By Obinna Chima
The Central Bank of Nigeria (CBN) has disclosed that the country is â€œnot on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012.â€
To this end, the CBN has commenced a review of the strategy.
The central bank disclosed this in an â€œExposure Draft of the National Financial Inclusion Strategy Refresh,â€ 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 Nigeriaâ€™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 widelyâ€”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.
â€œMuch has changed in the Nigerian context since the original NFIS document was written, especially regarding the economy, security and technology.
â€œUnforeseen socioeconomic shocks, such as the economic recession and the security situation in parts of northern Nigeria, have hampered the progress of financial inclusion. Furthermore, Nigeriaâ€™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,â€ 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.
â€œThe 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.
â€œIn the refreshed NFIS, priorities have been defined based on a new approach that is deliberately more â€œfuture-proofâ€ in its focus on first principles, instead of specific approaches that have the potential to become obsolete.Â A new first-principles approach
â€œThe 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,â€ it added.