Boosting financial inclusion with national domestic card scheme – New Telegraph Newspaper

The recent launch and brand unveiling of the national domestic card scheme, known as “AfriGo,” by the Central Bank of Nigeria (CBN) and the Nigeria Interbank Settlement System (NIBSS), is a significant development given that it will further enhance financial inclusion in the country, writes Tony Chukwunyem

In her address at the Zenith Bank Tech Fair held in November, the Director of Information Technology at the Central Bank of Nigeria (CBN), Rakiyat Mohammed, stated that about 36 million Nigerians have zero access to financial services. Mohammed, whose department spearheaded the development and deployment of the CBN’s digital currency (the eNaira), explained that the development of the digital currency was borne out of the need to provide “Financial inclusion to the 36m Nigerians who currently lack access to financial services.” Noting that the apex bank was the first Central Bank in Africa and second in the world to launch a Central Bank Digital Currency (CBDC), she said: “Nigeria has the 6th most advanced retail payment system. This was according to a report by ACI. So, if you look at that report you will see why. “Remember, when the President launched eNaira, he did say in the next ten years, we expected eNaira and its associated technologies to increase our GDP by $20 billion. We are working on that.” Indeed, in a statement he issued on October 25, last year, that is, exactly a year after President Muhammadu Buhari launched the e-Naira-another initiative that the regulator believes would help drive financial inclusion, among other benefits-the Director, Corporate Communications Department at the CBN, Mr. Osita Nwanisobi, announced that the apex bank, in collaboration with NIBSS, planned to launch a national domestic card scheme that is aimed at promoting stability, financial inclusion and growth in the financial and payment system. He said that the scheme was also expected to foster innovation within the Nigerian domestic market, while enabling African and international interoperability, allowing banks and other institutions to offer a variety of solutions including debit, credit, virtual, loyalty and tokenised cards amongst others. Nwanisobi also pointed out that the scheme could also be leveraged as a platform for the seamless dissemination of government-toperson payments and other social impact initiatives, enhancing financial access and supporting the growth of a robust and inclusive digital economy. He noted that domesticating the card scheme would further enhance data sovereignty, enabling the development of locally relevant products and services and reduces demands on foreign exchange.

He said: “The CBN recognises the significant benefits from delivering Africa’s first central bankdriven, domestic card scheme, which, when delivered at scale, has the potential to become the largest in Africa, and one of the largest in the world.” According to him, by introducing the scheme, Nigeria joins a growing list of countries including India, Turkey, China, and Brazil as leading examples – which have launched domestic card schemes and harnessed the transformative benefits for their respective payments and financial systems, particularly for the under-banked. However, the CBN postponed the date for the launch of the national domestic card scheme from January 16, 2023 that it had announced in October, to January 26.

Promoting cashless policy

In his speech at the virtual launch of the scheme last Thursday, CBN Governor, Mr. Godwin Emefiele, said that although efforts by the apex bank to deepen financial inclusion in the country since 2012, through the adoption of a National Financial Inclusion Strategy (NFIS), that promotes a cashless policy, many Nigerians still lacked access to financial services, adding that the national domestic card scheme would help to tackle the problem. He said: “You will agree with me that the Cash-less Policy has created value, engendered competition and attracted investment into the Nigerian banking and payments ecosystem. We have witnessed the proliferation of products, channels and participants with significantly increased foreign direct investments into the Nigerian payments space. “The CBN has also over time focused attention on robust development of financial service touchpoints including the ATMs, PoS terminals and agent networks. The success of the Shared Agent Network Expansion Facility has led to growth in the number of agents to about 1.5 million across the Federation with the capacity to accept card payments from Nigerians. “Whilst the penetration of card payments in Nigeria has grown tremendously over the years, many Nigerians are still excluded. The challenges that have limited the inclusion of Nigerians include the high cost of card services as a result of foreign exchange requirements of international card schemes and the fact that existing card products do not address local peculiarities of the Nigerian market. “Given the limited usage of cards by Nigerians and in a bid to deepen penetration, the bank actively promoted the national domestic card scheme which will be accessible to all Nigerians and also address our local peculiarities. This scheme is therefore an important plug in the gap that has remained with us since the cashless policy was introduced.” Mr Emefiele stressed that the national domestic card scheme was not targeted at preventing international service providers from continuing to provide services in Nigeria, but “aimed at providing more options for domestic consumers whilst also promoting the delivery of services in a more innovative, cost effective and competitive manner.” According to him, “the CBN is committed to a robust, efficient and safe national payments system and welcomes innovation from both domestic firms and foreign investors. The Nigerian market is vast, and the current participants have done so much in the last twelve years to transform the ecosystem. Yet there is much ground to be covered as millions of Nigerians are yet without payments cards to consummate transactions.” Stating that he was convinced that the national domestic card scheme would boost financial inclusion in the coming months, the CBN Governor said: “We can no longer neglect the vast majority of the Nigerians whose daily payments needs are micropayments. We need to capture them in national statistics to further understand their transaction dynamics and properly target interventions in that sector of the economy.” He further stated: “Indeed, the national domestic card scheme bodes opportunities for our economy to integrate the informal segment of our economy, reduce shadow banking, bring more Nigerians into the formal financial services with attendant diversification of deposit portfolio which will further strengthen the stability of the banking industry.” Also, in her address at the event, the Deputy Governor, Financial System Stability, at the CBN and Chairman, NIBSS, Mrs. Aishah Ahmad, pointed out that the Nigerian national domestic card scheme is the first central bank led national domestic card initiative in Africa. She said: “The national domestic card scheme is momentous development for a number of reasons, not in the least the data sovereignty it confers, cost savings for the industry; it heralds a new vista of opportunities for the card business, that several countries continue to recognize and leverage as they create their own domestic card schemes to augment existing foreign payment card rails. “This is an important platform for further innovation to solve some of the most pressing issues around financial inclusion, SME payments and trade facilitation primarily, supporting the drive for a robust digital economy for the Nigerian market the African continent and the world. Robust industry engagement and collaboration was critical in getting Nigeria to this crucial milestone.”

Zero dollar charges

Analysts note that at the event, CBN Governor, Emefiele, announced that with the take-off of the national domestic card scheme, the apex bank would prohibit payment of dollar charges on domestic transactions. He said that transaction charges on all cards would henceforth be paid in naira, except for international transactions, adding that AfriGo would be cheaper and would be a matter of national pride, with the potential to boost financial inclusion. The CBN Governor stated: “The national domestic card avails us the sovereignty of our data. Secondly, it comes at lower costs, and thirdly, the issue of foreign exchange. “At this time when foreign exchange challenges persist globally, it is important for me to say that we have come up with this card to ensure that all card online transactions will now effective immediately, begin to go on the Nigerian national domestic system. “At some point in the next few weeks, I am sure that the CBN will come up with the cut-off. All domestic card transactions that will be conducted in Nigeria will have to be through Nigerian Domestic Cards.” Continuing, he said: “Your existing cards are fine. You can continue using them but given that charges by foreign cards are in dollars, we will no longer pay dollars for the charges on those cards. “We will only pay dollars for charges on transactions that are done outside Nigeria. NIBSS, the CBN, and Nigerian banks will work together to see how to segregate those transactions. We will bar domestic charges from the Nigerian foreign exchange market at some point in the very near future.”


However, as some industry stakeholders have pointed out, for the national domestic card scheme to achieve its objectives, the CBN and its partners would have to take sensitisation campaigns on it to every nook and cranny of the country.




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