As 2020 draws closer, the Central Bank of Nigeria (CBN) and operators in the financial sector are stepping up efforts to ensure that the country succeeds in achieving its 80 per cent financial inclusion target.
Given that surveys conducted by the development finance organization, the Enhancing Financial Innovation and Access (EFInA), had shown that Nigeria’s financial exclusion rate reduced from 53.0 per cent in 2008 to 46.3 per cent in 2010, the Central Bank of Nigeria (CBN) and the stakeholders who collaborated with it to launch the National Financial Inclusion Strategy on 23rd October, 2012, must have been quite optimistic that they would meet their goals.
Principally aimed at reducing the country’s financial exclusion rate to 20per cent by 2020, the strategy also set targets such as, increasing the percentage of adult Nigerians with access to payment services from 21.6 per cent in 2010 to 70per cent in 2020; increasing the number of those with access to savings from 24.0per cent to 60per cent; increasing access to credit from 2per cent to 40per cent, insurance from 1 per cent to 40per cent and pensions from 5per cent to 40per cent, within the same period.
Similarly, under the strategy, channels for delivering financial services were equally targeted to improve, with Deposit Money Bank (DMB) branches targeted to increase from 6.8 units per 100,000 adults in 2010 to 7.6 units per 100,000 adults in 2020, microfinance bank branches to increase from 2.9 units to 5.5 units per 100,000 adults in 2020 and Automated Teller Machines (ATMs) from 11.8 units to 203.6 units per 100,000 adults in 2020.
Also targeted to improve were Point of Sale terminals (POS) from 13.3 units to 850 units per 100,000 adults between 2010 and 2020 and mobile agents from 0 to 62 units, for the same number of adults and within the same period. According to the CBN, “the targets were based on bench marking exercise carried out with peer countries, while also taking into consideration critical growth factors in the Nigerian environment.”
However, at a workshop organised by the banking watchdog last November, the chair of EFInA’s Board, Ms. Modupe Ladipo, disclosed that 40.1 million Nigerian adults (41.6per cent of the adult population) were still financially excluded, that is, without any form of access to financial services.
She identified factors, which, according to EFInA, are mainly responsible for increasing the financially excluded population in Nigeria.
Specifically, she said: “Generally, income levels in Nigeria are very low. 19.6per cent of Nigerians mainly get their source of income from non-farming business while 19.1per cent get theirs from family business (subsistence or commercial farming).”
Pointing out that only 4.2per cent of Nigeria’s adult population get their source of income from the formal sector, the EFInA boss also revealed that the organisation’s surveys indicate that the Northern region has a high level of financial exclusion due to massive job losses, limited resources and no basic facilities for opening a bank account.
‘Target still achievable’
Despite these challenges, CBN Governor, Mr. Godwin Emefiele, as at last December, was optimistic that the country could still achieve its 80per cent financial inclusion target by 2020.
Emefiele, who stated this while addressing a joint meeting of the CBN and other agencies involved in the implementation of the Financial System Strategy 2020 (FSS 2020) in Lagos, contended that with strong collaboration, the country will leapfrog its current challenges and could add several millions to the formal financial sector.
The Financial System Strategy 2020 was conceptualized in 2006 by the CBN in collaboration with other key financial sector regulators to fast-track the growth and development of Nigeria’s financial system as an integral part of the national vision 2020.
Indeed, in its bid to ensure that the financial inclusion target is met, the CBN, last January, inaugurated the Financial Inclusion State Steering Committee( FISSCO) inauguration of the financial Inclusion State Steering Committee (FISSCO).
Speaking at the event, the CBN Abuja Branch Controller, Mrs. Elizabeth Agu, emphasised that the Apex Bank was optimistic that the target would be met. She disclosed that the regulator had set state-by-state targets for the 21 commercial banks and 942 micro finance banks in the country to ensure that every Nigerian adult has access to financial services.
She said CBN had broken down the target state-by-state: “to ensure that the masses and people at the grassroot have access to financial services such as payments, savings, credit, insurance and pension.”
She explained that the target for banks was set because: “the cost-cutting and diverse nature of the targeted services require collaborative efforts by stakeholders in the financial sector, especially at the grassroots. In particular, financial service providers at the state level are pertinent to achieving at least 80 per cent inclusion of adult population by the year 2020.”
