World Bank plans universal access to banking facilities by 2020

World Bank plans universal access to
banking facilities by 2020
on october 21, 2013 at 1:31 am in business, finance
*As Nigeria secures $1.4bn support
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