Financial Inclusion in Nigeria; An Overview
This article is a mix of fact, data and my personal opinion on the state of Financial Inclusion in Nigeria. Let’s ride!
Financial Inclusion basically talks about how accessible financial services are to people. Financial inclusion is defined according to Investopedia as; the effort to make financial services accessible and affordable to individuals and businesses, regardless of their personal net worth or company size. What are these financial services? They include; Savings, Investment, access to loans and many more as pertaining to the everyday finance needs that people would require access to, thereby making life easier and better for them. Having said that, let’s go on to our Case Study; Nigeria. Is Nigeria as a country doing well in this regard? You’d find answers as we proceed.
My earliest exposure to the financial inclusion concept and policy was way back in secondary school, when there was a lot of buzz about the “Cashless Policy” word and move. The move then was to encourage limiting cash handling among people and was a part of the Financial Inclusion scheme by the CBN. I remember that, around that time, ATM and ATM cards became more rampant and available and this greatly increased the access to financial services. You could get access to money almost at a go. It made more people save more in the bank and really did a lot of good. That was then, how about now? The truth is that, now, the access to financial services are on the increase. With the work that the present day Fintech are putting, we can now save easily with platforms like Piggyvest (and even get interest on our savings), we can invest on platforms like Overwood, we can buy stocks on platforms like Bamboo. About 8-10years ago, all of these would have been impossible or would have taken a much longer route. But now, leveraging on technology for finance has made things a lot easier.
The popularity of agency banking in recent times also, has played a part in bridging the financial inclusion gap. It is swiftly becoming an important part of the financial sector in Nigeria. With mobile agents positioned in different locations in the country, individuals can now carry out basic banking operations like withdrawals, deposits, bank transfers at just a stone-throw. The agency banking system has brought banking closer to the people and it is projected to expand further in its reach in the future. The existence of Internet and USSD banking has helped likewise in the ease in accessibility of financial services.
Now, let’s come to the reality of how financially included Nigeria is. According to an article by nairametrics, it was recorded that; 41.6% of the adult population in Nigeria are financially excluded. The incidence of banking is higher in the South West region with 56% household banked and lowest in the North West region with only 16% of the household with a formal bank account (National Bureau of Statistics). I don’t know if you have said “Ah!”, but that was exactly my expression when I saw the statistics. That is why data would always be king, never assume until you see the data. From the statistics, it is obvious that there is a link between poverty and financial exclusion (the other end of financial inclusion), as the north represents a greater percentage of financially excluded Nigerians. This means that, the north has more people in poverty in comparison with the south, the north have also have been shown to have lesser access to financial services. So, there really is a link between financial exclusion and poverty.
To the way forward… Let’s start from the mobile bank apps, how accessible are these to the people and what percentage of Nigerians can actually make use of these apps without the thought of fear of theft of the money in their wallet. I got an information from a friend who went to the bank this period to perform a simple transaction he could have done from his phone because his bank failed to get his bank app sorted for him on time. Personally, I have had experiences with how slow the customer service of Nigerian banks are in attending to issues and requests. I believe that the response rate from banks should be better as this would help citizens access financial services better.
Also, it is seen evidently how the rural communities have been somewhat neglected on the course of financial inclusion. A friend also told me that in the city that she served as a youth corper in the north, there wasn’t a single commercial bank in the whole area. The financial inclusion gap is really wide in these areas. The establishment of financial institutions in these areas would go a long way and would also make these services available to them. Also, the possession of smartphones is also a key factor to consider regarding financial inclusion. The access to digital financial services is largely dependent on the availability of mobile phones required to use them. The question is, what percentage of people in these communities have an enabling mobile phone?
I believe that with innovation, education and empowerment, we would be a step closer in narrowing this gap. The reality is that, there’s still a lot of work to be done, collectively.
