•CBN banks on Revised National Financial Inclusion Strategy
World Bank report says 1.7 billion adults worldwide are unbanked with about 50 per cent of the unbanked people lead by women in poor households in rural areas or out of the workforce. The multilateral lender explains that financial inclusion gives individuals and businesses access to affordable financial products and services. For the Central Bank of Nigeria (CBN), achieving its 95 per cent financial inclusion target by 2024 will happen with the launch of its Revised National Financial Inclusion Strategy (NFIS 3.0) among other initiatives, writes COLLINS NWEZE.
Having access to a transaction account is a first step towards broader financial inclusion since a transaction account allows people to store money, and send and receive payments.
A transaction account serves as a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of the World Bank Group’s Universal Financial Access Initiative.
According to the report, financial access facilitates living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies.
The World Bank explained that as accountholders, people are more likely to use other financial services such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives.
“Great strides have been made toward financial inclusion and 1.2 billion adults worldwide have got access to an account since 2011. Today, 69 per cent of adults have an account,” the bank said.
In Nigeria, Central Bank (CBN) Governor, Godwin Emefiele, said Nigeria will attain 95 per cent financial inclusion by 2024.
Moving from access to account to account usage is the next step for countries where 80 per cent or more of the population have accounts. These countries relied on reforms, private sector innovation, and a push to open low-cost accounts, including mobile and digitally-enabled payments.
The gender gap in account ownership remains stuck at nine percentage points in developing countries, hindering women from being able to effectively control their financial lives.
The bank said that since 2010, more than 55 countries have made commitments to financial inclusion, and more than 60 have either launched or are developing a national strategy. When countries take a strategic approach and develop national financial inclusion strategies which bring together financial regulators, telecommunications, competition and education ministries, our research indicates that when countries institute a national financial inclusion strategy, they increase the pace and impact of reforms.
Financial needs are both global and local at the same time. While major financial institutions are interoperable on a global scale through systems like SWIFT, Visa, Mastercard, and others, local systems have evolved independently in different regions due to varying regulations, economic activity, and consumer behaviour.
Sadly, unequal access to technology and complex regulations are working against equitable financial access.
Even though bank account access has increased to 76 per cent of global adult population, there is clear inequality in the availability, cost, and quality of financial services worldwide. A report published by the African Development Bank shows less than half of the African countries covered have access to bank accounts, not to mention other financial services such as loans, insurance, investment, and savings products.
Way out with innovation, CBN’s support
Innovation inclusion is a key building block to financial inclusion. The World Bank said that financial inclusion can be accelerated by the use of innovative technologies and the entry of technology-driven, non-traditional institutions. Traditional financial institutions have failed in improving financial inclusion, it’s time for tech to step in.
For the CBN, the plan is to achieve its 95 per cent financial inclusion target by 2024, with the recent launch of its Revised National Financial Inclusion Strategy (NFIS 3.0) and some other important policy frameworks.
The bank listed the other initiatives to help ensure 95 per cent of Nigerians have access to financial services to include the National Strategy for Leveraging Agent Networks for Women’s Financial Inclusion; National Fintech Strategy; Nigeria Payments System Vision 2025 (PSV 2025); Nigerian Financial Services Maps (NFSMaps); the CBN Regulatory Sandbox as well as the Central Bank of Nigeria – Central Bank of Egypt Fintech Bridge.
According to CBN, “notwithstanding these successes, some of which were spurred by the COVID-19 pandemic, certain segments such as youth, rural dwellers, women, Northeast and Northwest regions and MSMEs/Farmers remain relatively excluded. Progress in credit, insurance and pensions have also been slow. These segments are the key target priority areas for the NFIS 3.0.
“Agent banking network growth was significant, increasing from 38,416 agents in December 2018 to 1.4 million by October 2022, primarily driven by the Shared Agent Network Expansion Facility (SANEF) initiative of the CBN and the Bankers Committee.’’
“This expansion of agent network is an important lever to expand the number of financial access points per 100,000 of the population – thereby boosting access to affordable financial services by those in the more dispersed rural areas and certain urban centers. The growth in agent networks which has been significant also in the North-East (67% in 2020) will be important for improving financial inclusion in the north.
“Whilst the 2022 A2F survey is being awaited, it is anticipated that the financial inclusion rate would have improved by another 5 percentage points, drawing on the momentum on Digital Financial Services spurred by COVID-19 pandemic, and leveraging the myriad of financial services solutions in the dynamic financial system.”
Furthermore, she listed future priorities for accelerating financial inclusion for the CBN to include consolidating interagency and policy – innovation collaboration; deepening digital financial services penetration in excluded segments through the e-Naira offline solution; enhancing and harmonising digital identity for financial inclusion; and leveraging NIN foundational ID for further financial inclusion.
“Financial inclusion is a strategic objective for the CBN given its mandate to promote price, monetary and financial stability. The role of financial inclusion in important in enhancing its financial stability and monetary policy effectiveness,” the bank said.