CBN to incorporate lessons learned into various regulation frameworks


Alliance for Financial Inclusion (AFI) member institution the Central Bank of Nigeria (CBN) recently participated in six knowledge exchanges as part of an AFI grant to support the development and implementation of its financial inclusion strategy. CBN met with Bangko Sentral Ng Pilipinas (BSP), National Bank of Cambodia (NBC), Banco Central do Brasil (BCB), Central Bank of Kenya (CBK), the National Treasury of the Republic of South Africa and Colombia's Ministerio de Hacienda y Crédito Público.

CBN gained substantial information and knowledge that will lead to the formulation of recommendations to amend existing regulation frameworks in the nation, including recommendations on microfinance, mobile financial services (MFS) and agent banking regulation frameworks.

Phase one of the process was completed when CBN held its "Launching of the Financial Inclusion Strategy (FIS)" on 23-24 October 2012 in Abuja, Nigeria. Vice President of Nigeria Namadi Sambo, the U.N. Secretary General’s Special Advocate for Inclusive Finance for Development Her Royal Highness Queen Maxima of the Netherlands, and CBN Governor Sanusi Lamido Sanusi were all present.

The FIS is currently being finalized for mass production for distribution to stakeholders.

Phase two included undertaking peer learning exchange visits to cover agent banking, MFS and microfinance, and to support development of the regulatory framework. The three areas were identified as ones that presented the greatest learning potential for fast-tracking financial inclusion in Nigeria.

CBN organized a troika of teams that comprised 3-4 people to each go on knowledge exchange visits to learn and build the capacity of the bank, and to develop an appropriate regulatory framework for second-tier microfinance institutions, as well as agent and mobile banking.

A delegation traveled to Brazil and Colombia to learn about agent banking. In Brazil they attended BCB, Caixa Econômica Federal and Bank of Northeast of Brazil (BNB). In Colombia, they visited Banca de las Oportunidades, Ministerio de Hacienda y Crédito Público, Superintendencia Financiera de Colombia, and Bancolombia.

A second team visited South Africa and Kenya to learn about MFS. In South Africa, members visited the National Treasury, South African Reserve Bank, FinMark Trust, Banking Association of South Africa, Payment Association of South Africa and First National Bank (FNB). In Kenya, the delegation went to CBK and Safaricom.

The final delegation visited the Philippines and Cambodia with the main objective to appreciate the regulatory frameworks and models of microfinance in both countries. Institutions met with in the Philippines included the People's Credit and Finance Corporation (PCFC), Microfinance Council of the Philippines, Inc. (MCPI), CARD Bank, Kasagana-Ka, Smart Telecommunications and Globe G-Exchange Inc. In Cambodia, the team visited with Acleda Bank and Prasac MFI.

Highlights from the learning experiences incurred while in these countries included:

  • Microfinance proved to be an effective means of expanding access to and usage of financial services;
  • Micro insurance is a major financial product with huge potential for deepening financial inclusion;
  • Group lending holds promise for Nigeria microfinance banks and institutions as it would provide a platform for low-cost financial services to members and provision of business development services, financial literacy and education; and
  • Considering the success of the PCFC, the lead government entity in charge of mobilizing resources for microfinance services for the poor in the Philippines, the proposed Micro, Small and Medium Enterprises Development Fund (MSMESDF) could be a profitable and sustainable venture as it is structurally and functionally designed to operate similarly according to CBN.

Moving forward CBN will act to incorporate various lessons learned into the different regulation frameworks.