Nigeria to establish national micro-finance bank

Central Bank of Nigeria (CBN)
Central Bank of Nigeria (CBN)

A national micro-finance bank is to be established to promote access to credit finance for small, medium enterprises (SMEs) and other unbanked groups in the country, the Central Bank of Nigeria (CBN) said on Thursday.

The CBN governor, Godwin Emefiele, who announced this in Abuja, said the bank will be established in collaboration with the Bankers Committee, the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) and the Nigerian Postal Service (NIPOST).

Mr Emefiele was represented by the deputy governor, Financial Systems Stability of the CBN, Aishah Ahmad, at the maiden two-day National Financial Literacy Stakeholders’ conference organised by the bank in Abuja.

The CBN governor said the new national MFB which shall be technology driven will leverage on the NIPOST’s presence in 774 local government areas of the country to reach its target beneficiaries.

“The bank will serve as an efficient channel for the disbursement and monitoring of key intervention funds by the CBN, such as the Anchor Borrowers fund, SME fund, etc, to farmers and SMEs at the grassroots level,” Mr Emefiele said.

He said the conference will provide the platform for participants to deliberate on key imperatives for achieving the country’s financial inclusion targets, promoting financial stability and entrenching sustainable and inclusive economic growth.

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The theme of the conference, “Implementing Financial Literacy and Consumer Protection to advance Financial Inclusion in Nigeria”, the CBN governor noted, was selected to help focus on the need to redress the challenges limiting financial inclusion in the country.

Building an inclusive financial system, he said, has positively impacted efforts towards poverty reduction and enhancement of economic prosperity.

Following the launch of a National Financial Inclusion Strategy in 2012, Mr Emefiele said the federal government set a target to achieve 20 per cent financial exclusion rate in the country by 2020.

He said the latest access to financial services survey showed about 36.8 per cent of eligible Nigerian adults do not have access to financial services, down from 41.6 per cent in 2016.

Despite the improvement, the CBN governor said more effort was necessary to achieve the overall 20 per cent target exclusion rate by 2020.

The revised National Financial Inclusion Strategy, which was launched at the opening session of the conference, he said, identified consumer protection and consumer education as critical to the attainment of financial inclusion.

He said adequate consumer protection will help sustain the long term viability of the financial sector, while consumer education will thrive on the foundation of financial literacy.

“The benefits of a financially literate population are immense. Consumers are better equipped to make optimal choices in the use of financial products, pose lower credit and default risk, constitute a market for sustainable financial services and products, reinforce competitive pressure on financial institutions for better products and services, and promote financial system stability by increasing market demand and responsible use of financial services,” he said

On the impact of technological advancement on the financial system, he said new digital products and services have emerged, with the internet greatly influencing consumers’ purchasing decisions on e-commerce.

In 2017, he said the banking industry processed about 1.4 billion electronic transactions valued at N97.4 trillion, against 869 million transactions valued at N69.1 trillion in 2016.

Regardless, he said these positive developments in aid of financial inclusion are associated with challenges, namely privacy and security concerns; exposure to new and more inventive fraudulent practices, and multiplicity of information leading to information processing errors.

To provide the framework for financial inclusion in the country, the CBN governor launched four policy documents, namely the Revised National Financial Inclusion Strategy; Consumer Protection Framework as well as National Financial Literacy Framework and National Financial Education Strategy.

While the Consumer Protection Framework will provide policy direction for a robust consumer protection regime in the banking and financial services industry, the National Financial Literacy Framework will provide a roadmap for the implementation of various financial literacy programmes for various target groups in the country.

Earlier, the Director, Consumer Protection Department, CBN

Kofo Salam-Alada, said efforts toward financial inclusion have been limited by the challenge of financial literacy and awareness amongst consumers and a general lack of confidence in dealing with financial institutions.

Mr Salam-Alada said these issues can only be addressed through robust financial literacy and consumer protection programmes.

“If consumers are not adequately protected – if they are constantly having unresolved issues with their financial services providers, they are bound to be apathetic towards the system. This will negatively affect the financial inclusion rate and ultimately the stability of the financial system,” he said.

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