By Emma Ujah, Abuja Bureau Chief
FOLLOWING the development of the National Economic Empowerment and Development Strategy, NEEDS, which is Nigeria’s comprehensive plan for poverty reduction, employment generation, wealth creation and value reorientation, it became clear that with a more robust financial sector, and as Goldman Sachs predicted (based on Nigeria being one of the “Next 11” countries with the potential to become like Brazil, Russia, India and China), Nigeria could become one of the top 20 biggest economies of the world by 2025. FSS 2020
Thus, the Financial System Strategy 2020, FSS 2020, was born. It is the blueprint for engineering Nigeria’s evolution into an international financial centre and for developing the financial sector into a growth catalyst that will enable Nigeria’s transformation into one of the 20 largest economies in the world by 2020. It is being driven by the Central Bank of Nigeria.
Its mission is: “To promote sustainable economic development”, with a Vision of being the safest and most diversified financial system amongst emerging markets of the world.
The overarching objective of the FSS2020 is to integrate reforms in the financial sector and develop a shared vision that would enable the financial system to catalyze growth and help transform Nigeria into one of the 20 largest economies by 2020.
The broad objectives of FSS 2020 include: Developing a shared vision and an integrated strategy for the nation’s financial system.
- Developing market and infrastructure strategies that will align fully with the strategic intent of the overall system.
- Creating a performance management framework and building a partnership of all key stakeholders to implement the strategy; and
- Establishing a harmonious and collaborative environment for the development and delivery of the strategy.
- Also read:CBN says 1m smallholder farmers accessed finance through anchor borrowers
Transformation of the Financial System
The implementation of FSS2020 since 2007 and the alignment of a number of the financial sector regulators and other key players in the sector (mostly referred to as the Implementing Institutions) is helping to foster key transformation in the Nigerian Financial System. Over the last several years across the various sectors in the system, a number of reforms and initiatives have been pursued to strengthen the domestic financial market and position it as a catalyst to drive growth in the real sector and to enable seamless linkage with international markets.
Some of the key activities include the ongoing drive to expand access to finance, the drive to integrate the informal sector, the transformation of the payments system, the expansion and growth of the Bond Market, the improving credibility and size of the capital market, ongoing stability of the banking sector, and ongoing focus on governance and risk management.
- Recently, the drive to engineer Nigeria into an International Financial Centre, IFC, in the Medium to Long term had a welcome boost with the public hearing of the necessary legislation. The failure of the eighth National Assembly to pass the relevant Bills was a major setback for the strategy.
The strategic sectors through which the objectives of the vision are to be achieved include financial markets, insurance, micro, small and medium enterprises, pension and mortgage.
Implementation of Key Financial Sector Initiatives
In line with the mandate of the apex bank, the Financial Sector initiatives which have been implemented include inflation targeting as a monetary strategy towards achieving a single digit. Although great strides have been recorded in this regard since 2014, with inflation now slightly above 11 per cent, it is yet to be fully achieved.
Checking of inflation to the single-digit; Micro-economic stability; Financial Inclusion; Corporate Governance in Banks and Other Financial Institutions; Cashless Policy; Changed from WDAS to RDAS; E-Governance.
Although progress has been made on many fronts, there is still a long way to achieving the objectives. For instance, the CBN efforts at bringing most Nigerians into the banking fold through its financial inclusion strategies has brought in more customers to the banks.
Access to finance by players in the real sectors of the economy has become a major focus of the banks, with a push from the CBN. However, the larger majority of Micro, Small and Medium Enterprises (MSMEs) operators still complain of lack of access to finance.
Similarly, not much has been achieved in bringing more Nigerians into the insurance industry owing to the fear that claims would not be paid by the insurance companies.