Journey Towards Payment System Vision 2020

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Nume Ekeghe assesses efforts by the Central Bank of Nigeria on the attainment of the Payment System Vision 2020

In 2007, the Central Bank of Nigeria (CBN) launched the Payment Systems Vision (PSV) 2020 whose objectives among other things include modernising the country’s payment system and ensuring that the use of electronic payment channels in the country becomes dominant. The PSV identified series of recommendations aimed at increasing the resilience of the payments system infrastructure.
With four to go, the CBN in a recent workshop in Lagos highlighted its journey towards the PSV 2020.

PSV 2020
The objectives are to facilitate economic activities by providing safe and efficient mechanisms for making and receiving payments with minimum risks to the central bank, payment service providers and end users extending the availability and usage to all sectors and geographies, banked and unbanked and conforming to internationally accepted regulatory, technical and operational standards.

The Deputy Director, Banking and Payment System Department, CBN, Mr. Musa Jimoh who spoke at the event, remarked: “Payment system is any arrangement that facilitates the transfer of monetary value among transacting parties. The most important thing is that there is exchange of value. When this process of exchanging and transferring value is automated using technology, it becomes a payment system it requires economic growth, whereby transactions are allowed to flow.

“The economy would not be completed and commerce would not be completed if you cannot exchange value. For an economy to grow there must be a formidable payment system. It also allows financial stability and trust and it promotes the monetary policy.

Speaking further on the role the central bank plays in the payment system, Jimoh said: “One of the mandates of the central bank is to promote sound financial system. On the basis of that, we have primitive role to promote payment system because payment system actually stabilises the financial system.”

He noted that CBN also develop the payment system by initiating, collaborating with stakeholders as well as promoting sound effective financial system.
Jimoh added: “We would continue as a regulator to work with stakeholders to promote financial stability in payment system and to also place Nigeria on the global map on payment system. Our payment mantra at the CBN is to have a system that is domestically utilised and internationally recognised.

“As CBN, in our own responsibility, we play several roles. As the regulator, we manage the medium of all the participants. We ensure that every institution participating in the payment system behave in a certain manner. We do that through regulations and framework guidelines that we issue. We are also an operator. We run a structure that we consider as systematically important and we don’t leave it to the hands of private sector.”

Journey towards PSV 2020
As part of efforts to achieve the PSV 2020, the CBN last year inaugurated the payment system strategy board, the payment scheme boards, the initiatives working groups and the special interest working groups.
The CBN Governor, Mr. Godwin Emefiele, who inaugurated members of the respective groups, had described the feat as another giant leap in realising the vision of facilitating economic activities.

He said it was expected to provide safe and efficient mechanisms for making and receiving payments with minimum risks to the central bank, payment service providers and end users.
Emefiele explained that members of the groups were selected to serve in any of the new initiative working groups, such that one member from each industry vertical, comprising of the user community, banks and other service providers.

“The groups will work on the principle of identifying quick wins for an initial period of two years, with an option to extend for another two-year term, subject to the level of achievements.

“These groups have laid the foundation for moving to the next level of scheme governance, which is a significant shift of responsibility from CBN to the participants in the Nigerian payments system. This no doubt will enhance self-regulation and engender the efficiency of the payments system,” he had said.

He pointed out that the having put in place the aforementioned initiatives working groups and the governance scheme boards, best practice recommends that, there should be a senior and superior body that oversees all payment systems activities.

“It is in this respect, and to provide strategic direction for the National Payments System, that the Payment Systems Strategy Board (PSSB) is being put in place.
“This body will replace the National Payment Systems Council (NPSC), and will be the pinnacle organisation for the governance, management and operation of the Nigerian Payment Systems,” he added.

The terms of reference included to provide strategic direction and drive the overall National Payments System Strategy, to provide cross-scheme priorities and resource allocation, among others.

The Board, which shall be chaired by the Governor of the CBN would have the Minister of Communication Technology; the Accountant General of the Federation; the four Deputy Governors of the CBN; the Chairmen of the four Payment Scheme Boards; independent Directors from the end-user community represented by the director generals, NACCIMA and Consumers Protection Council; the Director Generals of the Securities and Exchange Commission (SEC) and the National Identity Management Commission (NIMC).

Others include the chairmen of two sub-committees of the Bankers’ Committee (Payments Infrastructures and Financial Literacy subcommittees); the Executive Chairmen of the Nigerian Communication Commission and Federal Inland Revenue Service; the Permanent Secretary of the Ministry of Justice.

The Head/Project Manager, PSV 2020, Mr. Sam Okojere, who also spoke at the recent workshop, stressed that the cash-less policy is the future of payments in Nigeria. He also noted that the PSV 2020 initiatives are aimed instituting a robust national payment system that is nationally utilised and internationally recognised.

Experts argued that Nigeria has witnessed an impressive growth of electronic payments and a shift from dominance of cash as a means of payment. Furthermore, they listed the deployment of the real time gross settlement systems where transfer of money or securities takes place from one bank to another on a real time, the adoption of mobile money as a major channel, the implementation of the Treasury Single Account; and migration of all payment cards from magnetic stripe technology to Chip-and-PIN, otherwise known as EMV, as some of the steps towards achieving PSV 2020.

Technology Evolution
Technological advancement has no doubt played a role in aiding the payment system. Jimoh also pointed out that smartphones being used today have evolved.
“With the rapidity and changes in technology, there is no way one would still be using a phone they used four years ago because there are services social media and banks provide and if you don’t upgrade, you cannot move. Technology changes and at the CBN, we also have to move alongside with changes in technology with several initiatives. In 2007, nobody was talking about mobile money.”

“Things have changed which is why our payment system PSV 2020 which was crafted in 2007 has consistently changed alongside changes in technology. In 2013, we did a major revision because there were certain things that had happen between 2007 till 2013. One of the major changes was our commitment in Mexico on financial inclusion.”

Also, the acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor stressed that the national vision is to be one of the 20 largest economies in the world by the year 2020, adding that as a result of that, the country must not be found lagging in any area.

“The security systems on our cards are one of the best in the world. Our Monetary policy committee is the most transparent in the world; we publish the notes of all members,” he added.