The Central Bank of Nigeria’s approach to financial inclusion has included a number of regulatory actions to increase the supply of financial services, and these could be incorporated into sustainable financing frameworks in other contexts.
Nigeria’s experience provides key examples of ambitious approaches that are well aligned with a broader roadmap for sustainable finance. It also demonstrates some of the challenges of this approach.
The Central Bank of Nigeria (CBN) adopted the National Financial Inclusion Strategy in 2012, with an ambitious target of reducing the portion of the adult population that is financially excluded to 20 percent by 2020. The strategy was fourfold:
• Agent banking – delivering banking services outside of traditional bank branches;
• Mobile banking and payments – access to financial services through consumer technology;
• Linkage models – cooperation between banks, government, and microfinance institutions; and
• Client empowerment – financial literacy and consumer protection.
Implementation of these strategic priorities required CBN guidelines and frameworks, including tiered know-your-customer requirements; agent banking regulation; the national financial literacy strategy; and consumer protection policies.
The CBN has acted to address the challenges on digital financial services through a number of supply-side and regulatory actions, including:
• signing a 2018 memorandum of understanding with the Nigerian Communications Commission on digital payment systems to take greater advantage of innovative models that have substantially increased financial inclusion in other countries;
• levelling the playing field between providers via Payment Service Bank licenses in order to increase the category and number of digital financial service providers;
• harmonizing ‘know-your-customer’ requirements for opening and operating accounts and mobile wallets on
all financial services platforms, a key priority in the 2018 Financial Inclusion Strategy; and
• establishing a regulatory sandbox to support the development of innovative financial services, in partnership with the Nigeria Inter-Bank Settlement System (NIBSS).
The CBN has also focused on enabling the rapid growth of agent networks.
To increase the extension of agent banking, the CBN launched the Shared Agent Network Facility to roll out 500,000 agents to extend financial services to people in excluded regions. As a result of the national financial strategy and its implementation, the exclusion rate had dropped to 41.6% in 2016 from 46.3% in 2012, and continues to trend downward.