Nigerian government transfers USD227m annually through digital payment - BUSINESSDAY
Nigerian government transferred up to USD227 million per annum through digital payment as adoption of digital payments platforms cost up to 85-95 percent less than serving the unserved and underserved in a banking hall.
The Central Bank of Nigeria (CBN) disclosed this in a revised National Financial Inclusion Strategy (NFIS) released on Wednesday on its website.
The transfer, which is in the order of Government to People (G2P) and People to Government (P2G) payments present an opportunity to drive financial inclusion if the transactions are done on digital platforms that are linked to bank accounts or mobile wallets.
To drive adoption of digitised G2P/P2G payments, there is need to ensure that government achieves 70 percent digitization of G2P/P2G payments at all levels.
Currently, only 60 percent of Federal Government flows have been digitised. This rate is lower at the state government level and lowest at the level of local government. Local governments have the strongest interface with the financially unserved and underserved. If they lead in the adoption of digital payment, the potential for a trickle-down effect is high.
One way to achieve this is to push for compulsory digitisation of all state and local government payments, including all social benefit transfers.
According to the CBN, the major goal of this revised strategy is to reduce the proportion of adult Nigerians that are financially excluded to 20 percent in year 2020 from it baseline figure of 46.3 percent in 2010.
The revised strategy revealed that 46.5 percent of the females, 52.5 percent of those in rural areas and 53.5 percent of youth aged 18 to 25, 70 percent of those from the North West and 62 percent of those from the North East were excluded in 2016.
The NFIS was launched in 2012 with 70 strategic recommendations, targets for overall financial inclusion as well as targets for products, channels and enablers.
Six years after the release of the NFIS, progress in financial inclusion had been adversely affected by unforeseen socioeconomic factors such as the economic recession and security situation in parts of Northern Nigeria.
Slow uptake of DFS and the limited rollout of national identity numbers which restricted the ability of financial service providers to meet KYC requirements equally contributed to the sub-optimal progress recorded.
Despite the fact that Nigeria is yet to attain its financial inclusion goals, some recent developments may help drive inclusion over the next two years.