Understanding Financial Inclusion in Nigeria
Financial Inclusion simply means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
Financial Literacy remains key to increased financial inclusion, since it is more rational to participate in what you know about. Thus, knowledge of financial products and services is essential.
According to EFINA’s Access to Financial Services 2016 Survey, The total adult population (18 years and above) of Nigeria is 96.4 million Of this adult population:
· 59.6m (61.9%) are based in rural areas
· 56.2m adults (58.3%) are under 35 years
· 18.4m adults (19.1%) get their main source of income from subsistence/commercial farming
· 18.9m adults (19.6%) get their main source of income from own business (non-farming)
· 7.9m adults (4.2%) get their main source of income from the formal sector
· 21.8m adults (22.6%) have no formal education
· 33.9m (38.3%) are banked
· 36.9m (41.6%) of the adult population are financially excluded
Interestingly, 60.4% own a mobile phone.
Challenges / Barriers to Financial Inclusion
According to World Bank:
· an estimated 2 billion adults worldwide don’t have a basic account.
· 59% of adults without an account
Reasons cited include:
· a lack of enough money
· Distance from a financial service provider
· lack of necessary documentation papers
· lack of trust in financial service providers, and
The above challenges were corroborated in Nigeria following EFInA’s Survey which categorised barriers to financial inclusion as follows:
· Irregular income
· lack of employment, and
· low literacy levels.
· long distance to financial access points,
· the prohibitive cost of financial services, and
· inappropriate financial products
· Regulatory barriers such as cumbersome KYC requirements
· lack of trust in financial services providers, and
· high rates of corruption.
· Fees for ATM cards/transactions
Recent trends driving Financial Inclusion?
· Smartphone penetration
· Digital Finance through Technology (Fintech Solutions)
· Rise of other financial service providers & products
· Involvement of other sectors such as Telecom operators
· Increased Involvement of Regulators e.g. CBN’s cashless policy, agent banking, endorsement of digital currency, SEC’s journal launch to improve financial literacy.
· Access to consumer data
· Improved customer services and turnaround time in processing transactions
· Availability of financial information in various forms e.g. infographics, animations, etc
Essential factors needed for increased Financial Inclusion
· Understanding of financial products
· Trust building
This is where Journalists and Bank Communication Managers come in.
How Bank Communication Managers can support the move
1. Breaking down products and services in different forms and distributing same across various channels especially via mobile. E.g. Infographics, Animations, etc
2. Partnerships with financial literacy institutions
3. Encourage transparency amongst relationship managers especially in helping customers understand terms and conditions.
4. Investigating and reporting on compliance and exceptions
5. Coverage of enlightenment and educative sessions on financial products and services.
How Journalists can get involved
1. Get more knowledge about financial products. This will go a long way since they (collectively) have correspondents in more locations across the nation.
2. Attend EFINA and other group(s) events; indeed EfINA has a workshop for Journalists to facilitate this involvement.
3. Support bank’s initiatives via pre-launch focus group sessions and post-launch monitoring and 2-way feedback to the banks and the public.
4. Build public trust in the financial services sector by advocating on behalf of customers and where necessary provide teachable lessons on what is going on and how it can be better.
5. Encourage feedback from users especially those in the digital and radio genre where such feedbacks are easier.
Commendation of what various Financial Entities are doing in this area
· First Bank churning out content describing its products and services while partnering with organisations in other industries e.g. the Creatives Industry.
· First Bank, UBA Plc and Citi Bank also provides empowering training for journalists
· Access Bank – Deploying its blog where it shares stories, tips & inspiration for Financial Freedom
· GTBank – Analyse This Programme via Ndani TV is a good initiative
· Diamond Bank – Esusu Product which requires one on one interaction with market women.
· Fidelity Bank – Fidelity International Creative Writing Workshop
· Wema Bank – pushing its ALAT software to expand reach to the unbanked who are able to use mobile devices.
· Zenith Bank – empowering many financial journalists and publishing houses to sustain high quality reporting on financial services and products.
· AMCON’s support of the CFJ and the discussion of this topic.
Many other financial entities equally engage in road shows, events, TV and radio programmes that seek to enlighten and educate the populace.
Proshare has been a pacesetter in this regard with a core focus on Financial Literacy long before the advent of niche financial inclusion entities were established, having started as a personal finance hub. We had early on recognized that the growth of the financial industry, nay the financial information market was linked to the level of growth in discerning and more financially literate and enlightened populace.
This was simple enough. The more informed the public became, the easier it was to deliver a retail market that would sustain the financial industry – savings & thrift, investments, bonds & bills, derivatives, insurance, taxation, faith based finance, mortgages, pensions & retirements, property & real estate, travel & tours, health finance, and wills & trusts. Naturally, we anticipated the developmental needs and opportunities presented by technology to expand the options, service delivery, security and regulatory enhancement that comes from cashless services, cyrptos, fintech and mobile based banking services.
We have since seen a movement towards a possible quantum leap that should offer the financial services and financial information providers (who have now increased both in number and quality with non-traditional players as entrants) a veritable market.
It is on this basis that such parleys as we have today should be encouraged and dialogue sustained. We intend to remain a continuous supporter of financial enlightenment, education and empowerment through credible, timely and reliable information.