Some weeks ago, the Central Bank of Nigeria went a step further in driving financial inclusion in the country by setting state-by-state targets for the 21 commercial banks in the country. This is to enable it achieve its set target of 80 percent financial inclusion by 2020. The current financial inclusion rate is 41 percent. According to the report, the CBN broke down the target state-by-state “to ensure that the masses and people at the grassroots have access to financial services such as payments, savings, credit, insurance and pension.” For instance, on the targets for savings account, each of the Deposit Money Banks (DBMs) have operating in the Federal Capital Territory (FCT) were mandated to get a minimum of 1500 new savings customers by 2018 while the Microfinance banks would open at least 2500 new accounts.
This is noteworthy and commendable. Financial inclusion is linked to a country’s economic and social developments and is key to reducing extreme poverty. Indeed, as research has shown, financial inclusion is not only positively correlated with growth and employment, but it is generally believed to causally impact growth.
But Nigeria’s push for financial inclusion may continue to suffer setbacks if the apex bank does not act to remove disincentives to financial inclusion. Despite the stated intensions and strategies rolled out by the Central Bank of Nigeria and the deposit money banks to deepen financial inclusion in Nigeria, banking practices such as such as ATM withdrawal charges, SMS and email alert fees, account maintenance fee, fee on inter-bank transactions even on banks’ internet platforms and other such frivolous fees and charges continue to dissuade people from accessing financial services in Nigeria and have effectively become the greatest disincentives to financial inclusion in Nigeria.
Since the fall in price of oil and the recession in Nigeria that has badly affected the banks, the banks have turned their attention to depositor’s money to make up for their shortfalls.
Sometimes, even the CBN itself is not blameless. Some time back, it ordered the stoppage of the Commission on Turnover (COT) charges, but when it came under pressure from the bank who make up a significant portion of their revenues from fees and commission incomes, it was forced to do a volte face and introduced the arbitrary account maintenance fee, which is far worse and higher than the proscribed COT charge. This is besides the compulsory stamp duty charge of N50 on all bank customers for bank transactions in the country. Although the government and the CBN directed that the postal duty charge be levied only on current accounts, most banks have blatantly extended the charge to all account holders.
What is worse and bad news for financial inclusion is that Nigerians being targeted for inclusion are the most sensitive to the imposition of such arbitrary charges. Petty traders and those in operating in the informal economy now prefer traditional banking methods to than patronising the banks.
For the current financial inclusion drive of the CBN to pay off, the apex bank may have to actively work to remove the obstacles that have been hindering the effort to ensure that all adults have access to financial services in Nigeria.
