The Central Bank of Nigeria (CBN) yesterday said the Federal Government has slashed its budget by 50 per cent, lamenting that the development has seriously affected its capabilities to fund some financial system initiatives.
Its Director of the Financial System Stability (FSS 2020), Mr Mohammed Suleiman who spoke when members of the FSS 2020 visited the the Nigerian Deposit Insurance Corporation (NDIC) in Abuja, lamented that funding has been a major issue. He said: “The FSS 2020 programme since its inception has always been bankrolled single handedly by the CBN; the CBN is beginning to weary a little bit because the current budget this year was reduced by 50 per cent and that is majorly affecting some of our capabilities to implement some of these strategic objectives.”
Suleiman lamented that 50 per cent of the budget cut is no small measure at all. “We need to agree on the funding approach, we need to have a rethink and get the support of all implementing institutions. The FSS2020 is not a CBN project it is a financial system project, all financial system players have to take ownership of the project and be willing to support it,” he said.
During the exchange of views on the way to move the FS2020 project forward, an official of the NDIC said it costs about N198 billion to fund the FSS2020 project.
Suleiman said: “We will structure the FSS2020 to include dedicated team for monitoring, tracking and reporting and ensure regular quarterly or biannual meeting of stakeholders for the progress and implementation of the strategy.”
He identified some of the challenges the FSS2020 team have had to grapple with to include inadequate financial skills development particularly in the capital market; unavailability of funds for long term financial products; non existence of listing rules for special purpose vehicles (SPVs); increasing cost of transactions and operations and weak risk management.
Other challenges include low level of card usage on point of sale (PoS) terminals and high automated teller machine (ATM) usage for cash transactions; physical insecurities and prevalence of financial fraud; low levels of financial literacy and inclusion; low acceptability of mobile payment and merchant locations; non existence of sound collateral management; inadequate legal and regulatory framework for commodities market and unwillingness of private companies to go public; inadequate foreign direct investment and non existence of integrated credit scoring system.
To ensure that the FSS2020 project does not fail because of lack of funds, Suleiman said the intervention is to advocate that agencies making budgetary provisions provide funds for development because these products need the support of budget to implement them.
He also expressed concern that Nigeria does not “have the required skills for the products. We need to build the capacity of the industry, we have started capacity building at Woodpecker for heads of strategy of implementing institutions who were in attendance at Golden Tulip in Lagos recently.”
According to him, the programme “cost the CBN £144,000 because facilitators were brought in from United Kingdom. We will also build capacities in the bonds markets and derivatives.”