achieved. It is a global compliance standard for entities that store, transmit or process card payment data.

Other achievements include the review of guidelines on payment system, Mobile Money Services, regulatory framework for licensing super-agent, Electronic Payments Initiative Scheme (EPIS), industry-wide Anti-Fraud solution for the payment system, and payment system securities and Risk Management Centre.

iii.Consumer Credit Scoring System

  1. Bankers committee has initiated the biometric identification of all bank customers
  2. Credit scoring is undertaken by three renowned credit bureaus in Nigeria which is already in place. They are: CRC Credit Bureau, Credit Registry Bureau, XDS Credit Bureau.
  3. Credit Reporting Act in place
  4. CBN’s Redesigned CRMS
  5. Phase 1(scoping and documenting an end-to-end set of requirements) of a credit rating regime is on-going by CBN.
  6. Nigerian International Financial Centre

The concept note for the establishment of NIFC has been developed, designed and choice of model recommended. A typical engineered model in Dubai, UAE has been chosen since 2008. A local Consultant was hired to develop the initiation document. The local Consultant developed Request for Proposal framework for selecting appropriate location. A legal framework on NIFC was developed and follow-up to ensure the bill is represented and cleared by NASS is being pursued. The bill which is the legal framework has been passed by the 7th senate and was due for presidential assent. Activities on the Request for Proposal have been concluded and await sign off.

  1. Framework and Structure for Commodity:

Business development approach and collaboration with CBN have been adopted. The programme launched the electronic warehouse receipt system (e-WRS) and built capacity for the exchange. The Secretariat created support for full take-off of the operation of the NCX by working toward provision of infrastructure, provision of market information services (MIS), established Quality Assurance Laboratories and is working towards the provision of legal framework on the operationalization of warehouse receipt system.

  1. Advocacy & incentives to expand capital market listing

The Nigeria Stock Exchange is marketing companies in Oil & Gas, telecommunications and power. Large national corporates are also being marketed.  Of recent is the Listing of MTN in the Nigerian Stock exchange.

 vii.            Risk Based Supervision framework

    So far, Insurance, Pension and Capital markets are adopting the CBN framework.



The following are the key challenges confronting the financial markets sector development in Nigeria:

  1. Inadequate skills for financial products development (Capital Market);
  2. Inadequate collaboration of regulators and stakeholders;

iii.            Unavailability of investible fund for long term financial products;

  1. Weak risk management;
  2. Physical insecurity and prevalence of financial fraud;
  3. Low level of financial literacy and inclusion;

vii.            Low acceptability of mobile money at merchant locations;

viii.            Non-existence of sound collateral management;

  1. Inadequate legal and regulatory framework for the commodities  market and the NIFC;
  2. Unwillingness of Private companies to go public;
  3. Inadequate Foreign Direct Investment and non-existence of an Integrated Credit Scoring System.



FSS2020 is currently collaborating with CBN, NDIC, SEC NSE, FIRS, DMO, NCX and FRC to increase the tempo in transforming the Financial Markets in Nigeria. FSS2020 supports the identification of relevant skill gaps in the financial markets sector for appropriate training programs to address the gaps in the financial markets.

This report re-states the interest of the FSS2020 Secretariat in the development of the Corporate Bond Market and the Derivatives Market in Nigeria. In the private sector, corporate bonds are not often considered an option by many companies in funding expansion and innovation. FSS2020 has commenced regular engagement with relevant institutions and stakeholders to fast-track and align strategies to support the development of the financial markets in Nigeria.