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By Omodele Adigun
The unemployment rate in the country will soon thin out as digital financial service is expected to create three million new jobs in the next nine years.
According to the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, who disclosed this Thursday in Lagos at this year’s Businessday financial inclusion summit, digital financial services are estimated to reduce the cost of providing financial services by 80 to 90 per cent when compared with the cost of a traditional bank branch.
Defining digital financial services as all financial services conducted through electronic platforms, Emefiele lamented that several people do not use financial products because they live too far away from a physical financial access point such as bank branch, an insurance agent or ATM. “It is puzzling that while about 63 per cent of adult Nigerians, and even 44 per cent of the formally financially excluded, had a mobile phone as at 2014, based on EFINA data, only 13 per cent of adult Nigerians were aware of mobile money, and less than one per cent used mobile money,” he added. But he noted that digital financial services “transcend physical barriers as they can be availed through virtual channels such as mobile phones, which today are ubiquitous.”
Quoting recent study by the McKinsey Global Institute, the CBN boss was optimistic that digital financial services could lead to the financial inclusion of up to 46 million individuals in the country.
He stated: “Financial inclusion is required to enhance incomes, investment and wellbeing at the household level. It is also critical for economic growth and financial stability at the macroeconomic level. It is in this regard that Nigeria launched its National Financial Inclusion Strategy on October 23, 2012, with the overall target of reducing the adult financial exclusion rate from 46.3 per cent in 2010 to 20 per cent by 2020. This means that by 2020, we expect that eight out of every 10 adult Nigerians should make use of at least one financial product (formal or informal).
“Within this strategy, distinct targets were stipulated for specific elements of financial inclusion including access to electronic payments, savings, credits, insurance and pension products, etc. For instance, 70 per cent of the adult population is designated to utilise electronic payments platforms comprising Cards, ATMs, Mobile Money/Banking and PoS channels by 2020. Based on the bi-annual survey report routinely conducted by the Enhancing Financial Innovation and Access (EFINA), the adult financial exclusion rate had dropped from 46.3 per cent in 2010 to 39.5 per cent by 2014. However, in order to achieve the defined target for 2020, the extant rate still needs to be halved. This requires stronger and systemic efforts by all stakeholders. This is where digital financial services become germane.”
Emefiele then identified three channels through which digital financial services could affect GDP: Increased productivity through the time and cost savings of businesses and financial services providers and reduced leakages in government expenditure; increased investment in physical capital through additional formal deposits and lending, while the third one is increased time savings of individuals.