As CBN sets 80% financial inclusion target for 2020

In spite skepticisms from some experts that the 80 percent financial inclusion target for all adult Nigerians by year 2020 is impossible, the Central bank of Nigeria (CBN) has assured that the target is achievable. Speaking at the inauguration of the financial Inclusion State Steering Committee (FISSCO) in January this year in Abuja, the CBN […]

In spite skepticisms from some experts that the 80 percent financial inclusion target for all adult Nigerians by year 2020 is impossible, the Central bank of Nigeria (CBN) has assured that the target is achievable.

Speaking at the inauguration of the financial Inclusion State Steering Committee (FISSCO) in January this year in Abuja, the CBN Abuja Branch Controller Elizabeth O. Agu, had said the broader aim of the target is that 80 percent or more of Nigeria’s adults population should have access to and make use of financial services, with at least 70 percent of that number in the formal sector.

Agu, who is also the Chairperson of the Committee had noted that there were specific targets for different financial services such as payments, savings, credit, insurance and pensions and the channels through which the services will be delivered.

“The cross-cutting and diverse nature of the targeted services require collaborative efforts by stakeholders in the financial service providers at the state level are pertinent to achieving at least 80 percent inclusion of adult population by the year 2020” she had said.

Thus, the target was downscaled to specific states so the that the entire nation will have improved financial inclusion penetration rate.

For instance, she said the target that has been set for Abuja include; each deposit money bank branch in Abuja should sign on at least 1,500 new savings account customers who had no bank account previously and each micro finance bank branch should sign in 2,500 new savings account customers. Also each DMB bank should have at least 600 new credit customers while the microfinance banks should have 1,000.

Agu also noted that, three years to the 2020 target, Nigeria is still at 41.6 percent exclusion rate which presupposes that Nigeria needs to work a lot harder o the exclusion rate between now and 2020.

She assured the CBN strongly believes that the 2020 target is attainable as the strategy documents were being reviewed to reveal the major challenges, so they could be fixed urgently as the nation inches towards the target

As exciting as that optimism is, the latest financial inclusion data isn’t so exciting.  The data shows declining financial inclusion rate with women and youths being the major hit.  

So rather than financial exclusion among adult population in Nigeria to be lowering, the number spiked in 2016 as more people were financially excluded relative to the population, the latest study from the Enhancing Access to Finance, EFInA 2016 survey on financial inclusion showed.

According to the report released in 2017, the number of financially excluded rose to 40.1 million in 2016 compared to the 39 million in 2015. The 2017 study hasn’t been publicly released.

Making a presentation on the data, the Chairman EFInA’s board, Ms. Modupe Ladipo had said the youths, women, the rural people and the north were the most excluded financially in 2016.

She explained that among the male adult, 46.3 percent have a bank account and only 30 percent among women have bank accounts, which represented a gender gap of about 16.3 percent.

She noted that whereas Nigeria is targeting to have 80 percent financial inclusion by 2020 but there is no age group close to that figure currently.

“There are high levels of exclusion across all age groups particularly in the 18-25 years and the above 56 years. A lot of work has to be done around the youths and a lot of work has to be done around gender” she said.

According to her “less than 20 percent of farmers have bank accounts and they contribute a lot to employment which is indeed a huge problem as the bulk of the monies controlled by farmers don’t make it into the banking system.

Thus, the EFInA posited that if Nigeria wants to drive down financial exclusion rate, she must focus on the youths, women, rural areas (52 percent are financially excluded), farmers and on the North.

According to the data in the “North East and North West were the regions with the most exclusion rate. The data said 70 percent of the adult population in the North West where financially excluded in 2016 while in the North East it was 62 percent.

Ms. Ladipo explained that since EFInA survey began in 2008, the North East has always been the most financially excluded but by some curious reasons, it shifted to North West. She cited the rising attention to the North East as a result of the insurgency in the area as a critical reason for the rising inclusion rate. A decline in the population in the North East could also have impacted the inclusion rate proportionately.

“There have been a lot of focus on the North East states like Yobe, Taraba etc. But in North West Kano state, financial exclusion increased by 30 percent, and that dragged down the number of exclusion” she explained.

“People say there were massive job losses, limited resources and lack of basic necessities which made opening bank accounts less important. But in the North East, people had to open bank accounts to access government initiatives. But once those initiatives stopped, people stopped using their bank accounts and they become dominant” she noted.

On savings the report suggested that, a lot of people save at home. About “N206bn is being saved at homes she” said.

“Can you imagine what that would do if brought to the formal financial system? She asked adding that about N120m is in cooperatives, N60m in Esusu, N85.3m saved with family and friends.

She noted that largest source of credit is family and friends. “80 percent of people who borrow, do so from family and friends, and for us, this is not the way to sustain financial system. We must ensure better access to credit” she said.

As a part of measures to drive financial inclusion, and to add to the renewed interventions in providing credit to small business in Nigeria at a cheaper cost, the Bankers’ Committee partnering the Central Bank of Nigeria (CBN) has set aside N26bn fund to finance agric businesses and other small informal businesses across the country under the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS).

The  AGSMEIS, an initiative of the Bankers’ Committee, was introduced at the Committee’s 331st meeting held on February 9, 2017. Under the initiative, all the deposit money banks (DMBs) will aside five percent of their annual profit after tax to fund the scheme. The fund which has peaked N26bn is expected to grow to N60bn before the end of 2018.

The initiative has as its core objectives to improve access to affordable financing for MSMEs, particularly those operating in the informal sector of the economy and to support the Federal Government’s efforts and policy measures to promote sustainable economic development and employment generation.

The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele on Thursday, April 12, 2018, flagged off the disbursement of the funds to the first set of beneficiaries in Abuja during the Bankers’ Committee meeting. At least 300 young small enterprises benefit from the first tranche.

Also to bring farmers into the inclusion list, the CBN launched the Anchors Borrowers