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By Omodele Adigun
Since the idea of the Financial Sector Strategy (FSS 2020) was first mooted in 2007, the expectation was high that the country, in the 10 years, would be closing to the transformation of its entire financial system.
But 10 years down the line, that was not to be. Although the nation still retains the potentials to arise and shine in the rest three years of FSS 2020. To get the full gist of the initiative, a dissection of the strategy would provide such insight.
FSS 2020 is a comprehensive strategy aimed at repositioning the Nigerian financial system for domestic and external recognition; to enable it compete globally and attract foreign investment for growth and development.
Its objectives, basically, are to transform Nigeria into a financial hub for Africa by 2020; to position Nigerian banks among the best 100 in the world by 2015, and to make Nigerian financial institutions competitive in all aspects of investments and credit granting services by year 2020. In other words, the financial system is expected to be the driver and catalyst that will lead to full diversification of the economy and gear the system for world class efficiency and relative safety by that magic year. The key drivers of the proposal are credit market; SME financing; pension; mortgage market; capital market; insurance as well as money and foreign exchange market
“If we want to move to where the world is, we must do things that the world wants, says Oluwatoyin Jokosenumi, the Deputy Director/Head of Strategy, FSS 2020 Desk of the Central Bank of Nigeria (CBN), to drive home the point.
A cursory look at some aspects of FSS 2020, and how the strategy is expected to achieve its objectives, shows that, if the nation is committed to its implementation, the value chain is expected to stimulate business and create jobs. “In short, FSS 2020 is one of the catalysts to take us out of recession and depression,” added Jokosenumi.
He singled out a key component of the idea, Ombudsman: “This is a service within the financial sector. It covers all the financial system. It is to fast track resolution between customers and customers without going to court. If foreign investors know that dispute resolution in the financial system or e-payment can be settled without going to court, they will be willing to come to the country.”
To corroborate this, Mohammed Suleiman, the Director of FSS 2020, stated: “The credit registry has over N60 billion assets base. If the law (on FSS 2020) is passed, people can register their assets and the asset base may run into trillions. “Take Pension contribution, for instance, It is about N6.12 trillion. We want to start deploying the fund into infrastructure development with strong partners like the Nigeria Sovereign Investment Authority (NSIA) investing in infrastructure bond.This would make it secure. Out of the 36 states, only 14, and lately Kaduna, has keyed into the mandatory pension scheme. We are going to get states, Association of Local Governments of Nigeria(ALGON) and Governors’ Forum, among others, to make them key into the Pension Scheme. Afterwards, we can start to create Construction Bond for the pension fund.”
However, as lofty as the FSS 2020 seems, it is bogged down by the some challenges such as inadequate skills for financial products development (Capital Market); inadequate collaboration of regulators and stakeholders; inavailability of investible fund for long term financial products and increasing cost of transactions and operations. Weak risk management; low level of card usage on PoS and high ATM usage for cash transactions, physical insecurity and prevalence of financial fraud .The rest are low level of financial literacy and inclusion of low acceptability of mobile money at merchant locations; non existence of sound collateral management, inadequate legal and regulatory framework for the commodities market.
The biggest constraint, according to Jokosenumi, is non- signing of the Electronic Transaction Bill. Hear him:
“Things that would change the fortunes of the nation took eight years before they (the National Assembly) could even listen. After passing the bill at the tail end of the 7th Assembly, The president withholds his assent .If we donít have the law, we cant harvest all the benefits of the e-payment system.”
But despite the challenges, FSS 2020 is currently collaborating with CBN, Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission(SEC), the Nigerian Stock Exchange (NSE), Federal Inland Revenue Service (FIRS), Debt Management Office (DMO),Nigerian Commodity Exchange (NCX) and Financial Reporting Council (FRC) to increase the tempo in transforming the financial markets in the country.