ACHIEVING FINANCIAL INCLUSION IN NIGERIA

SANUSI, LAMIDO SANUSI, CONGOVERNOR, CENTRAL BANK OF NIGERIA

Presentation Delivered at the Financial Regulators Forum18th Nigerian Economic Summit Transcorp Hilton Hotel, Abuja

5th December, 2012

OUTLINE

Introduction

State Of Financial Inclusion In Nigeria

Nigeria’s Path To Financial Inclusion

National Financial Inclusion Strategy (NFIS)

Role Of The CBN in Financial Inclusion

Role Of The Major Stakeholders In Financial Inclusion

Progress Made Towards Financial Inclusion

Conclusion

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INTRODUCTION

The Central Bank of Nigeria (CBN) launched the National Financial Inclusion Strategy (NFIS), in October 2012

The NFIS is a concerted attempt to increase access to a range of financial services such as payments, savings, remittances, pension, insurance and credit at an affordable cost to consumers

Having a financial inclusion strategy can lead to improved income, poverty reduction and a stable financial system

Global efforts toward financial inclusion date back to 2009, when a Financial Inclusion Summit was convened in Pittsburgh, U.S.A as part of the G20.

So far, over 60 countries have initiated financial inclusion reforms in recent years

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STATE OF FINANCIAL INCLUSION IN NIGERIA Nigeria’s rate of financial exclusion is currently at 39.7%, according to the 2012

survey conducted by Enhancing Financial Innovation and Access (EFInA)

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Formally bankedAdults who has access to or use financial services supplied by ‘Deposit Money Banks’

Formal otherAdults who has access to or use formal financial services and financial products not supplied by ‘Deposit Money Banks’

Informal onlyAdults who has access to or use any unregulated financial institution or informal service, such as cooperatives or moneylenders

Completely ExcludedAdults without formal or informal financial products

Source: EFInA Access to Financial Services in Nigeria 2012 survey

NIGERIA’s PATH TO FINANCIAL INCLUSION

Efforts at financial inclusion in Nigeria date back to 2005 with the launching of the Microfinance Policy, Regulatory and Supervisory Framework, subsequently revised in 2011

Key elements which the Policy sets out to achieve are:

Assist Microfinance Banks to set up an Apex Regulatory Body Establish a Microfinance Certification Programme Set up credit bureau Promote the setting up of rating agencies for Microfinance Banks Establish Micro, Small and Medium Enterprises Development Fund

(MSMEDF)

The Central Bank of Nigeria has delivered on all of the above except the MSMEDF on which we are working to finalize modalities and guidelines for its implementation 5

NIGERIA’s PATH TO FINANCIAL INCLUSION

In 2011, Financial Regulators from 20 developing countries including Nigeria made financial inclusion commitments referred to as the “MAYA DECLARATION”, in Rivera Maya, Mexico

The pledge seeks to:

Create an enabling environment that substantially lowers the cost of financial services through the deployment of innovative technology

Implement a sound and appropriate regulatory framework that balances the goals of financial inclusion, integrity and stability

Recognize consumer protection and empowerment as key pillars of financial inclusion

Make evidence-based financial inclusion policy a priority by collecting and analyzing comprehensive data 6

NIGERIA’s FINANCIAL INCLUSION STRATEGYNigeria, through its Maya Declaration is committed to reduce its rate of financial exclusion from 39.7 per cent in 2012 to 20.0 per cent of the population by 2020 through the implementation of seven key interventions:

Simplified KYC Framework

Agent Banking Regulatory Framework

National Financial Literacy Framework

Consumer Protection Framework

Mobile-Payments and “Cash-less” Policy Initiative

Establishing Linkages between government, DFIs, DMBs and MFBs / MFIs

Introduction of Credit Enhancement Schemes and Programmes – MSMEDF, NIRSAL and EDCs

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NIGERIA’s FINANCIAL INCLUSION STRATEGY

Key interventions are expected through the following targets to directly reduce the rate of financial exclusion from 39.7 per cent in 2012 to 20.0 per cent of the population by 2020

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Source: National Financial Inclusion Strategy (2012)

ROLE OF THE CBN IN FINANCIAL INCLUSION

CBN aims to reinforce its function in ensuring monetary stability and sound financial structure, so as to enhance economic development

In addition to implementation of seven key interventions, the Bank will continue to adopt some specific models to help drive financial inclusion

Transformation of the payment system Ensuring healthy financial evolution through the development of

specialized banks and alternative sources of finance Financial Education and Consumer Protection

Creating effective policy and regulatory environment that empower and protects the populace - Financial System Stability Framework

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ROLE OF THE MAJOR STAKEHOLDERS IN FINANCIAL INCLUSION

The Financial Inclusion Strategy clearly provides the road map for the activities of all stakeholders in the provision of financial services for growth and development of the economy. There are three major stakeholders in the National Financial Inclusion Strategy (NFIS) namely:

The ‘Providers’ – financial institutions and partner infrastructure and technology providers – DMBs, DFIs, MFBs / MFIs, NIBSS, Telcos …

The ‘Enablers’ - regulators and public institutions responsible for setting regulations and policies in respect of financial inclusion - FSRCC

‘Supporting Institutions.’ Partners and experts with the mission to support Nigeria in meeting its economic objectives and delivering on their technical assistance mandates – IFIs and NGOs

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PROGRESS MADE TOWARDS FINANCIAL INCLUSION

The Financial Inclusion Strategy has been validated and launched

A Consumer Protection Department and a Financial Inclusion Secretariat within the CBN have been established

Strategic alliances to develop agent banking initiated with the Nigerian Communications Commission (NCC) and the Nigerian Postal Service (NIPOST)

The cashless policy implementation, which commenced in Lagos, has been reviewed and would be extended to other States of the Federation with refinements

The Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) has been given presidential approval and is being implemented

A ‘Financial Literacy Framework’ and ‘Guidelines for Agent Banking’ are being finalized

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CONCLUSION

Financial sector operators are to implement the strategy, while the oversight function resides with the Financial Services Regulatory and Coordinating Committee (FSRCC)

Optimistic that despite some of the challenges highlighted, with commitment and determination, we shall collectively reach our goal

An affirmation that we are determined to drive this process and make the Nigerian financial inclusion model a trademark for other countries to replicate

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I thank you all for your attention…