Customers on queue for banking transactions
Olaseni Durojaiye,
in this report, reviews the reasons adduced by the Central Bank of
Nigeria for missing out on the target to achieve 80 per cent financial
inclusion by 2020
An end seems not in sight for the
discourse in financial circles on the imperatives to bridge the wide
gulf between banked and unbanked Nigerians, which led to the adoption of
the Exposure Draft of Financial Inclusion Strategy of 2012.
This
is one of the imports of the Exposure Draft of the Financial Inclusion
Strategy Refreshed, released by the Central Bank of Nigeria recently.
The
apex bank, guided by the advantages inherent in bringing more Nigerians
into the financial pool had launched the financial inclusion strategy,
which targeted 80 per cent of Nigerians by 2020, in 2012. But
after a review of the whole process, the CBN has now admitted that the
goal was not achievable by the set date, owing to a number of factors,
even as findings has revealed that some of the factors that militated
against achieving the target, as revealed in the refreshed document, are
still around and, not likely to go away soon.
In
the exposure draft released earlier this July, the apex bank stated
that, “Nigeria is not on track to meet the 2020 targets set out in the
National Financial Inclusion Strategy (NFIS) of 2012,” and traced the
cause to economic constraints, insecurity issues in the northern part of
the country, obsolete strategies, economic recession and cumbersome
process of opening and operating a bank account.
Continuing,
the document, which was posted on the website stated: “The NFIS redraft
identified five 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
report has, however, caused a revisit of some of the encumbrances
identified by the apex bank. Of particular interest to financial experts
and operators in the nation’s financial circles are the Know Your
Client (KYC) hurdles to opening and operating a bank account; driving
adoption of cashless payment channels, particularly in
government-to-person and person-to-government payments; as well as
creating conducive environment to drive the inclusion of the excluded.
Some
of the respondents to THISDAY enquiries, while admitting that the
economic recession may have impacted negatively the set goals, disagreed with the CBN claims on the security challenges in parts of the country, particularly the North-east.
One
of them, a branch manager with one of the nation’s commercial banks
explained that, “Issue of insecurity in the North East as a factor does
not fly with me. What is the percentage of banked Nigerians in the rural
North even before the advent of the Boko Haram insurgency and what has
been the figure with the improving security situation in the area?”
Going Forward
Instructively,
the CBN is not discouraged by the failure of its initial attempt.
Determined to bridge the gap, it has adopted a two-pronged strategy
going forward, which in its projection will drive financial inclusion to
a level obtainable in some African markets like Kenya, where financial
technology market is huge.
According
to the website, the refreshed strategy is based on a first-principle
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.
Part
of the details of the refreshed document, to ensure that regulation
will focus on the activity and not the actor; a subtle preference for
the eligibility to provide the financial service without closing off the
sector from future innovation. The other leg of the strategy favours
that operators are to focus more on areas of “comparative advantage” to
achieve more impact. The CBN is reportedly inclined towards a situation
whereby mindful of the complexity and volume of changes that need to
happen, going forward; individual operators focus more on operations
that best suit their capacity even with an eye on inclusiveness as much
as possible.
Analysts React
Analysts
appeared critical of some of reasons the CBN adduced for the inability
to meet the target to harness 80 per cent of Nigerians into the banking
basket. One of them described the plan as a “pipe dream.”
Reviewing
the reason, Research and Economic Analyst with the Nigerian Economic
Summit Group (NESG), Rotimi Oyelere, agreed that economic recession
indeed impacted the target negatively, but added that the insecurity in
the North-east was not tenable even as he agreed that the KYC process of
opening and operating a bank account is cumbersome as it presently is.
Oyelere
explained that, “Theoretically, when consumption grows, saving shrink,
because people are only able to save. In a recession, people have to
re-adjust their spending patterns and this always leads to lesser
savings or no saving at all and then the ability of people to save goes a
long way in facilitating financial inclusion. Increase in prices of
consumables like food and energy, transportation cost have eroded any
given gains in nominal disposable income as such more proportionate
income will go into consumable. So recession is a tenable reason.”
Chief Executive Officer of Cowry Assets, Johnson Chukwu, however, argued that
the reason is only tenable to the extent that “anybody who lost his
source of income would not have any compelling need for banking
services, anything otherwise, I do not agree.”
In
weighing in on the security challenges in the North-east, he agreed
that it might have affected the projection given that the North-east
would have been factored into the projections and the inability to reach
the people in the areas must have impacted the projections.
According
to Chukwu, the people in the North-east were factored into the
inclusiveness projection, so when they cannot be reached they would be
subtracted from inclusiveness projection target.
However,
Chukwu and Oyelere appeared to side the rural penetration of banking
services as a major challenge towards achieving financial inclusion in
the country. Both respondents noted the absence of money deposit banks
in the rural areas, thus leading to a disinterest in banking services by
rural dwellers.
“Another
contributory factor is absence of banking services in the rural areas.
In some places people would travel five to seven kilometers before they
could get to the nearest bank. The microfinance banks that are supposed
to fill the gap are not helping matters. A farmer who goes to the farm
everyday would not see any compelling reason to travel up to seven
kilometers just to deposit his cash in a bank,” Chukwu explained. He
added that, “What is needed to drive financial inclusion is financial
literacy,” even as he agreed that operational KYC process is cumbersome
due to the absence of a unified and universally adopted means of
identification.
“The
current KYC of opening and operating a bank account is a contributory
factor. To open a bank account, you will be required to produce a valid
Drivers’ License or an International Passport; you will agree with me
that not all Nigerians have that. The third option is a Voters’ Card as a
means of identification. It would have been much easier if there were
something like a social security number, which gives a unique identity.
Government should drive towards a unique and universally adopted means
of identification,” he posited.
No comments:
Post a Comment