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Financial Inclusion In Nigeria

Financial inclusion provides a comprehensive range of high-quality financial products, such as savings, credit, insurance, payments, and pensions, which are relevant, appropriate, and affordable for the adult population, especially the low-income sector. It is acknowledged as a potentially crucial tool for addressing poverty and inequality, producing jobs, developing wealth, and increasing welfare and living conditions for many people, notably the rural poor and the financially excluded.

Many people are excluded from financial services in developing economies in various ways. For three key reasons, it is essential to include them. It makes it possible for struggling people to improve their quality of life through work. Financial service providers may gain from the expansion of the banking industry. Additionally, a nation’s economy can grow when its population have access to financial resources.

This is why the importance of financial inclusion in African economic and policy growth is gaining traction. So, to do this, banks must engage with potential clients who are not now part of the financial system.

According to the  EFInA Access to Financial Services in Nigeria 2020 Survey, formal financial services such as banks, microfinance, mobile money, insurance, and pension accounts are used by 51% of Nigerian people, up from 49% in 2018. This has mainly been fueled by the expansion of banking, with 40% of Nigerians having accounts in 2018, rising to 45% in 2020. The entire financial inclusion goal was 80% by 2020; however, according to EFInA data, just 64% of adult Nigerians were financially included by that time. This indicates that 38 million adults, or 36% of Nigeria’s adult population, remain financially excluded. Meanwhile, the World Bank says financial inclusion in Nigeria grew from 45% in 2022 to 64% as of 2022, and the Central Bank of Nigeria (CBN) hopes to raise the figure to 95% by 2024.

How Is CBN Promoting Financial Inclusion In Nigeria?

In Nigeria, Telecom companies (Telcos) have shown particular interest in two of the initiatives adopted by the Central Bank of Nigeria (CBN) in its financial inclusion drive the licensing of Mobile Money Operators (MMOs) and Payment Services Banks (PSB), as they both rely heavily on the infrastructure and technology they provide.

Under the mobile money program, telecommunications companies provide the infrastructure to support message exchange for mobile payments, and PSB licensees are expected to use mobile and digital channels to deliver their services, which in turn increases financial inclusion and promotes economic activity at the local level through the provision of financial services.

1. Mobile Money Services

Mobile money is initiating, authorising, and confirming a value transfer from a current/checking, savings, or stored value account via a mobile phone. Some observers believe that the current legislative system, which prohibits Telcos from acting as “the lead initiator” even in the non-bank-led model, is to blame for Nigeria’s low success rate of mobile money services. This argument is based on the observation that countries where telcos have assumed the initiative in service offering have seen the most success with the uptake of mobile money services in Africa.

Since 2011, the CBN has granted licenses to 21 mobile money companies in Nigeria (MMOs). According to reports, mobile money transactions increased by 50% between January and September 2018 to a total of NGN1.2 trillion, compared to NGN795.18 billion during the same time in 2017.

Additionally, it has been stated that the number of mobile money users has climbed from 3.2 million in 2017 to 5.54 million in the same period in 2018. According to sources, the leading payment platform for the digital economy in many emerging areas is MMOs, which have transactions worth over US$1 billion per day globally and over 690 million registered users in 90 countries.

The CBN acknowledges the significance of telecommunications in running the mobile money scheme given the necessity of the infrastructure they provide but feels compelled to prohibit the telco-led option to maintain complete control over the operations of monetary policy, reduce risks, and ensure that the provision of financial services is led by entities that have been granted licenses by it. As a result, telcos are limited to offering telecom network infrastructure to mobile money carriers.

2. Payment Service Banks

The CBN published the Guidelines for Licensing and Regulation of Payment Service Banks in Nigeria by its statutory powers. According to the Guidelines, licensees must “leverage on mobile and digital channels to expand financial inclusion and boost economic activity at the grassroots level through the supply of financial services.”

The PSBs must “facilitate high-volume, low-value transactions in remittance services, micro-savings, and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help attain the policy objective of a 20% exclusion rate by 2020,” according to the PSBs’ mandate. Therefore, those without bank accounts, those who are underserved, and those who are financially excluded are the main goals of PSBs.

The list of authorised PSB promoters includes banking agents, Telcos via subsidiaries, retail chains (supermarkets, downstream petroleum marketing companies), postal (Fintechs), financial holding companies, and any other service providers, courier companies, MMOs, switching companies, financial technology companies entity on the merits of its application subject to the approval of the CBN.

The CBN may, from time to time, specify a different sum as the minimum capital requirement for a PSB, which is NGN5 billion (about US$13 million). To reach those financially excluded, PSBs are expected to operate primarily in rural areas and other places without banks, with at least 25% of their financial service touch points. They can establish direct business relationships with card scheme operators, set up agent networks, deploy point-of-sale systems, and hire agents. They must also be technologically advanced and follow industry data storage, security, and integrity standards.

How Are Nigerian Banks Promoting Financial Inclusion?

1. Product Development

Banks in Nigeria are creating solutions exclusively for customers who are financially excluded. These include “tier 1” bank accounts and personal customers’ first accounts. A passport photo and a bank verification number are required to open the account. Small business entrepreneurs can also get loans from microfinance institutions.

