Industry operators in the financial technology (fintech) space say 50 percent of the Nigerian population are financially excluded from various financial services despite economic growth and technological advancement.
At the CIO Club Award Summit 2023, on Thursday, themed “Digital Economy and the Nexus between E-identity, connectivity, and financial inclusion stakeholders highlighted that Africa’s most populous country lags in financial inclusion rate adoption.
According to Olu Akanmu, CEO of Opay, 50 percent of Nigerians are financially excluded and this is an opportunity for the telcos and fintech to rise.
“Financial inclusion is a business of scale, the low-earned customers mostly residing in the rural areas are mostly ignored by the banks, and these sets of individuals carry millions of transactions daily that give businesses the revenue they need.
According to him, there is no unprofitable market segment, there is only an unprofitable business model. He added that finding the right business opportunities can unlock financial inclusion growth.
A financially excluded individual is a person without access to common financial services. These can include savings accounts, loans, cashless transactions, credit, and other traditional banking services.
Before these financial services can be used by this individual, trust is needed, Oludare Ishola, Territory Manager FFI, HPE said.
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“Lack of trust can be a significant barrier to financial inclusion, as it can prevent people from accessing and using financial services.
“if people do not trust financial institutions or providers, they may be reluctant to use their services or share their personal information, such as their financial history, income, or identity.”
“This can make it difficult for financial institutions to access their creditworthiness, which can, in turn, limit their ability to access credit, insurance, or other financial services,” he said.
Akanmu added that digital identity is the foundation stack of payment, without having an inclusive, accessible, affordable digital identity financial inclusion can’t be possible.
“Digital identity has to be seen as a fundamental citizens right, every Nigerian that doesn’t have a digital identity can’t participate in the formal economic right.”
According to him, fixing the digital identity lapses in a country can also promote the financial inclusion growth rate.
About peers, Mauritius, South Africa, Kenya, Namibia, and Ghana are among the top five countries in the Sub-Saharan Africa (SSA) region that recorded the most growth in bank account ownership last year driven by a rise in mobile money adoption, a recent Global Findex report shows.
The report published by the World Bank showed that the percentage of account ownership for Mauritius stands at 90.5 percent, South Africa is at 85.4 percent, Kenya (at 79.2 percent), Namibia (at 71.4 percent), and Ghana (at 68.2 percent).
Mobile money helped increase account ownership, especially in Sub-Saharan Africa, said the report.
Richard Nunekpeku, V.P, GhanaFintech & Payment Associations, said the financial inclusion rate in the formal and informal sectors rose to 94 percent to 95 percent respectively as a result of the policy implemented by regulators to ensure that every citizen is financially included.
However, mobile money contributes 84 percent to financial inclusion growth as agency network and smartphone penetration is on the rise, he said.
“More people see the importance of having either a smartphone or feature phones that are linked to a certain unique number, this paved the way for telcos to strive and build their payment infrastructure,” he said.
Akanmu added that mobile money is a major indicator of financial inclusion growth in Nigeria, but it entails more efforts from regulators, telcos and the government has a greater role to play.
