• Monday, July 15, 2024
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Nigeria closer to 2024 financial inclusion target but gaps persist

Unveiling the path to economic empowerment: Financial inclusion in Sub-Saharan Africa

Nigeria has inched closer to its 2024 financial inclusion as more Nigerians are now banked even as gaps persist.

The 2022 National Financial Inclusion Strategy aims to reduce the level of financial exclusion in the country to 25 percent by 2024.

Financial inclusion rose to 74 percent in 2023 from 68 percent in 2020, while 26 percent of Nigerians are financially excluded, according to the 2023 EFInA Access to Finance (A2F) Survey results unveiled on Thursday in Lagos.

“Despite the growth in access, certain demographic gaps continue to persist in Nigeria. For instance, gender gap: growth in women’s financial inclusion from 60 percent in 2020 to 70 percent in 2023 despite an increase in the gender gap from 8 percent recorded in 2020 to 9 percent in 2023. Urban-rural gap: decrease in the gap from 24 percent recorded in 2020 to 20 percent in 2023. Youth (18-35): 71 percent financial inclusion recorded in 2023. Northern Nigeria: despite growing access, including significant gains in the North-East and North-West, all states in the North-East report exclusion levels above the national average,” the report said.

The A2F survey is Nigeria’s primary source of financial inclusion data and is designed to assess access to and use of financial services for the adult Nigerian population. The methodology for the 2023 survey has been updated to reflect changing population dynamics, and 2018 and 2020 data were also updated using the same methodology to enable comparison.

Presenting the report in Lagos, Oluwatomi Eromosele, general manager of EFInA, said: “The 2023 results show that 26 percent of Nigerians are financially excluded, down from 32 percent in 2020, demonstrating clear progress towards the Nigeria Financial Inclusion Strategy (NFIS 3.0) recommended target to reduce levels of financial exclusion in Nigeria to 25 percent by 2024.

“However, with formal financial inclusion levels at only 64 percent (up from 56 percent in 2020), there remains significant work to do in order to achieve the ambition of the central bank of 95 percent formal inclusion in the long term.”

Yemi Cardoso, governor of the Central Bank of Nigeria (CBN), called for concrete commitment towards achieving the 95 percent financial inclusion.

Represented by Chibuike Nwaegerue, director in charge of other financial institutions at the CBN, he charged financial inclusion implementation agencies to set up specific functions or units dedicated to financial inclusion in their various organisations.

“I call on all financial inclusion implementation agencies to set up specific functions or units dedicated to financial inclusion in their various organisations. This we believe will provide the necessary ownership and commitment required to achieve our collective goal,” Cardoso said.

He said that in addition to the existing strategies, the apex bank will focus more on the role of formalisation to support the conduct and transmission of monetary policy.

He said financial inclusion broadens the reach of monetary policy by increasing the number of individuals and businesses participating in the formal financial system.

Cardoso said: “This expanded participation provides additional channels through which changes in interest rates and other policy tools can influence economic activity.

“As data is the main crux of this event, let me mention that the Bank would continue to leverage data for policymaking and to strengthen monetary policy transmission. The financial inclusion data that would be showcased at this event would contribute to this objective in no small measure. I call on all stakeholders to come up with a framework that will leverage data for all financial inclusion-related efforts going forward.”

The report shows that there was a decline in the proportion of adults who rely on informal financial providers from 14 percent in 2020 to 10 percent in 2023.

It said: “Over the last 15 years, the proportion of formally served adults has more than doubled from 24 percent recorded in 2008 to 64 percent in 2023. Little or irregular income was the major barrier to financial inclusion reported as it grew from 31 percent in 2020 to 49 percent in 2023. This was closely followed by attitudes/perceptions and access to banks.

“Usage of mobile phones increased to 93 percent (103 million) in 2023 from 90 percent in 2020. The adoption of financial service agents skyrocketed, from 4.4 percent in 2018 to 54 percent in 2023. About 45 percent of Nigerians used digital financial services in the past 12 months, up from 34 percent in 2020.

“Across the other focal product areas, savings and credit increased marginally by 1 percent and 3 percent, while insurance and pension rates were maintained at 3 percent and 8 percent respectively.”

The survey indicated that mobile phone usage has risen to 93 percent, reaching 103 million individuals in 2023, compared to 90 percent in 2020. However, it also noted a 4-percentage point decrease in smartphone usage and a 1-percentage point decrease in feature phone usage.

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Commenting on the results of the survey, Agnes Martins, EFiNA chair said: “We are seeing encouraging progress towards the NFIS 3.0 recommended goal to reduce exclusion to 25 percent by 2024, and we must acknowledge all the good work that has gone into making this happen. However, we also have to be clear that 26 percent exclusion means that 28.8 million adult Nigerians continue to be completely excluded from the financial system. That is a statistic that we must recognise remains unacceptable, and we must redouble our efforts to accelerate their inclusion. These are predominantly farmers and dependents, more likely to be female, and to live in rural areas in Northern Nigeria.

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“We need intentional, deliberate strategies to give them financial access and to support them to graduate to the products and services that can enhance their resilience. Over the coming weeks we will be engaging all stakeholders to further analyse the data and work collaboratively to develop solutions.”

Mary Ellen Iskenderian, president/CEO of Women’s World Banking, said women’s financial inclusion goes beyond financial literacy as more women need to be digitally included as well.

“Financial services have evolved to be largely smartphone-centric, making digital literacy a critical component of women’s financial inclusion. Merely being financially literate is not sufficient, as a significant percentage of financially excluded women also face digital exclusion,” she said.