Loans, credit options, and grants are also made available to women working in the unorganised sector, including those doing small commerce, street hawking, and selling food. These loans frequently feature low-interest rates to be affordable to persons with low incomes and promote the expansion of women-run businesses.

Financial vulnerability might have a disability component. An estimated 25 million people in Nigeria are disabled and some banks have a reserved product to offer these persons to promote their financial capacity.

2. Product Marketing

Although digital services and marketing are becoming more prevalent in banking, traditional marketing techniques are still necessary to attract new clients. Nigerian banks know that these clients may not always use social media or other technological tools. The three main languages, Hausa, Igbo, and Yoruba, are operated by banks in radio campaigns and commercials to reach their target consumers in the country’s rural areas.

Another marketing technique that banks employ to target these clients is called “market storm.” To draw traders and customers during market storms, bank employees enter a market or other public setting with music and entertainment.

3. Adoption Of Technology

Nigerian banks understand the importance of technology in reaching out to unbanked, underbanked, and low-income customers. These clientele segments hardly ever use social media. However, they frequently converse via text messages as part of their regular routines. To communicate with customers, banks use text messages and USSD codes. To start an account, send money, pay bills, and apply for loans, type the numbers and symbols into any mobile phone, whether it has internet access or not.

Another way Nigerian banks interact with their customers is through mobile money agents. Banks provide these representatives with mobile point-of-sale equipment to assist bank customers.

Financial Inclusion And Gender In Nigeria

Financial inclusion also has a particular gender component. In a 2019 poll conducted in Nigeria by EFINA, women were more likely to experience financial exclusion (36% and 24% for men). It is also noteworthy that Nigeria has lagged behind less populous counterparts like Kenya, South Africa, Tanzania, and Uganda in closing the gender gap in access to financial services.

The gender element of financial inclusion is essential. Women were more likely to experience financial exclusion in a 2019 poll performed in Nigeria by EFINA (36%  24% for men). In reducing the gender gap in access to financial services, Nigeria has fallen behind less populous rivals like Kenya, South Africa, Tanzania, and Uganda.

Financial Inclusion And Youth In Nigeria

Nigeria has a youthful population, yet many of its youths, like its female populace, are financially excluded. Young adults between the ages of 18 and 35 are substantially more likely to be financially excluded than older adults, according to EFINA’s projections. Out of the estimated 56.7 million young people, only 21.5 million, according to a report by EFINA, have bank accounts as of 2018. The relationship between youth financial exclusion and other socioeconomic problems, including youth unemployment and underemployment, is also evident.

Factors Affecting Financial Inclusion In Nigeria

1. Low Level Of Financial Literacy

Nigerians with access to financial services reportedly lack the essential resources and knowledge of finance required to conduct transactions: Only 16% of Nigerian adults report having the financial literacy necessary to complete routine financial operations like opening an account, and the lack of education surrounding financial services has probably contributed to poor financial inclusion.

2. High Service Charges

Most people in Nigeria’s adult population work in the informal sector and prefer cash. This has resulted in a very static use of financial services. Most of those who do not utilise formal financial services reported not being able to afford the transactional costs, which is one of the main reasons cash is still the preferred means of payment.

3. Inadequate Required Documentation

Many Nigerians lack the necessary identification needed to open any financial account. Only 79%  of the Nigerian adult population have the documents required to open a bank account or a mobile money account, according to a study by InterMedia and the Bill & Melinda Gates Foundation, making the absence of necessary documentation one of the most significant obstacles to financial inclusion in Nigeria.

4. Lack Of Proximity To Service Points

More than half of the Nigerian adult population lacks easy access to financial services like ATMs, banks, or service kiosks, which is one of the main obstacles to financial inclusion in Nigeria. It was claimed that most Nigerians were unaware of any within a single bus ride of their homes. Since Nigeria’s rate of access to formal financial services stayed unchanged in 2016 at 42%, this has been the case for many years.

Benefits Of Financial Inclusion

1. Build Assets

Financial services give low-income households the money to buy land, build or renovate a home, buy livestock and consumer durables, or expand their businesses thanks to improved income and the capacity to save and take on loans.

2. Improve Household Income

Financial services can enhance lives by providing necessary funding for commercial activity, which can boost household earnings. Reliable sources of financial services make it easier to plan and grow business operations, which can help families save money, manage their cash flow, and lessen the need to liquidate assets in times of need.

3. Promote Security

Financial institutions are only used by a quarter of the developing world to safeguard money. Many people keep their cash in plain sight, such as on their floorboards, under their mattresses, or in containers. Another extremely rigid approach to accumulating and accessing funds is to invest your money in jewels or animals. Families may preserve, grow, and securely use their savings by depositing them in a reliable financial institution.

4. Create Jobs

Financial services give aspiring business owners a chance to generate employment for themselves. Additionally, it guarantees that expanding microenterprises will create employment possibilities for others in the neighbourhood.


Financial inclusion is a powerful tool that can drive a nation to prosperity because it improves the financial capacity and capability of the populace, which in turn promotes economic growth. Therefore, it is important for the Nigerian government, through the CBN, to give financial inclusion its undivided attention.






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