General News
Access to Finance Requisite for Economic Growth – EFInA
Enhancing Financial Innovation and Access (EFInA) in its finding has submitted that given significant financial sector reforms and private sector innovations, access to finance is poised for growth in Nigeria.
The report provides a diagnostic of access to finance and identifies key issues for microfinance, branchless banking and SME finance.
Microfinance
The Microfinance Policy, Regulatory and Supervisory Framework for Nigeria developed by the CBN in 2005 initiated an important turning point in the industry with the creation of the Microfinance Bank (MFB) as an institutional vehicle for privately owned, deposit-taking microfinance institutions (MFIs). Prior to this, a few notable Non Governmental Organisations (NGOs) were established that have grown to provide microfinance in a sustainable manner according to international standards of good practice. However, until recently the majority of institutions have been smaller NGOs, community banks, cooperatives, and non-bank financial institutions with uneven management capacity, low outreach to clients, and challenges to becoming profitable.
The framework is designed to unite the best of the NGO credit organizations, the privately owned community banks and the new MFI initiatives under a common legal, regulatory and supervisory regime. The microfinance framework catalyzed two driving forces in the microfinance industry at an extraordinary pace and scale. First is the immediate investment of capital by large number of Nigerian and international investors in newly created MFBs. The second force is the new regulation and supervision framework for this emerging industry. The rate of growth in the microfinance industry, measured by number of institutions, capitalization, or portfolio growth, is among the fastest of any microfinance industry globally at similar early stages of development.
As part of the microfinance policy framework, the CBN in collaboration with the bankers Committee created the Micro Credit Fund (MCR) to partner with state governments to channel credit to the micro enterprise sector. The CBN reports that the balance of funds available to the MCF at the end of 2007 was around N20 billion. Specific lending policies for the MCF were not shared with the diagnostic team. In itself, the MCF reflects an emphasis on credit that is pervasive in Nigerian policy discussions around access to finance. If large volumes of wholesale funds are made available to the MFBs, they will have less interest in providing savings services and may become dependent on wholesale borrowing to fund growth.
Branchless Banking
The main payment instruments available in Nigeria include large-value credit transfers, cheques, retail electronic debit and credit transfers, and payment card systems, among others. Electronic purses (a form of stored value cards), internet-based banking along with mobile payment services. Fir the first seven months of 2009, ATM transactions represented nearly 91 percent of the value of all electronic fund transfers in Nigeria. For the first seven months of 2008, point of sale (POS) transactions represented over 4 percent of the value of all electronic fund transfers in Nigeria. The POS penetration rate represents a ratio of less than 50 POS terminals per 1million inhabitants. The CBN is in the process of drafting mobile payment guidelines to promote branchless banking. Discussions with members of the CBN’s Banking Operations Department indicates that there is a well developed understanding of the many legal domains implicated by a comprehensive branchless banking regulatory regime. These domains include the often complicated issues presented by the use of agents, Anti-money laundering/combating financing of terrorism (AML/CFT) and consumer protection. Given that effective branchless banking requires the cooperation of parties outside the control of the CBN, such as telecommunications service providers and consumer protection agencies, it is unclear how effective the mobile payments guidelines will be in practice. In addition, even parties under CBN supervision, such as private switch operators, appear to be resistant to CBN efforts at promoting interoperatability, a primary component of expanding access to finance. However, reports indicate that draft operational rules for interoperatability through a national switch are awaiting CBN approval.
SME Finance
SME finance is constrained by lack of data, regulations and infrastructure for collateral and insufficient credit information. Policy making for the sector is severely constrained by the lack of data that would allow a better understanding of the problems and performance of ongoing initiatives. Regulations require loans to be collateralized and limit the types of acceptable collateral. At the same time the laws relating to security over movables (i.e., equipment) are antiquated, fragmented and do not offer Nigerian businesses an effective means of raising capital. The current credit information system does not address the needs of the SME sector. However, with quick approval of well designed regulations, a competitive and open credit information industry where private credit bureaus working alongside the Credit Risk Management System (CRMS) can quickly begin to cover the population.
