Economy
Emerging Markets Still Deprived of Fit-For-Purpose Financial Systems
By Modupe Gbadeyanka
The lack of an efficient and resilient financial system is still holding back inclusive and sustainable growth in emerging markets. Policymakers, regulators and financial services organisations should more actively shape a financial system that is fit for purpose.
These are the main findings of a new PwC Project Blue report ‘Geared up for growth: Shaping a fit for purpose financial system’. In this paper, PwC sets out what an efficient, resilient and inclusive financial system looks like across eight key dimensions; and how leading emerging markets – Brazil, China, India, Indonesia, Mexico, Nigeria and South Africa – rate against its ‘fit for purpose’ targets.
The assessment highlights considerable room for further improvement in key areas, ranging from financial inclusion to pensions and protection.
While growth in emerging markets continues to outstrip developed counterparts and hundreds of millions of people have been lifted out of poverty, developing a well-functioning financial system remains critical to tackling poverty and sustaining economic growth over the long term. Emerging markets need a robust and broad-based financial infrastructure to channel funds efficiently, draw people into the market economy and enable them to share in the benefits.
The good news for emerging markets
In the PwC research, all seven emerging markets perform well on private sector lending, which is known to drive growth. With the exception of Brazil, the banking spread (difference between bank lending and deposit rates) in the emerging markets is low, improving borrowers’ ability to service debt. Another key area in which most of the seven emerging markets do reasonably well is controlling the size of their banking system. Only the size of China’s banking sector – compared to its economy – could raise systemic concerns.
Nigeria: financial system significantly impeding growth
This can’t be said about the other African country in PwC’s assessment. Not only has Nigeria by far the highest percentage of its population living in poverty, its financial system is also showing the least progress of all seven emerging markets. In five of the eight key areas, Nigeria’s financial system scores significantly below PwC’s fit-for-purpose targets, holding back inclusive and sustainable growth. However, the success of Nigeria’s auto-enrolment pension model is a bright spot.
South Africa: on the right track, but with a long way to go
Although poverty reduction has stalled in recent years and it has the worst income inequality of all seven emerging economies, South Africa is showing the most progress towards a fit-for-purpose financial system. Four of the eight key areas for a healthy financial system are already supporting inclusive and sustainable growth, and while more work is needed – for instance on the high levels of indebtedness – the country is moving in the right direction in the other four areas.
China and Indonesia underperforming in number of key areas
Compared to the other emerging economies, China has the biggest difficulties with its pension asset management and the size of its banking system. China’s banks are facing a troubling collision of swelling balance sheets, high corporate debt levels and a rise in insolvency and default. Indonesia seems particularly off track when it comes to financial inclusion and a well-functioning housing sector.
India: financial system showing mixed signs of progress
Strong innovation coupled with regulatory support is proving to be a boon for financial inclusion in India, with the Indian payments industry standing out from its emerging market counterparts by driving above-average growth in non-cash payments. However, the country’s pension asset management and life insurance penetration are both significantly below healthy targets.
Brazil and Mexico moving in right direction with e-payments
Brazil’s household debt and comparatively high banking spread make its financial system vulnerable. But policymakers are actively working to reduce its banking spread. Another positive sign is the country’s use of electronic payments, opening up access to financial services for under-served communities. Mexico’s banking spread is already low, while it’s also actively promoting e-payments to accelerate economic development. However, it has more work to do on financial inclusion and life insurance penetration.
Hugh Harley, Global Emerging Markets FS Leader, believes policymakers, regulators and financial services organisations should be more active in shaping a fit for purpose financial system.
“A fit for purpose financial system fosters inclusion, investment, access to credit and support for people when they retire, while promoting efficiency and protecting against systemic risks. The development of this financial system isn’t organic or passive. You shape it. Strong regulation and enforcement are essential for financial systems to develop, so regulators across different market sectors should get on the front foot and work together,” he said.
Andrew S. Nevin Ph.D., FS Advisory Leader and Chief Economist at PwC Nigeria and Project Blue Global Leader, stresses that emerging markets should try and learn from their peers.
“Our analysis clearly shows that some markets are ahead of others in different dimensions. Ask yourself the question: what can we learn from each other’s experience? Specifically financial services organisations should realise that many of the ground-breaking innovations in FS are being spearheaded in Asia and other emerging markets. Without ageing legacy systems to hold them back, they have clean sheets upon which to harness the latest developments in technology and develop their own distinctive business models,” he submitted.
By Adedapo Adesanya
The Senate Committee on Banking, Insurance and Other Financial Institutions has called for stronger collaboration among financial sector regulators and other stakeholders to strengthen Nigeria’s financial system and support sustainable economic growth.
The committee made the call during an expanded stakeholders’ engagement in Lagos, attended by the leadership of the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Asset Management Corporation of Nigeria (AMCON), National Insurance Commission (NAICOM) and Nigeria Export-Import Bank (NEXIM), among other industry stakeholders and financial experts.
Chairman of the committee, Mr Adetokunbo Abiru (Lagos East), who was represented by Mr Osita Izunaso (Imo West), said stronger legislative reforms and regulatory collaboration were necessary to reposition Nigeria’s financial architecture for long-term economic prosperity.
Mr Abiru said the financial sector remained critical to investment, job creation, business expansion and macroeconomic stability, stressing that its ability to mobilise savings, channel credit to productive sectors, facilitate investment and manage risks was fundamental to sustainable economic growth.
He said the current economic realities required closer collaboration between the legislature and financial regulators, noting that challenges confronting the sector were interconnected and could not be effectively addressed through isolated interventions.
