CBN throws in the towel, says 80% financial inclusion target not feasible - BUSINESSDAY

JULY 11, 2018

by Endurance Okafor & Oluwatosin Dokunmu


The Central Bank of Nigeria (CBN) seems to have given up its quest to meet the 80 percent set financial inclusion target which was projected to be achieved by the year 2020.

The apex bank, in its refreshed exposure draft on Financial Inclusion asserts that the target may not be feasible as stated in the National Financial Inclusion Strategy (NFIS) of 2012.

The economic recession in the country as well as the insecurity in northern Nigeria is said to have hampered the progress of financial inclusion in the country, as they were never anticipated in the course of drafting the NFIS in 2012.

“Nigeria is not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012,” the apex bank disclosed in its website on Friday, 6 July 2018. The impediments to achieving this target have been ascribed to economic constraints, insecurity issues in the northern part of Nigeria, obsolete strategies, among others.

Dolapo Ashiru, a Lagos-based financial analyst said the CBN’s target is supposed to be based on some certain assumptions, and as such the failure of the apex bank had led to the excuses stated as to why it cannot meet its target.

“North East Nigeria is not the whole of Nigeria, if they had driven financial inclusion in other parts of Nigeria, that could have made up for the exclusion rate witnessed in the northern part of Africa’s largest economy which is as a result of the security crisis,” Ashiru said in a phone response.

According to CBN’s 2016 financial inclusion figures, just 58.4 percent of Nigerian adults were financially included with only 48.6 percent using formal financial services. This showed that Nigeria lagged in its inclusion targets of 80 percent (overall financial inclusion rate) and 70 percent (formal financial inclusion rate) of Nigerian adults by 2020.

The NFIS defined 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets, but Nigeria still lags across all these measures.

Also, the slow uptake of digital financial services and limited rollout of national identity numbers restricted financial service providers to meet the know-your-customer (KYC) requirements, as compiled from the CBN’s statement.

Ayo Akinwunmi, Head of Research at FSDH Merchant Bank said it is a wakeup call for the federal government of Nigeria because if they are saying the insecurity in the northern part of the country is one of the reasons as to why they cannot achieve the set target, it means that the crisis is beginning to have negative impact on the Nigerian economy.

“This is because CBN cannot resolve that crisis and a lot of banks are closing down from those areas and the economic activities are also nothing to write home about in those places. So if the crisis cannot make CBN to attain 80 percent target by 2020 it implies that it is having another dimension of risk to the Nigerian economy,” Akinwunmi said.


The 2012 NFIS draft was also limited by a lack of prioritisation of actions and the KPIs as well as obsolete set of solutions which were suboptimal in achieving the desired targets. These limitations informed a refreshed NFIS which were drafted to be more ‘future-proof’ in order to avoid it from becoming obsolete, according to the CBN.

“The constraints pointed out as to why they are not being able to meet the set target still exist, they existed 10 years ago, they also existed 20 year ago, so if you are saying only when you have overcome those challenges that is when you will obtain full financial inclusion and literacy, I do not think so,  as financial inclusion means making payments and having access to financial services and products and not necessarily with a bank account,” Bismarck Rewane, MD of Financial Derivatives  explained.

Meanwhile, CBN recently signed a Memorandum of Understanding (MoU) with Nigerian Communications Commission (NCC) on digital payment systems while collaborating with Nigeria Inter-Bank Settlement System (NIBSS) to roll out 500,000 shared-agent network to offer basic financial services to the excluded, but all these have failed to make the 80 percent inclusion target feasible.

The apex bank has therefore outlined new strategies that will help drive financial inclusion to a position like its African peers.

The new strategies adopted were based on two major principles. Firstly, regulations should be focused on the activity and not the actor; defining the eligibility to provide the financial service without closing off the sector from future innovation.

Secondly, actors are to focus more on the activities they possess ‘comparative advantage’ in to achieve the greatest impact. Given the complexity and volume of changes that need to happen, individual actors are to focus more on the activities that best suit their capacity whilst maintaining an inclusive lens as much as possible.

Rewane of Financial Derivatives said if Nigeria wants to do anything, the country will do it irrespective, and as such including more Nigerians into the financial cycle can be done, and whatever has been done so far can also be accelerated by bringing more people into the financial inclusion cycle.

“Just look at the number of telephone lines compared to the number of bank accounts compared to the number of BVN and you will see that disparity,” he added.

The NFIS redraft identified 5 crucial priorities to increasing financial inclusion in the country, with emphasis on; creating a conducive environment for the expansion of DFS, enabling the rapid growth of agent networks with nationwide reach, reducing KYC hurdles to opening and operating a bank account, creating an environment conducive to serve the most excluded and driving adoption of cashless payment channels, particularly in government-to-person and person-to-government payments.

The apex bank said 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.

“The refreshed strategy is based on a first-principles approach. It recognises the various core mandates that need to be managed to develop a solid, stable yet inclusive financial system and identifies the principles that need to be in place to manage and govern financial services,” it added.

On the best strategy to help include more Nigerians into the financial cycle and the solution to solving the exclusion problem in Nigeria Rewane concluded by saying  “more people should be brought into the financial inclusion cycle as this can be done by not necessarily through bank account.”


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