There has been a huge increase of Nigerians included in the nation’s financial system over the years with over 10 million new accounts opened in the last one year. According to data by the Nigeria Inter Bank Settlement System, total bank accounts held in the country grew by 13.8 per cent.
Total bank account as at 2016 October ending stands at 94.3 million compared to 82.9 million accounts which were held by banks in the country as at October last year. Also, total savings account had improved by 15.7 per cent, growing from 57.27 million in October 2015 to 66.25 million at the end of October 2016.
With these figures, Nigeria is almost at the target set by the Central Bank of Nigeria of achieving 68.5 per cent financial inclusions in the country by the end of 2016. Earlier in the year, CBN Director, Banking Supervision, Mrs Tokunbo Martins had said 66 per cent of the country’s adult population has been included in the financial system.
Martins, who said 57 million Nigerians, which represents 66 per cent of the bankable population, now have access to financial services, noted that “it is very important for 170 million Nigerians to have some form of access to financial services and so I am happy to report that there has been substantial improvement.
‘‘The target that we are working on is 68.5 per cent by the end of December 2016 and so if that target is achieved, I think we would have gone a long way in alleviating the sufferings of Nigerians,’’ she said.
Back in 2008, the number of financially included Nigerians was less than half the bankable population as a report by EFInA showed that more than 52 per cent of Nigerian bankable populace was excluded from the financial sector.
This means that in every six Nigerian sampled in 2008, only about four of them had access to one form of financial service or the other. Financial services in this context however goes beyond commercial banking as it includes micro financing, insurance, mortgage amongst others.
Many Nigerians, for numerous reasons are unbanked and lack access to formal financial services. Billions of naira circulates through the informal sector and this has a negative impact on the country’s economic growth and development.
The results of the EFInA Access to Financial Services in Nigeria 2012 survey showed that 34.9 million adults representing 39.7 per cent of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5 per cent of the adult population.
The 2012 survey also revealed that 23.0 million adults save at home, and if 50 per cent of these people were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year.
This is one of the reasons the CBN and financial institutions in the country have continued to push forward in the drive to achieve financial inclusion in the country. Mobile Money is one of the initiatives of the CBN to drive financial inclusion, by bringing in the unbanked segment of the society to the formal financial system.
With the release of the Framework on Mobile Money in 2009, the stage was set to license the Mobile Money Operators. To date, 21 Mobile Money Operators (MMOs) have been fully licensed, and are in operation in Nigeria, while a few others are at various stages of pilot.
According to CBN Director, Banking and Payment System, ‘Dipo Fatokun, “the average value of transactions the MMOs carry out is in the neighborhood of over N3 billion per month (inter-scheme), with about 100,000 agents scattered all over the country. The figure for January 2016, was over N4 billion.
The apex banks also driving financial inclusion through agent banking which refers to the provision of financial services through a third party contracted by a financial institution to offer services on its behalf, especially in locations not covered by the financial institution’s branch network.
Banking agents can be pharmacies, supermarkets, post offices, kiosks, etc. The best suited are however, businesses that have built good customer relations and gathered experience in handling cash floats. Financial services that can be delivered by agents include: payments, deposits, withdrawals, loan repayments, settlements of utility bills, taxes and even individual transfers.
The framework for licensing of super agents was released sometime in April 2015, and some organizations, including the major telecommunication companies in Nigeria have applied. Although, much of this initiative has not been seen, it is expected that very soon, it will be embraced as the CBN said some licences for super agents would be issued before the end of the first quarter of the year.
These efforts by the CBN in collaboration with financial institutions in the country which have started to yield results has not gone unnoticed as the Brookings 2015 Financial and Digital Inclusion Project (FDIP) report, which evaluates access to and usage of affordable financial services across 21 countries, has rated efforts by Nigeria to drive financial inclusion as high.
Nigeria tied for first place for country commitment and was ranked ninth for the country’s overall financial inclusion efforts. The report analysed the financial inclusion landscape in Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. Countries received scores and rankings based on 33 indicators across four dimensions: country commitment, mobile capacity, regulatory environment, and adoption.
On the performance chart, Nigeria had placed eight for mobile capacity; 12th place for regulatory environment; and 10th place for adoption. The report highlighted meaningful initiatives that Nigeria, led by the CBN, has undertaken to promote financial inclusion in Nigeria.
These efforts included the launching of a national financial inclusion strategy in 2012 and a Financial Inclusion Secretariat. Also the apex bank developed an extensive set of quantifiable goals, including increasing the percentage of the adult population using formal financial services to 70.0 per cent by 2020; and issued the 2013 guidelines on agent banking, which enabled banks to expand beyond traditional brick-and-mortar infrastructure.
The report noted that with about 44.0 per cent of adults aged 15 and older have an account with a formal financial institution or mobile money provider as of 2014, up from about 30.0 per cent in 2011 (World Bank’s Findex).
Nigeria has clearly demonstrated progress towards deepening financial inclusion. However, it highlighted that further work remained to be done with respect to expanding access to formal financial services among the remaining adults who are largely excluded from the formal financial sector.