Efficient payment system pivotal to Nigeria’s financial system

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele has stressed that an efficient payment system is pivotal to Nigeria’s financial system as well as in engendering sustained economic growth and development.

The governor pointed out that it was on this basis that the CBN has been making strides in the payment system sphere, from effective strategic planning, in collaboration with various stakeholders, to positioning the system for the facilitation of commerce, financial inclusion and inclusive economic growth.

Emefiele said this in a speech he presented the 10th annual banking and finance conference of the Chartered Institute of Bankers of Nigeria (CIBN) held in Abuja Wednesday.

The conference was entitled:” Innovation in the Financial Services Sector: Driving Nigeria’s New Economy.”

According to him, it was in line with this vision, the central bank embarked on a programme to transform the payment system, aimed at migrating transactions from cash to electronic payment in 2010.

“This programme, which is now about six years old, was sequel to the successful implementation of specific payments infrastructure enhancements, which included interoperability at payments infrastructure level and the commitment of the government, expressed through the 2009 directive, that all government payments be effected electronically.

“Between 2010 and 2015, we were able to grow the active point of sale (PoS) systems from less than 5,000 to over 70,000. More also, instant payments was implemented for online, real-time, retail account-to-account transfers, over ten e-commerce businesses commenced operations in Nigeria; while mobile money operations now have over ten million mobile money subscribers currently.

“The ongoing distribution of farm input, through the use of mobile wallet based fertilizer vouchers also attest to the importance of an efficient payments system in an economy. These changes were not just limited to growth in electronic payments transactions, but also improved financial and economic inclusion, as more people now have access to payments services.

“We must also acknowledge the effect of these innovations on our goal of assisting to attain full employment, in view of the several thousands of jobs created down the value chain. Such jobs include those working as network agents, logistics officers, technicians, programmers, system developers, etc,” he explained.

In his address, the President/Chairman of Council, CIBN, Prof. Segun Ajibola, said in view of the present economic situation, this is the time the financial services sector needs to play some catalystic roles to redirect the economy to path of recovery, growth and development.

The CIBN boss noted that over the years, the country has been inundated with hopes and desires for a new dawn through import substitution strategies, adding that the time is now ripe to walk the talk. “Again, Nigeria has experimented with multitude of policies and programmes aimed at supporting this lower end of the economy with minimal results.

Perhaps, one way of entrenching a lasting initiative is to benchmark the models already successfully implemented in countries such as India, Malaysia, South Korea, Indonesia where the contribution of micro businesses to GDP hovers around 75 per cent. “South Korea for example recovered from the Asian Financial Crisis of 1997 through SMEs.

In 1999, SMEs accounted for 81.9 per cent of industrial employments and 74.3 per cent of total manufacturing in the country. We should also be prepared to accept the truism that the promotion of this segment of the economy can succeed if only the various institutions and agencies provide their complementary roles of providing the enabling environment, infrastructural base and funding support,” Ajibola added.