Nairametrics
  • Home
  • Exclusives
    • Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Ranking & Reviews
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • General News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Ranking & Reviews
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • General News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Industries Financial Services

Are Payment Service Banks key to Emefiele’s financial inclusion legacy?

Kelly Ushedo by Kelly Ushedo
July 17, 2021
in Financial Services, Op-Eds, Opinions, Spotlight
Total loans in Nigeria's banking sector hits N15.35 trillion, Are PSBs key to Emefiele’s financial inclusion legacy?

CBN's governor, Godwin Emefiele

Share on FacebookShare on TwitterShare on Linkedin
  • Over 36% of Nigeria’s adult population is unbanked. 
  • Nigeria contributed 3.4 percent to the world’s unbanked population in 2017 even though its population was 2.6 percent of the world’s population.
  • There are just a little over 40 million Nigerians with BVN, a far cry from the estimated population of Nigerian adults.

This is numbing data if you are a Nigerian living the urban life where you juggle transactions between two to three of your bank cards on a daily basis, troubling data if you are with the banks who think their retail sales teams are meeting their customer onboarding targets, and humbling data if you are the CBN who set an 80% target for financial inclusion by the year 2020 and has consistently rolled out different frameworks and policies to achieve this, including licensing three Payment Service Banks (PSBs).

Payment service banks are a new category of small-scale banks established by the CBN in 2018 to facilitate high volumes of low-value transactions, offering payment and remittances under a secured technology-driven environment. The scope of their license is to deepen financial inclusion, and they are forbidden from credit risk and foreign exchange operations.

Since their licensing, however, there has been little impact on the financial inclusion scene, and they are beginning to look like a surplus arrangement to the CBN’s financial inclusion drive, and for good reason too, as the newly authorised PSBs are bound to face stifling operational and profitability problems in their financial inclusion campaign.

PSB operators, who by the way are required to have a minimum paid-up capital of N5 billion, are in competition for basically the same markets with Microfinance banks (who require a capital of ₦200 million, ₦1 billion, and ₦5 billion for a unit, state, or national license, respectively) and mobile money operators whose paid-up capital is N2 billion, not to mention the commercial banks who are not averse to making inroads into whatsoever markets will earn good returns for their shareholders.

Operational efficiency in this market could be an uphill task as the PSBs lack the infrastructure that the MMO and commercial banks already have in place, and can not rely on the government’s non-existent infrastructure in the rural areas where these PSBs are supposed to amass their targets. Challenges with insecurity and poverty are also a major concern in banking in the rural areas, mostly the northern parts of the country where poverty rates are as high as 77% and insecurity has become a booming industry.

That the PSBs are not allowed to take on credit risk is a major disadvantage to them as well as their customers. The PSBs, by virtue of their license, forfeit the profit margins they could potentially make by lending to their customers. On the other hand, there seems to be no incentive for their customers to bank with them when they could be getting much-needed financial assistance from the MFB competitors.

Perhaps on this note, the CBN would do well to borrow a leaf from the Nobel prize-winning Grameen Bank of Bangladesh by mixing financial inclusion with a dose of financial empowerment. Who knows, perhaps this will help address the issues with insecurity in these rural areas. After all, the Grameen Bank’s Nobel peace prize (jointly awarded to its founder) was for their work to “create economic and social development from below.”

In the years since Soludo’s consolidation era of banks, Nigerians have come to expect a landmark achievement from subsequent CBN regimes. There is an unsaid word, an expectation that CBN Governors should distinguish themselves in a particular area of endeavour in banking reforms or economic input that will leave a legacy for which they will be remembered.

Lamido Sanusi’s manner of exit as CBN Governor, and subsequently, Emir of Kano does not in any way undermine his work as CBN governor where he stabilised the sector amidst a global downturn and was the first Governor in Nigeria’s recent history to nationalise banks in a bid to protect depositors.

In Godwin Emefiele, we have a man passionate about growth in the real sector of the economy who continuously seeks to achieve this by exchange rate unification and financial inclusion, amongst other policies.

While the exchange rate unification battle may be a protracted one, financial inclusion is achievable and could provide an easy win for the present CBN leadership if the right policies are enforced, stakeholders are provided a level playing field and are rightly incentivised.

With a revised financial inclusion target of 95% by 2024, the PSB strategy to financial inclusion could be Emefiele’s biggest win yet—if rightly implemented.

Related

Tags: CBNGodwin EmefielePayment System Banks (PSB)

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Eco Bank
Access Bank
Bankers Committee
First bank


Flowmono

Bfpeer
Mega Millions
FCMB
Ikeja Electrics
Kwakol Markets




    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • Russia reduces interest rate to 11% boosted by the success of the ruble
    • Lagos seals properties in Ikoyi, Lagos Mainland for various contraventions
    • Terra 2.0 gets community approval

    Follow us on social media:

    Recent News

    Russia’s Central Bank holds interest rate at 20%, warns of inevitable inflation 

    Russia reduces interest rate to 11% boosted by the success of the ruble

    May 26, 2022
    Lagos seals 16 buildings in Ikeja, issues contravention notices

    Lagos seals properties in Ikoyi, Lagos Mainland for various contraventions

    May 26, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Ranking & Reviews
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • General News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com