FSS 2020 in danger as FG cuts CBN budget by 50%

•Project requires N198bn for completion

The Central Bank of Nigeria (CBN) on Tuesday warned that its capability to fund some financial system initiatives is now in jeopardy as its 2016 budget has been slashed by 50 percent.

Director of the Financial System Stability (FSS 2020) of the CBN, Mohammed Suleiman, who disclosed this when members of the FSS 2020 visited the Nigeria Deposit Insurance Corporation (NDIC) on Tuesday in Abuja, said the team will have to 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 stated that funding has been a major issue since the inception of FSS 2020 programme as it has 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% and that is majorly affecting some of our capabilities to implement some of these strategic objectives.”

According to him, “50% of our 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.”

Suleiman revealed that the sum of N198 billion would be required to ensure a successful execution of the FS2020 project.

He enumerated some of the challenges being faced by the FSS2020 team to include inadequate financial skills development particularly in the capital market; unavailability of investable funds for long term financial products; nonexistence of listing rules for special purpose vehicles; increasing cost of transactions and operations; weak risk management.

In addition, low level of card usage on POS and high ATM usage for cash transactions; physical insecurities and prevalence of financial fraud; low levels of financial literacy and inclusion; low acceptability of Mobil payment and merchant locations; nonexistence 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 nonexistence of integrated credit scoring system are other hindrances.

He then advocated “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” in order to ensure that the FSS2020 project does not fail because of lack of funds.

He also expressed concern that Nigeria does not “have the required skills for these 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.

The FSS2020 director then revealed that that capacity building programme “cost the CBN £144,000 because facilitators were brought in from UK. We will also build capacities in the bonds markets and derivatives.”