By Babajide Komolafe

IT is two years to the end of the time frame for achieving the vision to make Nigeria’s  financial system to be the safest and most diversified  financial system among emerging markets supporting the real economy.

This time frame was set in 2006 when regulators and government agencies in the financial system, led by the Central Bank of Nigeria (CBN), developed the Financial System Strategy 2020 (FSS 2020).

The Central Bank of Nigeria head office in Abuja.

The FSS 2020 vision was prompted by the prediction of Goldman Sachs that Nigeria is among 11 emerging countries that have the potential to be among the 20 largest economies  by year 2020. The overriding objective was to develop and transform Nigeria’s financial sector into a growth catalyst and engineer Nigeria’s evolution into an international financial centre. In addition to this, FSS 2020 was designed to strengthen and deepen the domestic markets, enhance integration with the external financial  markets; and promote sustainable economic development.

Effective coordination

The task of implementing the vision was vested in the participating institutions including Nigeria Deposit  Insurance Corporation, Securities and Exchange Commission, Nigeria Stock Exchange, National  Insurance Commission (NAICOM), Pension Commission of Nigeria (PENCOM), Debt Management Office, Financial Reporting Council, Federal Inland Revenue (FIRS) and the Ministry of Finance.

To ensure effective coordination of activities under FSS 2020, an  FSS 2020 Office was created domiciled in the CBN, led by the Deputy Governor, Corporate  Services, and  the   Coordinator,  Financial System Strategy (FSS)  2020, Alhaji Suleiman Barau.

What has been achieved?

The Nigerian financial system is still far from what was envisioned in FSS 2020 document. However, the commitment of the various participating institutions to delivering on its objectives has led to  policy initiatives   which have  produced profound impact on the financial industry and the economy at large.

In  the Mortgage Sector, a robust secondary mortgage has been  created with the  Central Bank of Nigeria and the Mortgage operators clearly  streamlined which  has led to the establishment of the Nigeria Mortgage  Refinancing Company  (NMRC). Also, the Uniform Underwriting Standard which was nonexistent has now been codified and introduced in the Mortgage Industry to regulate their practice. In addition, the framework for the Mortgage Asset Registry has been developed to capture Mortgage transactions on a common IT platform.  The CBN has also introduced the categorization of Primary Mortgage Banks into National, State and Local.

Furthermore, implementation of the FSS 2020 has led to radical improvement in the nation’s payment system. This is reflected in the increasing deployment and adoption of electronic payment channels, propelled by the cashless  policy of the CBN.

Interbank funds transfer

There is also the Central Bank of Nigeria Immediate Transfer Service (CBSITS) and an interbank platform for effecting payment transactions.

In addition is the Electronic Cheque Clearing (ECC) system, which allow for a same day cheques-clearing process, the Nigeria Electronic Funds Transfer (NEFT) as an alternative means for interbank funds  transfer among others including the Real Time Gross Settlement System, as  well as the  introduction of the Biometric Verification Number (BVN).

Also,  Nigeria’s pension asset has grown from about N3 trillion  in 2013 to N6.02 trillion in 2017. The Nigerian Sovereign Investment Authority (NSIA) has been appointed advisers to manage the deployment of Pension funds into long  term infrastructure deployment.

For  the insurance sector, the Micro insurance (Takaful) and  compulsory insurance schemes are being implemented. Also, improvement in the settlement of insurance claims of policy holders is being pursued as confidence and  trust of the  holders which was at lowest ebb has now being restored.

The CBN has also introduced several interventions to improve funding and access to finance for Small and Medium Enterprises (SMEs). These include the creation of  the National Collateral Registry for lending and access to finance by SMEs and the  passage of the Secured lending using movable assets Bill by  the national  Assembly.

Challenges to FSS 2020

More than the above could have achieved but for some challenges which have militated against implementation of the FSS 2020. Highlighting some of these challenges, Coordinator of the  “There  are some challenges militating against the achievements of  FSS2020 objectives including but not limited to the following- Funding and  logistics, technical  challenges, human capital development, especially the  inability to attract  talent from abroad to Nigeria, delays in the passage of the  identified  financial sector bills by the national assembly is a  drawback, policy  inconsistency and lack of continuity.”

 Roadmap for the future

In a bid to strategise on how to overcome these challenges, the  participating  institutions led by the CBN Governor, Mr. Godwin Emefiele  held a strategic  review meeting in Lagos last week.  While addressing the meeting Emefiele commended participating  institutions and the  FSS 2020 for their commitment to the vision. He specifically commended Barau,  who will retire from the apex bank this month, for his  leadership of the FSS  2020 office since inception.

 The way forward

Emefiele  however called for increased support and collaboration among  the institutions.

He said:  “without doubt, services provided by the financial System Strategy 2020,  have impacted on economic growth of Nigeria in the last 10 years. We expect them to do more by collaborating with the implementing  institutions to promote  sustainable economic growth.

“If today, only five out of 10 people have access to financial services, how do we  ensure that by the next three years, eight out of 10 are able to  have access to  financial services. This session that closes today will provide a roadmap that will help us achieve that.”

Speaking on the sidelines of the meeting, Barau also made for  increased collaboration,  stressing that whatever have been achieved so far was made  possible by  collaboration.  He  said: “One of the things we must continue to do is to  continue to work together  so that the huge challenge we have on inclusiveness is  achieved as quickly as  possible because we do not have time to wait.”