Why can’t BVN be classless?
A recent report that Bank Verification Number (BVN) introduced into the Nigerian banking industry in 2014 to serve as a unique identifier of bank customers in the country under a centralised identity system has been tinkered with by the Bankers Committee chaired by the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele is bound to raise some curiosities at this time.
According reports, the BVN is now going to be in two classes. The existing BVN is to be known as BVN Premium (the grade one) while the second grade to be introduced is to be known, as BVN Lite 2.0. Essentially, BVN Lite 2.0 is said to be targeted at people in the rural communities who have mobile telephones but are financially excluded and need to be included. The BVN Lite, according to Emefiele, will enable them to use their telephones to conduct basic financial and not just banking, services including insurance or anything in terms of finance. Ultimately, the intention is to make more Nigerians financially included so that the nation’s Financial Inclusion Programme will receive a boost by increasing the rate of the financially included and thus, reducing the exclusion rate.
In this pursuit, transactions to be conducted will be reclassified and segregated such that there will be limit(s) to the types of transactions a BVN Lite customer can do in terms of deposit and loans. The Bankers Committee and the Nigerian Communications Commission (NCC) are reported to be collaborating to make this a reality.
Many questions have, however, arisen from this new development about BVN. First, is the creation of BVN Lite 2.0 the most urgent and important challenge that should engage the attention of the Bankers Committee and the CBN in view of all the multifaceted challenges (especially in terms of rising incidences of frauds, delinquent credit facilities, cyber attacks, consumer complaints against excessive bank charges, among others) being faced by the Nigerian banking industry? How will mobile banking alone in rural Nigeria (with little or no viable economic and business activities), give recognisable impetus to financial inclusion since financial inclusiveness in the cities, urban communities and, of course, Nigeria’s economic and business centres where brick and mortar banks as well as mobile, electronic and other forms of banking services abound, has raised the number of bank customers to only about 40 million in the last five years that BVN was introduced? What is the guarantee that any expected growth in financial inclusion driven from the rural communities with mobile telephones that are hardly funded and operational, will be achieved? In any case, will mere nomenclature of BVN Lite 2.0 cause a growth in financial inclusion rate without the requisite motivating ingredients for market or business expansion? When any of the BVN Premium or BVN Lite customers relocates to the rural or urban communities, respectively, what will happen to his or her classification? What are the likely risks that this new arrangement will pose in the system given, especially, the need for effective management and maintenance of the centralised BVN System? What are the possibilities of compromising the system and how will such be prevented or mitigated?
It is worth mentioning that at the inception of BVN in the banking system, Nigerians were not informed that it would get to a stage when it would become a status or grade issue in the system. Today, however, the CBN and the Bankers Committee have decided to use BVN to situate individuals where they believe they rightly belong in respect of their banking and financial operational locations as well as capabilities. Nigerians were also not informed that the BVN would be operated in phases as has now been announced that it has entered the second phase. No one therefore, knows when it will become due for subsequent unknown phases and perhaps, new grades.
Already, this country is confronted with different types of identifiers including, Voter Cards, Passport, Driver’s Licence, National Identity Card, and other identity cards issued by various institutions and organisations such as telecommunication firms. Ordinarily, the National Identity Card should suffice for the multiple identification cards. Indeed, introducing more will definitely continue to create more confusion and associated challenges in the nation. Even, with all of the existing identifiers, the Federal Government has come up with another – Tax Identification Number (TIN). Except that this country appears to derive joy in expending scarce resources unnecessarily otherwise, with the advent of modern technology, all these and other splinters of identifiers in the country can be collapsed into one to achieve the need for an all-purpose national instrument for the identification of Nigerians.
Finally, as the Bankers Committee plans that its BVN will facilitate, not only banking but also financial transactions like insurance, it becomes germane to ask how many inter-sectoral discussions, plans and strategies have been between the Bankers Committee/Central Bank of Nigeria, National Insurance Commission, Securities and Exchange Commission, Nigerian Stock Exchange, National Pension Commission and other relevant bodies in the financial system. Except the relevant sectoral regulators, supervisors and operators in the banking and finance industry agree and work towards a common identifier, it is highly presumptuous for the Bankers Committee and CBN to believe that its BVN, whether Premium or Lite or both, will be adopted by all sectors in the Nigerian financial services industry.
In view of the foregoing, there is just one word that should serve, for now, on the subject at issue: caution. The banking industry – regulators, supervisors and operators, encapsulated in the Bankers Committee, should tread with caution in introducing a second-class grade of BVN. It is obviously, neither auspicious nor healthy. Indeed, in rural branches of banks, there is the likelihood that some, if not many, bank customers already have the BVN identifier against their names. Since the main aim of this second phase is to raise the level of financial inclusion, there is hardly any doubt that, with increased rate of well focused and directed public awareness programmes and activities as well as a better performing economy, a higher rate of financial inclusiveness can be attained. And making this possible is not a job for the banking sector alone. All constituent parts of the Nigerian financial system should be visibly involved.
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