Nigeria May Miss 2020 Financial Inclusion Targets – CBN

Nigeria May Miss 2020 Financial Inclusion Targets – CBN

SHARE:

Post Views: 203 The Central Bank of Nigeria (CBN) says the nation is not on track to meet the financial inclusion targets, barely two years to the 202...

MTN May List Nigerian Arm In July, To Cut Debt With $5.2bn IPO
More Nigerians Prefer 9Mobile Network, As 16,809 GSM Subscribers Port In 2017Q3
Several States Not Meeting Conditions For Budget Support Facility- FG

The Central Bank of Nigeria (CBN) says the nation is not on track to meet the financial inclusion targets, barely two years to the 2020 deadline as contained in the National Financial Inclusion Strategy (NFIS) of 2012.

In an executive summary of the exposure draft tagged NFIS Refresh, released last week, the CBN noted that two financial inclusion targets were set for the year 2020. They are: “an overall financial inclusion rate of 80% of the adult population and a formal financial inclusion rate of 70% of the adult population.”

Recall that in 2010, Nigeria began working towards reducing the percentage of its adult population without access to the formal financial system from 46.3% to 20% by the year 2020, following which the NFIS was launched on October 23, 2012.

By 2016, the percentage only fell marginally to 41.6%, following which there were attempts at reviewing the strategy, focusing on evaluating progress, identifying gaps and developing a refreshed strategy document to serve as a roadmap for implementation until 2020, according to the covering letter of the draft, signed by Dr. Mudashiru Olaitan, the CBN’s Director, Development Finance Department

In the executive summary of the document, the CBN noted that by the end of 2016, only “58.4% of Nigeria’s 96.4m adults were financially served and only 48.6% of all adults used formal financial services. The NFIS defined an additional 15 targets for channels, products and enabling environment, as well as 22 key performance indicators (KPIs) related to these targets. Across all these measures, Nigeria lags inclusion targets.”

It however noted the presence of new promising developments, especially in recent times, with new stakeholders joining the push for financial inclusion, one of which was the Memorandum of Understanding (MoU) CBN and Nigerian Communications Commission (NCC) on digital payment systems earlier in the year. There is also the collaboration between the apex bank the Nigeria Inter-Bank Settlement System (NIBSS) “to create a regulatory sandbox that will allow financial technology start-ups to test solutions in a controlled environment and is partnering with the private sector to roll out a 500,000-agent network to offer basic financial services.

“In addition, several players in the private sector have introduced new products and services aimed at the unserve/underserved, and new partnerships are driving the delivery of digital financial services more widely—programmes have been launched to boost access to finance specifically for excluded groups such as women and micro, small and medium-sized enterprises.”

Growth, the CBN continued, has been hampered by such issues as macroeconomic realities and constraints on the implementation of the NFIS, which have impacted the

status of financial inclusion in the country.

“Much has changed in the Nigerian context since the original NFIS document was written, especially regarding the economy, security and technology. Unforeseen socioeconomic shocks, such as the economic recession and the security situation in parts of Northern Nigeria, have hampered the progress of financial inclusion.

“Furthermore, Nigeria’s slow uptake of digital financial services (DFS) and limited rollout of national identity numbers (restricting the ability of financial service providers to meet know-your-customer (KYC) requirements) represent ongoing impediments.”

Continued, the apex bank explained that new lessons leant and priorities identified since the inception of the NFIS, and some of the limitations of the 2012 approach, have become clearer and need to be reflected in Nigeria’s strategy to better address financial inclusion.

The report identified limitations of the 2012 report to include “a lack of prioritisation across a long list of actions and KPIs, as well as an outdated set of solutions, some of which, as innovation advanced, became increasingly suboptimal in their prescribed methods.”

Consequently, it stressed that “in the refreshed NFIS, priorities have been defined based on a new approach that is deliberately more “future-proof” in its focus on first principles, instead of specific approaches that have the potential to become obsolete.”

“The refreshed strategy is based on a first-principles approach. It recognises the various core mandates that need to be managed to develop a solid, stable yet inclusive financial system and identifies the principles that need to be in place to manage and govern financial services. The strategy outlines two overarching principles, and several topic-specific principles, addressing the priority action points. It is critical to note these principles are to be adopted as an inseparable set, collectively important to drive financial inclusion in the Nigerian context. Strategy implementation must take all the principles into consideration, and not a just selection. The refreshed metrics and targets focus on outputs and outcomes, without seeking to prescribe a specific approach to or structure of the business model.

COMMENTS

WORDPRESS: 0
DISQUS: 0