December 3, 2018

The imperative, urgency of financial inclusion — NIBBS

The United Nations Development  Programme (UNDP) measures human development across countries in three basic dimensions: a long and healthy life, access to knowledge and a decent standard of living. Financial Inclusion on the other hand focuses on citizens’ access to financial services in such a manner that enables every adult citizen to realise his/her full potential and life aspirations.


Therein lies the obvious correlation between financial inclusion and human development, and this explains the recent buzz and increased activity, in Nigeria and the rest of the world, on growing financial inclusion as a means of lifting citizens out of poverty, improving citizens quality of life and enhancing the capacity of citizens to contribute meaningfully to national development. In the words of the Consultative Group to Assist the Poor (CGAP), a global partnership of leading development organisations, “Poverty – Inequality – Migration, financial services are foundational to addressing some of these pressing global issues and achieving a wide array of development goals, as evidenced by an expanding body of research. Numerous studies have demonstrated that access to bank accounts and payment services have a measurable impact on poverty”.

With the reported high poverty level in Nigeria in particular, it is imperatively urgent to enhance financial inclusion.

The objective of this piece is to simplify the meaning of financial inclusion, to explain why there has been so much talk and writing on the subject lately, and to challenge readers and indeed all adult Nigerians to go ahead, without delay, and take full advantage of the benefits that financial inclusion offers.

Financial Inclusion Defined

Kajole Nanda and Mandeep Kahur of Indian Guru Nanak Dev University, defined Financial inclusion simply as “where individuals and businesses have access to useful and affordable financial products and services that meet their needs, and are delivered in a responsible and sustainable way. Financial inclusion is defined as the availability and equality of opportunities to access financial services”.

The financial inclusion agenda is that every adult must have access to banking services as a matter of right. The system must provide a lot of convenience to the process of:

a.Opening transaction accounts i.e. bank accounts or mobile money wallets;

b.Saving money in the account to earn interest;

  1. Sending and receiving money in a convenient and affordable manner;
  2. Very convenient and low cost means of paying bills and making daily purchases;
  3. Access to finance to meet personal obligations and to establish and operate businesses i.e. loans at affordable rates and under friendly conditions;
  4. Investing in instruments for higher returns(fixed deposit, mutual funds, bonds, stock, etc);

g.Insuring risks around assets;

h.Savings for Pension.

Levels of Financial Inclusion/ Exclusion

Whoever is taking full advantage of the eight services enumerated above is said to be financially included, the individual who uses a few of the services is said to be financially underserved, while the person who does not use any of the services is said to be financially excluded. The goal of financial inclusion advocacy is to get every adult Nigerian to be financially included i.e. financially served.

There are 35Million BVN at the moment. Estimated 10Million of this number are adjudged to be financially included and financially served, this being the BVN holders are actively engaged in financial transactions through banks, microfinance banks, etc. while the remaining 25Million are generally considered to be financially underserved. Also an estimated 7Million financially underserved individuals do not own bank accounts but enjoy limited financial services through informal arrangements such as cooperatives, esusu, etc. It follows therefore that only about 42Million (42%) of the estimated 100Million adult Nigerians enjoy some form of financial inclusion while about 58Million (58%) adult Nigerians are financially excluded. EFiNA in a separate study of 2016 estimates that 41.6% of 96.4Million adult Nigerians are financially excluded.

According to the World Bank Global Findex Report 2017 “Financial inclusion is on the rise globally. The 2017 Global Findex database shows that 1.2 billion adults have obtained an account since 2011, including 515 million since 2014. Between 2014 and 2017, the share of adults who have an account with a financial institution or through a mobile money service rose globally from 62 percent to 69 percent. Account ownership has remained largely unchanged in developing economies where it was already about 70 percent or more in 2014, such as Brazil, China, Malaysia, and South Africa.”

Financial inclusion holds so much promise and benefits for all. A recent study by McKinsey Global Institute estimates that financial inclusion has the potential of boosting world GDP by $3.7Trillion by 2025 (6% growth), $4.2Trillion in new deposits, $110Billion annual reduction in government leakages, and $2.1Trillion new credits/loans.

The World Global Index 2017 report indicates that an estimated  1.7Billion adults are unbanked and financially excluded worldwide out of estimated world adult population of 5Billion.  The poor, women, rural dwellers, and refugees constitute a large percentage of the financially excluded worldwide. The urgency of growing financial inclusion cannot be overemphasized given the stack reality of the situation if we must advance the cause of eradication of poverty and improve the quality of life of the generality of our people.

Financial Inclusion Impediments & Solutions

The EFiNA survey of 2016 provided some insights to factors responsible for the high level of financial exclusion in Nigeria in particular e.g. 56.1% of the survey respondents attributed their exclusion to irregular income and unemployment. Other factors sited are indicated in the table below. Also indicated in the table is a summary of ongoing effort by various stakeholders to address the identified financial inclusion impediments.


1              Income not regular/No job – 56.1%          Job creation and other empowerment                                                  initiatives;Vocational Training;Improve access to loans

2              Banks are too far away – 30.7%  The Nigeria banking industry has embarked on the                          Shared Agency Network Expansion Facility (SANEF) project to rapidly grow the number of          financial services agents from present 60,000 to 500,000 by year 2020. These bank agents           would provide basic banking services to the populace and they would be located close to people’s homes and offices including rural areas where there are no bank branches.PSPs to                 release more e-solutions for remote financial services;

3              Can’t read/write – 11%  Improve Education, and Adult literacy.

4              Too expensive – 10.5%   Competition among service providers should drive down service costs over time.

5              Toomuch documentation/no ID – 10.1%                Banks now offer entry-level bank accounts to address this problem.



In this modern time, being financially included is not a choice. Every individual who desires to live life in full and to realise his/her potentials must take advantage of various financial services that Central Bank-licensed financial services providers have made available, leveraging appropriate technologies such as the internet, mobile phone, ATMs and kiosks and indeed bank branches and appointed financial services agents. That young school leaver who wants to run a startup will easily realise his/her dreams by latching unto the benefits that financial inclusion brings. Likewise the apprentice who is ready to start his/her trade, the petty trader who wants to grow the business, and that farmer who needs a small loan to start or expand his/her farm. The financial services industry is wide open with innovative financial services designed to meet the needs of the diverse groups of people in our country, to enable everyone realise his/her full potential towards improving quality of lives and ultimately growing the national economy.


‘Niyi Ajao Ag.CEO, NIBSS Plc; and Financial Inclusion Thematic Group Lead of the NESG Financial Inclusion &Financial Management Policy Commission.