At its National Financial Stakeholders meeting held in Abuja yesterday, the Central Bank of Nigeria (CBN) expressed confidence that the 80 percent financial inclusion target it set in 2012 would be achieved by 2020. The apex bank also discussed some of its current challenges and strategies that would be adopted in order to attain this goal.
According to the Deputy Governor, Financial System Stability (FSS) of the CBN, Mrs Aisha Ahmed some of these challenges include consumer protection, financial literacy, and financial education. However, with the help of the Bill and Melinda Gates Foundation in revising the Financial Inclusion Strategy, new policy frameworks have been made to help meet the target.
“During the course of implementing the National Financial Inclusion Strategy which was launched by the President in October 2012, the need arose for the review of the strategy to meet the challenges and re-assess the developments and the current realities, of the ever-evolving environment in which we operate”.
“With support from the Bill and Melinda Gates Foundation, we now have a revised strategy which we believe, with your support, would aid us as we strive to meet our year 2020 target of reaching 80 percent financial inclusion level,” she added.
A survey conducted in 2008 showed that 53 percent of Nigerian adults were not financially included. In the bid for financial inclusion as a drive for development, the exclusion from financial services reduced to 46.3 percent by 2010. Impressed by the development, the Central Bank in collaboration with stakeholders then launched the Financial Inclusion Strategy in 2012 which was aimed at further reducing the number of unbanked adults to 20 percent by 2020. Presently, in 2019, the number of financially excluded adults currently stands at 36.8 percent.
The aim of Financial inclusion is to allow individuals and businesses, regardless of their worth, have access to financial services. This means that people who are financially inclusive have control over their money, and have different options regarding financial services; whether to secure loans, or to prepare for emergencies, or even have access to insurance.
Achieving 80 percent financial inclusion in Nigeria would enable more people to plan their consumption and also invest in their future through education and health. It would also give credit access to businesses, promote the creation of jobs and reduce inequality. Nigeria presently has more than 80 million people living in extreme poverty. Using the Central Bank of Nigeria’s forecast for 2020, increased access to financial services could mean that the number of people living in poverty in the country could drastically reduce.
However, considering the pace of the CBN towards achieving financial inclusion for 80% of the adult population, a target set in 2012 when just 46.3 percent of the population was excluded from gaining access to financial services, the chances of meeting this target may look a little slim for the apex bank.
The adoption of technology through the use of mobile money operators will definitely help the CBN in achieving financial inclusion. According to the EFInA, digital payments improved by 4 percent between 2016 and 2018 and its usage has largely been driven by FinTech companies on banking applications.
Analysts have often theorized that financial inclusion in Nigeria would largely be driven by FinTech companies. For FinTech companies to thrive, monetary policies by the CBN has to give them some leeway, to protect them from cannibalisation from Nigerian commercial banks, who are mostly concerned with transactional banking, and might not provide solutions for financial inclusion. For the CBN to achieve its target next year, all hands must be on deck.
