A speedy implementation of mobile money and a proper management of the process are critical factors to the actualisation of the 95 percent financial inclusion target by 2024, announced Monday by the Central Bank of Nigeria (CBN), analysts have said.
Godwin Emefiele, the governor of CBN, said over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intended to broaden access to financial services to individuals in underserved parts of the country.
“Our ultimate objective is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024,” Emefiele said on Monday, as he unveiled his programme for his second term of five years.
Questioning the new target by CBN, Yewande Adewusi, a financial inclusion consultant, sought to know what would drive the new inclusion target. “The population is not stagnant. That is my problem, because people who were not eligible for financial services are now joining the excluded adult, so the numbers are growing. What exactly is happening that they suddenly going to have 15 percent inclusion in five years?”
According to EFInA’s data analysed by BusinessDay, Nigerian adult population who are both formally and informally excluded from the financial market stood at 36.6 million. This represents 36.8 percent, leaving the industry regulator with 31.8 percentage points to achieve the five year target.
According to the apex bank, it plans to intensify financial literacy and consumer protection programmes such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilising these services, “which will enable them to make well informed choices.”
“The onus is now on CBN to ensure a speedy implantation of the mobile money because, I think the introduction of PSB could be a game changer. If you look at the level of telephone penetration in Nigeria, nearly almost the entire population already has handset,” said Omotola Abimbola, Research Analyst at Lagos-based Chapel Hill
On October 23, 2012, the central bank of Nigeria in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from about 53 percent in 2008 to 20 percent in 2020.
Less than a year to the deadline, the apex bank has 16.8 gap to bridge for it to achieve the set target. With the aim to meet up with the projected time frame, the regulator proposed the issuance of PSB license to allow other industry players to share form financial inclusion space.
“The progress may not be linear but by the time the mobile money commences, coupled with the initiative to collaborate with microfinance, they should be on track but all they need to do is to ensure the implementation of all they have talked about,” Paul Uzuma, MD of Halo Nigeria Capital Ltd, said.
The analyst’s claim was affirmed by Abimbola, as he noted the apex bank has to ensure that they manage the PSB implementation process well, to enable they meet and exceed their target.
“I think it is very important on how they manage the process because, we have had a lot of mobile operators who have tried in that space but haven’t been able to breakthrough,” Abimbola told BusinessDay by phone.
According the CBN governor, an efficient payment system is vital to the effectiveness of monetary policy interventions, adding that it also helps in reducing the cost involved in payment for goods and services.
“The Payment Services Management Department in the CBN will work to enable the build-up of a robust and secure payments infrastructure in Nigeria that is reliable and easy to access. We will reinvigorate our efforts at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive,” Emefiele said.
Also commenting on the new target, Andrew S. Nevin, Advisory Partner and Chief Economist at PwC said he believes the CBN is right to set this ambitious target.
“While it may not be reached, we believe financial inclusion is going to increase rapidly because of the focus of the CBN (through SANEF and other initiatives already in process) and because payment innovation is going to make payments much easier at lower cost, including for feature phones,” Nevin told BusinessDay by mail.
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