The lawmaker identified inflationary pressures, global economic uncertainties, cybersecurity threats, low insurance penetration and the need to diversify Nigeria’s export base as some of the challenges requiring coordinated policy responses.
He said the engagement was aimed at generating practical solutions to strengthen the country’s financial architecture and support sustainable economic growth.
According to him, monetary policy, financial safety nets, banking institutions, the insurance industry and export finance were interdependent components of a stable financial system and must therefore be strengthened collectively.
The Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olusegun Ayo Omosehin, said the Nigeria Insurance Industry Reform Act (NIIRA) 2025 had contributed significantly to stabilising and repositioning the insurance sector.
Mr Omosehin disclosed that 43 insurance companies had successfully recapitalised, describing the development as a major milestone for the industry.
He commended Abiru and members of the committee for their role in advancing insurance sector reforms and urged the House of Representatives to expedite action on the relevant insurance reform bill to enable it to receive presidential assent and become operational.
Representatives of the CBN Governor and the Managing Directors of AMCON, NEXIM and NDIC also commended the Senate committee for its oversight and legislative support, saying its interventions had strengthened the agencies’ capacity to discharge their statutory mandates.
The engagement, held under the theme, Strengthening Financial System Architecture for Sustainable Economic Growth and Stability in Nigeria, also featured presentations by Professor Uche Uwaleke, President of Capital Market Academics of Nigeria (CMAN); Professor Biodun Adedipe, Chief Consultant, B. Adedipe Associates Limited; and Dr Tilewa Adebajo, Chief Executive Officer of CFG Advisory.
The experts presented policy recommendations on key issues affecting Nigeria’s financial system, with emphasis on financial stability, investment and sustainable economic growth.
Mr Abiru said the Senate would continue to engage financial regulators and other stakeholders to deepen financial inclusion, strengthen public confidence in financial institutions and improve regulatory effectiveness.
He said the broader objective was to position Nigeria’s financial system to compete more effectively in the global economy while remaining resilient and responsive to the country’s economic transformation agenda.
By Aduragbemi Omiyale
The first six months of 2026 were not too good for Caverton Offshore Support Group Plc, as it suffered an N8.7 billion loss compared with the N2.1 billion net profit it recorded in the same period of 2025.
This occurred as the company posted a 10.91 per cent decline in earnings between January and June 2026, according to its financial statements for the period ended June 30, 2026.
Analysis of the results showed that the revenue generated in the period under review stood at N14.7 billion versus the N16.5 billion printed in the corresponding period of last year.
Business Post observed that the revenue was negatively impacted by a decline in earnings from helicopter charter and helicopter/airplane contract.
Further analysis of the financial results indicated that operating profit went down by 22.34 per cent to N7.3 billion from N9.4 billion, with administrative expenses jumping to N7.9 billion from N4.7 billion.
But Caverton believes things will get better, noting that the clearest driver of the recovery is Caverton Marine.
Through its relationship with Stena Bulk, one of the world’s leading tanker operators, the organisation now participates in three Suezmax tankers trading a rare source of foreign-currency revenue for a Nigerian-listed company.
It noted that the relationship is being deepened through Unity Shipping Worldwide, a joint venture with the Nigerian National Petroleum Company (NNPC) Limited and Stena Bulk that pairs the state-owned oil firm’s national position and Stena Bulk’s fleet with Caverton’s indigenous operating platform
Closer to home, the firm’s OMIBUS platform, developed with Shanghai-based electric-propulsion OEM Explomar, is bringing battery-electric passenger ferries to Lagos waterways. A prototype is already in service, and Caverton holds a firm order from Lagos State for ten vessels, an early-mover position in clean inland-water transport that the group believes can be replicated across other states as the fleet enters service and ferry operations mature into steady, recurring revenue.
In aviation, the institution said the recovery is anchored on its partnership with NHV, a Belgium-based international helicopter operator, with the restructuring of charter operations targeted for the second half of 2026.
“The first half of the year tested us, but the direction of travel is now visible in the numbers.
“Quarter on quarter, we are working to build up our revenue to narrow losses. Our marine business units, from international tankers to electric ferries, are scaling.
“Meanwhile, our aviation relaunch is on track for the second half, and our cost base is tighter than it has been in years. There is distance still to travel, but Caverton is moving from stabilisation to recovery, and we intend to finish 2026 with that momentum intact,” the chief executive of Caverton, Mr Olabode Makanjuola, stated.
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) and the Joint Revenue Board (JRB) have issued new guidelines clarifying the taxation of virtual assets in Nigeria.
The guidelines provide an administrative framework for the taxation of virtual assets and specify the tax obligations of individuals and businesses operating in the sector.
According to a public notice issued by the two agencies, the framework covers registration, reporting and record-keeping requirements, valuation principles and the tax treatment of virtual asset transactions.
It applies to taxpayers, Virtual Asset Service Providers (VASPs), peer-to-peer (P2P) marketplace operators, tax practitioners and other persons engaged in virtual asset-related activities.
The NRS and JRB said the guidelines were developed in line with the provisions of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025.
The two bodies said the release was aimed at providing clarity, certainty and consistency in the administration of Nigeria’s tax laws as the country’s virtual asset ecosystem continues to evolve.
The agencies added that the framework would promote voluntary compliance, enhance transparency and support the development of a fair and efficient tax system for digital asset transactions.
They urged all affected taxpayers and stakeholders to familiarise themselves with the guidelines and ensure compliance with the applicable tax obligations.
The guidelines are available on the official websites of the two agencies.
