Twenty-nine percent of internally displaced persons (IDPs) in Nigeria are financially excluded because of inadequate identity documentation, lack of proof of address, and insufficient financial service capacity in underserved regions, according to the Central Bank of Nigeria.
In a report titled, ‘Financial Inclusion of Forcibly Displaced Persons in Nigeria: A Roadmap,’ the apex bank highlighted the exclusion challenges faced by IDPs, refugees, and residents across seven states: Adamawa, Borno, Benue, Cross River, Katsina, Yobe, and Zamfara.
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The survey, conducted among 1,677 respondents—comprising 1,071 IDPs, 370 refugees, and 236 residents—revealed that 24 percent of residents and 21 percent of refugees lack access to digital financial services. These exclusion levels are close to the national representative level of 26 percent, as found in the A2F 2023 survey findings by Enhancing Financial Innovation and Access (EFInA).
The report revealed that while refugees showed the highest levels of formal financial inclusion due to better access to commercial banks, significant gender disparities remain.
“Male refugees recorded the highest inclusion rate at 77 percent while female IDPs were the least included at just 39 percent. Many female IDPs relied solely on informal financial services,” it said.
The roadmap, which addressed Nigeria’s national financial inclusion policies and initiatives of these FDPs, emphasised that high costs and limited access to financial services remain key barriers.
The report noted that affordability issues, including “High bank charges and a lack of transparency in transaction fees, deter many from using formal financial services. Additionally, traditional banks dominate the market, restricting competition and innovation.”
On its part, EFInA, in a report titled “High Cost of Financial Services: A Barrier to Formal Financial Inclusion in Nigeria,” highlighted the cost of transactions as a significant issue affecting many Nigerians’ use of financial services.
The report disclosed that “33 million (30 percent) adult Nigerians, which comprises 31 percent of formal financial service users and 28 percent of those excluded from formal financial services, feel that bank charges are not affordable.”
Despite these challenges, the expansion of agent banking networks through initiatives like the Shared Agent Network Expansion Facility (SANEF) has improved access in rural and remote areas. However, the CBN report emphasised the need for transparent pricing and regulatory oversight to protect vulnerable populations from exploitation.
“The deployment of female agents in high FDP density areas could help bridge gender disparities, while digital financial services such as USSD codes and QR-based payment solutions offer significant potential for enhancing inclusion,” the CBN report said.
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The CBN report also highlighted the importance of introducing market-based pricing mechanisms to lower costs and promote compliance with Central Bank guidelines. It advocated for the inclusion of more non-bank financial institutions and fintech startups to spur competition and innovation.
It added, “Strengthening consumer protection frameworks and addressing fraud in digital channels are critical for building trust in formal financial systems. Additionally, targeted identification measures could help evaluate the impact of financial inclusion programs, enabling more tailored and effective interventions.”
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