Experts in the financial sector have identified financial literacy, digital transformation and access to credit as the pathways that financial institutions need to leverage on in order to drive inclusive growth and prosperity in Nigeria.
This was revealed at the Nigerian Economic Summit Group (NESG) workshop event in collaboration with the Zedcrest Group held recently.
The event, themed ‘Securing and Enriching Nigerians at Scale: Prosperity Inclusion Through Financial Sector Innovation’ aimed to re-evaluate and reconsider the role of the financial market in building a secure future for inclusive prosperity in Nigeria.
While delivering the keynote address, Demola Sogunle, the chief executive officer at Stanbic IBTC Holdings Plc, said the financial sector is essential to drive financial inclusion and economic growth.
“It is crucial for the financial sector, through commercial banks, capital markets, and the insurance sector, to play a vital role in funding capital investments and not just providing industry loans concentrated in the oil and gas sector,” Sogunle further said.
Data from credit Bureau Association of Nigeria, only four percent of the 40 million Micro, small and medium enterprises have access to credit. Also, the total value of private sector consumer credit is only around eight percent of the total loans in Nigeria versus 45 percent for South Africa.
“The factors affecting the financial sector include lack of credit history, inability to keep proper financial records, non-realization of collateral, lack of management strategies, and stiff competition from larger corporates and limited business presence of micro-SMEs,” Sogunle said.
The NESG board member recommends that there is a need to adopt partnerships that will drive mobile adoption and inclusive development.
Read also: How embedded finance can make mobile devices affordable
Experts say that inclusive prosperity is when many people have the opportunity, resources and education to be able to take advantage of economic growth and technology advancement so that they too can prosper irrespective of their background, class and financial status.
“One of the key areas for inclusive prosperity is education. I don’t mean going to school alone but being educated. If people are not educated, having inclusive growth will be very difficult,” said Zeal Akaruiwe, the chief executive officer at Graeme Blaque Group.
Akaruiwe also said that the rule of law is a factor that is downplayed when it comes to prosperity.
“If your economy or society does not respect rule of law, you are going to have the very prosperous people skew the opportunities in their favour, making those at the upper end of the society to be increasing while those in the lower end will continue to fall.”
According to data from Enhancing Financial Innovation and Access (EFInA), Nigeria’s financial inclusion rate grew to 64.1 percent in 2020 from 63.2 percent in 2018. The 2020 figure is below the Central Bank of Nigeria (CBN)’s 80 percent financial inclusion target for the year 2020.
Although the inclusion rate dropped marginally from 36.8 percent in 2018 to 35.9 percent in 2020, the excluded adult population of 38.1 million reported in 2020 was higher than the 36.6 million recorded in 2018, meaning 1.5 million adults fell into the exclusion circle in the last two years to 2020.
“Financial organisations like the banks need to have an incubator mind-set by participating in financial literacy and partnering more with Imams and pastors to educate people on the benefits of financial literacy and having a smartphone,” Oseikhueme Anao, chief financial officer at Standard Chartered Capital and Advisory said.
Anao also added that although agency banking is a good initiative by the banks, in order to bring more people into the financial net, they need to have an investment strategy by going to the streets to teach people like the market women on how to use bank accounts.
On his part, Dayo Obisan, the executive commissioner (operations) at Securities and Exchange Commission Nigeria noted that there needs to be a lot of work done in information dissemination and educating the public.
“People may have the money but there is a wide gap in terms of how to use it which explains why they spend their time chasing illegalities such as Ponzi schemes,” Obisan said.