According to her: “To achieve this, each of the Deposit Money Banks (DMBs), operating in the FCT have the target to get a minimum of 1,500 new savings customers by 2018, the Micro Finance Banks, MFBs, have the target to open at least 2,500 new accounts.
The DMBs in the FCT have to also offer credit to at least 600 fresh individuals and for the MFBs, they have the target of ensuring that at least 1,000 customers are offered fresh credit.”
However, arguably the most significant initiative introduced by the industry in recent months, as part of efforts to boost financial inclusion, was the CBN’s collaboration with DMBs, licensed mobile money operators and super agents to unveil a scheme tagged, Shared Agent Network Expansion Facilities (SANEF).
The initiative, launched in Lagos late last month, entails an aggressive roll out of 500,000 agent network to offer basic financial services, such as Cash-in, Cash-out, funds transfer, bill payments, airtime purchase, government disbursements as well as remote enrolment on BMS Infrastructure (BVN) to an estimated 50 million Nigerians that are currently under-banked.
Chairman, Body of Banks’ Chief Executive Officers, and Managing Director/Chief Executive Officer, Access Bank Plc, Mr. Herbert Wigwe, who along with some other bank CEOs, briefed journalists at the event, explained the scheme reflects the commitment of all the parties involved: “to aggressively pursue the CBN 2020 Financial Inclusion target in an integrated way with minimal systemic risk to the financial system.
This initiative will also generate 500,000 new jobs over the next two years.”
Also speaking, Managing Director/ CEO, GTBank Plc, Mr. Segun Agbaje said: “Under the agreement, 10 licensed mobile money operators and super agents are expected to immediately deploy financial services agents’ outlets in under-served urban and rural areas in Nigeria, with priority in the Northern geo-political zones where financial exclusion is most predominant.
The approved CBN-Bankers Committee’s roll-out ratio is as follows: North East, 30 percent; North West, 30 percent, North Central, 20 percent, South South, 7.5 percent; South East, 7.5 percent and South West, 5.0 percent.”
Explaining the role of the CBN and banks, Managing Director/CEO, UBA Plc, Mr. Kennedy Uzoka, stated: “According to the plan, the CBN and deposit money banks will over the next few months also roll out new initiatives, products and services to accelerate and deepen financial inclusion in Nigeria.
Over the next three years, Nigerian banks aim to on-board and formally bank 60 million additional Nigerians, an average of 20 million yearly as well as enrol 40 million Nigerians for BVN.
To this end, renewed focus will be given to driving low cost digital access, broadening financial literacy campaigns, and creating micro loans, micro insurance, micro investment products for benefit of excluded, under-served and low income Nigerians” In her remarks, the MD/CEO, Standard Chartered Bank, Mrs. Bola Adesola, disclosed : “Some of the prequalified CBN licensed operators include, Capricorn Digital Limited, e-Tranzact Limited, Innovectives Limited, Inlaks Limited, Interswitch financial Inclusion Services Limited, Paga Tech Limited and Unified Payments Nigeria Plc.”
Commenting on behalf of the mobile money operators, Founder and CEO of Paga, Mr. Tayo Oviosu, said: “To significantly grow financial inclusion in Nigeria we need to offer truly effective digital financial services that operate on all mobile telecom networks and a robust nationwide network of agents for convenient access.
The Shared Agent Network Expansion programme supports our plans to rapidly scale up the agent network over the next year. With this expansion programme, the entire financial industry will reach deeper into even more communities and give millions of Nigerians convenient access to financial services.”
However, reacting to the introduction of the Shared Agent Network Expansion Facilities (SANEF), a financial analyst, Mr. Sam Halim, said:
“It is a laudable initiative, but it could be hindered by the country’s huge infrastructure deficit. For instance, without adequate and regular supply of power, the banking industry will continue to face challenges leveraging technology to promote financial inclusion.”
In addition, as a banking industry source argued, as long as most Nigerians continue to live in extreme poverty, they would have no real desire for access to formal financial services.
Thus, it would seem that there is a slim chance of the country achieving its 80 per cent financial inclusion target by 2020.