Godwin Emefiele, CBN Governor


The Central Bank of Nigeria (CBN) is not shaking in its resolve to achieve 80 per cent financial inclusion in the country by the year 2020, as recent developments within the activities of the apex bank have shown.

Late last month, the CBN governor, Mr. Godwin Emefilele, reaffirmed that having moved from 42 per cent to about 65 per cent financial inclusion within 18 months, Nigeria can achieve 80 per cent come next year if the banks and telecoms companies cooperate with the apex bank.

Emefiele, who was kicking against a move by telecommunications giant, MTN Nigeria to charge N4 per 20 seconds on every Unstructured Supplementary Service Data (USSD), access it offers its customers to transact banking services, said such was not in the interest of the drive to deepen financial inclusion in the country.

According to World Bank, financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

World Bank notes that access to a transaction account is a first step toward broader financial inclusion since it allows people to store, send and receive money.

A few years the CBN set a target of 80 percent financial inclusion by 2020. But it was forced to revise the target to 95 by 2023 after it failed to meet the milestones set to achieve the target. However, the renewal of his appointment for a second has witnessed an aggressive pursuit of the target which is yielding the desired results.

The objective was to get Nigerians who do not bank or do online transactions to get onboard as a way of reducing poverty in Nigeria.

The apex bank was concerned that while Nigeria has about 96.4 million adult population, it is sad that 40.1 million (almost half of the population) are financially excluded in a digital age where e-payment, e-commerce, among other financial services products and banking innovations are trending.

CBN also found it shocking that women, youths under 35 years, rural dwellers and those in Northern Nigerian, particularly North West and North East are the most financially excluded.

The speed lane

To reach the 2020 target of 80 percent inclusion rate, the CBN is aggressively pursuing the initiatives, which include regulating and facilitating the development of digital financial services products and platforms in Nigeria through its Payment Systems Management Department.

It has launched guidelines for the licensing and regulation of Payment Service Banks, PSBs. The objective is to leverage on existing platforms to facilitate high-volume and low-value transactions in basic financial services in a secure technology-driven environment.

There is the implementation of the Shared Agent Network Expansion Facility (SANEF), and Bank Verification Number (BVN), enrolment. Under SANEF, a total of 500,000 agent networks will be established to offer basic financial services such as cash-in, cash-out, funds transfer, bill payments, airtime purchase, and government disbursements amongst others.

Also, the minimum capital requirements for microfinance banks (MFBs) have been upwardly reviewed to promote their soundness. The new minimum capital requirements take immediate effect for new applications while existing MFBs are required to fully comply with effect from April 1, 2021.

The CBN had raised the minimum capital base for the three categories of MFBs with December 31st 2020 as the deadline for compliance. The minimum capital base for national MFBs was raised to N5 billion from N2 billion, state MFBs was increased to N1 billion from N200 million while that of Unit MFBs was increased to N100 million from N20 million.

However the CBN later announced a graduated extension of the deadline to April 2021, while it categorised Unit MFBs into two namely Tier 1 Unit MFBs and Tier 2 Unit MFBs.

In a circular signed by the director, Financial Policy and Regulation Department, Mr. Kelvin Amugo, the CBN stated: “Unit microfinance banks shall comprise two tiers; Tier 1 Unit MfBs, which shall operate in the urban and high density banked areas of the society; and Tier 2 Unit MfBs, which shall operate only in the rural, unbanked or under-banked areas.”

Under the categorisation, while the minimum capital base for Tier 1 Unit MFBs was retained at N200 million, that of Tier 2 MFBs was adjusted downward to N50 million.

This move, CBN said, is to address the issues of inadequate capital base and generally boost the capacity of MFBs to play their key role in providing financial services to MSMEs and engendering financial inclusion.

Also there is the implementation of the National Financial Literacy Framework (NFLF). The framework provides a comprehensive blueprint for the development and implementation of financial literacy programmes across the various sectors. It aims to increase awareness and understanding of financial products and services, with the ultimate goal of increasing sustainable usage amongst Nigerians.

The implementation of the Financial Education Strategy (FES) provides coherent, institutionally coordinated and collaborative approach to financial education delivery in support of enhanced financial literacy levels and ultimately the financial capability of the highly excluded segments such as women, Northern states and those in rural areas.

Another initiative is the implementation of Consumer Protection Framework (CPF). The framework provides a guide for effective regulation of consumer protection practices of financial institutions, under the regulatory purview of the CBN.

There is also collaboration between the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), and the Nigerian Postal Service, NIPOST, to set up a National Microfinance Bank. This bank which is to be technologically driven would leverage on NIPOST’s presence in the 774 local government areas of the federation and reach to rural sectors of the population. It will serve as a channel for the disbursement and monitoring of CBN’s intervention funds to farmers and businesses at the grassroots.

