- Credit awareness campaign’ll attract the unbanked—Analysts
The Central Bank of Nigeria has intensified efforts to capture the informal sector of the economy with a view to growing the country’s level of financial inclusion over the years.
This is coming as the apex bank, in its national financial inclusion strategy, said its complaints bureau had so far resolved 260 complaints, amounting to ₦5.5billion in the effort to give more credibility to the system.
Meanwhile, the CBN has also disclosed that its ongoing drive will be targeting about 70 per cent adults.
The reason for the intensification of financial inclusion efforts is obvious. The apex bank believes that without a high level of financial inclusion, there cannot be a meaningful level of economic growth and development in the country, as many Nigerians do not have access to doing business with financial institutions, much less accessing bank credit.
This is due to the very low level of financial literacy and the absence of a consolidated credit awareness system. According to the apex bank, a total of 40.1 million adult Nigerians (41.6 per cent of the adult population) were financially excluded in 2016.
Further analysis has revealed that 55.1 per cent of the excluded population were women, 61.4 per cent, within the ages of 18 and 35 years; 34 per cent had no formal education; and 80.4 per cent resided in rural areas.
Financial inclusion means access to finance at reasonable cost to a wide range of financial services. These include savings, short and long-term credit, leasing and factoring, insurance, pensions, payments, local money transfers and international remittances.
The CBN, in its recent document on the revised strategy of financial inclusion, revealed that 46.5 per cent of the females, 52.5 per cent of those in rural areas; and 53.5 per cent of youth, aged 18 to 25; 70 per cent of those from the North West; and 62 per cent of those from the North East, were all excluded.
‘Financial inclusion not a choice’
Professor of financial economics, and Dean, Faculty of Business Administration, University of Uyo, Leo Ukpong, said, “In this modern time, being financially included is not a choice. Every individual who desires to live life in full and to realise his/her potential must take advantage of various financial services that Central Bank-licensed financial services providers have made available, leveraging appropriate technologies such as the internet, mobile phone, ATMs and kiosks and indeed bank branches and appointed financial services agents.
“That young school leaver who wants to run a startup will easily realise his/her dreams by latching onto the benefits that financial inclusion bring. Likewise, the apprentice, who is ready to start his/her trade, the petty trader who wants to grow the business, and that farmer who needs a small loan to start or expand his/her farm. The financial services industry is wide open with innovative financial services designed to meet the needs of the diverse groups of people in our country.”
An economics expert, Mr.Benjamin Shoroye, said, “The situation would have been worse for Nigeria but for those in the informal sector that engage in various forms of savings like esusu and ajo, (both of them daily, weekly or monthly contributions) and money lending. Financially literate consumers help to reinforce competitive pressures on financial institutions to offer more appropriately priced and transparent services. That is, they help to improve the efficiency and quality of financial services.”
On his part, the Executive Director, Credit Awareness Nigeria, Mr. Ladi Smith, said “the broad objective of the credit awareness campaign is to enhance financial intermediation and deepen financial awareness; broaden inclusion to attract the unbanked and un-insured, and improve access to demand-oriented financial
development services.
“The other objectives are enhancing better co-ordination and collaboration among key stakeholders, including financial institutions, regulatory agencies, development partners and government; supporting better regulation and coordination of microfinance institutions; improving the capacity to use loans effectively for income generation and repayment,” he said.
500,000 agents to serve 105m adult population – CBN
The CBN said the reversed strategy would result in about 500,000 agents being available to serve about 105 million adult population in the country, considering the shift from physical bank branches to branchless banking globally.
“Justification for this new figure is based on recent developments in the financial sector aimed at taking financial services to the un-served and under-served, using branchless platforms such as agent banking and digital platforms. The revised documents set a new target of 476 agent banks per 100,000 adult Nigerians by 2020, up from 62 in the 2016 strategy document,” the CBN said.
According to the apex regulator, the NFIS targets 70 per cent adults included in formal financial services and another 10 per cent in the informal sector by 2020, representing an increase of 58.4 per cent of Nigeria’s 96.4million adults who were financially included in the 2016 edition, which comprised 38.3 per cent banked, 10.3 per cent served by other formal institutions and 9.8 per cent served by informal service providers.
“The revised strategy recognises the imperative for prioritising the foundational constraints, the importance of innovation and the need to create an enabling environment to promote financial inclusion. The inter-departmental and inter-agency governance arrangements, including Steering and Technical Committees, Implementation structures in the 36 States and the Federal Capital Territory and National Working Groups, have been collaborating to achieve set targets,” the apex bank said.
Stakeholder engagements, it added, revealed the fact that some of the elements of the strategy such as point-of-sale terminals were no longer the appropriate or most efficient channels for distribution of financial services in view of advances in technology; regulations and policies such as fixed fees for certain transactions, as they limit the range and variation of business models that can be deployed.
Other revelations from the engagements include innovative models that have substantially increased financial inclusion in other countries such as mobile money penetration, which have yet to take significant root, owing to some restrictive policies and regulations.
There is also the slow pace of adoption and agent density due to lack of understanding of the workings of agent banking and the opportunities it provides for stakeholders; as well as the challenging macroeconomic and security situation in the review period, which exacerbated the constraints to financial inclusion.
According to the World Bank global Findex report, financial inclusion is on the rise globally.
“The 2017 Global Findex database shows that 1.2 billion adults have obtained an account since 2011, including 515 million since 2014. Between 2014 and 2017, the share of adults who have an account with a financial institution or through a mobile money service rose globally from 62 per cent to 69 per
cent.”
In this modern time, being financially included is not a choice. Every individual who desires to live life in full and to realise his/her potential must take advantage of various financial services that Central Bank-licensed financial services providers have made available
