Financial inclusion is gathering momentum in Nigeria and there is no better time than now to sustain the bounce. Accustomed to negative indices, a ray of hope shone forth upon the release of a new World Bank report classifying Nigeria among the countries making ‘steady progress’ in rolling back financial exclusion among its citizens. Entitled ‘The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19,’ the report counts Nigeria as one of the countries that recorded a double-digit financial inclusion rate of citizens in the 10 years to 2021. In a country where the negative is patently intrusive, the financial authorities should build on this good news.

In real terms, financial inclusion in Nigeria rose by 16 percentage points to 45 per cent in 2021, the Bretton Woods institution reported. That means from 30 per cent, adults who owned accounts at regulated institutions like a bank, credit union, microfinance institution, post office, or mobile money service provider climbed to 45 per cent. This is encouraging. But it is still way behind the targets set a decade ago. Average in the BRICS club of emerging economies which Nigeria aspires is 70 per cent.

In the past decade, several digital platforms and fintech start-ups have revolutionised access to financial instruments. Apart from deposit money banks that have liberalised account opening, money transfer has gained popularity. Point-of-sales operations have also gained currency, even in semi-urban areas.

Ten years or so ago, it was a muddle to receive or send money without the PoS operators, or the mobile phone. Not anymore. The Nigeria Inter-Bank Settlement System said N1.15 trillion was transferred through PoS terminals and N53.83 trillion through the Nigeria Instant Payment System between January and February 2022, a 45 per cent jump from the corresponding period in 2021.

The World Bank report attributes the growth in financial inclusion partly to the expansion of technology. In a landmark move in 2021, the Central Bank of Nigeria licensed GSM operators – MTN Nigeria and Airtel Africa – to operate payment service banks. There are three other PSBs in the country. Statista reported 144 fintech start-ups in 2021. A 2020 McKinsey report put the number of standalone fintech start-ups at 200. In June 2021, the CBN recognised 32 DMBs operating in the country.

Despite this, Nigeria cannot afford to rest on the moment, as others are also marching ahead. The World Bank says that Uganda more than tripled its rate from 20 to 66 per cent in the same period (2011-2021). India doubled its rate from 35 percent to 78 per cent; Egypt from 10 to 27 per cent.

Following a 2008 survey by the Enhancing Financial Innovation and Access, which stated that 52.5 per cent or 45.4 million adults were excluded from financial services, the CBN launched the National Financial Inclusion Strategy in 2012. It aimed to reduce financial exclusion to just 20 per cent of the adult population by 2020, meaning a target of 80 per cent inclusion. Nigeria has yet to achieve it.

The World Bank Group considers financial inclusion “a key enabler to reduce extreme poverty and boost shared prosperity.” It adds, “It means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance.” It is as an enabler for seven of the United Nations 17 Sustainable Development Goals.

Therefore, the main challenge is how to keep deepening financial inclusion. At an annual growth of 2.5 per cent, population is a copious obstacle to financial inclusion in Nigeria. As the population increases, there is a need to expand financial operations. While the percentage of exclusion declined between 2018 and 2020, the number of excluded adults increased from 36.6 million to 38.1 million, as the population surged past financial inclusion platforms.

Truly, banking in Nigeria is unfriendly. While banking services are more available at the urban centres, a large part of the hinterland is un-banked. A 2020 survey by EFInA said the worst rates of exclusion occurred in the North-Central (87 per cent); North-East (85 per cent); and North-West (73 per cent). The South-West has the lowest rate with 58 per cent, closely followed by the South-South (59 per cent) and South-East (61 per cent). An IMF report said banks shut 234 branches and 649 ATMs in 2020.

Bank customers constantly contend with excessive charges. The Value Added Tax is charged multiple times, in addition to stamp duty. Customers complain of poor services, delayed transfers and non-dispense of debited ATM withdrawals. Consequently, physical banking is still prevalent, bucking global standards where physical banking has become minimal.

There are more niggles. While access to bank accounts has risen, access to credit, pensions, and insurance fare badly. With a 13.0 per cent benchmark rate, borrowing from banks can reach 25 and 30 per cent. This discourages borrowing and constrains economic activities. Combined with inflation at 17.71 per cent in May, it depresses savings.

It is the same with pensions. In a clime where social security is zero,only 9.62 million workers own retirement savings accounts cumulatively as of March. Nigeria recorded a labour force of 64.47 million in June, the World Bank says. This translates to several millions of workers excluded from the savings that would sustain them in retirement.

Insurance penetration is low and those that do have insurance access mainly purchase vehicle insurance, which is mandatory. In the critical area of health insurance and mortgages, millions more do not own policies. They spend out of pocket to meet the payments for their health needs.

Achieving drastic change rests partly in infrastructure. Electricity, roads, railways, and technology are vital components to enhance banking operations. The CBN should eliminate charges at other banks’ withdrawals at ATMs. Cash disbursement initiatives should mandatorily be channelled through formal bank accounts to bring in the poorest.

The Federal Government should rebuild the security system, which has forced banks to shut in many towns and cities; and expand health insurance coverage to capture most of the population. PenCom should deepen pension enrolment.

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