Business - Business & Economy - News - November 24, 2022

How CBN grew Nigeria’s financial inclusion by 16.3% in 12 years -Emefiele

By Bassey Udo

Nigeria’s financially excluded adult population dropped from 52.2 percent in 2008 to 35.9 percent in 2020 due to initiatives spearheaded by the Central Bank of Nigeria (CBN), the apex bank’s governor, Godwin Emefiele, disclosed on Thursday.

Emefiele who spoke at the maiden International Financial Inclusion Conference in Abuja said the drop was as a result of decisive and concerted strategies by the National Financial Inclusion stakeholders led by the apex bank to remove key bottlenecks that were deterring financial inclusion in the country.

Jointly hosted by the CBN and its partners in the National Financial Inclusion Governance Committees, the theme of the conference is “Financial Inclusion for all: Scaling Innovative Digital Models.”
As of 2008, Emefiele said despite having a sizeable population of banked adults, Nigeria’s financial inclusion rate was one of the lowest in the sub-region, with one out of every two adults having no access to financial services.

More worrisome, he said, was that youth, within the 18-35 years age bracket, as well as micro, small and medium enterprises (MSMEs), which accounted for over 60 percent of employed Nigerians, were disproportionately excluded from access to financial products and services.

To drive access to finance for the benefit of the hitherto excluded segments of the population, Emefiele said, the CBN, through the National Financial Inclusion Strategy adopted some initiatives to remove the disincentives for many economically active Nigerians.

Although he cited the 2008 global economic meltdown as one of the key factors that were responsible for the low access to finance for the underserved Nigerians, the CBN governor also blamed the situation on infrastructural deficits in the economy.

He identified the deficits to include low broadband penetration, lack of a functional national identity system, and high cost of delivering financial services through bank branches to the underserved Nigerians.

“The global meltdown in 2008 made financial services regulators focus on improving the financial system’s stability and mitigating risks that could lead to a future recurrence.
“Nigeria implemented a tighter prudential regime to respond to the meltdown. While these efforts improved financial system stability, they inadvertently undermined access to finance as entry barriers to the financial system became a disincentive for many economically active Nigerians,” he noted.

As at end-2020, he said the financial exclusion rate in the economy had reduced to 35.9 percent, from 52.2 percent in 2008.
Acknowledging financial inclusion as key to economic development and inclusive growth, as researches showed a positive correlation between a country’s financial inclusion rate and its gross domestic product (GDP) growth.

As part of Nigeria’s commitment to the Maya Accord in 2010, an Alliance for Financial Inclusion (AFI) aimed at reducing poverty and ensuring financial stability for all, the CBN governor said the country’s first financial inclusion strategy was developed in 2012.

Under the strategy, which provided a platform to facilitate a concerted approach by stakeholders to address financial exclusion in Nigeria, Emefiele said a national goal for achieving a financial inclusion rate of 80 percent by 2020 was set.

The 2012 strategy reviewed some traditional financial services models, which made it slow and expensive for the country to meet its target of addressing financial inclusion
Following the revision of the strategy in 2018, to enable it focus on leveraging digital financial services to fast-track financial inclusion, the CBN governor said the implementation structure was extended to the sub-national level to address the peculiarity of each state.

Since 2012, he said over 59 policies and initiatives across the banking, insurance and pension sectors, the capital market as well as institutions responsible for infrastructural development, towards achieving financial inclusion.

He said the CBN, through the Financial Inclusion Steering Committee, has prioritized financial inclusion in its intervention schemes to farmers and to small and medium-scale businesses, with over 4 million small-holder farmers being provided concessionary credit facilities in all states of the federation since 2015.

While the credit facilities, which were disbursed through digital channels not only boosted the economic fortunes of the farmers, he said it also improved the national food output, prevented food insecurity, created over 2 million jobs as well as boosted financial inclusion in rural areas.

The focus of the CBN to leverage on digital innovations to drive financial inclusion, he said, was one of the main motivations for the launch of the eNaira, Nigeria’s digital currency.
To ensure that the eNaira was enabled for financial inclusion, he said a USSD channel for eNaira was created, the modification of which made it possible for all generations of mobile devices, including old phones, feature phones owned by rural dwellers to be compatible with the interface of the eNaira.

“Today even the most remote and the most vulnerable households and businesses now have unlimited and uninhibited access to the digital currency, the eNaira. The offline and smart contract capability of eNaira is a catalyst for broad adoption in underserved areas,” the CBN governor said.

President Muhammadu Buhari who spoke at the opening session of the conference traced the drive for financial inclusion as part of a blueprint for economic growth and development under the Economic Recovery & Growth Plan (ERGP) focused on economic recovery and sustained growth and development.

The President said the ERGP enabled his administration, through its flagship agricultural initiative, the Anchor Borrower Programme (ABP) implemented by the CBN to provide access to credit to over four million smallholder farmers in 36 states of Nigeria and the Federal Capital Territory.

Through the programme, he said, farmers were required to open a bank account to access the facility to mark the first time many of them had accounts and has consequently led to the growth of financial inclusion amongst this underserved segment.

In view of the impact of Financial Inclusion on economic growth and development, he said the administration has provided the enabling policy environment for initiatives to yield the expected results.
Some of the initiatives, the President said, include the Micro Pension policy launched in 2019 to deepen pension penetration amongst MSMEs and the informal economy as well as policies for Micro-Insurance and Collective Investment.

“These initiatives are geared toward providing access to a wide range of financial products and services to the underserved in line with our National Financial Inclusion objective.
“Also, the Federal Executive Council approved and redesignated the Federal Ministry of Communications as the Federal Ministry of Communications and Digital Economy in October 2019 and unveiled a National Strategy for Digital Economy in November 2019,” he said.

Noting the importance of citizens identity database and broadband internet to the attainment of the Digital Economy strategy, he said over 90 million Nigerians have so far been captured in the national identity database, while a broadband penetration strategy with specific targets have also been developed and is being implemented.

“One key component of the Digital Economy strategy is Digital Financial Services (DFS) which holds the potential to improve GDP and provide access to finance to underserved areas. This innovation has also facilitated access to credit and payment for rural dwellers and enabled them to conduct their businesses without the need to travel far in search of the nearest bank branch.

“Through the Shared Agent Network Expansion Facility (SANEF), the number of agent banking locations in the country is now over 1.4 million from 86,000 in 2018. The Open Banking framework and Regulatory Sandbox initiatives are some of the other initiatives that are meant to improve financial inclusion in Nigeria,” the President said.

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