The Central Bank of Nigeria has finalised the review of the National Financial Inclusion Strategy to achieve its 2020 set target.
In the review, Nigeria plans to have 70 per cent of its adult population in the formal financial services sector and 10 per cent included in the informal sector by 2020.
The National Financial Inclusion Strategy (revised), which was released on Wednesday, stated that in line with the 2012 NFIS monitoring plan, a review was carried out from October 2017 to June 2018 based on research reports, data analysis and stakeholder engagements.
The exercise aimed to understand the current state of financial inclusion in Nigeria, assess past approaches, and the lessons learnt in order to prioritise the most critical interventions to achieve the objectives.
Part of the review read, “In 2016, 58.4 per cent of Nigeria’s 96.4 million adults were financially included comprising 38.3 per cent banked, 10.3 per cent served by other formal institutions and 9.8 per cent served by informal service providers. In 2020, Nigeria plans to have 70 per cent of its adult population in the formal financial services sector and 10 per cent included in the informal sector.”
It stated that the strategy articulated the demand-side, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators and established the implementation structure.
The key findings from the review included that Nigeria had made significant progress to implement the NFIS because stakeholders regarded financial inclusion as a national development tool.
Inter-departmental and inter-agency governance arrangements including Steering and Technical Committees, implementation structures in the 36 states and the Federal Capital Territory and National Working Groups, had been collaborating to achieve set targets, it added.
Stakeholder engagements, it added, revealed that some of the elements of the strategy such as point-of-sale terminals were no longer the appropriate or most efficient channel for distribution of financial services in view of the advances in technology.
It also observed that regulations and policies such as fixed fees for certain transactions, limited the range and variation of business models that could be deployed.
“Innovative models that have substantially increased financial inclusion in other countries such as mobile money penetration yet to take significant root owing to some restrictive policies and regulations,” it observed.
In the review, the pace of adoption and agent density had been low due to lack of understanding of the workings of agent banking and the opportunities it provides for stakeholders.
Challenging macroeconomic and security situation in the review period exacerbated the constraints to financial inclusion, it added.
It also stated that low or non-adoption of financial products owing to cultural and religious factors slowed down financial inclusion in the northern parts of the country.
The revised strategy recognised the imperative for prioritising the foundational constraints, the importance of innovation and the need to create an enabling environment to promote financial inclusion.
It stated, “Despite the current implementation challenges, there are some emerging opportunities that enhance the prospects of remarkably increasing financial inclusion over the next two and half years (2018-2020). These include the signing of an MoU in 2018 between the Central Bank of Nigeria and the Nigerian Communications Commission on digital payment systems.
“Collaborative efforts between the CBN and Nigeria Inter-Bank Settlement System to create a regulatory sandbox for innovative financial services; partnership between the committee of bank chief executive officers and the private sector to roll out a 500,000-agent networks nationwide.”
In the revised NFIS, two overarching principles had been defined to make implementation comprehensive, easy and efficient.
One of them, it added was an appropriate risk based regulatory level -CBNplaying field that focused on both activity and the actors; The regulation should prescribe what eligibility conditions a party needs to meet to provide a particular service, without closing off the sector from future innovations.
It added that actors should play in their areas of core strength (comparative advantage) to engender high impact.