Leveraging digital platforms to boost financial inclusion – New Telegraph
Efforts by the Central Bank of Nigeria (CBN) to increase awareness of digital financial services and also ensure widespread adoption of its digital currency (eNaira) by Nigerians are positively impacting the apex bank’s quest to improve the country’s financial inclusion rate, writes TONY CHUKWUNYEM
When on June 26, 2019, the Chairman, Global Growth and Opportunities of the Bill and Melinda Gates Foundation, Mr. Roger Vorhiles, paid a courtesy visit to the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, during in which he announced that the Gates foundation had launched a new initiative to bridge the financial inclusion gap in Africa, Emefiele in his remarks noted that the apex bank remained committed to improving financial inclusion in the country as well to maintain the stability of the financial system. 95% target He also revealed that he has mandated a change in the adult financial inclusion target to reach 95% in Nigeria by 2024, saying CBN is exploring new techniques and policies to foster inclusion financial services, some of which included the Licensing and Regulatory Guidelines for Payment Services Banks (PSBs), the ease of expanding the shared agent network, and generally providing an enabling regulatory environment for Fintechs to contribute to financial inclusion. Furthermore, in his address at the 30th Seminar for Financial Correspondents and Business Writers held in Lagos in March 2021, the Governor of CBN, who was represented by the Deputy Governor for General Services of the bank apex Mr. Edward Adamu urged Nigerians to harness the benefits of the underlying crypto technology (blockchain), pointing out that while CBN had imposed restrictions on cryptocurrency transactions, its “political stance does not preclude Nigerians to harness the benefits of the underlying technology that supports crypto transactions, which is a distributed ledger, commonly referred to as blockchain.
launch of eNaira
So, given the above, the historic launch of CBN’s digital currency, known as eNaira, on October 25 last year, may not have come as a total surprise to observers. Of the industry. Admittedly, this was a landmark event as it made Nigeria the first African country and the second in the world to issue a Central Bank Digital Currency (CBDC), but CBN had made it clear long before the launch that it was not opposed. using the many benefits of the underlying technology that supports crypto and digital currency transactions, which is the distributed ledger, also known as blockchain. Indeed, in his speech at the launch of eNaira, President Muhammadu Buhari enumerated the many benefits that eNaira would bring to the Nigerian economy, including increasing the country’s Gross Domestic Product (GDP) and acceleration of financial inclusion. He said, “Indeed, some estimates indicate that the adoption of CBDC and its underlying technology, called blockchain, can increase Nigeria’s GDP by $29 billion over the next 10 years. “CBDCs can also help increase remittances, foster cross-border trade, improve financial inclusion, make monetary policy more effective, and enable the government to send direct payments to citizens eligible for programs. specific socials. Similarly, while giving updates on eNaira during the eNaira Hackathon Grand Finals held in Abuja last week, Emefiele highlighted the potential of digital currency, which he said has recorded total financial transactions amounting to 4 billion naira and 840,000 downloads since its launch in October last year to improve financial inclusion. The CBN Governor said, “When we launched eNaira, we promised to increase the level of financial inclusion in the country because, just like the naira, eNaira should be accessible to all Nigerians and would provide more opportunities to bring the unbanked into the country. Digital Economy. “I am happy to inform you that by next week, Nigerians, banked and unbanked, will be able to open an eNaira wallet and transact by simply dialing *997 from their phones.” Shortly after, traders and consumers with bank accounts can use NIBSS Instant Payment (NIP) to transfer and receive eNaira to any bank account. This will further deepen the integration of eNaira with the existing national payment infrastructure. Continuing, he said, “eNaira is expected to improve financial inclusion, support poverty reduction, enable the direct disbursement of social assistance to citizens, support a resilient payment ecosystem, improve the availability and ease of use of central bank money, facilitate diaspora remittances, reduce the cost of cash processing, reduce costs and improve the efficiency of cross-border payments, among others. “eNaira was also developed to provide Nigerians with a cheap, secure and reliable means of payment. Unlike offline payment channels, such as agent networks, USSD, handheld devices, cards, and near-field communication technology, eNaira would provide access to financial services to underserved and unbanked segments of population. Innovative eNaira-based products and services would enhance Nigerians’ participation in the digital economy and foster the development of a thriving Fintech ecosystem. “To achieve these goals, the project has taken a phased approach, with the first phase focusing on banked users, while the policy focus of the second phase is around financial inclusion.”
Awareness of digital financial services
Analysts note that in addition to highlighting the benefits of eNaira, the CBN has also been ramping up awareness of digital financial services in recent weeks as part of its efforts to boost economic growth. For example, on July 8, the CBN issued a circular to all depository banks (DMBs), other financial institutions (OFIs) and non-bank financial institutions, titled: “Exposure Draft on Digital Financial Services Awareness Guidelines (DFS). .” The apex bank explained that “the country is witnessing an exponential increase in the provision and use of digital financial services and products following the advent of COVID-19. guideline to address gaps in consumer knowledge and practice with DFS The overall objective of the guideline is to provide a set of principles and expectations that financial service providers should incorporate into the provision of DFS, fair treatment and better understanding of consumers to ensure positive outcomes.He also said that one of the main objectives of the guidelines is to establish “digital financial literacy (DFL) standards for financial service providers (DFSP).” Thus, the document states that DFSPs, among other requirements, must “provide information that will enable consumers to enablers to differentiate DFS products from conventional banking products and services; ensure easy access to information on all product offerings to enable consumers to make informed decisions; provide product information in plain English and local languages; conduct outreach to underserved populations about the DFS options available to them and provide information on how to use the product and how to obtain support services when needed. In addition, DFSPs are expected to “develop and deliver educational materials to potential and existing customers through core channels such as short message service (SMS), unstructured supplemental service data (USSD), and locations. agents, in addition to applications, web and social networks. media platforms and submit the developed educational materials to the Director of Consumer Protection, CBN for review. Additionally, under the guidelines, CBN said DFS providers are required to “disclose all terms, conditions, fees and other charges associated with product offerings prior to listing; ensure the integration of privacy and data protection standards into internal policies; conduct evidence-based awareness campaigns to educate consumers on how to protect their assets and sensitive data and develop default settings on DFS that are inherently “opt-out” and not “opt-in” data sharing with third parties, and clear and simple opt-in language for data sharing.
The guidelines also proposed that DFS vendors ensure confidentiality of data collection and sharing when registering for the product, as well as an easy opt-out process for data sharing. Regarding product usability and market testing, the guidelines stated that DFS vendors should “ensure that deployed products are suitable for target customers; test product usability with users and modify as necessary to reduce transaction errors and provide consumers with reliable and easily accessible channels for obtaining support services. I
In order to prevent fraud and manage the risks arising from it, the exposure draft proposed that DFS providers “provide fraud prevention messages and advice to consumers using both audio and virtual modes of communication in local languages and also monitor fraud reports to identify emerging fraud and educate their customers on how they can protect their assets. The document also stated that DFS vendors should “implement strategies to assess their consumer awareness and product usage policies; develop indicators and