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Published On: Tue, Nov 21st, 2017

CBN FSS 2020, a ‘Game Changer’ for Nigeria’s Financial System

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By Etuka Sunday

The Central Bank of Nigeria (CBN) took a bold and determined step 10
years ago through Financial System Strategy (FSS) 2020 to reposition Nigeria’s Financial System, making it becoming Africa’s financial hub.
FSS 2020 is a Financial Model set by the Federal Government to realise its dream of becoming one of the top 20 economies of the world by Year 2020.
Before 2004, Nigeria’s financial system could not deliver on its defined roles and was characterized by: low aggregate banking credit to the domestic economy (20% as percentage of GDP), systemic crisis, growing resort to Central Bank bailout, inadequate capital base, oligopolistic structure-10(out of 89) banks accounted for over 50% of total banking system asset, Poor corporate governance, low banking / population density -1:30, 432, payment system that encouraged cash-based transactions, insurance industry was weak, undercapitalized, Pension Funds were largely absent, stock market was shallow.
However, with determined, tireless and consistent efforts of the Governors of CBN: Prof. Charles Soludo, Sanusi Lamido Sanusi and the current Governor, Mr Godwin Emefiele, Nigeria now has a payment system comparable to what obtains in other developed economies.
History has it that the FSS 2020 project was initiated by Prof. Soludo 10 years ago, but it took the combine efforts of the three Governors to successfully drive the implementation of the project.
Although the journey has 3years before its finishing line of 2020, the achievements are obvious, that even the financial analysts have commended the initiative.
Speaking on the achievements of FSS 2020, the Head, Banking and Finance Department, Nasarawa State University, Keffi, Dr. Uche
Uwaleke, said, the “FSS 2020 was launched by CBN in 2006 to fast-track the implementation of the country’s Vision 20,20:20 with the support of other financial system regulators such as Securities and Exchange Commission (SEC), National Insurance Commission (NAICOM), and National Pension Commission (PENCOM).
He said: “the strategy was aimed at making Nigeria’s financial system one of the safest among emerging markets economies by deepening the domestic market and enhancing its integration with foreign financial markets.
“It is important to note that implementation of the FSS 2020 did not commence till sometime in 2008 and has been adversely affected by poor funding of the FSS Secretariat and inadequate attention by successive regimes which paid little attention to the implementation of Vision 20,20:20.
“Some progress have been made though: the BVN policy of the CBN and the e-dividend initiative of SEC are clear examples. There is the need to properly integrate it into the country’s Economic Recovery and Growth Plan (ERGP),” he said.
Dr. Uwaleke said, “FSS 2020 was designed to be a key driver of Vision 20,20:20. The government is now working with a new economic blueprint known as the ERGP. Therefore, for FSS 2020 to remain relevant, the strategies must now conform with the ERGP.
He said: “The FSS Secretariat should be seen to be working very closely with the ERGP delivery unit under the Presidency and the Ministry of Budget and National Planning.”
Also speaking on the milestones so far achieved, and the Challenges of FSS2020, the Deputy Governor, Corporate Services, CBN and Coordinator, (FSS 2020), Alhaji Suleiman Barau, said: “we have to look at them from the existing sectors perspectives. For 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).
Alh. Barau who has been in charge of FSS 2020 for 12years said, “the Uniform Underwriting Standard which was nonexistent has now been codified and introduced in the Mortgage Industry to regulate their practice.
In addition, he said, “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. The 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.
“Through sensitization and mass advocacy, PenCom has stepped up prompt settlement of pension claims for retirees and is embarking on massive technical trainings using the IT platform to ensure prompt service delivery and implementation of the Micro pension scheme. For 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. There is also capacity building of insurance and inclusion of insurance in the school curriculum for prompt service delivery.
“For MSME Sector several intervention to improve funding and access to finance for Small Businesses. Also creation of the National Collateral Registry for lending’s and access to finance by SMEs is a huge milestone, especially with the passage of the Secured lending using movable assets Bill by the NASS.”
Notwithstanding these milestones, Alhaji Barau said: “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.”
He said, “the FSS2020 is just a platform that brings together all the key implementing institutions to achieve a common objective in the financial system. Since actual implementations are being done by these agencies, our attempt is to identify where there are challenges or issues or duplication of efforts, FSS2020 call the attention of the affected institution to address it in the overall interest of the financial system.
“The FSS2020 initiatives were carefully tailored to align with the mandate of these institutions that have the responsibility to implement the identified initiatives which is within the realm of the FSS2020 Objectives. For Instance, CBN has achieved a lot in the areas of Payment System Vision 2020 which is an Initiative of the FSS2020 along with the Cashless policy. In the same vein, SEC has been successful in the implementation of the E-dividend policy which has always been one of the initiatives FSS2020 had been advocating, and so many others.
“Also, the funding of FSS2020 Programme had been solely the borne by the CBN, until recently when some of the implementing institutions like PenCom have started making contribution to the funding of the FSS2020 Activities with others showing interest to do same. Most of the implementing Institutions have been providing technical assistance to the running of the programme in the areas they are more specialized.
Speaking on what government can do to make the implementation of the initiatives successful, he said: government could initiate policies that will ease the doing of business in Nigeria and encourage investment within the country; ensure that there is enabling infrastructure and guarantee maximum peace and security in the country.
“Also the development plan of government must have bearing with the needs and realities of the citizenry especially issues of unemployment, microeconomic stability and capacity building in all sectors of the economy.”

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