Central Bank of Nigeria has said that at present, Nigeria is not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012.
Exposure draft of the National draft of the Financial Inclusion Strategy Refresh released by the CBN said that the NFIS set two financial inclusion targets for the year 2020- an overall financial inclusion rate of 80 per cent of the adult population and a formal financial inclusion rate of 70 per cent of the adult population.
The apex bank said that as of 2016, just 58.4 per cent of Nigeria’s 96.4 million adults were financially served and only 48.6 per cent of all adults used formal financial services, adding that the NFIS defined an additional 15 targets for channels, products and enabling environment, as well as 22 key performance indicators (KPIs) related to these targets.
It said that although across all these measures, Nigeria lags inclusion targets, but still, promising developments have emerged, especially in recent times, as new stakeholders have joined the push for financial inclusion.
For instance,” it said in 2018 the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission signed an MoU on digital payment systems, CBN collaborated with the Nigeria Inter-Bank Settlement System (NIBSS) to create a regulatory sandbox that will allow financial technology start-ups to test solutions in a controlled environment and is partnering with the private sector to roll out a 500,000-agent network to offer basic financial services.
In addition, several players in the private sector have introduced new products and services aimed at the unserve/ government securities and statutory withdrawal, leading to a net inflow of about N1.19 trillion.
FSDH Research group while expressing optimism that the yields on the Nigeria Treasury Bills may drop in July, they said the yields on the FGN Bonds may inch up from the current levels, as government begins the implementation of the 2018 budget and the yields in the international market increase.
On the fixed income securities , the analysts expected the yield to trend marginally higher in July to attract investors, except the yields on the NTBs.
underserved, and new partnerships are driving the delivery of digital financial services more widely— programmes have been launched to boost access to finance specifically for excluded groups such as women and micro, small and mediumsized enterprises.” The CBN, however, said that the macroeconomic realities and constraints on the implementation of the NFIS have impacted the status of financial inclusion in Nigeria, adding that much has changed in the Nigerian context since the original NFIS document was written, especially regarding the economy, security and technology.
The document said that unforeseen socioeconomic shocks, such as the economic recession and the security situation in parts of Northern Nigeria, have hampered the progress of financial inclusion, stressing that Nigeria’s slow uptake of digital financial services (DFS) and limited rollout of national identity numbers (restricting the ability of financial service providers to meet know-your-customer (KYC) requirements) represent ongoing impediments.
The apex bank stated that new lessons and priorities have been identified since the inception of the NFIS, and some of the limitations of the 2012 approach have become clear.
These changes and insights according to the CBN need to be reflected in Nigeria’s strategy to more adequately address financial inclusion.
Some of the limitations of the 2012 report included a lack of prioritisation across a long list of actions and KPIs, as well as an outdated set of solutions, some of which, as innovation advanced, became increasingly suboptimal in their prescribed methods.
In the refreshed NFIS, priorities have been defined based on a new approach that is deliberately more “future-proof” in its focus on first principles, instead of specific approaches that have the potential to become obsolete.
It said the refreshed strategy is based on a first-principles approach and recognises the various core mandates that need to be managed to develop a solid, stable yet inclusive financial system and identifies the principles that need to be in place to manage and govern financial services.
The strategy outlines two overarching principles, and several topic-specific principles, addressing the priority action points.
It is critical to note these principles are to be adopted as an inseparable set, collectively important to drive financial inclusion in the Nigerian context.
It said that Strategy implementation must take all the principles into consideration, and not a just selection, noting that the refreshed metrics and targets focus on outputs and outcomes, without seeking to prescribe a specific approach to or structure of the business model.
Firstly, it said it is “an appropriately regulated level playing field supports the building and growth of a services market.
For regulation to support inclusion, it should focus on the activity, not the actor.
The object of regulation must be to prescribe what eligibility conditions a party needs to meet to provide a particular service, without closing off the sector from future innovation.
” Specifically, this entails, ensuring that the same set of regulatory requirements and conditions apply to all potential providers of a given service, regardless of their background or type of operation, taking into account that the playing field, in some cases, is currently uneven and reflecting this in targeted, activityfocused requirements.
Ensuring that regulations are balanced across various objectives—for example, the set of licensing requirements should both maintain financial system sustainability and create incentives to drive towards financial inclusion.” It said”impact is likely to be greatest when each actor focuses on activities that best suit its capacity whilst all maintain an inclusive lens as much as possible.
Given the complexity and volume of changes that need to happen to achieve financial inclusion, focus on “comparative advantage” is important.”