Stronger banks will unlock FX liquidity, boost cross-border trade — Okpagu
As Nigeria’s banking sector undergoes recapitalisation exercises, industry observers are closely watching how this move will reshape liquidity, foreign exchange access, and cross-border payment efficiency. The Central Bank of Nigeria’s (CBN) directive, aimed at strengthening the capital base of commercial banks, could transform how funds move across borders and how businesses, large and small, access FX in the years ahead.
In this exclusive interview with BusinessDay’s Chinwe Michael, Austin Okpagu, Nigeria Country Director at Verto, a global B2B cross-border payments platform facilitating over $25 billion in annual transactions, shares deep insights into how the recapitalisation drive could recalibrate the FX ecosystem, enhance settlement efficiency, and redefine the collaboration between banks and fintechs in Africa’s evolving financial landscape.
The CBN’s recapitalisation directive aims to strengthen Nigeria’s banking sector. From your perspective, how will a stronger banking system influence FX liquidity and cross-border payment stability in the medium term?
The CBN’s recapitalisation drive is an essential and pragmatic measure aimed at creating fewer but larger and more financially resilient banks in Nigeria capable of competing with global peers. In the medium term, this strengthening should positively impact FX liquidity and cross-border stability in a couple of key ways, from enhanced risk-bearing capacity and improved liquidity to greater efficiency and expansion in cross-border payment services.
For businesses transacting across borders, what immediate or long-term effects do you foresee from this recapitalisation drive, especially regarding access to foreign exchange and settlement efficiency?
For businesses engaged in cross-border trade, the effects will be transformative, though not immediate. Initially, we may see short-term operational inefficiencies as banks focus their resources on meeting the recapitalisation deadline. This could temporarily slow service delivery.
Mergers and acquisitions will likely increase, creating short-term integration challenges for transaction platforms. However, in the long term, greater access to the FX market will emerge, reducing rationing and enabling smaller businesses to obtain FX more easily. Settlement efficiency will also improve as well-capitalised banks can invest in resilient infrastructure and advanced payment rails.
One of the goals of initiatives like PAPSS is to reduce Africa’s reliance on the U.S. dollar. How realistic is this goal in the short to medium term, and what role can fintechs like Verto play in accelerating that transition?
The goal of reducing dollar reliance is strategically sound and essential for financial sovereignty, but achieving it in the short to medium term will be challenging, though achievable for intra-African trade.
The key obstacle is the deep-seated preference for hard currencies due to the volatility and inflation risks of many African currencies. Without effective currency-hedging mechanisms, businesses will continue to hesitate to trade in local currencies.
Fintechs like Verto can accelerate this transition by building robust liquidity for local currency pairs similar to PAPSS’s African Currency Marketplace (PACM). By operating across multiple emerging and developed markets, fintechs can bypass hard-currency intermediaries, enabling cheaper, faster local currency trading through real-time conversion and settlement.
Nigeria’s liquidity challenges have often slowed trade settlements. In what ways could better-capitalised banks improve liquidity conditions for importers, exporters, and fintechs in the B2B payments space?
Better-capitalised banks are crucial to solving systemic liquidity constraints, especially in the FX market. We expect banks with stronger capital buffers to have higher FX risk appetite and the ability to hold more foreign currency reserves.
This aligns with the CBN’s recent efforts to fulfill legitimate trade demands more consistently. The overall impact will be improved predictability of trade settlements, greater transparency, and market stability—conditions that directly benefit high-volume B2B transactions across Africa.
With Verto facilitating over $25 billion in cross-border payments annually, how do you see your operations evolving in Nigeria’s changing banking and regulatory environment?
Our strategy is to treat the recapitalisation and evolving regulatory landscape as opportunities for deeper partnerships. Verto is prioritising best-in-class compliance and cybersecurity to align with the CBN’s vision for a more resilient financial system.
We aim to become not just a service provider but an infrastructure enabler of trust. Our enterprise-grade infrastructure will help consolidated banks manage increased transaction volumes and cross-border complexities more efficiently.
As banks recapitalise and expand their digital and cross-border services, do you see fintechs competing with or collaborating more closely with traditional financial institutions?
The future will favour co-opetition, collaboration within competition.
While banks may strengthen their digital offerings post-recapitalisation, fintechs will maintain their edge in speed, innovation, and user experience. Banks bring regulatory coverage and legacy trust; fintechs bring agility, proprietary technology, and seamless integration.
We envision an embedded finance environment where stable banks provide the regulatory rails, and fintechs embed FX engines, payment aggregation, and global payout systems within those offerings, creating a resilient, customer-first ecosystem.
PAPSS is known as a game-changer for intra-African trade. From your experience, what are the key bottlenecks slowing its adoption, and how can Nigeria’s banking recapitalisation accelerate its implementation?
PAPSS has immense potential, but adoption is slowed by several realities, including volatile local currencies, a lack of robust hedging mechanisms, and fragmented financial regulations across the continent. Many central banks still fear losing monetary policy control.
However, Nigeria’s recapitalisation drive can accelerate PAPSS adoption by positioning stronger banks as anchor institutions. With larger capital bases, banks can invest more in the infrastructure, technology, and integrations necessary to bring PAPSS to scale.
The government’s FX reforms aim to unify exchange rates and improve transparency, but volatility persists. How can fintech-led innovations contribute to restoring market confidence and stabilising rates?
Fintech innovations are instrumental in restoring market confidence. By leveraging data analytics and real-time market transparency, fintechs remove information asymmetries that often fuel speculation and volatility.
At Verto, we democratise access to foreign exchange by offering multiple liquidity channels that directly connect global capital to Nigerian businesses. This reduces reliance on legacy bank channels and central bank interventions. Additionally, digital audit trails enhance traceability, strengthening confidence in transactions and rates.
As the CBN tightens regulatory oversight through recapitalisation, how can regulators balance stability with the innovation required in fintech and payments?
It’s a delicate balance, but recapitalisation provides an opportunity to evolve regulation. The CBN must move from being just a gatekeeper to an enabler of innovation.
This means updating old guidelines, consolidating fragmented regulatory frameworks, and introducing effective sandboxes for emerging tech solutions. Capacity building among regulators is also essential through mentorships and exchange programs with innovation-friendly markets like the U.S. and China to help them better supervise deep-tech innovations.
Looking ahead, what trends do you see shaping the future of cross-border payments and FX management in Africa, and how is Verto positioning itself to lead that transformation?
The future of cross-border payments is real-time, platform-driven, and API-powered. Settlements will increasingly happen within minutes, not days. The early signs of stablecoin adoption point to faster, cheaper, and more secure transactions by removing traditional intermediaries.
Technology itself is becoming the payment rail. Through embedded APIs, institutions can integrate FX and multi-currency accounts directly into their systems, automate settlements, and enable programmable payments.
At Verto, we’re leading this transformation through our Atlas Suite, which allows partners to hold and disburse funds in over 40 currencies through domestic rails. We’re also leveraging AI and rich data for enhanced compliance, onboarding, and risk management, all geared toward a seamless, secure cross-border experience.
