Credit: Yepeka Yeebo
Nigeria is being left behind despite a global trend of rising financial inclusion and as such is in need of financial inclusion champions to help quicken access to financial services by its populace.
This is following the latest World Bank’s Global Findex Database released 19, April 2018 which revealed a slump in the level of financial inclusion in Africa’s largest economy.
“Financial inclusion is on the rise globally, accelerated by mobile phones and the internet, but gains have been uneven across countries,” the World Bank said in a statement.
Nigerian adults who are 25 years and above with bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017.
This was not different with account holders over 15 years, as their numbers fell 4 percentage points from 44 percent in 2014 to 40 percent in 2017, as compiled from the latest World Bank’s Global Findex Database.
The data shows that 51 percent of Nigerian males had a bank account in 2017 compared to the 27 percent recorded for females; this brings the gap between the male and female to 24 percentage points.
This is however a bigger than the 20 percentage points gap that was recorded in 2014 when the total male with an account was at 54 percent with females at 34 percent.
“Nigeria stands a better opportunity in exploring telecoms to help spur financial inclusion and as such there is need for accelerated regulatory framework between National Communication Commission (NCC) and Central Bank of Nigeria (CBN), as the world is moving on very fast with regards to mobile money,” Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities Limited said.
In 2011, just 30 percent of Nigerian’s who are 15 years and above had an account with a financial institution; however there was an improvement with 44 percent in 2014, while in 2017 it falls to 40 percent.
Also young adults within the age of 15 and 24 with an account in 2011 stood at 21 percent while 2014 and 2017 recorded 36 percent and 33 percent respectively.
“Apart from encouraging the collaboration between the telecoms and banks, through mobile money to spur financial inclusion, there is need to reduce the cost of financial transactions, as mobile money is more expensive than core banking,” said Wale Okunrinboye, a Lagos-based Investment Researcher.
As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system.
Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and
may not be visible to the regulatory authorities.
As such it was clear that a better balance between the market and the regulatory structures was required.
Meanwhile since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system.
“When loans and credits are given to individuals who have basic bank accounts especially those in the informal sector, (as they contribute to the larger population of the country), they will be encouraged to operate formally in the financial circle other than their normal traditional way of carrying out financial transactions,” Okunrinboye said.
“The fundamental obstacle to the rapid expansion of financial inclusion in Nigeria is the failure of the private sector actors in the telecoms and financial services ecosystem to collaborate effectively,” an analyst said in a statement
According to the World Bank report, mobile money drove financial inclusion in Sub-Saharan Africa, as only eight countries in Africa which included Burkina faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe recorded 20 percent or more adult using only a mobile money account. Although the World Bank also noted there are immense opportunities in the region as about 95 million unbanked adults in the region receive cash payments for agricultural products, and roughly 65 million save using semiformal methods.
Between 2014 and 2017, the World Bank noted that there has been a significant increase in the use of mobile phones and the Internet to conduct financial transactions which contributed to a rise in the share of account owners sending or receiving payments digitally from 67 per cent to 76 per cent globally, while developing countries recorded 57 percent to 70 per cent.
Globally, about 1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services, the study noted. It concludes that digital technology could take advantage of existing cash transactions to bring people into the financial system.
“In the past few years, we have seen great strides around the world in connecting people to formal financial services,” World Bank Group President Jim Yong Kim said.
The report noted that paying government wages, pensions, and social benefits directly into accounts could bring formal financial services to up to 100 million more adults globally, including 95 million in developing economies,” the report said.
“Financial inclusion allows people to save for family needs, borrow to support a business, or build a cushion against an emergency. Having access to financial services is a critical step towards reducing both poverty and inequality, and new data on mobile phone ownership and Internet access show unprecedented opportunities to use technology to achieve universal financial inclusion,” the world bank president said.
Global Findex database report admitted that there are other opportunities to increase account ownership and use through digital payments as more than 200 million unbanked adults who work in the private sector are paid in cash only, as are more than 200 million who receive agricultural payments.
The report revealed that 3.8 billion people around the world, or 69percent of all adults, have a bank account or mobile money provider in 2017, which was an increased compare to 62 percent recorded in 2014. Also, about 1.2 billion adults have obtained some sort of formal financial account since 2011, when the rate of financial inclusion was just 51percent. Still, there are 1.7 billion people around the world who remain outside of the formal financial system.
The study also finds that men remain more likely than women to have an account, this is up from 62 per cent in 2014 and just 51 per cent in 2011. From 2014 to 2017, 515 million adults obtained an account and 1.2 billion have done so since 2011.
“While in some economies account ownership has surged, progress has been slower elsewhere, often held back by large disparities between men and women and between the rich and poor,” the global lender noted.
Launched with funding from the Bill & Melinda Gates Foundation,the Global Findex database is the world’s most comprehensive data set on how adults save, borrow, make payments, and manage risk.
The database has been published every three years since 2011. The data are collected in partnership with Gallup, Inc., through nationally representative surveys of more than 150,000 adults in over 140 economies.
“The data offer a wealth of information for development practitioners, policymakers and scholars, and are helping track progress toward the World Bank Group goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals,” World Bank Development Research Group Director Asli Demirgüç-Kunt said.
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