Narayi is a large neighborhood in Kaduna state, Nigeria. It does not host a single bank and until a few years ago, it did not have a single Automated Teller Machine. This community is not in a rural area, it is in Kaduna city and close to other more privileged neighborhoods. The closest observable links to formal financial services sprang up about five years ago when Fidelity Bank installed an ATM in Narayi. Most recently, there has been an introduction of and increase in mobile money agents. While there is a lack of published data online about Narayi, this researcher based on empirical observation, can attest to the lack of banks and also to the population of Narayi in the thousands.
Financial inclusion 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 (World Bank Group, 2019)
THE NATIONAL FINANCIAL INCLUSION STRATEGY
Nigeria’s strategy at ensuring financial inclusion has been spearheaded by the Central Bank of Nigeria (CBN). Based on a survey conducted by Enhancing Financial Innovation and Access, which revealed that 53% of adults were excluded from financial services in Nigeria (ENIA, 2008), the CBN formulated a strategy to combat financial exclusion. The National Financial Exclusion Strategy was launched in 2012 with the aim of reducing the financial exclusion rate to 20% by 2020.
CBN identified the major tools for driving the NFES as;
• Agent banking
• Tiered Know-Your-Customer Requirements
• Financial Literacy
• Consumer Protection
• Linkage Banking
• Implementation of the MSME Development Fund
• Credit Enhancement Programmes
The target set by the CBN has seen active implementation by not just traditional banking services but also the involvement of new actors such as Fintechs in Nigeria. Four key examples of initiatives to drive financial inclusion in the country are;
• Firstmonie: The Firstmonie Agent Network is an initiative of First Bank Nigeria. Firstbank describes it as a bespoke channel through which the bank broadens the access to financial services for every Nigerian and African. The recorded milestones since its launch in 2012 include: simplified access to an account; cheap and affordable services, human ATMs, and a large-scale agent network (27,000 across all 36 states).
• Ecobank Pay and Ecobank Xpresspoint Agents: A lifestyle scan and pay digital payment and collection service, Ecobank Pay is available at over 90,000 merchant locations across the country while there are over 6000 Xpresspoint Agents across the country.
• Paxful: is a per-to-peer bitcoin marketplace with over 2 million users. Paxful is holding educational workshops across Africa in 2019 with a focus on countries like Nigeria, South Africa and Kenya. These workshops are aimed at creating awareness about the use of bitcoin in order to help people understand the digital currency market and transact safely and with confidence
• MTN MoMo: MTN Nigeria, in 2019, launched a mobile money transfer service, MoMo. It is targeted at the 36 million Nigerians which it says, based on data from EFinA, lack access to formal financial services.
There is an increased partnership with Fintechs as Nigeria is currently home to over 250 Fintechs and approximately 60% of them are supporting payments and lending capabilities (EfinA Fintech Report, 2018)
At the Financial Services Agents Forum on 5th September, 2019, officials of the CBN, SANEF (Shared Agent Network Expansion Facility) and EFinA reported that millions of low income and underserved Nigerians would have access to financial services by the end of the year. In summary, they believe Nigeria will meet its 2020 target. EFinA’s report is that so far 63.2% of the inclusion target has been reached.
The main challenges to financial inclusion presently are:
• Financial illiteracy in most target populations.
• Inflation in the country which makes it increasingly difficult for the financially excluded to save.
• Poverty continues to be a major hinderance because poor people mostly consume all they earn.
• Data: while there is general data on exclusion in Nigeria, obtaining more specific data on communities showing distribution of exclusion would go a long way in focusing efforts.
• Grassroot focus: most of the excluded are in rural areas that most big firms have not reached and which frankly, might not hold much appeal for them. Funds to finance grassroot businesses that can be incorporated into the financial services industry could fill in this gap
• Finance for the poor: already established financial services actors should create packages that appeal to the needs of the financially excluded
• Mobile technology: is playing a huge role in financial inclusion. However, there remain many people who cannot use or afford internet. Simple mobile banking solutions for these kinds of people is key.
• Awareness: campaigns targeted at drastically reducing financial illiteracy are key. There is no point in creating access that the target population is not informed enough about to take advantage of.
CBN (2012) National Financial Inclusion Strategy
Daily Trust (2019) Nigeria: 80% Financial Inclusion Target Possible by 2020
EFinA (2018) Fintech Report
Firstbank (2019) Firstmonie Agent
Kama U and Adigun N (2013) Financial Inclusion in Nigeria: Issues and Challenges
Ojekunle, A (2019) MTN is targeting 36 million Nigerians without bank accounts with the launch of a mobile money transfer service.
Proshare (2018) Nigeria’s Revised National Financial Inclusion Strategy 2018
Proshare (2019) Ecobank Pay and Ecobank Xpresspoint Agents are leveraging technology to expand financial inclusion
The Guardian (2019) Paxful boosts financial inclusion in Africa with bitcoin
World Bank Group (2018) Financial Inclusion
Article written in August 2019