With some exceptions, there are no real SME finance products. Banks and other authorities tend to treat SMEs as “small corporates” with no clear understanding of SME profiles. Globally, leasing is a widely-used service for SMEs, although the lack of a leasing law is constraining development of this sector in Nigeria. Finance companies have limited tools for credit risk assessment and lack of information and understanding of value chains that are important in the development of factoring services.
Recommendations
Greater transparency of financial performance and market information and strengthening capacity at all levels.
Moving quickly on promoting financial infrastructure could help Nigeria’s financial sector modernize and significantly expand access to finance through the design of new laws, regulations and guidelines to upgrade the payment system, private credit registries and collateral registries.
Harmonize all AML/CFR regulations to permit clear operation of risk-based approach.
Enhancing consumer protection by facilitating consumer access to credit reports and requiring disclosure of “disputed” status.
The establishment of a consumer protection body dedicated to protecting consumers of all financial services, not just mobile payment services, given the growing diversity and complexity of the market.
Independent Corrupt Practices and Other Related Offences Commission (ICPC) indicted the National Information Technology Development Agency (NITDA) and other ministries over administrative lapses that allowed the fictitious Presidential Foreign Investment Promotion Council (PFIPC) to operate.
Musa Aliyu, chairman, ICPC, stated that NITDA, alongside the Office of the Secretary to the Government of the Federation (OSGF), the Budget Office, and other bodies, failed to carry out adequate due diligence and standard operating procedures.
ICPC said however, clarified that the findings pointed to severe internal control weaknesses and administrative negligence rather than active official complicity by NITDA and the other affected agencies.
The briefing followed a 30-day investigation ordered by the president on July 7 into allegations surrounding the purported presidential council.
The commission also cleared the presidency and the Central Bank of Nigeria (CBN) of any wrongdoing but blamed institutional lapses in several ministries, departments and agencies (MDAs).
Aliyu said investigators established that Adeniyi Adeyemi, the director-general, was never appointed by the federal government and that the PFIPC had no legal existence.
“As you may recall, on the 7th of July, Mr. President directed the ICPC to conduct an investigation into the fake Presidential Foreign Investment Promotion Council and submit a report within 30 days,” he said.
“Today, exactly within the stipulated period, we have submitted an interim report based on our interactions with all stakeholders involved.”
According to Aliyu, Tinubu directed the commission to make its findings public in the interest of transparency and accountability.
He said the investigation found that Adeyemi’s purported appointment letter was forged.
“It has been established that Adeniyi Adeyemi Matthew was never appointed by the Federal Government or any authority whatsoever,” he said.
“The Presidential Foreign Investment Promotion Council, which sometimes they called the Presidential Foreign Intervention Promotion Council, was never established by any law, executive order or any valid instrument of government.
“The appointment letter presented by Adeniyi Adeyemi Matthew was completely forged alongside similar documents used to perpetuate the illegal activities of the fake agency.”
Aliyu stated that a purported government gazette used to legitimise the organisation was also fabricated.
“If you recall, there was a gazette which he used to support the fake agency. That gazette is an illegal document that never passed through the processes prescribed by law,” he stated.
“Our investigation found that the office used by the fake agency was the office of the Presidential Economic Advisory Council. The office was broken into and access was gained illegally. That was how he was able to operate from there.”
Aliyu also revealed that investigators uncovered two additional fictitious government agencies allegedly created by the suspect — the FCT Investment Promotion Agency (FIPA) and the Foreign Investment Promotion Agency/Public-Private Partnership (FIPA-PPP).
According to him, fake legislative instruments were used to create the agencies and open bank accounts.
Despite the elaborate scheme, the ICPC chairman said the investigation found no evidence that federal government funds were disbursed to the fake council.
“Our investigation found that no funds of the federal government were approved or disbursed to the fake PFIPC,” he said.
“We also discovered no weaknesses in the systems of the State House or the Central Bank of Nigeria during our investigation. The fake appointment letter did not originate from the presidency.
