How FSS 2020 spiked revolution in financial sector
It was Goldman Sach who first predicted that Nigeria’s economy would be among the top 20 economies of the world by 2020. Excited by that prediction, the Federal Government began to reform its development strategies.
Consequently, the Financial System Strategy (FSS 2020) was born. Its core mandate was to fasttrack and enhance the economic growth and development of Nigeria’s financial system.
The Central Bank of Nigeria (CBN), in collaboration with other key financial sector regulators, in 2006, put together local and international consultants to craft a strategy that would see to the realisation of the reform plans; hence the birth of FSS2020. The CBN became the key driver of FSS2020 and coordinating other implementing agents.
FSS2020 became an integral part of the national vision that was designed and developed with strategic objectives that would enable the Nigerian economy become one of the world’s safest and fastest growing economies by the year 2020.
In line with the vision, a report that would make Nigeria one of the top 20 economies by 2020 was produced. The report is the culmination of initiatives that were undertaken by Nigeria’s financial services industry, coordinated by the CBN in collaboration with other regulators and stakeholders.
The FSS 2020 stakeholders at take-off included the Federal Ministry of Finance, National Assembly; Securities and Exchange Commission (SEC); Nigerian Deposit Insurance Corporation (NDIC); National Insurance Commission (NAICOM); National Pension Commission (PENCOM); Federal Inland Revenue Service (FIRS); Nigeria Insurers Association (NIA); Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); Manufacturers Association of Nigeria (MAN); Debt Management Office (DMO); Nigerian Stock Exchange (NSE); Deposit Money Banks (DMBs); Federal Mortgage Bank of Nigeria (FMBN); Bank of Industry (BOI); Nigeria Export Import Bank (NEXIM); Bank of Agriculture (BOA) and Development Partners.
However, the key implementing institutions are CBN, NDIC, SEC, NAICOM, PENCOM, DMO, NSE, Federal Mortgage Bank of Nigeria (FMBN), FIRS, the Small and Medium Enterprises Development Agency of Nigeria and Financial Reporting Council.
In brief, the FSS 2020 framework is based on the recognition of the need for financial deepening/ growth, integration with the global economy and economic developments. FSS 2020 was, therefore, designed to continuously update, enhance and enrich the efficiency of the financial sector in line with international best practices.
The Financial System Strategy 2020 blueprint was used to kick-start the development and transformation of Nigeria’s financial sector into a growth catalyst, as well as engineer Nigeria’s evolution into an international financial centre.
According to Mr. Suleyman Mohammed, the director, FSS 2020, in a presentation titled an Overview of FSS2020, at the CBN retreat for financial correspondents and business editors held in Sokoto in March, 2017, the continuous interplay of key players in the financial system in line with global best practice is deepening Nigeria’s economy and making it one of the top 20s by 2020.
He noted that the implementing institutions of FSS2020 are required to collaborate freely, using the platform for the overall interest of the country’s economic growth and development.
The provision of infrastructure by government and building of capacity to bridge skill gaps and competencies is one of the critical enablers for essentials for the realisation of the FSS2020 objectives, he said.
The FSS 2020 saw profound coordination and direction from Alhaji Suleiman Barau, the deputy governor of the CBN, in charge of corporate services. He also coordinates the FSS 220 project. Speaking on the milestones so far achieved and the challenges of FSS 2020 under his coordination, he said, “In measuring the milestone of FSS2020 we have to look at them from the existing sectors perspectives. For the mortgage sector, a robust secondary mortgage system has been created with the CBN and the mortgage operators clearly streamlined, which has led to the establishment of the Nigeria Mortgage Refinancing Company (NMRC).” “Again, the uniform underwriting standard, which was nonexistent, has now been codified and introduced in the mortgage industry to regulate their practise. The Financial System Strategy 2020 blueprint was used to kick-start the development and transformation of Nigeria’s financial sector into a growth catalyst, as well as engineer Nigeria’s evolution into an international financial centre In addition, the framework for the Mortgage Asset Registry has been developed to capture mortgage transactions on a common IT platform.
“The CBN has also introduced the categorisation of Primary Mortgage Banks into national, state and local governments. The pension asset has grown from about N3 trillion in 2013 to N6.02 trillion in 2017. The Nigerian Sovereign Investment Authority (NSIA) has been appointed advisers to manage the deployment of pension funds into long term infrastructure deployment.
“Through sensitisation and mass advocacy, PenCom has stepped up prompt settlement of pension claims for retirees, and is embarking on massive technical trainings using the IT platform to ensure prompt service delivery and implementation of the micro pension scheme. For the insurance sector, the micro insurance (takaful) and compulsory insurance schemes are being implemented,” Barau said.
He also said, “There is improvement in the settlement of insurance claims of policy holders. The trust of holders, which was at its lowest ebb, has now been restored. “There is also capacity building of insurance and inclusion of insurance in the school curriculum for prompt service delivery.”
On the MSME he said, “There are several interventions to improve funding and access to finance for small businesses. There is also the creation of the National Collateral Registry for lending and access to finance by SMEs is a huge milestone, especially with the passage of the Secured Lending Using Movable Assets bill by the National Assembly.”
Notwithstanding these milestones, he said there were some challenges militating against the achievements of FSS 2020 objectives, including but not limited to the following: funding and logistics; technical challenges; human capital development, especially the inability to attract talent from abroad to Nigeria; delays in the passage of the identified financial sector bills by the National Assembly; policy inconsistency and lack of continuity.
The deputy governor further explained that the FSS 2020 initiatives were carefully tailored to align with the mandate of the relevant institutions that have the responsibility to implement the identified initiatives within the realm of its objectives. For instance, he explained that, “The CBN has achieved a lot in the areas of Payment System Vision 2020, which is an initiative of the FSS 2020, along with the cashless policy of the Federal Government. In the same vein, the SEC has been successful in the implementation of the e-dividend policy, which has always been one of the initiatives FSS 2020 had been advocating; and so many others.”
He further noted, “The funding of FSS 2020 had been solely borne by the CBN until recently when some of the implementing institutions like PenCom have started making contributions to the funding of the FSS 2020 activities, with others showing interest to do same. Most of the implementing institutions have been providing technical assistance to the running of the programme in the areas they are more specialised.
On what the government can do to make the implementation of the initiatives more successful, he said the Federal Government should “initiate policies that will ease the process of doing business in Nigeria and encourage investment within the country; ensure that there is enabling infrastructure and guarantee maximum peace and security in the country,” which the government is already responding to.
Alhaji Barau said the development plan of government must have bearing with the needs and realities of the citizenry, especially on issues of unemployment, microeconomic stability and capacity building in all sectors of the economy.
On the whole, the FSS 2020 can be said to have spiked revolutions in key sectors of the economy, especially financial services; and one can only hope for better results as 2020 draws closer.