Financial inclusion lessons Nigeria can learn from China, India, US

Nigeria can learn from China, India, and the United States about how the government played a key role in advancing financial inclusion, especially through strategic initiatives and digital innovations.

The World Economic Forum, in collaboration with the Research Center for Wealth Management, Tsinghua University PBC School of Finance, highlighted government programmes such as India’s Pradhan Mantri Jan Dhan Yojana (PMJDY).

The private sector’s contributions, such as digital banking platforms in China, the use of robot investment assistants (RIAs), and the need for inclusive lending practices in the US, are key lessons Nigeria can learn.

It said, “India’s use of the Pradhan Mantri Jan Dhan Yojana (PMJDY) to distribute COVID-19 relief payments and China’s introduction of the digital yuan to integrate underserved populations into the financial system, as well as the private sector’s role in improving financial inclusion.

“Chinese digital banking platforms’ use of artificial intelligence (AI) and big data to widen access to credit for some SMEs; the need for inclusive lending practices in the US; and how Chinese robot investment assistants (RIAs) can democratise investment and improve financial literacy in the general population.”

The report further revealed that financial inclusion is a critical solution for reducing limited access to financial services by providing all segments of society with access to essential financial services to all segments of society. It also highlights global efforts in financial inclusion, emphasising government initiatives, private-sector contributions, and technological innovations.

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According to the white paper, the success of India’s financial inclusion efforts during the pandemic can largely be attributed to its well-established digital public infrastructure and the banking sector’s collaboration.

In 2014, the PMJDY was launched as a key initiative aimed at creating bank accounts for every household. Over the decade from 2014 to 2024, the percentage of bank account ownership in India more than doubled, rising from 35 percent of the population to 78 percent.

A Women’s World Banking survey of 6,000 PMJDY account holders found that 50 percent of women account holders opened their accounts to receive government benefits.

For China, the introduction of the digital yuan, or e-CNY, was a significant step in using CBDCs to promote financial inclusion.

“By reducing the reliance on physical cash and integrating the digital yuan into everyday transactions, even in areas with poor network connectivity, the e-CNY has helped to bring unbanked or underbanked individuals into the formal financial system,” the report revealed.

However, research conducted by the JPMorgan Chase Institute into home-purchase loan costs illuminates the disparities in financial inclusion in the USA.

The report identifies and addresses these disparities and provides key insights that can guide policy and private-sector efforts toward more equitable financial services.

“US research on loan disparities and China’s use of RIAs demonstrate how the private sector enhances resilience by addressing financial fragmentation, improving access to financial services for SMEs, reducing inequalities in loan costs and democratizing investment opportunities for individuals with low financial literacy, ultimately contributing to a more inclusive and stable economic environment,” it stated.