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CBN and financial inclusion growth speed

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It is quite incredible that the Central Bank of Nigeria (CBN) is telling citizens to be hopeless in 2017 so that they will not be disappointed in 2020 when its own policy instrument could fall through.

This is sadly the apex bank’s recent prognostication on the National Financial Inclusion Growth Strategy (NFIGS) that should ordinarily touch off a glimmer of rising hope. The origin of pessimism: With less than three years to the target date of 2020 when, according to the CBN’s initiated NFIGS, when 70 per cent of Nigerians would be financially included in the economy, the CBN reportedly lamented a drop in the country’s financial inclusion (FI) growth rate when it stated that the possibility of meeting the targets come 2020 looked very dicey.

Although the report at a recent conference organised by Interswitch Nigeria Plc, did not give the rate of decline, it emphasized that the drop was more “prevalent in the North-East and North-West regions of the country.” According to the dismal report, the main reasons for the decline included poor economic situation in the country and poor security condition in the North-East and North-West regions. As a solution, the CBN reportedly called for collaborative efforts to drive the programme.

If the intention of CBN was to use the platform of the conference to give a status report on the National Financial Inclusion Strategy, it should not be difficult to award the apex banking regulator a mark tending towards zero. Given the all-encompassing nature of the strategy that was launched in 2012 and its importance to the national economy, enough reasons abound for the CBN to have provided a detailed evaluation report to facilitate all stakeholders’ understanding and appreciation of the current status. That way the apex bank would be able to use the situation report to propose practical steps towards reaching its target in the remaining three years.

Besides, although the reasons given for the decline in growth rate and the proposed need for collaboration as solution are both logical, they are narrow in scope granting what is apparently prevalent in today’s Nigeria.

The fundamental objective is for the CBN and other stakeholders to implement the National Financial Inclusion Strategy to “reduce the percentage of adult Nigerians that are excluded from financial services from 46.3% in 2010 to 20% by 2020”. According to CBN, achieving this target would increase the number of Nigerians included in the formal sector from 30% in 2010 to 70% by 2020. Ultimately however, full FI will be achieved “when adults have easy access to a broad range of financial services that meet their needs and are provided at affordable cost”.

In the strategy are highlighted the FI stakeholders (banks, other financial institutions, insurance industry, financial regulators, technology/telecommunication firms, public institutions and development partners/experts). Targets, responsibilities and strategies were created for each of the stakeholders towards ensuring success of the programme. For instance, CBN, deposit money banks, development finance institutions and microfinance banks were respectively assigned 14, 9, 3 and 8 responsibilities. Similarly, National Insurance Commission (NAICOM), Insurance companies, National Pension Commission (PENCOM) and Nigeria Communications Commission (NCC) had 6, 3, 5 and 3, respectively. Even, government, as a stakeholder, was assigned six responsibilities while some other stakeholders had various assigned roles to play.

Furthermore, the strategy identified challenges to FI in the country, which generally include issues bordering on accessibility, eligibility and financial literacy. In specific terms, income levels, unemployment, distance to branches of banks, lack of trust, high cost of conducting financial transactions and cumbersome regulatory requirements, have also been identified. Indeed, that strategy document is quite elaborate and encompassing that it raises the hopes of most Nigerians that the rate of financial inclusion in the country would from then leap upwards.

Consequent on the foregoing therefore, if the CBN wanted to update stakeholders on the status of the FI project, it ought to have holistically evaluated the performance against national and sectoral set targets and stakeholder-assigned responsibilities. To do otherwise leaves serious gaps in the performance review. And a casual event would not have been the datelines.

But should the CBN or indeed, any other stakeholders be surprised that rather than growth, decline was recorded in FI rate? In truth, nothing better should have been expected as the identified barriers to FI are not just around but have worsened. To appreciate the situation, one must think of the present levels of poverty, unemployment, insecurity, income inequality and illiteracy as well as the deepening lack of confidence in financial institutions by consumers, to mention a few.

Apart from the already highlighted contributions by the poor economic situation of the country, the other key issue is whether all the stakeholders delivered on their assigned responsibilities? For example, did the government “set aside part of the national budget for social pensions and a minimum guaranteed pension”? Did the CBN “educate stakeholders on regulatory changes”? Did NAICOM “define and implement insurance literacy programmes” and “incentivize insurance companies to develop micro-insurance products”? Did PENCOM “amend regulations to allow inclusion of smaller firms and cooperatives in the current pension scheme”? Perhaps, most importantly, did all the stakeholders promote FI? If they did not, why would anyone expect realisation of the set targets and objectives?

No doubt, many kilometers need to be covered by the country if FI will be achieved. While the people will need to recover from their significantly eroded financial values due to huge currency devaluation, high inflation and interest rates occasioned by economic recession, all the stakeholders with assigned responsibilities under the strategy must strive to deliver on them. Additionally, enough resources need to be deployed to promote FI across the country especially at the grassroots while prevailing insecurity needs to be effectively addressed. For reasons of passage of time and changes in the environment, the strategy and its delivery methods may also need to be reviewed.

Finally, FI will make no sense to citizens whose income cannot meet their basic day-to-day needs. Thus, the people must be empowered to earn income that will compel them to find the use of financial institutions necessary. Therefore, the regularly advertised diversification of the economy into positive value chain businesses must be tenaciously pursued, lest the aspiration of achieving financial inclusion growth in the country will remain a mirage.


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