‘Improve infrastructure, banking sector for financial inclusion to thrive’
• Collateral registry will open more opportunities, says CBN
Rising from a less impressive progress report on financial inclusion in Nigeria, stakeholders have reiterated the need to improve the nation’s infrastructure base, and rebuild lost confidence in the banking sector.
The 2016 yearly report of National Financial Inclusion Strategy Implementation, recently released, showed the country’s status as stagnant since 2014, and decreasing in the overall inclusion rate.
The development has cast doubt over the achievement of targeted 80 per cent financial inclusion level in Nigeria by 2020, as slow migration to the formal sector by Nigerian adults that were captured in the informal sector, estimated at 60.5 per cent in 2014, is now 58.4 per cent in 2016.
Consequently, the expected leap in the contribution of the financial sector to the Gross Domestic Product and its support for the fight against extreme poverty may fall far below expectations.
This is also coming despite several international commitments, interventions by regulatory authorities, establishment of specialised institutions, and buy-in by some local financial institutions.
The President and Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, admitted that the efforts to deepen financial inclusion in the country is a “quick fix”, as fundamental enablers are far from adequacy.
For him, three basic issues of infrastructure, product development and rebuilding of confidence are in high demand, but at different poor levels of supply.“For now, there is a challenge of infrastructure and you know the financial inclusion is driven by it. It has been on the table for long, but there is need to tackle it once for all time.
“We need to create enabling environment for people to have confidence in the banking system, not fear of financial crisis. But banks would also need to develop appropriate products and increase skills of workers to support micro businesses and reach out to rural areas.“The system is in search of these and without deliberate attempt to solve them, we may still remain with poor outcomes for a long time,” he said.
A customer of one of the top three banks in Nigeria, who identified himself as David Okenwa, told The Guardian that slow adoption seamless technology and connection problem, although now improving, are major setbacks to financial inclusion.“Many people are still afraid of getting into the web of wrong debit, fraud and disappointment from the technology and platform that the financial institutions are using. The time it takes to solve some issues associated banking transactions is worrisome and discouraging,” he said.
An analyst with one of the top five banks, alleged that government’s inconsistencies are part of the faltering financial inclusion figures, because they have promoted it with mere words that followed by action.“I still see government agencies do cash-based transactions in this level of financial inclusion. How can we explain the huge discoveries of cash in secluded apartments?” he queried.
Meanwhile, the Central Bank of Nigeria (CBN), said the National Collateral Registry (NCR) scheme will be opening more business opportunities, and contribute meaningfully to financial inclusion.The bank’s position was made known by its Acting Director, Corporate Communications, Isaac Okorafor, who said that NCR would soon move to the next phase of its mandate of easing business practices in Nigeria.
According to him, the efforts being put into strengthening the NCR by the CBN were a fall out of the recent World Bank report, which indicated Nigeria’s meteoric rise in the “Ease of Doing Business Index”.
Okorafor stressed that the bank would do all within its mandate to strengthen the NCR in order to improve Nigeria’s current ranking of 6th on the “Getting Access to Credit” index.
On the role of the bank in ensuring a robust financial sector, he said the reduction of information asymmetry had assisted lenders in making sound decisions on credit solutions and ultimately improved access to credit by Micro, Small and Medium Enterprises (MSMEs).“Since its inception in 2016, the NCR has acted as a catalyst to credit improvement by significantly improving the credit culture in the Nigerian banking system.
“The NCR equally made it possible for MSMEs to leverage significant portion of their moveable assets as collateral for loans from the financial institutions to grow their businesses,” he said.
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