New Telegraph

December 8, 2023

Reassessing financial inclusion as catalyst to improve Nigeria’s economy

In line with its moves to attain 94 per cent financial inclusion by 2024, the Central Bank of Nigeria (CBN) outlined financial inclusion measures the formal financial sector operators should take to provide convenient products for the informal sector Financial Inclusion is increasingly becoming an area of priority in the globe and among policymakers, researchers and development-oriented agencies. Its importance comes from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, employment generation, wealth creation and improved welfare and general standards of living. The Nigerian government launched the National Financial Inclusion Strategy in 2012 (NFIS 2012), to achieve 80 per cent inclusion by 2020. The NFIS framework was leveraged by the Central Bank of Nigeria (CBN) to effectively regulate the Nigerian financial sector. This drive necessitated the introduction of the cashless policy, the proliferation of agency banking, the growth of microfinance banks and increased adoption of fintech solutions; especially digital payment products. However, these positive outcomes could not help achieve the target of 80 per cent inclusion by the end of 2020. Barriers that hampered this target were irregular income, illiteracy, lack of proximity to access points, lack of required documentation, inadequate awareness, high service fees, and a high affinity for cash.

Impact of COVID-19

In the wake of COVID-19 were the falling prices of crude, the halt in economic activities and the loss of income by many Nigerian households. The unemployment rate rose to 27.1 per cent, inflation increased and the purchasing power of the people dropped. Interestingly, despite these negative impacts on the economy, there was growth within the entrepreneurial sector. According to the EFInA Access to Financial Services in Nigeria 2020 Survey, about 86 million Nigerian adults’ livelihoods were negatively impacted by the pandemic. However, the survey showed that about 49.1 million Nigerians turned the situation around to start their businesses either in agriculture or service delivery. These new businesses employed about 33.2 million Nigerians, thereby creating about 70.3 million jobs.

Revised NFIS

While the NFIS 2012 may not have delivered the 80 per cent inclusion target, it has however provided grounds to evaluate progress and identify the barriers and insights in developing a refreshed document for the new target. Upon review of the NFIS 2012, the CBN and its stakeholders came up with the Revised NFIS document which targets a 95 per cent financial inclusion threshold in Nigeria by 2024. This is ambitious given that the financial inclusion index moved from 57.3 per cent in 2010 to 60.3 per cent in 2012 and 63.2 per cent in 2020, a growth of about 5.9 per cent in 10 years. Achieving a 31.8 per cent increment in four years is indeed ambitious, but not impossible. In 2021, the FI index rose to 64.9 per cent, while tarheting to achieve 94 per cent financial inclusion by 2024. The Revised NFIS identified five priority areas as key to achieving the new target, namely; an enabling environment for the expansion of Digital Financial Services (DFS), rapid growth of agent networks for last-mile delivery, harmonisation of KYC requirements, conducive environment to serve the excluded; and incentivizing the adoption of cashless payment channels. The Revised NFIS also examines other salient issues such as increasing awareness and knowledge of financial products, channels as well as trust. There is also the need for frequent review of the implementation of the strategy to take lessons faster and adjust the strategy to fit prevailing realities.

Improved economy

More importantly, improving the economic and financial status of Nigerian households and firms will enhance the possibilities of a financially included Nigeria. With a thriving economy, households will save and embrace other financial products and services such as credit, insurance and pensions. The prevailing security challenges across the country should be addressed as it hampers economic activities and consequently the financial inclusion figures.

Capturing the over 40 million MSMEs in the formal financial sector is critical to improving the economy. This group employs over 80 per cent of the country’s population and contributes about 50 per cent of the country’s GDP. When formally served, progress is easier to monitor and track. With more women being financially excluded – 41 per cent female and 33 per cent male- it suffices to say that concerted efforts should be channelled towards ensuring that more women are empowered to carry out more economic activities and consequent financial transactions. Efforts should be made in advancing the National Financial Inclusion Special Intervention Working Group’s (a subcommittee that looks into genderrelated financial inclusion issues) recommendations. Financial products such as low-interest loans, grants and employment opportunities should be extended to women.

CBN, WSBI efforts

The Central Bank of Nigeria (CBN) and the World Savings and Retail Banking Institute (WSBI) in line with its moves to attain 94 per cent financial inclusion by 2024, have outlined financial inclusion measures the formal financial sector operators should take to provide convenient products for the informal sector.

This is coming even as the WSBI disclosed its plan to include one million low income Nigerians into the formal financial system by August 2022. Speaking at the WSBI’s Scale2Save event which was supported by the Nigerian Microfinance Platform (NMP), EFInA and Mastercard Foundation recently in Lagos, the Head, Financial Inclusion Secretariat at CBN, Paul Oluikpe, said savings in any economic configuration is basically a key driver of growth and is a key function of the apex bank’s economic policy for national productivity.

Oluikpe noted that the CBN was focused on bringing everyone in the inclusive net and ensuring that it captures data from the monetary policy and plan for the economy but added that the formal segment of the financial services sector cannot alone fill the gaps found in the inclusive net. Citing a 2019 report, Oluikpe explained that the challenges of bringing women on-board in the formal financial sector include lack of trust, education and income to interact with formal financial services. “We must also know that formal financial services players are really not having the products that will be able to reach these individuals at the very grassroot because the products are not convenient for these people and so there is need for fundamental change to bring them on board,” he said.

On her part, the Programme Director, Scale2Save at WSBI, Weselina Angelow, called for a joint effort from stakeholders to seek ways of connecting the formal financial services to the informal sector. According to her, “1.7 billion people globally remain excluded from formal financial services and the WSBI strives to change it. Scale2Save is WSBI’s current programme on financial inclusion- aimed at empowering low-income people working in Ivory Coast, Kenya, Nigeria, Morocco, Uganda and Senegal. “Our goal is to include one million low-income people, especially youths, women, and farmers into the formal financial system by August 2022.”


Though the pandemic might have spelt doom for a lot of businesses and economies, it has however thrown up a few positive indicators for the financial inclusion drive in Nigeria. As earlier mentioned, while people lost their jobs, there was an upsurge of micro-businesses which created employment opportunities, thus reducing the impact of unemployment in the country.The pandemic also led to the increased adoption of DFS and financial agent services. According to the Nigeria Inter-Bank Settlement Service (NIBSS) report, the monthly use of digital channels rose from 45 million transactions valued at N5.4 trillion at the end of 2017 to over 287 million valued at N23trillion in 2021. This represents a growth of over 530 per cent in the last five years.

Read Previous

Confronting menace of double taxation on jetty operations

Read Next

COP27: Nigeria pushes for $400bn funding for ETP

Leave a Reply

Your email address will not be published. Required fields are marked *