What Nigerians should expect from CBN’s financial system strategy – MD Suleyman

Executive Director, FSS 2020, M.D Suleyman.

In 2007, the Central Bank of Nigeria (CBN) launched the Financial System Strategy (FSS2020) aimed at calibrating the financial system as a means of ensuring economic growth and development in order to grow the Nigerian economy to be one of the 20 largest economies in the world by 2020. In this interview, the Executive Director of FSS2020, M.D Suleyman, speaks on the impact of the strategy and what to expect in the coming year.

What is FSS2020 about?

The FSS2020 is an initiative of the CBN and other regulatory institutions in the financial system that was launched in 2008, but its implementation was in 2009. The initiative came about since 2006 as a result of the prediction of Goldman Sac that come 2025 Nigeria is going to be among the net 11 developing nations in the world. So when that happened, the CBN governor felt that we needed to start a project to actualise that prediction to make Nigeria one of the top 20 economies, not by 2025, but by 2020. So that target was set in 2006.

The regulatory institutions in the financial system came together with some critical stakeholder ministries to craft the strategy document, and the vision of that strategy is to make Nigeria the safest and fastest growing financial system in the world by 2020, supporting the real sector, but after a 2013 review, the vision changed to becoming the safest and most diversified financial system among emerging nations supporting the real sector for economic development.

The strategy is to focus on the emerging economies in the Africa and Nigeria itself. So, basically that is what the strategy is about.

What is the focus of the strategy?

The strategy is anchored on three pillars: to deepen the Nigerian domestic financial market, to integrate the Nigerian financial market and the international market, and then the third pillar is to support real sector in promoting economic growth.

That was how we came about bringing in the Micro, Small and Medium Scale Enterprises (MSMEs) sub-sector into the strategy document so as to support the real sector in our bid to develop and deepen our economy. That’s how the strategy was crafted.

What sectors are you looking at in the implementation?

We are looking at five sectors in the implementation of the strategy: insurance, pension, mortgage, financial market (comprising of the money and capital market) and the MSME sub-sector.

These are the constituents of the strategy document. We are as well working in collaboration with the regulatory agencies and market players in all these sectors to make it happen.

What is the impact of the financial system strategy adopted in the last 10 years?

So far so good, though 2020 is just around the corner, but we have been able to achieve some milestones in some of the sectors, particularly the money market, because our focus in the money market is enhancing the payment system in the country; that’s how we came about innovations in the payment system space.

Today the payment system space in Nigeria is among one of the best in the world to the extent that other countries are coming to learn from us to see how we got to where we are today. You know in pre-2006 we couldn’t transact any business in any branch other than the branch which your account is, but today, even in the comfort of your bedroom, you can do your transactions: bank transfers, pay your bills and you can do so much using other channels of financial services to transact your business. And that I think is a great deal and I will say we have done much in that respect.

And for the capital market, gone are the days when you wait for your dividend warrants or share certificates from entities that you subscribe for their shares. Now with the coming up of the CSCS shares are registered online and people can manage and monitor their shares and their dividends can be paid into their accounts. All these came about from the innovations of the FSS2020 strategy.

Financial inclusion is part of the strategy we are trying to achieve. Just recently, last year December, the Governor of CBN, who is the chairman of the programme’s supervisory board of FSS2020, at an executive retreat in Lagos, gave a marching order that we needed to upscale the inclusiveness of Nigerians into the financial system to 80 per cent by 2020. So we are working with the national financial inclusion strategy secretariat, and to achieve that and to do that in the pension sector to have this micro pension that everybody is talking about, we have come up with an initiative that SMEs that want to patronise government for contracts must come up with certificate of compliance in participating in the pension scheme, at least to have three staff in their companies registered in the pension scheme. And that is working. The next level we want to get to on that is to encourage the banking sector, particularly the CBN, to make it a condition that any SME that wants to access intervention funds from the developmental funds in the CBN, either agric or the SME funds, that the provision of the certificate of compliance should be part of the requirement. That will go further in deepening the involvement of the SMEs in the pension funds thereby achieving the micro pension scheme that we are bringing in.

Likewise in the insurance industry, more products are coming in. Before now, people had this apathy about going into the insurance industry because of either cultural or religious beliefs. But now we are beginning to introduce into the space the non-interest insurance services like the Takaful so that will take care of the large segment of the society that has not been captured in the micro insurance industry.

For the mortgage, a lot of initiatives are coming up on board for the provision of affordable housing at a very reasonable costs. Though we are faced with the challenge of funding, but we are making effort to see how we can pluck from the low hanging fruits of the direct foreign investors who are interested in the housing industry.

So far so good we are talking to about two groups now: the African-Diaspora Chamber of Commerce who are coming in with billions of dollars for that purpose, we are still discussing with them on that in collaboration with the Federal Mortgage Bank, the Nigerian Mortgage Refinancing Company and the Mortgage Bankers Association.

By and large, we have made some good strides in the FSS2020 strategy. There is still work to be done and we are leaving no stone unturned to see to the achievement of our objectives.

With just one year remaining, is there going to be an extension of the strategy?

Usually, no strategy is cast in stone, the beauty is that part of the requirement of the strategy is that you apply some agility and flexibility to it. Where you find out that you are experiencing some issues or challenges; by that agility you can make it suit your purpose, so for that reason, if we are unable to meet our target by 2020; of course we are already embarking on a review of where we were before the strategy and where we are after the implementation of the strategy has commenced, and I think that document will be a referral document for research and records.

By 2020 we intend to do a final review of the progress of the strategy and then we will be able to decide whether we have been able to achieve our objectives or not and whether there will be need for us to extend that date or not.

What should Nigerians expect from FSS2020 in the coming months?

If what we are working on now works out and we get the support of our principals, I think Nigerians should begin to see a complete revolution in the areas of mortgage market development in the country and a lot of infrastructure; both financial and physical infrastructure, coming to the country.

We have succeeded in getting PenCom to agree to the increase of the level of pension funds that would be deployed to infrastructural development. And once that happens, Nigerians would see a lot of activities going on in the issuance of corporate bonds, green bonds, infrastructural development, in the spirit of sustainable banking principles to meet all these climate change challenges where we will start to encourage healthy environment.

So pretty soon we are going to have affordable housing, long-term housing projects and mortgage financial transactions in the country.

We have an initiative of coming up with the Green Smart City development, we have opened conversation on that and all that is in the spirit of climate change. The Green Smart City is going to come on stream, we have written to the Minister of the FCT, we have written to some of the states, because we want to have the pilot run in five states: FCT, Lagos, Kaduna, Enugu and Rivers.

The city is all about climate change, low emission, encourage green environment and reduce environmental pollution. The city will use alternative sources of energy and no generators, and environment where we can have automated surveillance security system for the city.

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