Stories by Omodele Adigun
The Central Bank of Nigeria (CBN) has called on the Federal Government to fully implement its recently launched Economic Recovery and Growth Plan (ERGP) to boost financial inclusion in the country as recession has dealt a serious blow on the National Financial Inclusion Strategy Implementation (NFISI)
The advice is contained in the annual report on NFISI obtained from the website of the apex bank.
According to the report, one key issue which adversely affected financial inclusion developments in 2016 was the economic recession, which the country was facing.
“While the oil price further declined from its already low level in 2015, the naira depreciated significantly and overall Gross Domestic Product (GDP) declined by 1.51 per cent relative to the previous year. This negatively affected the ability of the low income population to save, the likelihood of borrowers to pay back outstanding loans as well as the overall business performance of financial institutions. Therefore, one key recommendation is that the Federal Government implements its recently launched ERGP according to schedule because of a simultaneous relationship between economic growth and financial inclusion. Positive economic growth will likely increase the impact, which financial inclusion will have on economic growth itself,” the report states.”
It explains that the formal financial inclusion rate remained constant at 48.6 per cent between 2014 and 2016, which represented an achievement of 86 per cent of the 2016 target.
The apex bank adds: “Based on EFInA’s Access to Financial Services in Nigeria 2016 Survey, the formal financial inclusion rate remained constant at 48.6 per cent between 2014 and 2016, which represented an achievement of 86 per cent of the 2016 target.
“Electronic payments and savings: The percentage of the adult population owning a commercial bank account, proxied by the percentage of adults having a Bank Verification Number (BVN) increased from 23.6 per cent in 2015 to 28 per cent in 2016. The achieved value as at 2016 stayed behind the 2016 payments and savings targets of 56.4 and 45.6 per cent, respectively.
Credit
The percentage of adult population that had borrowed or paid back a loan through a regulated financial institution over the last 12 months increased marginally from 1.5 per cent in 2014 to 1.8 per cent in 2016, based on estimates from EFInA’s Access to Financial Services in Nigeria 2014 and 2016 Surveys. The 2016 target of a formal credit penetration of 28.8 per cent was not reached.
Insurance
The percentage of the adult population covered by a regulated insurance policy increased from 1.1 per cent in 2014 to 1.8 per cent in 2016, according to estimates from EFInA’s Access to Financial Services in Nigeria 2014 and 2016 Surveys. The penetration was far below the defined 2016 target of 24.8 per cent.