In recent weeks, two unsettling incidents—separated by geography yet united by their underlying themes—have captured global attention. In the United States, the tragic killing of the CEO of United Healthcare Group underscored rising frustrations in health care and financial services. Meanwhile, in Nigeria, a viral Instagram video featured a female skit maker brandishing a gun at a cashier in exasperation over repeated unauthorised deductions from her bank account. While the U.S. incident is a stark reminder of how unresolved grievances can fester into violence, the Nigerian episode paints a vivid picture of consumer frustration within our financial ecosystem.

These events compel us to examine the state of consumer protection in Nigeria’s financial system. Despite notable advancements in formal financial inclusion and the uptake of digital financial services, gaps in consumer protection have emerged as a glaring blind spot. Addressing these issues is not merely a regulatory obligation but a moral and economic imperative.

The Rising Tide of Consumer Grievances

Consumer complaints in Nigeria’s financial sector have become increasingly common. The list of grievances is extensive, from unauthorised deductions and excessive charges to opaque loan terms and digital fraud. Many consumers, especially those in rural and underserved areas, remain unaware of their rights or lack the resources to seek redress. They

Digital financial services, while a boon for financial inclusion, have also introduced new vulnerabilities. Fraudsters exploit gaps in cybersecurity, while consumers often bear the financial burden of system errors. This is compounded by weak dispute resolution mechanisms, leaving many feeling abandoned by the institutions meant to serve them.

The tragic U.S. incident highlights the psychological toll of unresolved systemic issues. While extreme, it is a cautionary tale: unresolved grievances can escalate into societal crises.

The Nigerian skit maker’s dramatic protest may have been staged, but it reflects a sentiment many Nigerians share—a deep frustration with financial institutions perceived as unresponsive and exploitative.

Building a Stronger Consumer Protection Ecosystem

Since its inception in 2007, EFInA has championed financial inclusion with a strong belief that financial systems can work for all. Over the last 15 years, the proportion of formally served adults has more than doubled, from just 24% of the adult population in 2008 to 64% in 2023. This increased formal inclusion has been accompanied by an unprecedented

surge in digital financial services. According to EFInA’s A2F 2023 survey, 45% of adult Nigerians used digital financial services in 2023, up from 34% in 2020. From mobile banking to online payment platforms, the financial landscape has transformed dramatically, bringing financial services closer to the people.

Yet, in over 15 years of enhancing financial inclusion, we have never been more alarmed by the potential negative impact of consumer protection challenges. The A2F 2023 survey revealed troubling insights: 44% of adults have experienced unexpected fees or charges, and 36% feel the information on financial products is not consistently clear. More worrisome, 19% report frequent bank system downtimes, while 2.3 million adults have encountered fraud through financial service agents. Our recent strategy contemplates a possible worst-case scenario where many Nigerians lose faith in the formal financial system and resort to self-help—a reality already evident in the South-East from the A2F 2023 survey results.

A recent survey into the Digital Portfolios of the Poor in Nigeria highlights a critical reality: using safe and secure formal financial services is directly linked to users’ feelings of confidence and empowerment. Conversely, the absence of such access leads to frustration, a sense of quitting, loss of hope, and agitation. This dichotomy underscores the profound impact that financial services can have on individuals’ emotional and psychological well-being. In a time when trust in government and institutions is waning, it is more important than ever to restore confidence through reliable and secure financial solutions. To restore trust and ensure the sustainability of Nigeria’s financial system, a multi-pronged approach is required:

• Strengthening Regulatory Frameworks: Regulators must update and enforce consumer protection regulations in collaboration with other stakeholders. This includes setting clear standards for prioritizing fairness, inclusivity, user needs and rights, safety of funds and information, and transparency in fees, charges, and loan terms,
• Enhanced Dispute Resolution Mechanisms: Financial institutions should be mandated to establish accessible, clear, quick, and responsive customer complaints Independent ombudsman services could also provide impartial arbitration for unresolved cases.
• Leveraging Technology for Protection: Just as technology has enabled financial inclusion, it can also be harnessed to protect consumers. Real-time alerts, fraud detection algorithms, increased choice through interoperability, and transparent digital platforms can empower consumers to monitor and control their financial activities.
  • Consumer Education and Advocacy: Public awareness campaigns are essential to educating Nigerians about their rights and the channels available for redress. Grassroots organisations and NGOs can play a pivotal role in reaching underserved
  • Accountability and Sanctions: Financial institutions guilty of exploiting or neglecting consumers must face stringent penalties. Publicising such sanctions will deter misconduct and rebuild consumer

  A Call to Action

  The Nigerian financial ecosystem stands at a crossroads. While innovation and inclusion have brought millions into the formal financial fold, the absence of robust consumer protection threatens to erode these gains. Policymakers, regulators, financial institutions, and civil society must act decisively to turn the tide, fostering an environment where confidence replaces despair and hope supplants frustration. Over the next year, EFInA is committed to working with stakeholders to create a future where every Nigerian feels secure in their financial dealings, knowing that their interests are safeguarded and their aspirations supported.

  Consumer trust is the bedrock of our financial system. Without it, the sector risks stagnation as disillusioned consumers disengage from formal financial services. Let the recent global and local incidents serve as a wake-up call. Strengthening consumer protection is not just a policy priority; it is a necessity for the resilience and integrity of Nigeria’s financial future.

  Oluwatomi Eromosele is a development economist with over 10 years of research and consulting experience in economic development, financial inclusion, and employment creation. She currently is the Research  Lead at EFInA.