At a major forum convened by the World Bank Group at the just concluded IMF/World Bank Group Annual Meetings in Washington DC, bankers, financial leaders and government functionaries of member countries set a goal of achieving universal financial access by 2020 as a way to accelerate economic progress and reduce extreme poverty.
The leaders at the forum included Nigeria’s Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala.
According to the World Bank spokesman for Africa, Agustin Castro, the goal is of utmost importance since 2.5 billion adults worldwide are ‘un-banked’ and almost 200 million micro to medium enterprises in developing economies lack access to affordable financial services and credit. This, he said, the bank considers as a major obstacle to reducing poverty levels and create much needed new jobs.
Also, the Minister of Finance, Dr. Okonjo Iweala, told journalists attending the meeting at a post annual press briefing that Nigeria has secured a $1.4billion support facility from the World Bank to speed up the development of the power sector and infrastructure in Nigeria. She said “The World Bank has pledged to support Nigeria’s power sector and infrastructure development with about $1.4 billion. The World Bank is planning to set up a global infrastructure facility and Nigeria would be among the first countries to benefit considering its population and infrastructure needs.”
According to the World Bank Group “More than 50 countries have now made commitments to financial inclusion targets. “If they fulfill their commitments, if other countries also set bold targets, and if the private sector responds by unleashing its resources and know-how – then we can reach universal access by 2020,” said Kim.
In a dialogue with Her Majesty Queen Máxima of the Netherlands – who is the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development and the Honorary Patron of the G20 Global Partnership for Financial Inclusion – Kim noted that financial inclusion can be a powerful accelerator of economic progress, and can help achieve the World Bank Group’s goals of eliminating extreme poverty and building shared prosperity.
The importance of universal access to financial services was also emphasized by Queen Máxima who pointed out that every person and every business in any country deserves that opportunity. The priority of broadening financial inclusion to individuals and small businesses globally was underscored by a panel of government and business leaders.
“Beyond ensuring universal financial access, a challenge which we all face is to ensure that financial services are available to meet the range of household and enterprise needs,” remarked Ngozi Okonjo-Iweala, the Coordinating Minister of the Economy and Minister of Finance of Nigeria who recently launched Nigeria’s financial inclusion strategy.
“Rwanda has an ambitious vision for financial inclusion, and I am pleased to say that we have made significant progress already towards that target, almost doubling formal financial inclusion from 21 per cent of adults in 2008 to 42 per cent in 2012,” said John Rwangombwa, the Governor of the Central Bank of Rwanda.
“When low-income workers or poor families gain access to basic financial services, they gain a foothold on the first rung of the ladder toward prosperity,” Kim said. “Access to savings accounts, credit or remittances can help families afford essential services like water, electricity, housing, education and health care. When firms gain access to financial services such as credit or insurance, they can reduce business risks, expand their firms and create more jobs.” Low cost, accessible transactions instruments and bank accounts can provide a gateway to this range of financial services.
Setting and then achieving country-led national targets will open the way toward broadening financial inclusion, Kim said. Adopting ambitious financial inclusion commitments can unleash private-sector innovation and investment, helping advance the goals of eliminating poverty and building shared prosperity.
Constrained access to finance for small businesses in many emerging markets hinders their growth and ability to generate much needed new jobs. Most of the 2.5 billion adults who lack accounts at formal financial institutions often use informal methods to save, borrow and secure their assets. These undermine efforts to reduce poverty levels worldwide. Kim emphasized that by energizing all the parts of the World Bank Group, the institution is committed to fulfilling its role as the leading global partner – for both public-sector and private-sector institutions – in supporting countries as they work toward these goals.
According Castro, while the goal of achieving universal financial access by 2020 as a way to accelerate economic progress and reduce extreme poverty is ambitious, the World Bank President, Jim Yong Kim, assured that universal access to financial services is within reach, attributing it to new technologies, transformative business models and ambitious reforms.
During the meeting and in line with this set goal, the Central Bank of Nigeria was one of the 45 signatories of commitments to financial inclusion worldwide (the Maya Declaration) that include: Creating an enabling environment to harness new technology that increases access to and lowers the costs of financial services; implementing a proportional framework that advances synergies in financial inclusion, integrity, and stability; integrating consumer protection and empowerment as a key pillar of financial inclusion; and utilising data for informed policymaking and tracking results.
In her own press briefing, Dr Mrs Ngozi Okonjo-Iweala said “The World Bank Group, that is the World Bank and the International Finance Corporation (IFC), the private sector arm of the World Bank, through the World Bank president has made it known that they want Nigeria to be one of the focus countries in sub-Saharan Africa. This means that they are willing to work with Nigeria to invest hundreds of millions of dollars.
“They have a lending programme of about a billion dollars a year, but they are willing to use that and pull in more resources from the U.S. through the Power Africa Initiative, using the offices of IFC to help us address infrastructure problems.
Continuing she said, “They want to concentrate on power, and they are already actively working with several private companies that want to work in Nigeria. A break down of the $1.4billion pledge showed that $700 million dollars is made up of guarantees from the International Bank for Reconstruction and Development for the power sector as well as $700 million dollars investment pledge in power transmission sector,
She added that the meeting also focused on how to improve the bank’s social safety network programme in Nigeria.
Okonjo-Iweala said that the bank and the Federal Government would collaborate on a 400 million dollar social safety net programme which would key into the existing programmes already running in the country. The programmes, she said, include, saving one million lives; instant cash transfers, improving nutrition for children, immunisation, HIV/Aids and anti-malaria programmes among others. She said the programme under conditional cash transfer would be used to scale up the project on cash transfer in education in Kano State to improve the number of out-of-school children, especially the girls.
According to Okonjo-Iweala, Nigeria also got pledges from the bank to help improve statistics. The minister reiterated that the 2013 budget was on course describing some speculations on the budget in the media as false.
“We have spoken to the National Assembly on the amendments and they have done something and we have decided to continue with the implementation. Please, 2013 budget is being implemented. What is being perpetrated by some sections of the press, that somehow the 2013 budget has fallen apart and not implemented, is false. This budget is being implemented, it still has some issues here and there, but we’ve decided to go ahead to find a solution and take care of the missing money to pay people involved under the SURE-P programme”, she said