Less than six months to the deadline set out by the Central Bank of Nigeria (CBN) to ensure it includes 80 percent of Nigerian adults into the financial cycle, many have raised the question on whether the apex bank is on track to achieve its goal.
Analyst polled by BusinessDay expressed mixed feelings on whether the central bank can pull off the target, some expressed optimism while others questioned the lender’s methodology.
On October 23, 2012, Nigeria’s apex bank in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from 53 percent in 2008 to 20 percent by 2020.
According to the most recent data by EFInA as analysed by BusinessDay, Nigeria has 36.8 percent of its adult population excluded from the financial cycle, this translates to a population of 36.6 million people who at the moment are not included in the financial net.
Going by that figure, the apex bank is left with an inclusion gap of 16.8 percent, expected to be bridged at the end 2019 to enable CBN achieve the targeted 20 percent exclusion rate.
“Despite the challenges, achieving the set financial Inclusion target is possible and requires a strong will, sustained commitment and active collaboration of all stakeholders towards the removal of bottlenecks militating against financial inclusion in the country,” CBN assured Nigerians in its newsletter dated July 06, 2018.
Since then, the industry regulator has implemented various initiatives geared towards achieving the set goal.
“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,” Andrew S. Nevin, Advisory Partner and Chief Economist at PwC said he believes the CBN is right to set this ambitious target.
In furtherance of CBN’s mandate to promote a sound financial system in Nigeria and the need to enhance access to financial services for low income earners and unbanked segments of the society, the industry regulator, the Nigeria Interbank Settlement System Plc., Chartered Institute of Bankers of Nigeria (CIBN), commercial banks and other operators in the payment system in 2018, developed a Shared Agent Network Expansion Facility (SANEF) initiative to offer basic financial services across the country.
According to Yele Okeremi, MD/CEO, Precise Financial Systems (PFS), a Software company, financial disempowerment is the reason why financial exclusion rate is high in Nigeria.
“People will remain financially excluded because they are financially disempowered,”Okeremi said, adding that Nigeria still has a large number of its population living below two dollars a day, “how do you want to include them financially?”
Nigeria currently boost of over 201 million, with a population growth rate that has been above the economic expansion rate since 2015.
According to the World Poverty Clock, Nigeria became the poverty capital of the world when it overtook India as the country with the most extreme poor people.
The apex bank plans to intensify financial literacy and consumer protection programs such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilizing these services, “which will enable them to make well informed choices.”
As a result, the central bank recently came up with a policy that will ensure Microfinance Banks (MFB) open new 64 accounts per month. This was after to it planned to on-board 500,000 mobile money agents by the year 2020. So far, the apex bank has enrolled only 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed.
“The population is not stagnant, that is my problem. 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?” Yewande Adewusi, a Lagos-based financial inclusion consultant, queried.
Recall that Godwin Emefiele, the governor of Nigeria’s central bank, said recently that over the next five years, through initiatives and policy measures such as SANE, the apex bank intend 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
Checks by BusinessDay revealed that the Telco-led model in driving financial inclusion in Africa countries reported tremendous progress owing to the already existing large customer base of the Telcos.
Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more higher population, remains at 1 percent.
Ghana’s decision to have a Telco-led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014.
This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent.
Nigeria has a bank-led financial inclusion model; this is argued by industry players as one of the reasons for the lag in the country’s inclusion rate.
Thus, International Monetary Fund (IMF) and other industry stakeholders applauded the apex bank when it revealed its plans to give Payment Service Bank (PSB) license to Telcos and among other industry players to participate in the country’s financial inclusion space. It’s almost one year since it proposed the license in October 2018, yet no license has been issued to any of the applicants.
To achieve any real financial inclusion impact, Mastercard said people also need to become active users of financial products. “Simply providing access to financial services is not enough. To achieve any real impact, people also need to become active users of financial products,” Ann Cairns, Vice Chairman of Mastercard said.
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