Nigeria failed to reach its National Financial Inclusion Strategy for 2020 as it recorded 51 per cent as against its 70 per cent target.
According to data obtained from the Access to Financial (A2F) 2020 survey findings, which was published by Enhancing Financial Innovation & Access (EFInA) in Lagos, 51 per cent of adults used formal financial services, such as bank, microfinance bank, mobile money, insurance, or pension accounts, up from 49 per cent in 2018.
This has largely been driven by growth in banking with 45 per cent of Nigerians banked last year, up from 40 per cent in 2018 while only 64 per cent of adults were financially included by the end of 2020. This meant that 36 per cent of Nigerian adults, or 38 million adults, remained completely financially excluded.
The report highlighted that large gaps in financial access remain for some of Nigeria’s most financially excluded groups even as women continue to be more financially excluded than men, with only 45 per cent of women using formal financial services, compared with 56 per cent of men.
It said: “Adults in Northern Nigeria continue to be significantly more financially excluded than those in the southern zones, and rural adults are still more excluded than those in urban areas. Young adults, between the ages of 18-25, are significantly more likely than older adults to be financially excluded.”
It is against this backdrop that the Central Bank of Nigeria (CBN) reiterated that it will continue to be at the forefront of efforts to drive financial inclusion in Nigeria by championing the development and implementation of Nigeria’s financial inclusion strategy while adding that concerted efforts from key stakeholders is needed to close the gap in financial access to ensure greater results in economic and social development.
Speaking during the virtual launch of the EFInA A2F 2020 survey findings, CBN’s Deputy Governor, Financial Systems Stability Directorate, Aishah Ahmad, stated that financial inclusion has become a global development initiative and it is critical to bridging inequality, combat poverty and preserve social harmony.
Ahmad noted that Nigeria adopted a multi-pronged strategy focusing on removing the barriers to financial access which to an extent have not only helped to reduce exclusion rates but they have transformed payment systems.
“Despite progress today, I believe we still have much work to do as gaps in financial services remain especially with women – the Northern region and the rural areas. We need to focus efforts on deploying solutions that target these excluded groups. Last year was indeed very challenging for all economies due to the COVID-19 pandemic and while many households faced financial setbacks as a result of the pandemic, we saw the importance of digital financial services in helping them cope and helping them to be resilient,” Ahmad said.
Corroborating the apex bank’s Deputy Governor, the Chief Executive Officer, EFInA, Ashley Immanuel, noted that at Nigeria’s current rate of progress, it will not reach the 2020 financial inclusion targets until around 2030.
According to her, the country can reach these targets much faster if it follows paths taken by other African countries that have seen rapid financial inclusion growth due to mobile money.
“EFInA’s Access to Financial Services in Nigeria Surveys show that use of digital financial services and agent networks started to grow significantly between 2018 and 2020. Phone ownership has also increased, with 81 per cent of Nigerians now owning mobile phones.
“Now is the time to build on this initial progress and drive faster financial inclusion growth through digital financial services such as mobile money. We can do this by creating an open and level playing field for a wide range of providers, creating the right environment for fintech to thrive, and encouraging partnerships between different providers” Immanuel said.
The EFInA Access to Financial Services in Nigeria Survey highlights significant market opportunity for financial service providers to address Nigerians’ financial needs. For example, only 2% of Nigerian adults are insured, but 18 million uninsured adults say they would be interested in microinsurance. Only 7% of Nigerian adults have pension accounts, but 24 million adults without pensions are making regular savings for their retirement. While only 45% of Nigerians are banked, 35 million unbanked Nigerians own mobile phones and could be reached with mobile money.
Economic Development Team Leader, Nigeria for the UK’s Foreign, Commonwealth & Development Office, Gail Warrander remarked that “The EFInA Access to Financial Services in Nigeria 2020 Survey shows that Nigeria has made progress on financial inclusion but there’s still a way to go. The report models how the journey to the financial inclusion goal can be speeded up by encouraging the scale up of mobile money. I firmly believe that the majority of those excluded, especially women and youth, could then enjoy the convenience of financial services, including using remote payments systems. This survey is full of rich data for policy makers, development partners and financial services companies to use.”
EFInA Access to Financial Services in Nigeria 2020 Survey was funded by the UK Government’s Foreign Commonwealth & Development Office.
SOURCE: THE NATION