Little wonder the CBN was given an award at the two-day Future Banking Tech West Africa summit in April by Digital Africa Global Consult Ltd, for its role in driving financial inclusion in the country.

However, some experts think that the major problem is lack of internet access needed to do most of the online transactions in rural areas where most of the excluded Nigerians are and also where most banks do not have branches.

Even in the places where security is a problem, banks resort to online transactions, but the people are yet to migrate to such services in those vulnerable areas.

“There are 102 market gaps that we have identified through research, which represents 20 to 30 million Nigerians, who have never made a voice call because they have never seen a mobile phone in their lives, let alone get onto the Internet”, Mr. Olusola Teniola, president of Association of Telecommunications Companies of Nigeria (ATCON), told Business Hallmark in an exclusive interview.

However, the CBN is optimistic on achieving its target by next year. Musa Jimoh, deputy director, Payment System Management, CBN said the apex bank is keen at reducing poverty in Nigeria by achieving 80 percent financial inclusion target by 2020.

At a recent First Bank-organised joint seminar for banking and telecoms regulators on the theme, ‘Advancing e-Payment and Digital Innovations in Africa- Evolution of Nigeria’s Payment Systems’ recently, Jimoh assured on meeting the target and working with all the stakeholders including telecoms, fintechs, commercial banks among others to get about 150 million Nigerians to embrace the financial system and its numerous offerings.

Collaboration as the way to go

While speaking against the planned implementation of ‘end user billing’ by MTN, Emefiele said: “You are all aware that there is a drive for us to deepen financial inclusion in Nigeria. I had made my commitments to Bill Gates Foundation as well as Queen Maxima that we would deepen financial inclusion and that by 2020 the rate of financial inclusion would have accelerated to about 80 per cent.

“At this time, we are close to about 65 per cent. We moved from about 42 per cent to 65 per cent in about 18 months and we believe that we can achieve this 80 per cent if everybody, that is, the banks and telecoms companies cooperate with us.

Accordingly, participants at the Nigeria Fintech Week in Lagos recently said telecommunications, banks and Fintech stakeholders needed to partner to make USSD short codes free to all users to boost financial inclusion. They said that collaboration of stakeholders in making USSD free would enable Nigeria achieve 90 per cent financial inclusion by 2020, higher than the apex bank’s 80 per cent target.

Speaking at the event, Mr Patrick Akinwuntan, Chief Executive Officer, EcoBank Nigeria, said that USSD short codes must be made free for every Nigerian in order to deepen financial inclusion.

Akinwuntan noted that a strong collaboration would help develop skilled manpower and deliver cutting edge solutions for sustainable growth and the realisation of all -inclusive growth. According to him, there was need for continuous advocacy on adaptation of platforms and gender balance to attract more participation from the under-served.

He said, “With strong collaboration, it is possible to offer to any Nigerian, zero cost for using financial services to lift Nigerians out of poverty. This will help to bring all Nigerians into the financial system to add value.

” The CBN is targeting 80 per cent inclusion by 2020 and latest figure showed that we are currently in 62-65 per cent. But the most pervasive gadget to achieve inclusion is a smart phone.

“With zero charges on USSD, 90 per cent inclusion by 2020 is possible.

Also speaking, the deputy governor, Financial Systems Stability, CBN, Mrs Aishah Ahmad, tasked fintech firms to be cautions in carrying out their innovative services. Ahmad, in her keynote address, said that fintech had played a major role in enhancing financial inclusion by providing services at low cost to consumers.

“Fintech as a tool and as institutions would help us meet a number of objectives. Customers would have greater freedom, wider access at favorable prices and even at zero prices.

On regulations surrounding fintechs, she disclosed that all regulatory institutions including the apex bank would develop a framework that would instill confidence in the system. Acting-director-general, Securities and Exchange Commission (SEC),  Ms Mary Uduk, stressed the need for an expanded access to financial services to enhance inclusion.

Uduk said that increased participation in the capital market would be achieved through collaboration. She said that to improve the penetration of investment products, there must be strategic alliance amongst regulators and other stakeholders within the ecosystem.

“Going forward, I am confident that together, we can surmount the challenges inherent and seize the potentials of Fintech to transform people’s lives for the better,” Uduk stated.

She explained that fintech roadmap document would broaden the robust conversation and engagements within the ecosystem to strengthen financial inclusion.

According to her, it will encourage responsible use of new technologies and digital finance in the capital market, influence increased international participation and cooperation, and also provide investors with more choices in the Nigerian Capital Market.

But Teniola maintains that any service that is rendered by anybody in any country (Nigeria not an exception) is not given for free. “There’s a cost associated with using the USSD off-net”, he insists.

“So, if it is not free, it cannot be a sunk cost. The law allows us to charge for USSD. The end user billing has been suspended but the corporate billing (the one paid by the banks) has not been suspended.”





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