THISDAY

2020 Financial Inclusion Target Not Feasible, Says CBN

- Obinna Chima

The Central Bank of Nigeria (CBN) has disclosed that the country is “not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012.”

To this end, the CBN has commenced a review of the strategy.

The central bank disclosed this in an “Exposure Draft of the National Financial Inclusion Strategy Refresh,” that was posted on its website at the weekend.

The NFIS had 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.

However, 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.

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. But across all these measures, Nigeria lagged inclusion targets.

But, some developmen­ts have emerged, especially in recent times, as new stakeholde­rs have joined the push for financial inclusion.

For instance, the CBN and the Nigerian Communicat­ions Commission signed an MoU on digital payment systems in 2018.

Also, same year, the CBN collaborat­ed with the Nigeria Interbank 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/ 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 medium-sized enterprise­s.

The central bank however listed some issues constraini­ng the growth of financial inclusion to include macroecono­mic realities.

“Much has changed in the Nigerian context since the original NFIS document was written, especially regarding the economy, security and technology.

“Unforeseen socioecono­mic shocks, such as the economic recession and the security situation in parts of northern Nigeria, have hampered the progress of financial inclusion. Furthermor­e, 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,” it stated.

According to the CBN, 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.

Therefore, it noted that such changes and insights need to be reflected in the new strategy it is working on to more adequately address financial inclusion.

“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. A new first-principles approach

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