The target by the Central Bank of Nigeria (CBN) to ensure 80 percent of the country’s adult citizens have access to financial services by end of 2020 may have been unrealised, according to Enhancing Financial Innovation and Access (EFInA), the organisation that conducts biennial report on Nigeria’s financial inclusion industry.
While EFInA is expecting to release its 2020 official figures in March 2021 due to COVID-19 pandemic, the organisation which has covered Nigeria’s financial inclusion space in the last 12 years said it is unlikely that Nigeria met last year’s 20 percent exclusion target by the CBN as available data show half of the adult population in the country are still without a bank account.
“It is unlikely that we will have met the target of 80 percent of Nigerian adults being financially included,” said Ashley Immanuel, CEO, EFInA.
According to Immanuel, EFInA is currently in the process of conducting its 2020 survey, and as a result, does not yet know the exact rate of financial inclusion in 2020.
“However, there are some data points we can look at to get a hint of how financial inclusion has changed in the last couple of years,” he said.
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The organisation which measures Nigeria’s financial inclusion rate through nationally-representative access to financial services survey said it based its projections on the data from the Nigeria Inter-Bank Settlement System Plc (NIBSS) which shows Nigeria had 46 million BVNs as of mid-January 2021.
While the BVN data from NIBSS shows there has been an increase from two years ago, EFInA says “it still means that less than half of the roughly 100 million Nigerian adults are banked”. As such, it believes it is unlikely the 80 percent inclusion target was achieved.
Financial inclusion, according to the World Bank, 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 – delivered in a responsible and sustainable way.
The 2018 and most recent data by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning that as much 36.8 percent of Nigerian adults as of two years ago lacked access.
To achieve the 80 percent inclusion target stated in the National Financial Inclusion Strategy (NFIS) plans of the CBN, Africa’s largest economy needed to have bridged the 16.8 percent inclusion gap at the end of last year.
While EFInA says it has a positive outlook for Nigeria’s financial inclusion space, the industry observer said “the CBN can accelerate financial inclusion by creating an open and level playing field for different types of financial service providers in Nigeria”.
According to Immanuel, the different types of companies – such as banks, FinTechs, microfinance banks, etc –have unique strengths and a role to play in deepening Nigeria’s access level.
“One of the quickest things the CBN can do to promote financial inclusion is to respond to the licence applications of additional Payment Service Bank applicants, to enable more well-qualified PSBs to enter the market,” Immanuel said.
Before August 2020, only banks and licensed financial institutions were allowed to provide financial services (bank-led financial inclusion model) in Nigeria. Although telecom operators and other fintech companies indicated interests to operate in the market, the CBN policy would not allow them.
Due to the increasing rate of the financially excluded segment of the Nigerian economy and the lack of progress in getting banks to provide financial services to people living in areas that lack access, the apex bank in October 2018 adjusted its bank-led financial inclusion model to accommodate other industry players.
But, more than two years after the CBN gave an official nod to non-financial companies to apply for mobile banking licences to assist in deepening access to financial services, not much has changed.
Only two smaller Telcos and a payments company have been given mobile money licences. The country’s largest mobile operators, MTN and Airtel, are yet to receive the licence even though they have applied.
