On the side line of the recently concluded World Bank/IMF Spring Meetings in Washington, D.C., Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), and Zainab Ahmed, finance minister, held a bilateral meeting with Queen Maxima of the Netherlands.
Queen Maxima is the United Nations (UN) Secretary-General Special Advocate leading global advocacy efforts to advance financial inclusion, opening a path to empowerment for all.
Following her last visit to Nigeria in October 2017, she wanted to know what progress had been made in the area of Financial Inclusion and how she could be of help.
Emefiele, who is optimistic of achieving 80 percent financial inclusion next year, gave an update on the progress.
“We are happy because I remember about 18 months ago, Bill Gates mentioned that the level of financial inclusion in Nigeria was 48 per cent and they were concerned that Nigeria was not making progress. We went to work to ensure we meet 2020 target of 80 per cent. As a result of the actions we have taken, our level of financial inclusion as at last week has improved from 48 per cent to 64 per cent in the space of 18 months.”
Briefing journalist after the meeting, Emefiele said, “I feel more confident that by 2020, we should certainly hit 80 percent mark we had set for ourselves. In doing this, it is important to look at how we faired as a country during the period of this crisis relative to some other emerging markets.”
The CBN adopted the National Financial Inclusion Strategy (NFIS) in 2012. The Strategy articulated the demand-side, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators (KPIs) and established the implementation structure. The NFIS was built on four strategic areas of agency banking, mobile banking/mobile payments, linkage models and client empowerment. Four priority areas were identified for guideline and framework development namely, Tiered Know-your Customer (T-KYC) regulations, agent banking regulations, national financial literacy strategy and consumer protection.
According to the regulator, Financial inclusion is achieved when adults have easy access to a broad range of formal financial services that meet their needs and are provided at affordable cost. Financial inclusion implies not only access but usage of a full spectrum of financial services including but not limited to payments, savings, credit, insurance and pension products.
Prior to the recent drive to achieve the 80 percent financial inclusion, many Nigerians, for numerous reasons, are unbanked and lack access to formal financial services. The results of the EFInA Access to Financial Services in Nigeria 2012 survey showed that 34.9 million adults representing 39.7 percent of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5 percent of the adult population.
Billions of Naira circulate through the informal sector and this has a negative impact on the country’s economic growth and development. The EFInA Access to Financial Services in Nigeria 2012 survey revealed that 23.0 million adults save at home. If 50.0 percent of these people were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year.
Last year, the CBN unveiled the 2018 revised NFIS, which revealed that In 2016, 58.4 percent of Nigeria’s 96.4 million adults were financially included comprising 38.3 percent banked, 10.3 percent served by other formal institutions and 9.8 percent served by informal service providers. In 2020, Nigeria plans to have 70 percent of its adult population in the formal financial services sector and 10 percent included in the informal sector.
The revised strategy revealed that 46.5 percent of the females, 52.5 percent of those in rural areas and 53.5 percent of youth aged 18 to 25, 70 percent of those from the North West and 62 percent of those from the North East were excluded in 2016. MSMEs were also peculiarly excluded from financial services.
Consequently, the CBN said demographics – women, rural areas, youth, Northern geopolitical zones and MSMEs shall be the primary focus of intervention in these revised NFIS.
The major goal of the revised Strategy is to reduce the proportion of adult Nigerians that are financially excluded to 20 percent in year 2020 from its baseline figure of 46.3 percent in 2010.
Although Nigeria is yet to attain its financial inclusion goals, some recent developments may help drive inclusion over the next year.
These include governance arrangement for NFIS implementation, memorandum of Understanding (MoU) on payments systems, regulatory sandbox for fintech, and Shared Agent Network Expansion Facility (SANEF) Initiative. The CBN, in collaboration with Deposit Money Banks (DMBs), Mobile Money Operators (MMOs) and Super-Agents have designed a programme for aggressive rollout of a network of 500,000 Agents. They will offer basic financial services including cash-in/cash-out (CICO), funds transfer, bill payments, airtime sales, Bank Verification Number (BVN) enrolment services and government payments among others.
Similarly, several private-sector players have introduced new products and services aimed at the unserved and underserved. These include “no-frills” savings accounts, Unstructured Supplementary Service Data (USSD) for account opening and funds transfer service among others, non-interest banking products and financial instruments, multifunctional ATMs and micro- insurance. Also, other partnerships in the industry are driving uptake in digital financial services (DFS), and programmes have been launched to boost access to finance for excluded groups such as women and MSMEs.
At the World Bank/IMF meeting, Ahmed informed Queen Maxima, of the various initiatives put in place to achieve financial inclusion like the National Social Net Program, trader mom’ scheme, among others.
“On the fiscal side, I informed her of the on-going work in the area of National Savings Strategy and that we will reach out to the World Bank to help us with this initiative,” he said.
