As the countdown to the Future Banking Technology West Africa Conference billed to hold in Lagos begins in earnest, the Director, Development Finance Department, Central Bank of Nigeria, Dr. Mudashiru Olaitan, speaks on the ongoing efforts to deepen financial inclusion in the country and the reasons for supporting the summit. HAULAT AFOLABI brings the excerpts.
Please tell us about yourself. What is your current role? And what would you say are the key mandates of the Central Bank of Nigeria’s Development Finance Department?
I am currently the Director of the Development Finance Department, Central Bank of Nigeria charged with the responsibility of implementing the development finance initiatives.
My task involves the formulation and implementation of various policies, innovation of appropriate products and creation of enabling environment for financial institutions to deliver services in an effective, efficient and sustainable manner.
The key mandate of the development finance department is promoting access to finance to ensure job creation and sustainable inclusive economic growth in Nigeria.
Why are you excited about attending the Future Banking Technology West Africa conference? And what is the added value brought by this event?
We at the Central Bank of Nigeria are open to attending conferences like this, because it gives us insights into emerging innovations in the financial, banking and technology landscape.
It also provides an avenue for us to learn about innovative financial service solutions that could enhance delivery of development finance services to clients in Nigeria.
A key focus of the event, an initiative driven in large by your department at the Central Bank of Nigeria, is to increase financial inclusion. What are the emerging technologies and programs in the region that are increasing access to finance?
The CBN in its bid to increase access to finance has embarked on a number of initiatives such as the Establishment of National Collateral Registry, for movable assets particularly for Small and Medium Enterprises and reduce the risks associated with lending to the sector. With the NCR Nigeria’s credit ranking has improved from 32nd to sixth position and the country is adjudged one of the 10 most improved economies. Credit penetration in Nigeria is currently at 3 per cent according to recent surveys by Enhancing Financial Innovation and Access, EFInA, as part of the Financial Inclusion strategy, we hope to improve that number to 40 per cent and this initiative will help towards that objective.
Another one is the Shared Agent Network Expansion Facility, which Nigeria seeks to roll out 500,000 agents across the 774 local governments in the country by 2020, capture 40 million Bank Verification Numbers, and rapidly drive Financial Literacy amongst the unbanked. This is to address the gaps of Agent Network, functional identity and financial literacy in Nigeria.
Also, the establishment of a National Microfinance Bank, which leverages Nigerian Postal Service outlets in rural communities to deepen access to finance. The NMFB will revamp the postal system in Nigeria and make NIPOST agent outlets financial service points across the country.
Finally, Introduction of Payment Service Banks which is aimed at leveraging mobile and digital service to enhance financial inclusion and stimulate economic activities at the grass roots. Promoters are expected to have 25 per cent of their location in excluded areas of the country. Also, non-traditional players like the Telcos and Fast-Moving Consumer Goods companies can now play in providing financial services.
How do you foresee consumer demand driving the regions banking sector?
The new age consumers of financial services in Nigeria demands convenient, fast, affordable, responsive and reliable products from financial service providers. In responding to these demands, the financial and banking sector in the region have begun to innovate, embark on technology transformation and change internal processes to adapt to the needs of their consumers and compete in acquiring new customers.
For us as regulators, our policies most constantly consider and reflect the dynamic nature of an increasingly sophisticated consumer base, while also constantly seeking ways to develop policies that will close the financial inclusion gap.
How would you describe the future of the financial industry in Africa considering the advent of automation, Artificial intelligence and big data?
The availability of mobile phones in Africa, has presented a huge opportunity to reach the consumer more than ever. With Artificial Intelligence and big data, customer insights can now be readily available to address specific needs in specific ways. This will bring strongly to the fore, the issue of consumer and data privacy especially amongst the unbanked.
To harness these potentials, we need to first address the existing infrastructure gap plaguing the region. Also, we need to look at the regulation space in the region such that it is well balanced and does not stifle innovation.
There have been a lot of discussions surrounding telcos entering the financial space, especially since the CBN launched Payment Service Banks late last year. Do you believe this will directly threaten the traditional financial institutions? And what recommendations are you sharing with organizations applying for this new license?
The primary objective of the Payment Service Bank is to provide financial services to about 36.6 Million Nigerians who currently unbanked.
At the core of the revised National Financial Inclusion strategy are two principles, which are, regulators providing a level playing field and promoters playing according to their strength.
From the foregoing the intent of this new category of financial services producers is to enable non-traditional players come in and play to their strength with eyes on reaching the unbanked. So, we believe the telcos and the banks have their strengths and this policy will facilitate collaboration for the interest of the stakeholder.
In your opinion how have digital financial services changed over the last 5 years? What are some of the local, regional and international developmental finance programs you are most excited about seeing rolled out this year and into 2020?
From our experience, a focus on consumer needs is important to increase usage of these technologies. There is need to constantly up skill our staff to enable them to manage digital platforms and
process.
Our interest is and will always be on programmes that will help achieve of monetary stability objective while ensuring inclusive growth and economic
development.
