Overview

Innovations for Poverty Action (IPA) has partnered with the Central Bank of Nigeria (CBN) to establish an Embedded Evidence Lab within the CBN's Consumer Protection Department. This strategic collaboration focuses on promoting data- and evidence-based financial inclusion policy, enhancing the effectiveness of consumer education initiatives to financial consumers across Nigeria.

Context

The Central Bank of Nigeria (CBN) serves as Nigeria's primary financial regulatory authority, responsible for monetary policy, financial system stability, and consumer protection. One of the CBN's core mandates is to safeguard financial consumers across Nigeria; however, relevant data on consumers and financial institutions was often isolated within different teams and lacked actionable analysis for regulators and sector stakeholders. Further complicating this picture, the rapidly evolving Nigerian financial services sector presents unique consumer risks that require new, adaptive approaches to market monitoring and consumer protection regulation.

Lab Approach

Recognizing these challenges, the CBN partnered with IPA to create the CBN Data Office – an Embedded Lab within the Consumer Protection and Financial Inclusion Department. This innovative approach embeds evidence-based decision-making directly into regulatory operations, creating sustainable institutional change from within.

The team’s methodology centers on creating data products that directly inform regulatory actions and policy decisions, fostering sustainable, evidence-driven conduct supervision. IPA supports this work through a comprehensive, multi-faceted approach that includes:

• Capacity Building and Training: IPA provides comprehensive analytics training and hands-on support to CBN staff, focusing on practical application of data analysis tools in daily regulatory work. This includes structured learning programs and mentorship that builds internal expertise.
• System Enhancement: The Data Office upgrades administrative data systems to strengthen data quality and reliability, ensuring that regulatory decisions are based on accurate, comprehensive information.
• Strategic Prioritization: Working directly with CBN leadership, the Data Office helps prioritize monitoring, evaluation, and learning needs to ensure analysis directly supports key regulatory decisions and aligns with the bank's strategic objectives.
• Data Product Development: The Data Office creates recurring market monitoring reports, consumer complaint dashboards, and institutional performance assessments that inform day-to-day regulatory operations.

This approach emphasizes collaboration and co-creation, working directly with CBN staff to develop tools and frameworks that are both technically sound and practically applicable within the existing regulatory structure. This methodology ensures sustainability and local ownership of the Data Management Office.

Lab Achievements

The Data Office Embedded Lab has delivered substantial improvements in CBN's approach to consumer protection and market supervision:

• Analytical Tool Development: The team has developed tools and models that leverage CBN's administrative data collected through regulatory channels to analyze market trends and institutional behavior.
• Institutional Process Enhancement: CBN has established a recurring process for producing and disseminating market monitoring reports, creating a sustainable framework for ongoing market surveillance.
• Consumer Protection Research Innovation: IPA collaborated with CBN to design innovative demand-side surveys to better understand consumer behaviors and risks. This includes the co-design and implementation of the Digital Financial Services (DFS) User Survey, which provided critical insights into Nigeria's DFS market dynamics and associated consumer risks.
• Industry Engagement: The lab facilitated the institutionalization of a CBN-led annual workshop with industry stakeholders to discuss new evidence on consumer protection risks and co-create solutions for the industry, establishing crucial feedback loops between regulators and market participants.
• Performance Assessment Tools: IPA co-created tools to assess the performance of financial institutions against CBN's established Service Level Agreements (SLAs), enhancing supervisory oversight and accountability mechanisms.
• MEL Framework Integration: The enhanced MEL capability within the Consumer Protection and Financial Inclusion Department has led to learning and adaptation of financial education program design and implementation.
• Data Quality Improvements: The quality of the department's consumer complaints data has improved, with the data dictionary expanded to include key indicators like gender, allowing for more detailed and impactful analysis on financial inclusion issues.

Through these activities, the Lab has successfully established itself as an essential component of CBN's strategy, demonstrating the tangible value of evidence-based decision-making in financial regulation. Early outcomes indicate that the lab is already driving the development of a data-oriented culture within the CBN, which will continue to have beneficial policy impacts for years to come.