“Our investigation found that some public officers failed to carry out due diligence and failed to comply with standard operating procedures in their ministries and departments. That gave him the opportunity to carry out these illegal acts.”
Nigeria tax system is build on taxing prosperity not poverty, according to Dr. Zacch Adedeji, executive chairman, Nigeria Revenue Service (NRS).
Dr. Zacch Adedeji, executive chairman, Nigeria Revenue Service
Adedeji, also dismissed the insinuation that the government’s tax reform is aimed at extracting money from Nigerians .
He said the essence of reform is creating an economic environment where individuals and businesses can prosper.
Dr. Adedeji made the clarifications on Sunday night while appearing on Channels Television’s Politics Today, where he defended the administration’s tax reforms and addressed concerns over rising government revenue amid the economic hardship facing Nigerians.
According to him, the government’s objective is to tax the fruits of investment rather than the investment itself.
“For us at Nigeria Tax, we are not there to extract. Our focus is not revenue. I don’t want to tax poverty. I’m to tax the fruit, not the seed, and I’m to tax the return, not investment.”
Adedeji explained that the government would generate more revenue as businesses became more profitable, without necessarily increasing the tax burden on individuals and companies.
He said a company that made N100 in profit could generate N30 in tax revenue for the government, but if its profit increased to N200 or N300, government revenue would rise accordingly.
“So, if I want to make more, I must work for you to make more. And that is why it is in the best interest of us in Nigeria Revenue Service that businesses are doing well, individuals are doing well,” he said.
He said the approach was consistent with President Bola Tinubu’s economic agenda, which seeks to remove barriers to investment and create a more conducive environment for businesses to operate and expand.
Adedeji cited reforms in the electricity sector as part of the government’s efforts to stimulate economic activity.
He noted that the Electricity Act had devolved powers to state governments to generate, transmit and distribute electricity, arguing that improved power supply would boost production and productivity across the economy.
Prof Chidi Oguamanam, Nigerian scholar, has been invited to serve as a member of the United Nations Educational, Scientific and Cultural Organization (UNESCO’s) World Commission on the Ethics of Scientific Knowledge and Technology.
Prof Chidi Oguamanam,
The appointment, which covers four years from 2026 to 2029, recognises Oguamanam’s contributions to the ethics of science and technology and related disciplines.
The invitation was conveyed in a letter from UNESCO on Saturday, which described the commission as an independent advisory body and forum for reflection on major ethical challenges arising from advances in science and technology.
The letter stated, “Recognising your significant contributions to the ethics of science and technology and related disciplines, it is my honour to invite you to become a member of UNESCO’s World Commission on the Ethics of Scientific Knowledge and Technology for a period of four years, from 2026 to 2029.”
Established in 1998, the commission brings together experts from different regions and disciplines to examine ethical issues associated with scientific and technological developments, climate change and the environment.
UNESCO said regional balance was important to the commission’s membership to promote multidisciplinary and transdisciplinary debate on emerging ethical challenges.
According to the organisation, the commission provides guidance and recommendations through its reports to UNESCO, its member states, the scientific community, policymakers, civil society and other stakeholders.
Its previous work has contributed to global normative instruments, including the Declaration of Ethical Principles in Relation to Climate Change adopted in 2017 and the Recommendation on the Ethics of Artificial Intelligence adopted in 2021.
UNESCO noted that the commission had recently published reports examining the ethics of quantum computing and space exploration and utilisation.
The organisation said the commission would now focus on new areas identified for its future work programme, including emerging ethical challenges arising from scientific and technological developments.
In inviting Oguamanam to join the commission, UNESCO expressed confidence in his expertise and active contribution to the development of its forthcoming reports.
The organisation also said it expected members to contribute to “horizon scanning” of emerging ethical challenges and help identify issues that should be addressed in the commission’s next cycle.
Oguamanam’s appointment adds to Nigeria’s representation in international discussions on the ethical implications of science, technology and innovation.
He is expected to serve on the commission alongside experts from different regions and academic disciplines during the 2026–2029 term.
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