The Central Bank of Nigeria’s (CBN) customer due diligence regulation is set to boost enrolment for Bank Verification Number (BVN) and financial inclusion in Africa’s most populous country.

BVN is a fundamental prerequisite for individuals to own an account, whether new or existing. It serves as a unique identifier that utilises human characteristics to enhance authentication and ensure real-time security procedures.

According to the Nigeria Inter-Bank Settlement System (NIBSS), the number of unique bank customers experienced a 54.9 percent growth from 2015 to 2022, with the total count rising to 56.4 million in 2022 from 36.4 million in 2021.

BVNs increased to 40.4 million in 2019 from 36.4 million in 2018. The number of customers with BVN rose to 45.8 million, 51.9 million, and 56.4 million in 2020, 2021, and 2022, respectively.

According to a recently released report, titled ‘The Nigeria Financial Service Market’, by Moneiepoint, Nigeria’s adult population reached 121 million in 2020. Out of this, 54 million individuals were found to have bank accounts, while the remaining 67 million individuals were identified as part of the unbanked population.

Ngozi Odum, an analyst at CardinalStone Partners Limited, highlighted that the disparity between the number of BVNs recorded and the number of individuals without bank accounts creates an opportunity for payment service banks to thrive.

“The necessity of possessing a wallet is not as stringent as that of maintaining a bank account, which could lead individuals to overlook the importance of having a unique number associated with their financial transactions,” she said.

The CBN customer due diligence 2023 guideline specifies call-to-actions banks should execute to combat financial crimes.

“It aims to bolster compliance with anti-money laundering and counter-terrorism financing provisions while aligning with international best practices,” it said.

With the requirement stated in the regulatory guideline, a banking customer is expected to own a BVN to become an account owner.

Odum said this will have a way to include the 67 million Nigerians who are excluded and accelerate the cashless policy in the economy.

Based on the analysis conducted by BusinessDay using NIBSS data, the number of active bank accounts in Nigeria grew to 133.5 million by December 2021, with an additional 18.7 million accounts becoming active, compared to 114.9 million accounts in 2021.

While dormant bank accounts reported in 2021 were to 57.9 million, compared to 52.2 million in 2020.

Oyinkansola Aregbesola, an investment research analyst, said: “The growth in BVN and account ownership is at a slow pace, and this is a result of financial literacy and inclusion. We have the unbanked in large numbers.

“Nigeria currently has 133 million multidimensionally poor people, representing 63 percent of the nation’s total population of 211 million individuals, according to the 2022 Multidimensional Poverty Index report by the National Bureau of Statistics (NBS).”

Aregbesola added that a significant portion of these individuals face challenges in meeting their basic needs, making it difficult for them to have sufficient resources for both sustenance and savings in a bank.

According to her, in order for these financially excluded individuals to be included, the government should prioritise enhancing the economy, reducing unemployment, and improving the overall well-being of the population. By doing so, there would be greater demand for banking services, leading to increased inclusion of the financially excluded individuals, she said.

In 2020, Nigeria’s financial inclusion rate grew to 64.1 percent from 63.2 percent in 2018, according to Enhancing Financial Innovation & Access (EFinA).

The 2020 figure is below the CBN’s 80 percent financial inclusion target for the year 2020. And although the inclusion rate dropped marginally from 36.8 percent in 2018 to 35.9 percent in 2020, the excluded adult population of 38.1 million reported in 2020 was higher than the 36.6 million recorded in 2018, meaning 1.5 million adults fell into the exclusion circle in two years.

Read also: CBN debunkes 10 years BVN life span

“When we look at the percentages and numbers, in terms of financial inclusion, we are lagging behind payments by 25 percent and credits by 37 percent,” Isaiah Owolabi, chief executive officer of EFinA, said.

However, the National Financial Inclusion Strategy spearheads the country’s drive towards achieving the financial inclusion target of 95 percent by 2024 through increased adoption and usage of financial services in priority demographics, amongst others.

Experts have proffered digital financial services, integrating financial inclusion into development programs, and certified mobile money agents, among others as some of the initiatives Nigeria needs to achieve its 95 percent financial inclusion target.

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